NEW YORK, Feb. 27, 2015 /PRNewswire/ -- Lone Star
Value Management, LLC (together with its affiliates, "Lone Star
Value", "we", or "us") is a significant, long-term shareholder of
Ciber, Inc. ("Ciber" or the "Company") (NYSE: CBR) with ownership
of approximately 2.7 million shares of common stock. Lone
Star Value announced today that it delivered a formal notice to
Ciber of its intention to nominate three director candidates for
election to the board of directors of Ciber (the "Board") at the
upcoming 2015 annual meeting of Ciber shareholders (the "2015
Annual Meeting").
Lone Star Value is dedicated to enhancing shareholder value and
improving shareholder rights for ALL Ciber shareholders. In
our view, upgrading the incumbent Board is a critical first step
for shareholders to realize our goals. Lone Star Value believes
that Ciber's stock is deeply undervalued due in large part to
failures of oversight by the incumbent Board and poor corporate
governance. We fear many of the incumbent Board members are
more focused on their director fees and the prestige of serving on
a public board in their hometown of Denver, than they are on maximizing value for
Ciber's shareholders. During Chairman Jacobs' tenure as a
Board member, for example, CBR stock has declined by more than
45%(1) while he has made over $1.2 million in director
fees.(2) In addition, average Board member
compensation during Chairman Jacobs' tenure has risen from
approximately $40,000 per year to
approximately $200,000 per
year(3) and is paid mainly in cash -- not the
compensation terms shareholders want to see in a turnaround
situation. As a sign of a poorly performing Board, management
team turnover has been alarmingly high over the past ten years with
four different CEOs and four different CFOs. We believe the
incumbent Board, until very recently, has repeatedly failed to find
a suitable CEO to lead the Company toward profitability and
performance in line with its peers. Ciber's dismal operating
performance, for example, is represented by a cumulative net loss
to shareholders of more than $193
million ($2.69/share) since
2010 in GAAP earnings and it has reported annual net losses in GAAP
earnings every year since 2010, while its industry peers were much
more profitable during this time period.(4)
To be clear, we have tremendous confidence in Ciber's new CEO,
Michael Boustridge. We believe he and his management team are
beginning to execute on a long-awaited turnaround of Ciber's
operations as evidenced by Ciber's improved financial results in Q4
2014. Of course the incumbent Board will try to take credit
for hiring Mr. Boustridge as CEO, but it should be pointed out that
the incumbent Board only hired Mr. Boustridge as CEO after
our activist effort was initiated a year ago, after Lone
Star Value gained representation on the Board, and after it
had become undeniable that the previous CEO, David Peterschmidt, hired by Chairman
Paul Jacobs, had been a failure over
his 4-year tenure. We also have deep respect for Ciber Board
member and Company founder Bobby
Stevenson, both for founding the Company and for owning
almost 8% of its stock. Unlike the other Board members, we
believe Mr. Stevenson thinks like an owner and is much more focused
on shareholder value creation than his director fees.
We believe this Board has failed in one of the most important
roles for any board -- recruiting the right management talent and
creating the right incentives by compensating them based on
performance. Ciber's unfortunate history with its former CEO,
Mr. Peterschmidt, is a strong example of the Board's failure in
this regard. Chairman Jacobs hired David Peterschmidt as CEO in July 2010, a time when Ciber was in desperate
need of a turnaround, but, unfortunately, Mr. Peterschmidt had no
turnaround expertise. Two years into Mr. Peterschmidt's
tenure, the Board had apparently become concerned about his
performance and decided to appoint Mr. Boustridge to the Board so
he could step in as CEO if needed. A direct quote from
Chairman Jacobs in 2014 clearly explains the reasoning behind
adding Mr. Boustridge to the Board in 2012: "Michael was brought
onto our Board two years ago with succession planning in
mind. We are fortunate to have a strong and qualified
candidate, with global operating experience. And, because
Michael has been on our Board, he has a perspective of the role
that no outside candidate could bring".(5)
Yet despite every indication that Mr. Peterschmidt was grossly
underperforming and had been for two years, the Board did nothing
about it for another two years. It was not until Lone Star
Value launched a campaign to seek change on the Board in 2014 that
Ciber's incumbent directors finally took action to replace the
failed CEO. Even then, this Board, which well knew that Mr.
