Sunday, January 4, 2009

Getting uglier at Premier

Incumbent management filed a consent revocation statement on Dec 29:

As expected, this inspires no confidence in management at all. The section below, in particular, is galling:

Sellers’ Solicitation, If Successful, Could Trigger The Company’s Change of Control Severance Agreements. The employment contracts of Messrs. Geller and Thomas Zaller, Vice President of Operations, contain a “Change in Control” provision, whereby if during the term of their employment, three of the four members of the Board of Directors, a majority as of the effective date of the Agreement (February 4, 2002 as amended), no longer comprise a majority of the Board, a “Change of Control” will occur. In the event that Mr. Geller’s or Mr. Zaller’s employment is subsequently terminated, each would be entitled to a lump-sum cash payment of 299% of his current salary. Messrs. Geller and Zaller’s compensation is currently $705,737 and $273,000, respectively. This would result in a combined payment of approximately $2.9 million in the event that the employment of both of them is terminated. According to the terms of Mr. Geller’s agreement, he can elect to receive compensation in the form of the Company’s common stock at a price equal to 50% of the closing bid price as quoted on the NASDAQ Stock Market as of the date of election. If he should so elect, based on the closing price of the Company’s common stock on December 22, 2008, he could receive up to 2,827,000 shares of common stock, thereby diluting the interests of the Company’s shareholders. These agreements have been in place for several years. As a result, if Mr. Geller or Mr. Zaller were to successfully assert that a change of control preceded his termination, the Company would become obligated to pay him the foregoing compensation.

The argument for Geller and co. keeping their jobs is that their dismissal would cost the company money. Clearly, shareholders ought to let them keep their jobs and save the $2.9 million in payments while they continue to mismanage the company and cause erosion in value. No kidding.

One other interesting nugget from that filing:

The Company is also aware that there have been discussions between Mr. Geller and his counsel and representatives of Sellers Capital and its counsel in regard to a settlement of this matter, but no resolution has been reached as of the date hereof. (emphasis mine)

Maybe, just maybe, Geller will see that Sellers is odds on to get his slate of directors nominated and go away on his own.

Couple of days later, Sellers Capital filed their response to the Consent Revocation Statement:

Clearly, incumbent management is not only lacking in competence, but is also bereft of rectitude. Geller's settlement with the SEC in response to potential violation of securities laws in 2004 is particularly disturbing. At this point, the sooner the CEO and his cronies go, the better off all other shareholders will be.

Often wrong but seldom in doubt,

1 comment:

  1. Nice BLOG , But fonts hurt my eyes when I read .
    (white on black)
    I have to enjoy it in 5 min increments.