0001162893-11-000004.txt : 20110509
0001162893-11-000004.hdr.sgml : 20110509
20110509131016
ACCESSION NUMBER: 0001162893-11-000004
CONFORMED SUBMISSION TYPE: SC 13D/A
PUBLIC DOCUMENT COUNT: 2
FILED AS OF DATE: 20110509
DATE AS OF CHANGE: 20110509
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: 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: 11822390
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
SC 13D/A
1
slgd13d1.txt
FORM 13D AMENDMENT NO. 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(AMENDMENT NO. 1)
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)
MAY 9, 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. 810-202101
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1. Name of Reporting Person
TIMOTHY JOHN STABOSZ
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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 543,636
Shares ____________________________________________
Beneficially (8) Shared Voting Power 0
Owned by ____________________________________________
Each (9) Sole Dispositive Power 543,636
Reporting ____________________________________________
Person With (10) Shared Dispositive Power 0
--------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned 543,636
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 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 $142,566.03 have been used to
effect the purchases. No part of the purchase price represents borrowed funds.
ITEM 4. Purpose of Transaction
The reporting person has acquired the shares for investment purposes.
The reporting person submitted a letter (attached hereto) to the Board of
Directors, dated May 9, 2011, indicating his intent to withhold his support
for 5 out of the 6 directors (Messrs. Goldstein, Johnson, Field, Bellini, and
Hinkle) up for nomination at the May 18th, 2011 Annual Meeting, and also his
intent to vote against Proposal #2 (to expand the number of options available
for grant). In his letter, the reporting person also draws attention to a
number of intractable problems at the Company (most notably, a longstanding
record of CEO value destruction, a board lacking in independence, and, as a
result, a deeply troubling unwillingness of the board to hold the CEO
accountable). In the letter, the reporting person also makes a number of
requests of the Company, including, but not limited to: 1) appointing one or
more new outside board members, who own material amounts of stock (the
reporting person offers himself up as a candidate), 2) separating the role of
Chairman and CEO, 3) reconstituting the membership of the Compensation
Committee to make it fully arms-length from the CEO, 4) releasing the list of
peer group companies in the previous Maxus Group Compensation study, and 5)
honestly confronting the question of whether the current CEO is the right
person for the job.
It is the intent of the reporting person to draw the Board's attention to
the concerns noted in his letter, so that the Board will begin a long and
painful process of beginning to rebuild trust with the Company's outside
shareholder base, and so that the Board will set up a much needed "Chinese
Wall" between the CEO and the Board of Directors...of a family run company
that has evidenced a disturbing lack of such separation.
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 (including the letter attached hereto) 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 May 6, 2011, the reporting person has sole
voting and dispositive power over 543,636 shares of Scott's Liquid Gold, Inc.'s
common stock. According to the company's April 20, 2011 proxy statement, as of
March 29, 2011 there were 10,898,500 common shares outstanding. The reporting
person is therefore deemed to own 5.0% of the company's common stock.
Transactions effected by the reporting person since March 18, 2011 were
performed in ordinary brokerage transactions, and are indicated as follows:
05/06/11 bought 1700 shares @ $.306
ITEM 6. Contracts, Arrangements, Understandings or Relationships
with Respect to Securities of the Issuer
Not Applicable
ITEM 7. Material to be Filed as Exhibits
Letter to the Scott's Liquid Gold, Inc. Board of Directors, dated May 9, 2011.
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 05/09/11
Signature Timothy J. Stabosz
Name/Title Timothy J. Stabosz, Private Investor
EX-1
2
slgdltr.txt
WITHHOLD LETTER TO SLGD BOARD DATED MAY 9, 2011
Timothy J. Stabosz
1307 Monroe Street
LaPorte, IN 46350
Board of Directors
Scott's Liquid Gold, Inc.
4880 Havana Street
Denver, CO 80239
Mark E. Goldstein
Jeffrey R. Hinkle
Carl A. Bellini
Dennis H. Field
Jeffry B. Johnson
Gerald J. Laber
May 9, 2011
Dear Members of the Scott's Liquid Gold Board:
Despite my extensive discussions with Independent Director Bud Laber and
CEO Mark Goldstein, and my numerous e-mail communications to the Board laying
out what I see as the glaring, intractable, and unacceptable problems at
Scott's Liquid Gold ("the Company," or "SLGD"), including, but not limited to
the...