Boustridge would replace Mr. Peterschmidt as CEO, still renewed Mr.
Peterschmidt's contract on March 25,
2014 and kept him on the payroll as a consultant for an
additional year after his replacement as CEO. This Board, led
by Chairman Jacobs, "rewarded" Mr. Peterschmidt with an exit
package worth more than $2.6
million.(6) Mr. Peterschmidt's exit package
included a $710,000 one-year
consulting contract, 350,000 CBR shares, medical benefits, moving
costs from Colorado to
California, closing costs related
to the sale of Mr. Peterschmidt's home, and the cost of renewing
his Executive's status as a Global Services member on United
Airlines for two years.(7) We believe Mr.
Peterschmidt's superfluous addition to his compensation package was
completely unnecessary and not required by his employment contract
– essentially, it was a tip.
While presiding over a period of disruptive management turnover
and unnecessary compensation practices, the Board has also
continually had poor corporate governance, which is a sure sign of
an entrenched Board. The Board has shown little appetite for
fresh perspective in the boardroom with barely any turnover over
the last 10 years. Further, the Board has sought to stifle
shareholders' ability to seek change on the Board through, among
other things, a classified board structure and an absolute
prohibition on the shareholders' ability to call special meetings
or act by written consent. Leading proxy advisory firm,
Institutional Shareholders Services (ISS), rates Ciber's overall
corporate governance with the lowest possible governance score of
10 on a scale of 1 to 10 with 10 indicating maximum corporate
governance risk. Two specific corporate governance areas have
been highlighted by ISS in its 10 grade maximum governance risk
rating – shareholder rights and executive compensation.
Furthermore, through the course of our involvement with Ciber,
the Board has shown disregard for shareholder input and nonchalance
in breaking its contractual commitments to shareholders. Last
year, pursuant to an agreement with Lone Star Value, the incumbent
Board agreed to add a shareholder representative on the Board,
Richard Coleman, who has added
tremendous value in the boardroom and whom we are re-nominating for
election to the Board this year. In our agreement, the Board
committed to actively search for two additional Board members in
order to upgrade and enhance the talent on the
Board.(8) In the year since then, one director,
Betsy Atkins, joined the Board, but
promptly resigned after only three months. Other than that,
there is no evidence that the Board took its obligations to upgrade
and enhance the talent on the Board seriously. In failing to
replace Ms. Atkins and to add an additional new director, the Board
led by Mr. Jacobs failed to honor its responsibilities to
shareholders and its agreement with us.
Lone Star Value has clearly expressed its views on the urgent
need for improvement of Ciber's Board and corporate governance
practices to Chairman Jacobs in numerous calls and emails.
The incumbent Board has so far refused to make the necessary
changes to avoid a proxy contest. We have reluctantly come to
the conclusion that the behavior of the incumbent Board will not
change unless the personnel changes. We are convinced that
reconstituting the Board is imperative to improving shareholder
value and rights. An upgraded Board will be in a far stronger
position to help the new management team in their continuing
turnaround efforts at Ciber.
Accordingly, Lone Star Value today submitted formal nominations
of three highly-qualified director candidates, Richard K. Coleman, Jr., Robert G. Pearse, and Joshua Schechter, for election to the Board at
the 2015 Annual Meeting. Our nominees' experience encompasses
technology, telecom, business services, financial, and turnaround
expertise. Messrs. Coleman, Pearse, and Schechter not only
possess substantial and relevant turnaround experience and a
well-balanced mix of skills but each also boasts an exceptional
track record of creating shareholder value. Each is committed
to the highest levels of corporate governance. These proven
value-creators will ensure that the Company evaluates, with an open
mind and a keen sense of urgency, all strategic alternatives to
maximize value for all shareholders.
