0001162893-13-000006.txt : 20130909
0001162893-13-000006.hdr.sgml : 20130909
20130909125951
ACCESSION NUMBER: 0001162893-13-000006
CONFORMED SUBMISSION TYPE: SC 13D/A
PUBLIC DOCUMENT COUNT: 2
FILED AS OF DATE: 20130909
DATE AS OF CHANGE: 20130909
SUBJECT COMPANY:
COMPANY DATA:
COMPANY CONFORMED NAME: SCOTTS LIQUID GOLD INC
CENTRAL INDEX KEY: 0000088000
STANDARD INDUSTRIAL CLASSIFICATION: PERFUMES, COSMETICS & OTHER TOILET PREPARATIONS [2844]
IRS NUMBER: 840920811
STATE OF INCORPORATION: CO
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: SC 13D/A
SEC ACT: 1934 Act
SEC FILE NUMBER: 005-10347
FILM NUMBER: 131084977
BUSINESS ADDRESS:
STREET 1: 4880 HAVANA ST
CITY: DENVER
STATE: CO
ZIP: 80239
BUSINESS PHONE: 3033734860
MAIL ADDRESS:
STREET 1: PO BOX 39S
CITY: DENVER
STATE: CO
ZIP: 80219-0019
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
SC 13D/A
1
slgd13d9.txt
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(AMENDMENT NO. 7)
Under the Securities Exchange Act of 1934
SCOTT'S LIQUID GOLD-INC.
-------------------------------------------------------------------------------
(Name of issuer)
COMMON STOCK
-------------------------------------------------------------------------------
(Title of class of securities)
810-202101
--------------------------------------------------------
(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 7, 2013
--------------------------------------------------------
(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. 810-202101
--------------------------------------------------------------------------------
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 734,717
Shares ____________________________________________
Beneficially (8) Shared Voting Power 0
Owned by ____________________________________________
Each (9) Sole Dispositive Power 734,717
Reporting ____________________________________________
Person With (10) Shared Dispositive Power 0
--------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned 734,717
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) 6.5%
--------------------------------------------------------------------------------
14. Type of Reporting Person (See Instructions) IN
--------------------------------------------------------------------------------
ITEM 1. Security and Issuer
Common stock of Scott's Liquid Gold-Inc. ("the company"), 4880 Havana
Street, Denver, CO 80239.
ITEM 2. Identity and Background
The reporting person, Timothy J. Stabosz, 1307 Monroe Street, LaPorte, IN
46350, a natural person and United States citizen, is engaged as a private
investor. He has not been convicted in a criminal proceeding (excluding
traffic violations or other similar misdemeanors) in the last 5 years, and has
not been a party to any proceedings, or subject to any judgements, enjoinments,
decrees, et al., related to violations of state or federal securities laws, in
his lifetime.
ITEM 3. Source and Amount of Funds or Other Consideration
Personal funds in the aggregate amount of $202,726.81 have been used to
effect the purchases. No part of the purchase price represents borrowed funds.
ITEM 4. Purpose of Transaction
The reporting person is the largest outside shareholder of Scott's Liquid
Gold. He has acquired the shares for investment purposes, and has held a
position in the company's common stock, continuously, for nearly 6 years.
On June 14, 2013, the reporting person attended the company's annual
meeting, confronting a conflicted CEO, for his enduring legacy of value
destruction, and a feckless board, for its misplaced loyalty to an inept and
incompetent CEO, for its negligent corporate governance, and for a reprehensible
pattern of fiduciary betrayal. A number of other major outside shareholders
were also in attendance. The board conducted a lengthy, approximately 2 hour,
Q&A session, in which a number of concerns were brought up, by a number of
shareholders, including the reporting person. Following up on said meeting, the
reporting person wrote a letter (see Exhibit #1) to the board of directors,
dated September 7, 2013, addressing a number of the concerns brought up at the
meeting, and making specific requests of the board.
To summarize, in the letter, the reporting person:
1) Noted how the outside shareholders, almost unanimously, expressed the urgent
necessity that the board appoint a new director, with MATERIAL SHARE OWNERSHIP,
sourced from the outside shareholder base.
2) Noted how, by his good faith estimate, the outside shareholder base voted, by
a margin of roughly 2 to 1, to WITHHOLD the current board. Such a result can
only be taken as a stinging rebuke of company management, considering there was
no organized proxy campaign, or "vote no" campaign that was conducted.
3) Noted how, by his good faith estimate, an outside shareholder's proxy
proposal, requesting the board adopt cumulative voting for directors, was
approved by the outside shareholder base by a margin of roughly 2 1/2 to 1. As
a result, the reporting person demands that the board IMMEDIATELY ADOPT A
POLICY REQUIRING THAT THE COMPANY UTILIZE CUMULATIVE VOTING IN ALL DIRECTOR
ELECTIONS, GOING FORWARD.
