0001162893-11-000005.txt : 20110912
0001162893-11-000005.hdr.sgml : 20110912
20110912105648
ACCESSION NUMBER: 0001162893-11-000005
CONFORMED SUBMISSION TYPE: SC 13D/A
PUBLIC DOCUMENT COUNT: 3
FILED AS OF DATE: 20110912
DATE AS OF CHANGE: 20110912
FILED BY:
COMPANY DATA:
COMPANY CONFORMED NAME: STABOSZ TIMOTHY J
CENTRAL INDEX KEY: 0001162893
FILING VALUES:
FORM TYPE: SC 13D/A
MAIL ADDRESS:
STREET 1: 1307 MONROE STREET
CITY: LA PORTE
STATE: IN
ZIP: 46350
SUBJECT COMPANY:
COMPANY DATA:
COMPANY CONFORMED NAME: P&F INDUSTRIES INC
CENTRAL INDEX KEY: 0000075340
STANDARD INDUSTRIAL CLASSIFICATION: METALWORKING MACHINERY & EQUIPMENT [3540]
IRS NUMBER: 221657413
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: SC 13D/A
SEC ACT: 1934 Act
SEC FILE NUMBER: 005-39826
FILM NUMBER: 111085033
BUSINESS ADDRESS:
STREET 1: 445 BROADHOLLOW ROAD
CITY: MELVILLE
STATE: NY
ZIP: 11747
BUSINESS PHONE: (631)694-9800
MAIL ADDRESS:
STREET 1: 445 BROADHOLLOW ROAD
CITY: MELVILLE
STATE: NY
ZIP: 11747
FORMER COMPANY:
FORMER CONFORMED NAME: PLASTICS & FIBERS INC
DATE OF NAME CHANGE: 19671225
SC 13D/A
1
pf13d14.txt
STABOSZ FORM 13D AMENDMENT NUMBER 6
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(AMENDMENT NO. 6)
Under the Securities Exchange Act of 1934
P&F INDUSTRIES, INC.
-------------------------------------------------------------------------------
(Name of issuer)
COMMON STOCK
-------------------------------------------------------------------------------
(Title of class of securities)
692830508
--------------------------------------------------------
(CUSIP number)
TIMOTHY J. STABOSZ, 1307 MONROE STREET, LAPORTE, IN 46350 (219) 324-5087
-------------------------------------------------------------------------------
(Name, address and telephone number of person authorized to receive notices and
communications)
SEPTEMBER 2, 2011
--------------------------------------------------------
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following box. [_]
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
CUSIP No. 692830508
--------------------------------------------------------------------------------
1. Name of Reporting Person
TIMOTHY JOHN STABOSZ
--------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) [_]
NOT APPLICABLE (b) [_]
--------------------------------------------------------------------------------
3. SEC Use Only
--------------------------------------------------------------------------------
4. Source of Funds (See Instructions) PF
--------------------------------------------------------------------------------
5. Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [_]
--------------------------------------------------------------------------------
6. Citizenship or Place of Organization UNITED STATES
--------------------------------------------------------------------------------
Number of (7) Sole Voting Power 251,850
Shares ____________________________________________
Beneficially (8) Shared Voting Power 0
Owned by ____________________________________________
Each (9) Sole Dispositive Power 251,850
Reporting ____________________________________________
Person With (10) Shared Dispositive Power 0
--------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned 251,850
by each Reporting Person
--------------------------------------------------------------------------------
12. Check if the Aggregate Amount in Row (11) Excludes [_]
Certain Shares
--------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11) 7.0%
--------------------------------------------------------------------------------
14. Type of Reporting Person (See Instructions) IN
--------------------------------------------------------------------------------
ITEM 3. Source and Amount of Funds or Other Consideration
Item 3 is hereby amended and restated to read as follows:
Personal funds in the aggregate amount of $486,647.14 have been used to
effect the purchases. No part of the purchase price represents borrowed
funds.