If elected by our fellow shareholders, our highly-qualified and
experienced Board nominees will immediately seek to align the
Company's interests with maximizing shareholder value, improving
the fundamental operations of the business to an operational level
on par with its direct competitors, and steer the Company toward
long-term profitability. Our goal is to inject a sense of
urgency, while implementing a coherent strategy between the Board
and management team, which will ultimately yield an increase in
shareholder value.
Shareholders can no longer put their faith in the incumbent
Board that has historically eroded shareholder value, delayed
Ciber's needed operating turnaround, and stubbornly refused to
implement proactive change on the Board. At this stage,
change on the Board should be made by the shareholders and for the
shareholders. We believe that ONLY THE SHAREHOLDERS and not the
incumbent Board should be allowed to choose new directors. We
caution the Board against thinly veiled reactive measures to
entrench themselves under the guise of proactive action. We
further remind the incumbent directors of their fiduciary duty to
shareholders, particularly in the context of any potential proxy
contest, and that actions taken in violation of shareholder rights
and destructive of shareholder value may expose incumbent directors
to liability that exceeds any D&O insurance coverage.
Lone Star Value remains open to a meaningful dialogue with the
Board regarding its composition and corporate strategy and remains
amenable to reaching a mutually agreeable resolution to
re-constitute the Board in a manner that is in the best interests
of all shareholders. If no agreement is reached, however,
Lone Star Value is fully prepared to solicit the support of its
fellow shareholders to elect all three of its director nominees at
the 2015 Annual Meeting. Our nominees, if elected, will take
their fiduciary responsibility very seriously and will represent
the interests of ALL shareholders.
Lone Star Value's independent and highly-qualified candidates
are:
Richard K. Coleman, Jr.,
age 58, is the founder and President of Rocky Mountain Venture
Services. Since 1998, his company has helped businesses plan
and launch new ventures and restructuring initiatives. As a
private investor and advisor, Mr. Coleman envisions, develops, and
executes strategic changes, often serving as an interim executive
and/or board member. Mr. Coleman is currently the President
and Chief Executive Officer ("CEO") of Crossroads Systems, Inc.
(NASDAQ:CRDS) ("Crossroads Systems"), a global provider of data
archive solutions, a position he has held since November
2013. He has also served on the Board of Directors of
Crossroads since April 2013.
Previously, he served as the interim President and CEO of
Crossroads from May 2013 until
November 2013. Mr. Coleman has been a director of Ciber, Inc.
(NYSE:CBR), a leading global information technology company, since
April 2014, where he also serves on
the Nominating/Corporate Governance Committee. Mr. Coleman has also
served as a director of Hudson Global, Inc. ("Hudson Global"), a
worldwide provider of highly specialized professional-level
recruitment and related talent solutions, since May 2014, where he also serves on the
Compensation Committee. Previously, Mr. Coleman served as a
director of Aetrium Incorporated ("Aetrium"), a manufacturer of a
variety of electromechanical equipment used in the handling and
testing of semiconductor devices, from January 2013 until April
2014, where he also served as a member of its Audit and
Compensation Committees as well as Chairman of the Nominating and
Corporate Governance Committee. In addition, Mr. Coleman
served on the Board of Directors of On Track Innovations Ltd. ("On
Track Innovations"), one of the pioneers of cashless payment
technology, a position he held from December
2012 until April 2014. Mr. Coleman also served on the
Board of Directors of NTS, a broadband services and
telecommunications company, from December
2012 until the completion of its sale in June 2014, where he served as Chairman of the
Strategy Advisory Committee and as a member of the Special
Committee. Previously, Mr. Coleman served in a variety of
senior operational roles including CEO of Vroom Technologies Inc.,
a Customer Relationship Management (CRM) software company, Chief
Operating Officer of MetroNet Communications, Canada's largest independent facilities-based
telecom services provider, and President of US West Long
Distance. Mr. Coleman also previously held significant
officer level positions with Frontier Communications, Centex
Telemanagement and Sprint Communications. Mr. Coleman began
his career as an Air Force Telecommunications Officer managing
Department of Defense R&D projects. He has served as an Adjunct
Professor for Regis University's
Graduate Management program and is a guest lecturer for
Denver University, focusing on
leadership and ethics. Mr. Coleman holds a B.S. Degree from the United
States Air Force Academy, an M.B.A. from Golden Gate University, and is a graduate of the
United States Air Force Communications Systems Officer
School. Lone Star Value believes that Mr. Coleman's depth of
experience serving in senior executive positions and on various
public company boards coupled with his extensive expertise in
business development and operations well qualifies him for service
as a director of the Company.
