Oak’s Annual Meeting Fairly Tame Affair : Predictions of Return to Profitability Dull Barbs
Based on assemblies in recent years, Oak Industries officials had expected a raucous shareholders gathering Monday. Instead, the 41st annual meeting of the financially troubled media concern was a relatively tame affair.
A handful of barbed questions were seemingly offset by generally upbeat predictions that the company--beset by red ink, a Securities and Exchange Commission investigation and a bitter shareholders class-action suit that is inching toward settlement--will return to profitability sometime next year.
“It has not been a time for the faint of heart,” Oak Chairman and Chief Executive E. L. McNeely said of the financial woes of the last three years.
Nonetheless, a reorganization, divestiture of losing operations and various cost-cutting moves will spell a “leaner and meaner” Oak, he told more than 200 shareholders.
Make Company More ‘Flexible’
Stockholders overwhelmingly approved a management proposal to pick directors every year instead of having staggered elections. In addition, Oak’s nine-member board will be trimmed to six, with five of the directors from outside the company.
The change, McNeely said, will make the company more “flexible” to respond to potential merger or acquisition proposals. Several companies have made inquiries, McNeely said, but “two-thirds of them are vultures (and) the rest aren’t serious.”
Shareholders also approved doubling--to 80 million--the number of Oak common shares. Proceeds from the shares will be used to pay interest on Oak’s recently offered $230 million in debentures. Eventually, there will be a reverse stock split to compensate for the common stock dilution, McNeely told reporters after the meeting.
McNeely said the SEC investigation into business dealings between the company and family and friends of former Chairman and Chief Executive Everitt A. Carter probably will be completed soon. In addition, he said, a class-action lawsuit alleging fraud and negligence also should be settled soon.
Even when the subject was controversial, Oak shareholders generally asked mild-mannered questions of McNeely.
‘A Lot of Dead Chickens’
San Diego developer Ed Malone questioned whether director Roderick M. Hills could be objective because he is “of counsel” to Latham & Watkins, Oak’s outside law firm. Hills said he doesn’t receive any of the law firm’s profits and therefore has no conflict as an Oak director.
Another shareholder protested that employment contracts for some Oak officials who may lose their jobs represent “a lot of dead chickens around our neck.”
And another, George Buckman, complained that a purchasing manager of an Oak subsidiary in Illinois had “entered into a cozy relationship with a Chicago scrap metal dealer.” Buckman, whose family owns a scrap metal firm near Chicago, has complained before, Oak officials said, because his firm has been unable to secure a contract with Oak.
McNeely, the former chairman and chief executive of Wickes Cos. who resigned in 1982 rather than take the company into reorganization under Chapter 11 of the U.S. Bankruptcy Code, handled shareholders’ concerns smoothly.
But the timing of the Oak meeting was ironic for McNeely, in light of Wickes’ announcement Sunday that it will buy a Gulf & Western unit for $1 billion in cash.