ITEM 4. Purpose of Transaction
Item 4 is hereby amended to add the following:
In a series of communications with the P&F board, over the last 2 years,
the respondent has made clear the urgent need for the board to, once and for
all, assert its collective independence and oversight authority, and stand
apart from the Chairman and CEO, Richard Horowitz. While the board took some
heartening actions, over a year ago, after the 2010 annual meeting, by, most
notably: 1) adding a new independent director, Howard Brownstein, and 2)
removing Horowitz cronies Alan Goldberg and Mitchell Solomon from the
Compensation Committee, replacing them with bonafide independent directors
Kenneth Scheriff and Jeffrey Franklin...it is plainly evident to the
respondent that, since the 2010 annual meeting, the board has been
breathtakingly intransigent, petulant, and defiant, with regard to
implementing further necessary reforms.
The respondent's efforts have been, therefore, largely to no avail, with
5 of 9 board members (Messrs. Horowitz, Dubofsky, Goldberg, Solomon, and
Kalick) remaining steadfastly loyal to Mr. Horowitz, rather than having as
their first loyalty the rightful interests of all of P&F's shareholders. As a
result, the board has, as a whole, evidenced a marked contempt towards the
need for a flow of information from the P&F boardroom that would build
shareholder trust and confidence, and show appropriate transparency and
accountability. Instead, the information flow remains severely constricted
and constrained...all in the name of secrecy, and protecting a history of
self-serving decisions on the board's part (with the exception of the recently
appointed Mr. Brownstein), and previous Compensation Committee's part, vis a
vis Mr. Horowitz.
More recently, reflecting matters "coming to a head," the respondent
sent a formal demand letter (via e-mail), dated August 17, 2011, to the board.
In the letter (attached as Exhibit #1), the respondent, among other things,
demanded that the board: 1) release the list of peer group companies from the
previous outside compensation study, so that shareholders can, in good faith,
determine for themselves whether the former Horowitz-loyalist controlled
Compensation Committee acted in good faith with regard to its work, and 2)
state its intention to release the list of peer group companies from the
CURRENT outside compensation study, so that shareholders can determine for
themselves the credibility of the peer group, and the appropriateness of any
contract of employment for the next CEO (whoever he may be).
Moreover, respondent has ongoingly requested that at least one of the
remaining "legacy" directors step down...preferably NON-independent board
member Dennis Kalick, who, as Mr. Horowitz's personal tax advisor, could not
possibly claim the ability to be "disinterested" in Mr. Horowitz, let alone
possessing even the ability to see himself as someone separate from the CEO.
Replacing one of the four remaining "Horowitz 4" (Goldberg, Dubofsky, Solomon,
Kalick) would finally ensure that P&F's board consists of a majority of
members whose loyalty is, or can plausibly be seen as, primarily to the entire
P&F shareholder base...and not simply to advancing Mr. Horowitz's personal,
social, and/or financial well being.
While management has, damningly, refused to acknowledge the importance of
the above requests, or stated its intent to fulfill them, recently, the
respondent did receive an invitation from the Compensation Committee to engage
in a conference call with the two members of that committee (Messrs. Scheriff
and Franklin), in order for the Committee to hear the respondent's views
regarding an appropriate pay structure for P&F's next CEO.
On September 2, 2011, the above referenced conference call was held.
After the call, the respondent followed up with an e-mail to Messrs. Scheriff
and Franklin, summarizing his input (attached as Exhibit #2).
Respondent intends to continue to communicate, in letters and other
communications to the board, and, in public forums, press releases, and
amended 13D filings, as necessary and/or required by law, to lead the board
members in a direction of more accountability and transparency, and to educate
and inform the P&F shareholder base, and the broader "corporate
governance space," on P&F's poor corporate governance, lack of collective
board independence, history of outrageous executive compensation, and the
continued domination of the board, overall, by Mr. Horowitz, and people whose
first loyalty is to advancing his personal interests.
Consequentially, the respondent continues to believe that P&F's common
stock will continue to trade at a substantial discount to what fair value
might otherwise be. (The respondent believes that the Company is viewed by
many investors, de facto, as a nominally public Company, being operated
primarily for the private gain of Mr. Horowitz.)
