0001162893-14-000002.txt : 20140429 0001162893-14-000002.hdr.sgml : 20140429 20140429145512 ACCESSION NUMBER: 0001162893-14-000002 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20140429 DATE AS OF CHANGE: 20140429 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: 14793341 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 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 PF13D17.TXT SCHEDULE 13D AMENDMENT NUMBER 11 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D (AMENDMENT NO. 11) 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) APRIL 23, 2014 -------------------------------------------------------- (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 185,301 Shares ____________________________________________ Beneficially (8) Shared Voting Power 0 Owned by ____________________________________________ Each (9) Sole Dispositive Power 185,301 Reporting ____________________________________________ Person With (10) Shared Dispositive Power 0 -------------------------------------------------------------------------------- 11. Aggregate Amount Beneficially Owned 185,301 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) 5.0% -------------------------------------------------------------------------------- 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 $1,323,384.87 have been used to effect the purchases. The respondent maintains the shares in a "pooled" margin account, and may borrow against the shares, in the ordinary course, from his broker. ITEM 4. Purpose of Transaction Item 4 is hereby amended to add the following: On April 29, 2014, the respondent submitted a letter (see Exhibit #1) to Compensation Committee members Kenneth M. Scheriff (Chairman), and Jeffrey D. Franklin, demanding their immediate resignation from the P&F board. The respondent believes Messrs. Scheriff and Franklin have comported themselves with a longstanding record of servility, being tethered to the CEO and P&F exclusively for reasons of "prestige"...and that they have, manifestly, deemed their primary purpose to be the advancement of the CEO's personal financial desires. In the letter, Stabosz lambastes the 2 roughly decade-serving board members for: 1) Providing the CEO with a raise, and increase in bonus percentage, midstream in 2014 (backdated to the beginning of the year, no less!), when no raise was called for...as a corrupt form of "make up," in order to accomodate the CEO's petulance over not reaching the expected bonus threshold in 2013, suffering a net pay cut that year, and therefore "needing more money." 2) Approving a pay regimen that allowed the CEO & CFO to collectively take out total compensation, outrageously, in an amount equal to 70% of the company's reported pre-tax income, in 2012, and 41% of reported pre-tax income, in 2013. 3) Allowing the Chairman and CEO to take out roughly $15 million in aggregate compensation, over the last decade, when the CEO has only increased shareholders' equity by less than 1% annually, over this period. (This is an ungodly amount for a company of P&F's annual revenues and historical net profit.) 4) The continued refusal, year after year, of the Compensation Committee to release the list of peer companies, used to purportedly justify the CEO's licentious pay regime. (The committee and board refuse to evidence transparency, or a willingness to subject their decisions to reasonable scrutiny.) Defiance remains the order of the day at P&F...ever suggestive of the CEO's constant "overshadowing," and domination, of the board. 5) Scheriff and Franklin's lack of any material stock ownership. (Deplorably, Franklin has never bought a single share in his 10 years sitting on the board.) Neither man evidences any remote interest in viewing P&F as a bonafide "investment." Respondent has owned shares in P&F for the better part of the last 18 years, and considers himself to be a "student" of the company, its history, and its long-standing dysfunctional and debilitated corporate governance. (Chairman and CEO, Richard Horowitz, through extraordinary charm and guile, has ruled the company with an iron fist for a generation, keeping the board...with one or two exceptions...in a fundamentally "docile" and subjugated state. Consequently, the board, collectively, continues to evidence a breathtaking primary loyalty to the personal financial needs of the CEO, enabling the CEO to expropriate the capital of the outside shareholders, for his own self-serving purposes.) A previous 13D filer, respondent returned to 5.0+% ownership interest of P&F on April 23, 2014. He believes the shares are undervalued, based upon his view of underlying asset value, the value of the company in a sale or breakup (especially sans Mr. Horowitz), and the favorable cyclical economic trend that the company currently finds itself. Respondent may increase or decrease his ownership position in P&F's common stock in the future, based upon respondent's investing, trading, diversification, margin, arbitrage, or other needs and purposes. 