Issue Date: January 7, 2008
Schulman Rejects Investor Proposal
PLASTIC COMPOUNDS MAKER A. Schulman has written to shareholders, urging them to support the company's recommended slate of board directors and to reject a competing slate of directors proposed by activist investors Ramius Capital Group.
Schulman says it has developed a 100-day plan that will return the U.S. firm's North America operations to profitability, increase profits in Europe and Asia, reduce costs, and broaden the company's customer base beyond automotive markets. At its annual meeting on Jan. 10, Schulman wants shareholders to endorse its plan and elect its slate of directors, including new nominee Stanley W. Silverman, former CEO of inorganic chemicals maker PQ Corp.
However, Ramius, which owns a 7.6% stake in Schulman, says the firm has a long history of deteriorating operating performance and has not met promises to improve profits. Ramius wants to replace newly appointed CEO Joseph M. Gingo and is urging shareholders to sign proxies in favor of its two proposed directors to ensure that current management remains accountable and that Schulman continues to explore strategic alternatives, including a possible sale of the company.
Schulman has had a difficult year. Price increases for the company's products failed to keep pace with rising costs of raw materials. Though sales for the fiscal year ending Aug. 31, 2007, were $1.8 billion, up 11% compared with the previous year, net income slipped more than 30% to $23 million. In addition to engineered plastic compounds, the firm formulates color concentrates and additives that improve the appearance and performance of items such as hard hats and appliance housings.
The Akron, Ohio-based firm has been scuffling with several disgruntled investors since October. A few weeks ago, several investors led by Barington Capital Group came to terms with Schulman and agreed to withdraw their own slate of directors and support the firm's nominees.
Schulman says it has tried to resolve the proxy fight with Ramius. It offered to back one of Ramius' two nominees for election to the board, but Ramius rejected the offer.
- Chemical & Engineering News
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