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