ITEM 5. Interest in Securities of the Issuer
Item 5 is hereby amended and restated to read as follows:
At the close of business on September 9, 2011, respondent has sole voting
and dispositive power over 251,850 shares of P&F Industries, Inc.'s common
stock. According to the Company's latest Form 10-Q filing, as of August 12,
2011, there were 3,614,562 common shares outstanding. Respondent is therefore
deemed to own 7.0% of the Company's common stock. Transactions effected by
the respondent in the last 60 days, were performed in ordinary brokerage
transactions, and are indicated as follows:
07/19/11 sold 308 shares @ $4.89
08/08/11 sold 2500 shares @ $3.412
08/09/11 sold 1318 shares @ $3.98
08/15/11 sold 2228 shares @ $4.75
08/16/11 sold 272 shares @ $4.75
08/17/11 sold 5000 shares @ $5.052
08/18/11 sold 2496 shares @ $4.939
08/26/11 sold 2500 shares @ $4.84
08/29/11 sold 1262 shares @ $4.93
08/30/11 sold 795 shares @ $4.93
08/31/11 sold 2254 shares @ $4.93
09/02/11 sold 2733 shares @ $4.89
09/06/11 sold 1378 shares @ $4.89
09/07/11 sold 889 shares @ $4.89
09/08/11 sold 346 shares @ $4.93
(The 08/08/11 transaction above was intended to be placed as a limit BUY
order, but was incorectly placed by the respondent as a sell order. It was
too late for the respondent's broker to "bust" the mistakenly placed sell
order.)
ITEM 7. Material to be Filed as Exhibits
Exhibit #1: Demand letter (via e-mail) dated August 17, 2011, from Timothy
Stabosz to the P&F board.
Exhibit #2: E-mail dated September 3, 2011, from Timothy Stabosz to
Compensation Committee members Kenneth Scheriff and Jeffrey Franklin.
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and
correct.
Date 09/09/11
Signature Timothy J. Stabosz
Name/Title Timothy J. Stabosz, Private Investor
227:
EX-1
2
pfindmd.txt
DEMAND LETTER TO P&F BOARD DATED 8/17/11
Richard Horowitz, Chairman and CEO
Marc Utay, Lead Independent Director
Richard Goodman, General Counsel
August 17, 2011
Via E-mail
Gentlemen:
I make the following DEMANDS of the board, at this time. Please let me know
your response promptly.
1) I DEMAND that you release the peer company list from the previous Nadel
Compensation Study.
2) I DEMAND you state the total number of your directors (and preferably
which ones specifically) that have taken the time to compare the previous
peer company list to P&F, to determine whether the peer comparisons are
credible.
3) I DEMAND that you publicly release, in an 8-K filing or otherwise, the
name of the consultant doing the current outside compensation review.
4) I DEMAND that you formally state your intent, in an 8-K filing or
otherwise, to release the list of peer group companies, in the CURRENT
outside compensation review, as soon as those peer group companies are made
known to the compensation committee and/or board...and that such peer group
list will be released to the entire shareholder base at least 30 days before
ANY agreement with ANY new CEO is signed.
I am willing to have a direct and substantive one-on-one discussion on what
I am trying to achieve on behalf of the entire shareholder base, and why a
board acting in good faith would have long ago accomodated my requests. But
I am NOT willing to have these demands ignored...or the spirit or intent
behind them...which is to compel the board to show an appropriate level of
accountability and transparency on matters of executive compensation, and
improve the company's overall governance.
If the board should choose to ignore these demands, then unfortunately, it
will leave me no choice but to haul back into the public sphere, and shine
the light of day on, this and other matters, that continue to evidence a
board thumbing its nose at, and showing its collective contempt for, our
company's outside shareholder base.
