Urges Stockholders to Create a More Balanced Board of Directors by Voting FOR Ramius' Nominees on the GOLD Proxy Card Today
NEW YORK, June 23 /PRNewswire/ -- RCG Starboard Advisors, LLC, a subsidiary of Ramius LLC (collectively, 'Ramius'), today announced that it has filed with the Securities and Exchange Commission (the 'SEC') definitive proxy materials in connection with the 2009 Annual Meeting of Stockholders of CPI Corp. ('CPI' or the 'Company'), scheduled for July 8, 2009, and is mailing the following letter to the Company's stockholders. Ramius is the largest stockholder of CPI, owning approximately 23% of the Company's outstanding shares of Common Stock. Ramius' nominees for election at the Annual Meeting include Peter A. Feld, a Ramius representative and an existing Director of CPI, and Joseph Izganics, a new independent director nominee with extensive experience in the retail industry.
The full text of the letter follows:
June 22, 2009
Dear Fellow CPI Corp. Stockholder:
WE ARE SEEKING A BOARD WITH MORE BALANCE AND RELEVANT RETAIL EXPERIENCE THAT WILL REPRESENT YOUR BEST INTERESTS
DO NOT BE MISLED - WE ARE NOT SEEKING CONTROL OF THE BOARD - JUST A BETTER BOARD
WE WANT THE BEST BOARD FOR ALL STOCKHOLDERS - HELP US ACCOMPLISH THAT GOAL BY VOTING THE GOLD PROXY CARD
The Ramius Group collectively owns approximately 23% of the common stock of CPI Corp. We are the Company's largest stockholder and have been a stockholder and board member of CPI for over five years. We are engaging in this election contest only as a last resort. We have long tried to work cooperatively and constructively with the Company to reach an amicable resolution with the objective of creating a balanced board that would represent the best interests of all stockholders and avoid the necessity for a costly proxy contest.
To that end, as a settlement, we proposed the following seven-member Board:
- Five independent directors, three of whom have relevant retail experience; one direct Knightspoint representative; and one direct Ramius representative
CPI rejected that settlement, and, instead proposed the following six-member Board:
- Two direct Knightspoint representatives, zero direct Ramius representatives; and four independent directors, only two of whom have relevant retail experience.
The table below specifically lays out the two competing Board proposals:
Ramius Gold Proxy Company White Proxy
----------------- -------------------
David Meyer David Meyer
(No retail exp / Knight direct) (No retail exp / Knight direct)
James Abel James Abel
(Ind / No retail exp / Knight rec) (Ind / No retail exp / Knight rec)
Michael Glazer Michael Glazer
(Ind / Retail exp / Knight rec) (Ind / Retail exp / Knight rec)
Paul Finkelstein Paul Finkelstein
(Ind / Retail exp / CPI rec) (Ind / Retail exp / CPI rec)
Joeseph Izganics Mike Koeneke
---------------- ------------
(Ind / Retail exp / Ramius rec) (No retail exp / Knight direct)
Peter Feld Turner White
---------- ------------
(No retail exp / Ramius direct) (Ind / No retail exp / Knight rec)
Legend:
Ind - Independent Knight rec - Knightspoint
recommended
Retail exp - Retail experience Knight direct - Knightspoint
direct representative
No retail exp - No retail experience Ramius rec - Ramius recommented
CPI rec - CPI recommended Ramius direct - Ramius direct
representative
THE DIFFERENCES BETWEEN THE TWO PROPOSALS ARE CLEAR:
THE COMPANY PROPOSAL SERVES KNIGHTSPOINT'S BEST INTERESTS
THE RAMIUS PROPOSAL SERVES ALL STOCKHOLDERS' BEST INTERESTS
The Ramius proposal would create a board with the right balance of directors with relevant retail industry experience and independence so as to not represent the interests of any one stockholder over the interests of others. Even though Ramius owns 23% of the total outstanding shares, our proposal entails only one direct Ramius representative, Mr. Feld, who is currently an incumbent member of the Board. On the other hand, the Company's proposed Board calls for two direct Knightspoint representatives, despite their owning only 3.5% of the total outstanding shares, and zero Ramius representation even though Mr. Feld is currently on the Board.
In addition, five out of the six directors on the Company's proposed Board are either directly affiliated with Knightspoint, or were previously recommended to the Board by Knightspoint, thus ensuring Knightspoint's effective control over the Company. CPI stockholders should not be satisfied with a pro forma Board with just one new Board member, Paul Finkelstein, who has no previous relationship with Knightspoint. Ask yourself if Mr. Finkelstein alone will be able to serve as a check on Knightspoint's unbridled influence in the boardroom. Unfortunately, we know from our direct experience on the Board that the answer is 'no'. Knightspoint's influence over all Board matters will continue just as it has over the past several years if you elect the Company's nominees.
CPI IS UNWILLING TO SETTLE BECAUSE IT WOULD REDUCE KNIGHTSPOINT'S EFFECTIVE CONTROL OVER THE COMPANY
Although the Ramius proposal is clearly in the best interests of all stockholders, CPI has no interest in any settlement that would erode Knightspoint's control of the Boardroom. Instead, Knightspoint is seeking to dominate a Board with members whose past relationships with Knightspoint will ensure their continued support, regardless of performance.
David Meyer and Michael Koeneke, Knightspoint's direct representatives, have turned CPI from an investment opportunity into a career opportunity. Even as the CPI stock declined by 75% over the past two years, Mr. Meyer and Mr. Koeneke, working part time, have reaped millions of dollars in 'service' fees from the Company. We do not believe Mr. Meyer and Mr. Koeneke have any other material sources of income besides CPI.
AS A RESULT, RAMIUS HAS BEEN FORCED TO SEEK THE ELECTION OF TWO HIGHLY QUALIFIED CANDIDATES TO CREATE BALANCE AND NEEDED RETAIL EXPERIENCE ON THE BOARD
The Company's unwillingness to compromise has forced us to undertake a proxy contest to seek the election of a balanced, experienced Board.