4) Requested that the board a) remove the poison pill, b) separate the chairman
and CEO positions, c) institute a mandatory stock ownership program for
directors and officers, as was promised at the annual meeting, d) immediately
cut the CEO's pay by 50%, pending the naming of his eventual successor, and e)
require that the CEO be forbidden from dealing with any outside expressions of
interest in purchasing the company, but that such expressions be directed
instead to a Special Committee, to wall them off from the CEO's historical and
pervasive "conflict of interest," in seeking to SABOTAGE efforts to sell the
company, in order to maintain his licentious $400K a year employment sinecure.
Under the current CEO, Mr. Goldstein, who ascended to the top executive
position in August of 1990, sales of the company's signature Scott's Liquid Gold
household product line have been thoroughly decimated, peaking at $22.5 million
in 1992, and plunging to $4.9 million in 2012...an incredible 78% decline.
(Adjusted for inflation, as measured by the CPI, the decline is a staggering
87%.) Mr. Goldstein has, by any honest measure, ravaged the company's namesake,
60 year old brand...with no chagrin, accountability, or shame. Moreover,
historically, a do-nothing board, subjugated to Mr. Goldstein's will, has,
astonishingly, looked the other way, allowing Goldstein to continue to
functionally "cannibalize" the company, for the sake of the founding family
scion's $400K annual employment sinecure. The reporting person believes the
SLGD board has breached its fiduciary responsibility, by making Mark Goldstein's
continued employment as CEO a "given," merely because the board is too timid and
cowardly to "hurt Mr. Goldstein's feelings," and because the board's primary
loyalty, collectively, is to the Goldstein family's financial and personal
needs. The board has, therefore, countenanced the virtual destruction of a once
great brand, hiding behind the "business judgement rule," and facilitating the
maintenance of Mr. Goldstein's outrageous 22 year record of wanton value
destruction, incompetence, nepotism, cronyism, self-dealing, and
self-entrenchment.
Noting Mr. Goldstein's abject failure, and the alarming risk to further
dimunition and dissipation of shareholder value, under the SLGD family scion,
the reporting person has made a number of strategic proposals, as indicated in
this and previous 13D filings. He has asked the company to put itself up for
sale. He has asked the company to make a broad-based tender offer to all of the
shareholders, at 50 cents per share, that want a "divorce" from Mr. Goldstein's
imperious control of SLGD. He has offered to buy out Mr. Goldstein's interest
at 50 cents a share. And he has demanded that, if the board insists on
continuing to kowtow to Mr. Goldstein and keep him in charge, that the board
require Goldstein to raise the capital to take the company private, at a fair
price.
The reporting person intends to review his investment in the company on a
continual basis and engage in discussions with management and the Board of
Directors concerning the governance, business, operations, and future plans of
the company. Depending on various factors, including, without limitation, the
company's financial position and investment strategy, the price levels of the
common stock, conditions in the securities markets, and general economic and
industry conditions, the reporting person may, in the future, take such
actions with respect to his investment in the company as he deems appropriate
including, without limitation, communicating with other stockholders, seeking
Board representation, making proposals to the company concerning the
capitalization and operations of the issuer, purchasing additional shares of
common stock or selling some or all of his shares, or changing his intention
with respect to any and all matters referred to in Item 4.
Other than as indicated in this and previous 13D filings, the reporting
person has no plans or proposals which relate to, or could result in, any
matters referred to in subsections (a) through (j) of Item 4 of Schedule 13D.
ITEM 5. Interest in Securities of the Issuer
As of the close of business on September 6, 2013, the reporting person has
sole voting and dispositive power over 734,717 shares of Scott's Liquid Gold,
Inc.'s common stock. According to the company's 1st quarter 2013 Form 10-Q, as
of August 8, 2013 there were 11,274,397 common shares outstanding. The
reporting person is therefore deemed to own 6.5% of the company's common stock.