You have done NOTHING since shortly after LAST year's shareholder meeting,
to show the outside shareholder base that our company is being led in the
proper direction, from a governance perspective. I have been patient for a
very long time. But the board has failed to show any attempt to meet me half
way with requests that I believe are eminently reasonable, and for which
your unwillingness to accomodate suggests to me, in a stark and damning
fashion, that the board has something to hide, or is afraid of releasing
something that has absolutely no consequences to P&F's competitive position
in the marketplace...but would only serve to build its credibility with its
shareholder base, and the entire "Street," for that matter.
Let the light of day shine on the peer group company list, without fear. The
truth will set you, and your outside shareholder base, free. It is time for
you to show accountability and respect for this request, rather than
derision and contempt. I would prefer not to have to explain to the entire
shareholder base my thoughts, interpretations, and opinions on what has been
transpiring at P&F the last year, but you've pretty much boxed me into a
corner at this point. This is my last attempt to get you to see the light
of day, since I, as a 7.6% owner of our company, would very very strongly
prefer to keep these discussions out of the public sphere...just when our
company is beginning a period of improvement.
As an alternative, the board might consider having me sign a NDA, which
would allow me to privately review both compensation studies. Please do
not push me into the need to bear public witness to your inexplicable,
inexcusable, and unacceptable behavior regarding this issue.
I have waited long enough. I'M DONE WAITING.
Timothy Stabosz
EX-2
3
pfincmp.txt
LETTER TO P&F COMPENSATION COMMITTEE DATED 9/3/11
To the P&F Industries Compensation Committee:
Kenneth Scheriff
Jeffrey Franklin
September 3, 2011
Via E-mail
Gentlemen:
Your soliciting my interest in a phone conference to draw me out on the
subject of executive compensation, while long overdue, was a most welcome
event. I'm somewhat heartened to see the Compensation Committee (and
presumably board as a whole) act demonstrably independently, and in a way
that might begin to suggest that the 2/3 of the shareholders that are not
the CEO, might actually be just as important as the CEO. Many a time, the
"vibes" I got in private meetings (in particular, the 2 annual meetings I
have attended, and my meeting with Richard and Marc 18 months ago), betrayed
a marked undertow of hostility, contempt, and repressed rage emanating from
Richard, and the board members' general unwillingness to show any sympathy
or empathy or understanding or validation towards what I, and other
shareholders, have tried to communicate. This gave me a feeling that
Richard was, de facto, in full control of the P&F board, and was exercising
a staggering array of self-assumed perogatives, as he saw fit. That was
alarming, to say the least. And it needed...and needs to...stop. But it
is not going to, in the way it needs to, with 5 of 9 board members loyal to
Richard (Kalick, Dubofsky, Goldberg, Solomon). That is why I again took the
time to bring the subject up to you of the need for one more new board
member at P&F, and the stepping down of one of the "legacy directors," so
that we can create, once and for all, a P&F board that is bonafide
"arms-length" from the CEO.
By way of following up on the items we discussed specific to executive
compensation, I remind you of (and ask you to re-review) the research I
submitted to the board, early last year, indicating a typical base salary
range for P&F's peer companies (similar revenue size, industry, and/or
located on Long Island) in the rough ballpark of $200,000-400,000. I also
want to emphasize that the zip code Richard chooses to live in, his
"lifestyle needs," and the expenses of high-living, are not a concern or
responsibility of P&F's shareholders. We have absolutely no obligation to
"do him a favor" or be generous in an outsized fashion (as the previous
Compensation Committee was), to ensure that he can meet his fellow
(previous) Comp. Cmte. chums, "in style," and in good financial steed, at
the local country club.
The fact of the matter is, the higher Richard's salary requirements
are, the more it is in the interest of the rest of the shareholders to put
the company up for sale, letting Richard, or anyone else who is interested,
make a bid on the assets. (This was my point to you about P&F's long history
of trading at or below the book and/or market value of its assets. That's
something the board should be unwilling to tolerate! If our company is
ascribed no "going concern premium" by the marketplace, and longtime board
members are not interested in buying stock in the open market, that might
suggest that the Street has historically perceived that board members take
their measly $10,000 a year in board fees, and "give the CEO what he wants"
in exchange.)