Robert G. Pearse, age 55,
currently serves as a Managing Partner at Yucatan Rock Ventures, a
firm he co-founded in 2004, where he specializes in technology
investments and consulting. Mr. Pearse serves as a director
for Aviat Networks, Inc and member of the Compensation Committee
and Nominating & Governance Committee since January 2015.
Mr. Pearse serves as a director for Crossroads Systems, Inc.,
Chairman of the Compensation Committee, and member of the Audit
Committee and Nominating & Governance Committee since
2013. From 2005 to 2012, Mr. Pearse served as vice president
of Strategy and Market Development at NetApp, Inc. ("NetApp"), a
computer storage and data management company. Mr. Pearse
played an influential role leading the NetApp's growth strategy
which drove the firm to become a Fortune 500 company during his
tenure. From 1987 to 2004, Mr. Pearse held leadership
positions at Hewlett-Packard, most recently as the vice president
of Strategy and Corporate Development from 2001 to 2004 focusing on
business strategy, business development and acquisitions. Mr.
Pearse's professional experience also includes positions at
PricewaterhouseCoopers LLP, Eastman Chemical Company, and General
Motors Company. Mr. Pearse earned a Master of Business
Administration degree from the Stanford Graduate School of Business
in 1986, and a Bachelor of Science degree in Mechanical Engineering
from the Georgia Institute of
Technology in 1982. Lone Star Value believes that Mr.
Pearse's extensive leadership experience and deep understanding of
the technology industry will make him a valuable addition to the
Board.
Joshua E. Schechter, age
41, has served as a director of Aderans Co., Ltd. ("Aderans"), a
multi-national company engaged in hair-related business, since
August 2008, and is the Executive
Chairman of Aderans America Holdings, Inc., Aderans' holding
company in the United States. Mr. Schechter has also served
on the Board of Directors of The Pantry, Inc. a leading
independently operated convenience store chain in the southeastern
United States and one of the
largest independently operated convenience store chains in the
country, since March 2014, where he
currently serves as a member of the Audit Committee and Corporate
Governance and Nominating Committee. From 2001 to 2013, Mr.
Schechter served as Managing Director of Steel Partners Ltd., a
privately owned hedge fund sponsor, and its affiliates. Mr.
Schechter has served as co-President of Steel Partners Japan Asset
Management, LP, a private company offering investment services,
since 2008. From 2005 until 2008, Mr. Schechter served on the
Board of Directors of WHX Corporation (n/k/a Handy & Harman
Ltd.), a diversified manufacturer of engineered niche industrial
products with leading market positions in many of the markets it
serves. Mr. Schechter was also a member of the Board of
Directors of Puroflow, Inc. (n/k/a Argan, Inc.), a provider of a
full range of power industry and telecommunications infrastructure
services, from 2001 until 2003. Mr. Schechter earned an MPA in
Professional Accounting, and a BBA from The University of Texas at Austin. Mr. Schechter's
experience in a variety of industries together with his managerial
experience in a variety of roles will enable him to provide
invaluable oversight to the Board.
CERTAIN INFORMATION CONCERNING PARTICIPANTS
Lone Star Value, together with the participants named herein,
intends to file a preliminary proxy statement and accompanying
proxy card with the Securities and Exchange Commission ("SEC") to
be used to solicit votes for the election of their slate of six
highly-qualified director nominees at the 2015 annual meeting of
stockholders of Ciber, Inc.
