Steel Excel Inc. (the “Company”) had previously entered into a Management Services Agreement (the “Services Agreement”), dated October 1, 2011, between the Company and SP Corporate Services LLC (“SPCS”), whereby SPCS provided management services, principally including the services of the Company’s Chief Financial Officer, to the Company. SPCS is an indirect wholly owned subsidiary of Steel Partners Holdings L.P., which is the majority shareholder of the Company. Effective August 7, 2012 the Company’s Board of Directors, upon the recommendation of its Audit Committee, determined that that the services provided by SPCS should be substantially expanded in order to better serve the needs of the Company as it grows organically and by acquisition, including providing the services of additional key senior personnel and adding additional critical functions in the areas of finance and accounting, legal, human resources, business development and otherwise. Accordingly, the Board approved an Amended and Restated Services Agreement, to be effective August 1, 2012, at a revised annual fee of $3,600,000. In addition, the Board approved a request by SPCS for an increase in the fee payable under the existing Services Agreement for additional services provided by the Company’s Chief Executive Officer and Chief Financial Officer during the first seven months of the current year, in the amount of $275,000. A copy of the Amended and Restated Services Agreement is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
I don't see it as shady at all. I read the agreement and Steel is providing a lot of services that SXCL would have to spend a lot of money to acquire. Not only does Steel provide the people for the jobs, they also provide systems that typically only exist in much larger companies.
I own SPLP. Lichtenstein has a long and successful track record of investing in small cap companies. I doubt he's doing all this just to skim some money off the top, as you suggest. SXCL is the largest investment for SPLP. The acquisitions made by SXCL will largely determine whether both SXCL and SPLP are successful. He has a big incentive to put together a good company.
With all that said, he has yet to produce good results since SPLP transitioned to a public company.