LAPORTE, Ind., May 14, 2012 (GLOBE NEWSWIRE) -- Longtime P&F Industries, Inc. (Nasdaq:PFIN) shareholder Timothy Stabosz, a 7.1% holder, with ownership dating back to 1996, today announced his intent to WITHHOLD the election of Director Jeffrey R. Franklin, at the company's annual meeting, to be held on May 23rd, 2012. Franklin, who is the CFO of New York based Executive Charge, Inc., has been on the P&F board since 2004, and currently sits on the company's audit, compensation, and stock option committees.
Explaining his reasons for withholding Franklin, Stabosz flatly stated, "Unfortunately, Jeffrey Franklin has become one in a series of legacy directors who have seen fit to kowtow to CEO Richard Horowitz, showering said gentleman with ungodly amounts of compensation over his 16+ year tenure as CEO, while the outside shareholder base has been unceremoniously kicked to the curb. More specifically, I intend to withhold Mr. Franklin for the following reasons:
1) In his capacity on the compensation committee, Franklin negotiated a 'sweetheart deal' with a failed CEO, renewing Horowitz's employment contract, as of January 1, 2012, for an annual base amount ($650,000) that was previously deemed by independent advisory firm Proxy Governance to be roughly 2x the peer group norms.
2) Despite outside shareholder concerns expressed about the previous compensation committee being 'packed' with Horowitz cronies, putatively independent Franklin, a new member of the committee, along with Kenneth Scheriff, refused to subject their decision making on Horowitz's employment renewal to appropriate scrutiny. Inexcusably, they failed to insist that the board release the list of peer group companies produced by an outside compensation consultant. Naturally, one wonders if the primary standard used, in coming up with the peer group, was the fact that Mr. Horowitz resides in one of the 10 most expensive zip codes in the United States! Were Franklin and Scheriff primarily interested in facilitating Richard Horowitz's 'lifestyle needs,' and feathering his nest...apart from what fiduciary duty to all of P&F's shareholders might have called for? Clearly, the board doesn't want its shareholders to know the answer to that question.
3) From all the evidence at my disposal, no consideration was given by the compensation committee, or the board, to replace Mr. Horowitz, or find someone who could earn more than the pathetic 3.5% compound annual growth in shareholders' equity that Horowitz has 'achieved' over his failed 16+ year reign as CEO.
4) Despite sitting on the board since 2004, Franklin REFUSES to show any solidarity with P&F's long suffering shareholders, by purchasing stock in the open market. Franklin owns NO shares in the company outright; instead, he mirthfully sits on a 2500 share option grant, oblivious to the credibility issues inherent, and continues to show DISDAIN for the outside shareholder base. One has to naturally wonder: Considering how P&F's stock has traded for as low as $1, in the last few years, compared to historical levels as high as $15+, is there ANY price at which Mr. Franklin would view the company as a potential investment for himself? Does Franklin view Richard Horowitz as a credible manager he is eager to INVEST in, or does he merely sit on Horowitz's board as a 'favor' to a highly influential and 'commanding' figure in the rarefied (and no doubt enthralling) world of the Long Island elite?"
Speaking directly to the company's outside shareholder base, Stabosz, who has diligently sought to bring accountability to a dysfunctional and disordered governance structure at P&F, noted his conclusions and findings of the last few years: "Unfortunately, historically, and until very recently, the P&F board has fundamentally operated as a 'socialite board.' Most members sat on it because their association with Richard Horowitz, a powerful and influential man, advanced THEIR careers, THEIR social status...and flattered their self concepts. Naturally, then, they were loathe to cross Horowitz, and the ordinary course of events was to pretty much give Horowitz what he wanted (an outrageous compensation package, carte blanche on acquisitions, etc.), while receiving astonishingly meager board fees, themselves, in return. Outside shareholder needs, and any implicit responsibility to us, were fundamentally denied, ignored, and quashed. Richard came first. Notions of moral responsibility as fiduciaries were summarily checked at the boardroom door. That is obvious for anyone to see, comparing the 16 year $20+ million aggregate 'haul' that Horowitz has taken out of P&F, to the embarrassing $13+ million increase in shareholders' equity realized on Horowitz's watch. The damage has been done. The goal, on my part, all along, has simply been to STOP IT from continuing...through a process of accountability and witnessing--witnessing to the truth, in all of its unseemliness.
"While much effort has been put in, the last few years, with considerable success, by a number of outside shareholders, to bear public 'witness' to that shamelessness, to call it to task, and to CHANGE it, the process has been unacceptably slow, and it has clearly been, in my humble opinion, DESPITE Mr. Horowitz...who has been recalcitrant, condescending, disingenuous, and doggedly territorial, the whole way through. Unfortunately, the entire board was not yet independent enough to ensure that Horowitz wouldn't be granted another 'sweetheart deal,' in his most recent employment renewal (Horowitz saw fit to that, by staving off necessary change for as long as possible), even if the amount of the annual salary was significantly reduced from the past.
"With the anticipated replacement, at this month's annual meeting, of Horowitz-tethered director Dennis Kalick, by Mr. Richard Randall (who I intend to vote FOR, along with the highly respected Howard Brownstein), the board continues to slowly move in the right direction. But whether or not the board as a whole will now be independent enough to finally throw off the oppressive yoke of Mr. Horowitz and his country club cronies, liberate the company, and truly operate it for ALL of P&F's shareholders (seeking to maximize returns for all, even if it means taking away Mr. Horowitz's 'lollipop'), remains a question of seering interest.
"In conclusion, I repeat my intention to WITHHOLD director Jeffrey Franklin...and my intent to vote in FAVOR of directors Randall and Brownstein. It is my hope that further change will be forthcoming on the P&F board, including replacement of the remaining conflicted legacy directors (Alan Goldberg and Robert Dubofsky, most notably), a separation of the chairman and CEO positions, elimination of the staggered board and poison pill...and an initiation of a long overdue stock buyback program, rather than pandering to Richard Horowitz's historical desire to make acquisitions, and 'grow at all costs'....using the contributed capital of his outside shareholder base for his own self-serving purposes," Stabosz concluded.