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 April 28, 2014, respondent has sole voting and dispositive power over 185,301 shares of P&F Industries, Inc.'s common stock. According to the Company's latest proxy statement, as of April 11, 2014, there were 3,695,177 common shares outstanding. Respondent is therefore deemed to own 5.0% of the Company's common stock. Transactions effected by the respondent in the prior 60 days were performed in ordinary brokerage transactions, and are indicated as follows: 02/28/14 bought 1667 shares at $7.56 03/05/14 bought 6152 shares at $7.48 03/06/14 bought 651 shares at $7.42 03/07/14 bought 100 shares at $7.41 03/10/14 bought 100 shares at $7.41 03/11/14 bought 4168 shares at $7.52 03/12/14 bought 3100 shares at $7.46 03/13/14 bought 3300 shares at $7.58 03/14/14 bought 300 shares at $7.42 03/17/14 bought 8 shares at $7.32 03/18/14 bought 6628 shares at $7.60 03/19/14 bought 619 shares at $7.44 03/20/14 bought 2603 shares at $7.51 03/21/14 bought 5228 shares at $7.50 03/24/14 bought 7006 shares at $7.62 03/25/14 bought 2000 shares at $7.90 03/31/14 bought 750 shares at $7.80 04/02/14 bought 395 shares at $7.84 04/03/14 bought 588 shares at $7.81 04/07/14 bought 100 shares at $7.81 04/11/14 bought 100 shares at $8.02 04/23/14 bought 1500 shares at $8.26 ITEM 7. Material to be Filed as Exhibits Exhibit #1: Letter dated April 29, 2014, demanding the immediate resignation of board and Compensation Committee members Jeffrey D. Franklin and Kenneth M. Scheriff. 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 04/29/14 Signature Timothy J. Stabosz Name/Title Timothy J. Stabosz, Private Investor EX-1 2 scheriff.txt LETTER DEMANDING COMP CMTE'S RESIGNATION FROM P&F BOARD TIMOTHY J. STABOSZ 1307 MONROE STREET LAPORTE, IN 46350 P&F Industries Compensation Committee Kenneth M. Scheriff (Chairman) Jeffrey D. Franklin April 29, 2014 Messrs. Scheriff and Franklin: Your electing to provide Chairman and CEO Richard Horowitz a raise, during the final year of his contract, and increasing the bonus percentages, is the final straw. You have both been on the P&F board for roughly 10 years, and you have evidenced yourselves to be continual patsies for Mr. Horowitz. What Richard wants, Richard gets, has been your mantra. It is really never ending for both of you. When outside shareholders raised a storm, and drove Horowitz "pals" Alan Goldberg and Mitch Solomon off the compensation committee, a few years ago, I should have known that Horowitz would find a way to replace them with 2 of the most pusillanimous and malleable individuals extant. The "buddies" stepped aside...and the "cronies" stepped in, to "secretly" do Horowitz's bidding. All the more easier to cloak the nature of the dishonest "decision-making" at P&F. Simply put, if the compensation committee has a more "credible" form of plausible deniability, then Horowitz can get what he wants, without consequence or accountability. YOU HAVE BEEN WILLING AND KNOWING AGENTS IN THAT DISGUSTING FLIM FLAM. P&F's executive compensation policy is a SCANDAL...perpetrated at the hands of a CFO and a banker, no less! One wonders why you two are so willing to sully your reputations for independence...your judgement...your integrity....and, ultimately, sell out your self respect, as men. I find it despicable. I also find it to be a rank betrayal of your solemn duty to perform as true fiduciaries, to protect the outside shareholders of P&F Industries from the unchecked appetites of a domineering CEO, who has few limits, and knows no shame. Mr. Franklin, you have NEVER bought any shares of this company in the open market, in the 10 years you have been on this board. You own a measly 1332 shares outright, all granted as restricted shares. Mr. Scheriff, you have been on this board for 9 years, and own only 1766 shares outright. It is quite clear why you, and your sidekick, have no interest in partaking in substantive ownership of P&F stock....because you have known, during your entire board service, that the point of "serving" on P&F's board is, has been, and "must" be, to give Richard Horowitz exactly what he wants, needs, expects, and demands. AND YOU HAVE DONE JUST THAT. FACTS: Horowitz was paid $1.58 million in 2012 and $1.4 million in 2013. CFO Joe Molino was paid $723K in 2012 and $668K in 2013. Yet, the company's pretax income was only $3.3 million in 2012 and $5.0 million in 2013. The company's bottom line ROE (that's return on equity, gentlemen!) was approximately 7% in 2012 (adjusted for normalized tax rates) and 9% in 2013. (ROE would be even worse, if the company's understated assets were adjusted to their higher market values.) This indicates a MEDIOCRE performance by Mr. Horowitz, at best. Yet, Horowitz was paid an amount equal to 48% of reported pretax income in 2012, and 28% of reported pretax income in 2013. Even more troubling, Horowitz and the CFO together were paid a sickening 70% of reported pretax income in 2012, and 41% of reported pretax income in 2013. That is obscene. It gets worse. With bald-faced effrontery, you state, on page 18 of the current proxy, that: "The company's overall executive compensation philosophy is to align its compensation program with optimizing stockholder value." One wonders how exactly this would be the case, when the company's total stockholders' equity was $37 million at year end 2003, around the time both of you chuckleheads came onto "Richard's board." Ten years later, at year end 2013, total shareholders' equity, at $38.7 million, had barely budged. The compound annual growth in shareholders' equity has, therefore, been LESS THAN 1% ANNUALLY, over that 10 year period. (The company has paid no dividends in the last 10 years.) Meanwhile, you, and previous compensation committees, have, and continue to inappropriately shower Mr. Horowitz with all manner of ungodly largesse. Horowitz has taken out an equivalent of roughly $15 million from the company, over the years of your useless, contrived, and debased "service" on the P&F board. This, despite the fact that bottom line EPS were 83 cents in 2013, versus 93 cents in 2003. Sales were $76 million in 2013....and $86 M in 2003. What