Transactions effected by the reporting person, in the previous 60 days, were
performed in ordinary brokerage transactions, and are indicated as follows:
07/11/13 bought 4100 shares @ $.390
07/15/13 bought 10,900 shares @ $.390
07/22/13 bought 2500 shares @ $.381
07/31/13 bought 410 shares @ $.381
08/09/13 bought 25,000 shares @ $.478
08/14/13 sold 10,000 shares @ $.549
08/14/13 bought 1800 shares @ $.411
08/15/13 bought 30,700 shares @ $.390
08/16/13 bought 7000 shares @ $.380
08/28/13 bought 2945 shares @ $.383
ITEM 6. Contracts, Arrangements, Understandings or Relationships
with Respect to Securities of the Issuer
None
ITEM 7. Material to be Filed as Exhibits
Exhibit #1: Letter to the SLGD board, dated September 7, 2013
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 09/09/13
Signature Timothy J. Stabosz
Name/Title Timothy J. Stabosz, Private Investor
EX-1
2
slgdexh1.txt
Timothy J. Stabosz
1307 Monroe Street
LaPorte, IN 46350
Bud Laber
Phil Neri
Mark Goodman
Barry Levine
Mark Goldstein
September 7, 2013
Members of the Scott's Liquid Gold ("SLGD") Board of Directors:
As you know, I am the company's largest outside shareholder, with 6.5% ownership
of SLGD.
I'd like to take a moment to review the voting results, and the discussions
held, at this summer's annual shareholder meeting. While the general tone of
openness of the meeting, receptiveness of management to criticism, the
robustness of the Q&A session, and the extended time period allowed for Q&A,
were certainly welcomed.....there are several "take homes" from the annual
meeting that it is imperative the "new" SLGD board confront, if it is to
establish any form of crediblity or respect, versus the prior "crony boards"
that Mr. Goldstein, with bald-faced impunity, has assiduously maintained, year
in and year out.
I want to first note the fact that five of your largest outside shareholders,
representing over 20% of the outstanding shares, took the time to fly out and
attend the meeting. That is amazing, for a company of SLGD's size, and shows a
remarkable level of commitment and conviction. Almost universally, during the
Q&A session, these shareholders emphasized, in no uncertain terms, THE NEED FOR
A NEW DIRECTOR, APPOINTED FROM THE OUTSIDE SHAREHOLDER BASE, as a "witness," and
a "trust builder," to ensure that the interests of outside shareholders are
being properly addressed, at the board level. This SINGLE ACT would do more to
build trust, and ameliorate discord, than any other act the board could possibly
take, at this time. I call on you to take action, and add the requisite new
board member with due haste!
The critical need for an outside shareholder-sourced new board member is
especially important, considering the ACTUAL VOTING RESULTS of the annual
meeting. By my calculations, assuming that all directors and officers, and the
lion's share of the ESOP plan, voted in favor of current management, if those
votes are set aside, YOUR OUTSIDE SHAREHOLDER BASE VOTED ROUGHLY TWO TO ONE TO
WITHHOLD THE ENTIRE BOARD (with the possible exception of Mr. Goodman, who
achieved a modestly higher vote total). Considering that there was no organized
proxy fight, or "say no" campaign, management must necessarily view these voting
results as a stark repudiation of its policies, and its support of the current
CEO, Mr. Goldstein. I hope you will not take such a stinging rebuke lightly,
and that you will begin to adopt policies that will win you the support of your
outside shareholder base, and earn this board some desperately needed
credibility in the corporate governance space. Such policies, that I heard more
than one of your outside shareholders talking about at the meeting, in their
public filings, or in private discussions, include the following action items:
1) The need to adopt cumulative voting for directors. It should be noted that
outside shareholder Michael Deutsch's proposal to adopt cumulative voting, by my
calculations, was voted in favor of by the outside shareholder base, by roughly
a 2 1/2 TO ONE MARGIN. There is no greater testimonial to the outside
shareholder base's thorough disgust with the dysfunctional corporate governance
at SLGD, and the attitude of exclusion that the SLGD board has taken towards the
company's outside shareholders. The voice of your outside shareholders should
be heard LOUD AND CLEAR by you. We are not "interlopers" into Mark Goldstein's
family fiefdom, or personal kingdom; we are the primary owners of the company!
Based on this shareholder vote, I DEMAND THAT THE BOARD IMMEDIATELY ADOPT A
RESOLUTION TO IMPLEMENT CUMULATIVE VOTING FOR THE ELECTION OF DIRECTORS.
2) Removal of the poison pill. The poison pill serves one purpose...to entrench
the CEO and founding family scion, Mr. Goldstein. It is unnecessary, because of
the high management and inside ownership, and, adding insult to injury, the 15%
triggering threshhold is one of the lowest I have seen. Meanwhile, the CEO, Mr.
Goldstein, is allowed to, brazenly and hypocritically, maintain his own 25%
ownership position, hindering the potential for a value-unlocking M&A
transaction for the company....and sedulously "protecting" Goldstein's $400K a
year employment sinecure (clearly the primary intent of the pill).
