- Questions why Mr. Sisko wasn't replaced earlier
- Questions why Mr. Sisko was initially hired and his level of compensation
- Questions Chairman Rosenthal's desire to act in the best interests of shareholders
- Believes stock price would appreciate significantly if Chairman Rosenthal would resign
NEW YORK, NY / ACCESSWIRE / April 21, 2020 / Earlier today Ephraim Fields of Echo Lake Capital issued a letter to Mr. Robert Rosenthal, Chairman of the Board of Directors of Safeguard Scientifics, Inc. ("SFE" or the "Company") (SFE). In the letter Mr. Fields commented on the departure of Mr. Sisko and on the performance of Chairman Rosenthal.
A full copy of the letter can be found below:
April 21, 2020
To: Mr. Robert Rosenthal, Chairman of the Board:
Safeguard Scientifics, Inc. ("SFE" or the "Company") recently announced that its CEO, Mr. Brian Sisko, had "stepped down" (with a severance package) from his position. For some time we have been suggesting the Board replace Mr. Sisko and we are glad it finally occurred. However, we believe tremendous shareholder value could have been saved had you and the rest of the Board acted with greater urgency and replaced Mr. Sisko sooner.
We also wonder how much shareholder value could have been saved had you not hired Mr. Sisko as CEO in the first place. As you may know, many investors questioned if Mr. Sisko had the appropriate skill set for the CEO job. Nevertheless, you approved his promotion. Unfortunately for shareholders, during his time as CEO the Company's stock price dramatically underperformed many indices.
We also question your decision to provide Mr. Sisko with compensation which seemed excessive to us considering his background and the poor performance of SFE's stock price. During his tenure as CEO, Mr. Sisko was paid approximately $1 million annually and he will now be receiving a generous severance package. We believe that hiring and paying Mr. Sisko was yet another costly mistake that has occurred during your tenure as Board Chairman.
Since you joined the Board over 12 years ago, the Company's stock price has declined approximately 60% and the stock has underperformed the NASDAQ by approximately 260%. Considering everything that has occurred during your tenure at the Company, we find it rather ironic that Mr. Sisko apparently lost his job because of poor performance yet you somehow have retained yours.
Considering this abysmal long-term performance, we believe that if you were to resign from the Board immediately, SFE's stock price would appreciate significantly because investors would then have a renewed confidence in the Company's leadership. Many investors estimate the value of SFE's assets vastly exceeds the current stock price; however, we believe many investors refuse to buy SFE stock because they doubt you are truly committed to maximizing shareholder value considering what has occurred during your 10+ years on the Board.
We believe there are many things you could have easily done over the years which would have demonstrated to investors that you are committed to creating shareholder value. For example, you could have personally purchased stock in the open market or you could have reduced or declined your Board compensation.
You have been paid over $2 million in Board fees and have overseen a number of highly questionable decisions (as referenced in our March 18, 2020 letter) regarding portfolio management, capital allocation, corporate overhead and hiring that we believe contributed to tremendous destruction of shareholder value.
We believe the shareholders of SFE deserve better from the Board Chairman.
SOURCE: Echo Lake Capital
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