NEW YORK, Oct. 1, 2018 /PRNewswire/ -- Sententia Capital
Management, LLC and its affiliates (collectively, "SENTENTIA" or "we"), the beneficial owners of approximately 8.1% of the
outstanding shares of common stock of Schmitt Industries, Inc. (NASDAQ: SMIT) ("Schmitt" or the "Company"), today announced that,
in a report issued on September 28, 2018, Institutional Shareholder Services ("ISS"), one of the
world's leading independent proxy advisor firm, recommended that Schmitt shareholders "WITHOLD" votes from legacy director
nominee Maynard E. Brown and vote "AGAINST" approval of Schmitt's say-on-pay proposal at the
Company's annual meeting scheduled to be held on Friday, October 12, 2018, in Portland, Oregon.
Michael R. Zapata, founding manager for Sententia, commented, "We are pleased to see further
support for our concerns with Schmitt. We urge fellow shareholders to join us in voting for needed accountability and
independence in Schmitt's boardroom. Together, with Andrew P. Hines, we are working to help unlock
shareholder value at Schmitt with our comprehensive plan."
In summarizing its recommendations, ISS commented (emphasis added):*
- "The consistent net losses over the past decade appear to have been driven by an inability to deliver
sustainable gross margins and to control operating expenses."
- "a credible argument could be made that the board did not react soon enough to remedy SMIT's
deteriorating performance, given that concerns initially presented in FY2009."
- "it is too soon in the turnaround process to draw conclusions, and the strategy itself has been articulated in a
manner that makes it difficult for shareholders to assess whether it is likely that SMIT will be
able to deliver sustainable profits moving forward. This ineffective communication is problematic, particularly since
it appears to be part of a wider pattern of shortcomings."
- "there are uncertainties about the viability of the company's plan due to shortcomings in
disclosure."
- "there are historic concerns relating to board independence (highlighted in ISS analyses
from 2011-2016)."
- "the board failed to demonstrate responsiveness to the concerns of shareholders reflected in say-on-pay
vote outcomes for two consecutive years"
- "WITHOLD votes are warranted…for long-tenured incumbent director Maynard E. Brown –
who, as chair of the compensation committee, also bears direct responsibility for the company's poor
responsiveness to shareholder concerns regarding executive compensation"
We are encouraged by ISS's recognition of the board's historical independence issues and ISS's recommendation that
shareholders withhold votes on Maynard Brown, the longest tenured Schmitt director. We believe
David Case should be held to the same standard as he has been in a leadership
role at Schmitt since 1996. We believe that the lack of accountability on the board is a key reason for the last decade of
cumulative negative $7.5 million in net income and destruction of shareholder value.
During one of the strongest economies in a decade, Mr. Case continues to trumpet the "first profitable fiscal year for
the Company since FY2012." Schmitt shareholders deserve better.
REAL LEADERSHIP IS NEEDED
THE SENTENTIA PLAN
Sententia's nominees are highly qualified and will ensure accountably and transparency and will work to
unlock shareholder value through a comprehensive plan.
1) Conduct Comprehensive Strategic Review to Evaluate
a. Sale of non-operating real estate
b. Potential sale of Xact and Acuity
c. Main SBS business line to improve profitability
2) Instill Operational Discipline
a. Instill fiscal discipline across the Company though
targeted cost-cuts
b. Improve working capital management
3) Improve Corporate Governance
a. Improve compensation disclosures
b. Eliminate staggered board
c. Create a lead independent director
d. Appoint two new highly qualified, independent board members
4) Link Pay to Performance
a. Cut director pay in line with peers
b. Link executive pay to key performance metrics
A VOTE "FOR" SENTENTIA NOMINEES WILL BRING TRUE LEADERSHIP AND HELP MAXIMIZE
SHAREHOLDER VALUE FOR SCHMITT SHAREHOLDERS
VOTE BLUE PROXY CARD TODAY
*Sententia has neither sought nor obtained consent from any third party to use previously published information as proxy
soliciting material.
ADDITIONAL INFORMATION
SENTENTIA, together with the other participants in its proxy solicitation, have filed a definitive proxy statement and
accompanying BLUE proxy card with the Securities and Exchange Commission ("SEC") to be used to solicit proxies in connection with
the Company's 2018 annual meeting of shareholders (the "Annual Meeting"). Shareholders are advised to read the proxy statement
and any other documents related to the solicitation of shareholders of the Company in connection with the Annual Meeting because
they contain important information. These materials and other materials filed by SENTENTIA with the SEC in connection with the
solicitation of proxies are available at no charge on the SEC's website at http://www.sec.gov. The definitive proxy statement and other relevant documents filed by SENTENTIA with the SEC
also are available, without charge, by directing a request to SENTENTIA's proxy solicitor, InvestorCom, at (877) 972-0090 for
shareholders and (203) 972-9300 for banks and brokers.
ABOUT SENTENTIA CAPITAL: Sententia is a value investing based capital management firm that runs a concentrated, deep value
portfolio. www.sententiacapital.com
Investor Contact
Investor Relations
212.851.3488
investorrelations@sententiacapital.com
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SOURCE Sententia Capital Management, LLC