3) Separate the Chairman and CEO positions. Mr. Goldstein's 22 year record of
continuous value destruction is an abomination, and indisputably calls for a
form of "separate accountability." It is imperative that Goldstein have a
chairman that is an "overseer" of him, rather than the continued sleazy
situation of the fox guarding the chicken coop. The desperate need for
accountability has been constant at SLGD; yet, the board continues to abdicate
its fiduciary role, and turn a blind eye. As a result, the company has been
under a dark cloud, and in a longstanding moral crisis, for an entire
generation! Make no mistake, Mr. Goldstein's ongoing denial and delusions, and
the board's reckless enablement of those delusions, is a distinctively
degrading, unmanly, and unprincipled display of board, and CEO, cowardice. No
self-respecting board would allow a CEO, such as Goldstein, to oversee himself,
when he has caused the company to lose money for 10 consecutive years, and 14 of
the last 15 years. YOUR credibility as fiduciaries is inherently compromised,
as a result of this debased legacy. WILL YOU, the most purportedly
"independent" board that SLGD has had in years, CONFRONT THIS OUTRAGE AND
DISGRACE, or continue to turn a blind eye, just as the "purely crony" boards of
old did, seduced and subjugated as they were by Mr. Goldstein?
4) Where is the mandatory stock ownership program for directors and officers you
promised at the annual meeting? Since the annual meeting ended, nobody has
bought ANY shares in the open market, and no plan has been formally adopted.
Currently, NO directors and officers own ANY common shares outright, other than
Mr. Goldstein. That is outrageous! Outside shareholders continue to be forced
to witness a disturbing situation where the board members are not willing to
"tether" their own personal wealth to Mr. Goldstein, but they are willing to
"give away the store" to him, so he can continue to suck the company dry,
shamelessly collecting his $400K a year employment sinecure...and maintaining
his spouse on the payroll. WHERE IS THE BOARD'S INTEGRITY? WILL THIS NEW
BOARD FINALLY CONFRONT THIS SORDID SITUATION?
5) Excessive CEO pay. Reduce Mr. Goldstein's salary by at least 50%, until a
suitable replacement for him is found. The salary exceeds the peer norm, by
far, the company's revenues have shrunk so much, and the company has lost so
much market share in household products under this CEO, such that the level of
compensation is outrageous...especially in light of the company's epic
financial losses.
6) REQUIRE that all expressions of interest in purchasing the company be
referred to a Special Committee. Owing to his history of manipulation and
chicanery, his unshakable belief that the company is ultimately "his family's,"
and a historical pattern of brazen self-dealing with regard to corporate M&A,
you MUST NOT allow Mark Goldstein to be the initial "go to" person with ANY
potential suitors.
Finally, from a strategic perspective, to summarize the public discussion that
went on at the annual meeting, I want to emphasize that the sale of company's
real estate represents a potential "unlocking event" for SLGD shareholders. As
many have pointed out (including a number of outside observers), all the evi-
dence suggests that the company should be put up for sale, or taken private.
In any case, the company should NOT be public. It is too small! It is worth
more to a larger, more well-heeled manufacturer, with a stable of brands, or a
private equity firm with experience in reinvigorating brands that have been
seriously decimated (i.e. the Liquid Gold line)...but still have a significant
amount of brand identification, or "latent value," in the public's eyes.
Self-evidently, Mr. Goldstein is NOT the one to effect these changes, and it is
travesty that he is still in charge, merely because his surname is "Goldstein."
Put the company up for sale. Do NOT buy something. Do NOT buy orphaned product
lines. We have neither the experience, nor the depth of management, nor the
corporate heft, to succeed. It is too risky. And considering the current CEO's
record, ADDING to his responsibilities would be the height of insanity. Do a
tender offer at 50 cents, so that those that want to "divorce" themselves from
this CEO's colossal failures can move on with their lives, their
self-respect...and their money. It's OUR money, and it's OUR company. It's not
a family owned company. STOP treating it like it is. There are many options
here. Why don't you schedule another meeting with some of your largest outside
shareholders, inviting a number of them to Denver, as the representatives of
outside shareholder interests, and show you are serious about the angst and
displeasure evidenced at the annual meeting, and that you actually care about
what your shareholders want. I hasten to again remind you that roughly two
thirds of your outside shareholder base voted to throw out the board. That's
something that should concern you. And give you grave pause. And compel you
to be accountable....rather than continuing to be lackeys for the founding
family scion, as previous boards have.
It is time for you to FINALLY focus on what the broader shareholder base of
Scott's Liquid Gold wants, and NOT on what the Goldstein family's financial and
personal needs are. I will continue to publicly witness the storied betrayal of
Mark Goldstein, and his "stacked" boards, to outside shareholder
interests....and will similarly call you to task, roundly, if you, the most
potentially independent board SLGD has had in a generation, continue to
perpetrate those same betrayals.
Very truly yours,
Timothy J. Stabosz