Lone Star Value Management STRONGLY ADVISES ALL STOCKHOLDERS OF
THE COMPANY TO READ THE PROXY STATEMENT AND OTHER PROXY MATERIALS
AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. SUCH PROXY MATERIALS WILL BE AVAILABLE AT NO
CHARGE ON THE SEC'S WEB SITE AT HTTP://WWW.SEC.GOV. IN
ADDITION, THE PARTICIPANTS IN THIS PROXY SOLICITATION WILL PROVIDE
COPIES OF THE PROXY STATEMENT WITHOUT CHARGE, WHEN AVAILABLE, UPON
REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO THE
PARTICIPANTS' PROXY SOLICITOR.
The participants in the proxy solicitation are Lone Star Value
Investors, LP ("Lone Star Value Investors"), Lone Star Value
Investors GP, LLC ("Lone Star Value GP"), Lone Star Value
Management, LLC ("Lone Star Value Management"), Richard K. Coleman, Robert G. Pearse, and Joshua E. Schechter (collectively, the
"Participants").
As of the date hereof, Lone Star Value Investors beneficially
directly owns 2,701,000 shares of common stock, par value
$.01 per share (the "Common Stock"),
of the Company (1,000 shares of which are held in record
name). Lone Star Value GP, as the general partner of Lone
Star Value Investors, may be deemed the beneficial owner of the
2,701,000 shares of Common Stock beneficially directly owned by
Lone Star Value Investors. Lone Star Value Management, as the
investment manager of Lone Star Value Investors, also may be deemed
the beneficial owner of the 2,701,000 shares of Common Stock
beneficially directly owned by Lone Star Value Investors. Mr.
Eberwein, as the manager of Lone Star Value GP and sole member of
Lone Star Value Management, also may be deemed the beneficial owner
of the 2,701,000 shares of Common Stock owned by Lone Star Value
Investors. In addition, as of the date hereof, Richard K. Coleman, Jr. directly beneficially
owns 10,424 shares of Common Stock, Robert
G. Pearse directly beneficially owns 20,000 shares of Common
Stock, and Joshua E. Schechter owns
80,950 shares of Common Stock.
About Lone Star Value Management:
Lone Star Value Management is an investment firm that invests in
undervalued securities and engages with its portfolio companies in
a constructive way to help maximize value for all shareholders.
Investor Contacts:
John Glenn Grau
InvestorCom, Inc.
(203) 972-9300 ext.
11
|
|
(1)
|
From Paul Jacob's
addition to the Board on 2/23/2005 the price per share has fallen
by approximately 46% from $7.48/share to $4.04/share as of
2/23/2015.
|
(2)
|
Lone Star Value
estimated Chairman Jacobs' total compensation based on the Director
Compensation section shown in each Annual Proxy Statement filed
with the SEC.
|
(3)
|
Total Board
Compensation located in the Annual Proxy Statement filed with the
SEC.
|
(4)
|
Based on 2014 Form
10-K.
|
(5)
|
8-K Exhibit-99.1:
http://www.sec.gov/Archives/edgar/data/918581/000110465914046092/a14-15495_1ex99d1.htm
|
(6)
|
10-Q Exhibit-10.1
filed on 7/30/2014: The value of total severance package calculated
on post market value of 350,000 shares awarded to Mr. Peterschmidt
on 6/19/2014 plus the $710,000 value of his one-year contract plus
an estimated 5% real estate broker commission or $195,000 based on
the $3,900,000 list price of Mr. Peterschmidt's Colorado residence.
http://www.sec.gov/Archives/edgar/data/918581/000091858114000099/exhibit1011.htm
|
(7)
|
10-Q Exhibit-10.1
filed on 7/30/2014:
http://www.sec.gov/Archives/edgar/data/918581/000091858114000099/exhibit1011.htm
|
(8)
|
8-K Exhibit-10.1
filed on
4/14/2014:
http://www.sec.gov/Archives/edgar/data/918581/000110465914027420/a14-10501_1ex10d1.htm
|
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SOURCE Lone Star Value Management, LLC