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