exactly, Mr. Scheriff and Mr. Franklin, has Horowitz done for "optimizing stockholder value," to justify this outrageous pay...and your asinine "bump up" for 2014? The conclusion is obvious: Your oversight of the compensation policy is incompetent and grossly negligent, at best, and MANIFESTLY CORRUPT, at worst. You, and the rest of the board, REFUSE to pay a dividend, because Horowitz wants to continue to EXPROPRIATE the capital of the outside shareholders, for his own selfish use (i.e. outrageous compensation, and retaining all capital for "growth").....with the imprimatur of weak and spineless "board sitters," such as yourselves, that enable Horowitz...and serve to give a sham aura of "legitimacy" to what any THINKING person with a bonafide fiduciary mien would see as deeply troubling, if not unscrupulous, behavior. You refuse to buyback stock because, again, Horowitz doesn't want to create value, or take the company private. He wants to use the capital of outside shareholders for his own purposes, while remaining "addicted" to the prestige of a Nasdaq stock listing, so he can show Long Island socialites how "important" he is. You have become tethered to Horowitz and "wed" to giving him a lifestyle he needs, craves, and can't live without. Consequentially, you have sacrificed the outside shareholders of P&F on a pyre, as you have shamelessly and tragically "burned up" your own honor, decency, and integrity. For WHAT?! Why would you EVER, EVER want to be tethered to another man in this blatantly unseemly, dishonorable, and unholy way? You refuse to sell the company, because Richard wants to continue to make $1.5+ million a year....even if it were possible that the company could be sold for the low to mid double digits per share, as I believe it probably could. Absurdly, Richard, seemingly, wants to continue to make $1.5+ million a year, REGARDLESS of the size or profitability of the company. You, in your dishonesty, are willing to make "adjustments," as needed, in order to "comply" with Richard's "requirements." That's what you did in the latest 8-K filing. Richard had a hissy fit, that you set the bonus trigger at a level where he made less in 2013 then he was anticipating, and you decided that you needed to "make it up to him" in 2014. That is NOT the way it works. You can't "make up" for a prior year. That is CORRUPT. On page 19 of the proxy, you state that: "The compensation committee agreed to such modifications because among other factors, under Mr. Horowitz's stewardship, since the beginning of the employment agreement, the company has experienced considerable revenue growth, profitability and liquidity." But this is nonsensical. The fact of the matter is, the company almost went bankrupt in the recession, and Mr. Horowitz bears a considerable degree of responsibility for that. The increase in income and sales HASN'T EVEN RETURNED US TO 70% of PRIOR PEAK LEVELS OF SALES AND PROFIT. We are getting a natural "bounce" in our results, as the economy has recovered, and you are perversely finding a clever excuse to "credit and reward" Richard Horowitz for that. More flim flam. More rationalization. More guile and manipulation and trickery, to fleece the outside shareholders, and "hand over the goodies" to Horowitz. It really is quite shameless. You basically serve on this board to be part of a pretigious "socialite" world, and run around in the rarified airs that Mr. Horowitz sedulously cavorts in. I'm sure it's all very intoxicating and "glittering" for you. But what about the outside shareholders of P&F? Don't you owe us ANYTHING?? You state, in the proxy, how an outside compensation consultant reviewed the company's executive compensation policies, but, despite repeated requests, year after year, for you to release to list of peer companies used in this review, you, and the board, REFUSE to release the information. This suggests that YOU HAVE SOMETHING TO HIDE. This is all the more true, considering that respected independent proxy advisory services have claimed that appropriate peer compensation is a mere FRACTION of what you pay the CEO....and my own analysis likewise suggests that Horowitz's base pay should be cut by at least 50-60%, and the maximum bonus should be likewise reduced by at least 50%. Year after year, you REFUSE to be accountable. You REFUSE to show transparency. The reason is clear: You KNOW that the amount that you pay the CEO cannot be justified, and you only "procure" an outside comp review, as a means of "justifying" the compensation requirements of "your sponsor," Mr. Horowitz. The allegation has been made a number of times, by a number of different entities, and I'm going to repeat it: Horowitz is paid an ungodly premium to bonafide peer companies, and in relation to P&F's historical income and return on equity, and other measures of bonafide value creation. Therefore, until you are willing to subject the outside comp reviews to scrutiny, you will rightly be viewed by many as being CORRUPT in your motives, and purposes. With all this in mind, I call for your IMMEDIATE RESIGNATIONS FROM THE BOARD OF P&F INDUSTRIES. You have failed us and failed yourselves. You serve no purpose. You are tethered to Richard Horowitz in a most ungainly, compromised, and tragic way. And you refuse to be accountable for your decisions. I once had high hopes for you, but, as you have been put into positions where you could "make a difference" for P&F's outside shareholders, and you have not only failed us, but you have outright BETRAYED us, your credibility, in my view, is destroyed. Sincerely, Timothy J. Stabosz