I would ask you to please make a calculation of the expected future
returns of the company. If Richard's compensation requirements are likely
to prevent the company from earning a decent long run ROE for ALL of its
shareholders, then we have, fundamentally, a STRUCTURAL problem with
executive compensation, PERIOD. And it's the board's responsibility to
confront such a reality...even if the Chairman and CEO may not be happy
with such a confrontation on the board's part.
P&F is not the same company it was 5 years ago. It is much smaller, and
it is uncertain where the company is going to go, growth-wise, over the term
of the next CEO's employment agreement. Therefore, extra care is required in
structuring that arrangement. (This is especially true, considering the
ultra-wide standard deviation in the level of success Richard has been able
to attain with the hodge-podge of acquisitions over the years.)
If Richard intends to "shoot for broke," or "shoot for the moon" on
acquisitions (piling on goodwill, which is later written down), when the
interest of the rest of the shareholders might very well to be to set P&F up
as a "cash cow" (buying back stock and/or paying dividends), kick Richard
upstairs to a low-paying "emeritus" position, and let the operating subs "run
themselves," then this SHOULD be a consideration. There are a whole HOST of
things that should be a consideration...but my sense is that the board has
essentially been letting Richard direct the affairs of P&F, manifestly, in
almost every way...and that is because Horowitz, Kalick, Goldberg, Dubofsky,
and Solomon want it that way.
Richard's record as a consolidator and aggregator of businesses leaves
a lot to be desired. It is a spotty and mixed record, at best. Therefore,
since Richard has stated in recent conference calls that the company intends
to remain in an acquisition mode, it is IMPERATIVE that the board set up the
lion's share of his compensation as incentive pay for successfully growing
the company's revenues and profitability. As I told you on the phone, I
believe something on the order of a $250,000 base salary, and a bonus that
represents 20% of any pre-tax income from operations the company achieves,
that is over $5 million, is a good place to start. (This is just a rough
idea of what might be appropriate. Perhaps the "bonus threshold" could
start at $4 million for 2012, and climb by $500,000 increments each year.)
There is an appropriate level of the company's long run profitability
that should be allocated to the CEO. Reasonable people can differ on the
exact amount...but that level needs to at least pass the "smell test"! And
that level needs to be LOWER than it otherwise would be, for a company,
such as P&F, that is a holding company, where the CEO's activities are
mainly strategic and planning, in nature. This is all the more reason why
the previous compensation arrangements for Mr. Horowitz were egregious...and
why the board's unwillingness to "shine the light of day," and otherwise
spiritedly, and openly, defend the peer group that was used in the outside
compensation study, REFLECTS POORLY ON THE INTEGRITY OF THE BOARD. It also
clearly tells me, again, that 5 of 9 board members are firmly in control of
the flow of information from P&F's boardroom. That's unfortunate, not only
because it makes outside shareholders such as myself suspicious...but it also
looks, prima facie, like "Stonewalling," and damages trust in the board as a
whole. It also continues to make, in my view, people on Wall Street see P&F
as, primarily, a public company being operated for private gain. I HOPE YOU
WILL FIRMLY DISABUSE THEM OF THAT NOTION, WITH THE STRUCTURE OF THE NEXT
CEO'S PAY PACKAGE.
It is my distinct hope that myself, and other shareholders who have
spoken up on the travesty of the previous compensation arrangement that Mr.
Horowitz has received, and his unwillingness to restructure that agreement
(as a sign of GOOD FAITH and loyalty to the other shareholders), will have
served a purpose, and that the Compensation Committee will seek to offer to
Mr. Horowitz a renewal (if any) that is at or near (or below, in order for
Mr. Horowitz to "pay penance") the current level that is being paid at P&F's
peers.
Finally, I again ask you, for the sake of building trust and
credibility with your shareholder base, to release the list of peer
companies in the current outside compensation review.
I hope you will welcome my continued attempts to communicate my
thoughts directly with you, as you continue your work over the coming
months, on this very important matter...and this very important chance to,
in one fell swoop, dramatically improve P&F's reputation on the Street, and
with its own shareholder base.
Sincerely yours,
Timothy Stabosz