Steel Partners II has sent a letter to stockholders of Adaptec requesting support for the removal of two directors: chief executive Sundi Sundaresh and Robert Loarie.
Steel Partners, Adaptec’s largest investor, says Sundaresh and Loarie are two of the directors who recently opposed a recommendation by the company’s own independent financial adviser and strategic committee that the company initiate a sale process to seek a buyer for the company’s business operations.
Steel Partners believes this is the best way to maximise stockholder value at Adaptec.
Sundaresh and Loarie are also two of the legacy directors who recently took secretive and aggressive measures to further consolidate their control of Adaptec, which included ousting a stockholder representative from the position of chairman of the board and informing the board that at least two stockholder representatives would not be re-nominated for election as directors, both of which occurred after the nomination deadline for this year’s annual meeting had already passed.
In the letter to stockholders, Steel Partners pointed out that the legacy directors prefer to stay the course with the same chief executive, despite his apparent inability to develop a profitable business plan based on growth, and under whose leadership the company has lost over USD270m since he took office.
“Stockholders have suffered mightily under the watch of the legacy directors who have failed time and time again to enhance stockholder value. While they appear to be more concerned with entrenching themselves and protecting their own positions and compensation as directors, we are solely focused on maximizing value for all stockholders. That is why we are asking you to remove Messrs. Loarie and Sundaresh, the two directors whom we believe to be most responsible for the failures at Adaptec,” wrote Warren Lichtenstein of Steel Partners.
He added: “We cannot afford to sit idly by and allow the legacy directors to reconstitute the board with three new handpicked nominees and avoid accountability to the stockholders.”