1) 70% collapse in sales under the current CEO
2) losses sustained under the current CEO in 12 out of the last 13 years
3) board insularity, and lack of board independence
4) collective loyalty of the Board to the Goldstein family
5) lack of substantive stock ownership of Board members (except the CEO)
6) excessive CEO pay
7) the recent renewal of the poison pill as an "entrenchment device"
....the Board has issued a proxy statement which does little more than pay lip
service to these concerns. Specifically, having one employee board member
step down, with a stated intent to add a new independent director later (at
the Board's unilateral discretion), does NOT show the outside shareholder base
the level of good faith and accountability that is needed, at this time.
I made it clear to the Board that what is REQUIRED at this time is for
our company to appoint an outsider to the Board who owns MATERIAL amounts of
stock, so that that person can be a legitimate "witness" to whether the Board
is operating independently, in order to protect the outside shareholders from
Mr. Goldstein's self-interest. I told you I was willing to serve in that
capacity...or that you might consider approaching one of the other major
outside shareholders, since this is not ultimately "about me." I told you
that adding one new board member is not enough, if that member is not a
material stockholder, and I provided you with the names of two highly
qualified outsiders (independent of both me and the Company). I told you that
you need to set up a "Chinese Wall" between the governance of this company,
and Mr. Goldstein. I told you that we need to separate the role of Chairman
and CEO, in order for the Board to show that Mr. Goldstein will finally be
held accountable. I told you that the Compensation Committee needs to be
reconstituted, so that shareholders can be confident that "robotic renewal" of
Mr. Goldstein's employment will no longer be the order of the day. I told you,
for the sake of transparency, that you need to release the list of peer group
companies from the last Maxus Group compensation study, so that outside
shareholders can verify for themselves the legitimacy of the consultant's
work.
You have done little or nothing of the above; instead, you seem to
continue to do the bare minimum, apparently to protect the interest of Mr.
Goldstein, at the expense of the outside shareholder base.
It is embarrassing when, year after year after year, Mr. Goldstein tells
his shareholders, and tells his board, how things are going to get better,
when they do not. After a certain point in time, credibility is destroyed.
WE HAVE LONG SINCE REACHED THAT POINT. Yet, the Board remains oblivious,
whistling past the graveyard...and ascribes our company's problems, primarily,
to a real estate problem...instead of facing the fact that we also have a CEO
problem.
There is EVERY reason to believe that there is a better person to be our
"salesman in chief" than Mark Goldstein...as evidenced by his 13 year track
record. I am convinced the only reason he is still in place as our CEO is
because: 1) he is the son of the founder, and "grew up" in the company, 2)
the company's history is "imbued" with the Goldstein family name, 3) he is
"deferred to" because of his substantial share ownership in the Company, 4)
despite the fact that we are a public company, the Board does not have the
heart to confront the CEO with the fact that he has failed, 5) Goldstein, as
Chairman of the Board, doesn't have the courage to confront HIMSELF with the
fact that he has failed (if we had a chairman separate from the CEO, as a
matter of self-respect, such a chairman would be hard pressed to ignore the
CEO's record of failure), and 6) despite fiduciary obligations, a majority of
the board has their first loyalty to the Goldstein family, as a result of
longstanding social and/or employment relations with the family and/or
Company.
The above 6 points are particularly validated, and the need for outside
shareholders to obtain board representation unassailable, considering how, in
my extensive due diligence, I was told by a long-time and highly credible
institutional stockholder that said stockholder received indications of
interest by a consumer products company to pay around $3 a share for the
company, back in 1999...with Mr. Goldstein, remarkably, indicating to said
stockholder that he wouldn't let the company go for less than $12. (This is
despite, as was indicated to me, that said consumer products company was
willing to keep the company's plant, all of the employees, and Mr. Goldstein,
in Denver, to continue to produce the company's products on a contract basis.)
The above, more than anything, along with my other research, leads me to
conclude that 1) With the stock trading around 30 cents now, the wrong decision
was made in 1999, and a large amount of value has been destroyed over the in-
terim time period, 2) Scott's Liquid Gold is operated primarily as a "sinecure"
for Mr. Goldstein, 3) Mr. Goldstein thrives on the high regard in which he is
held by his employees, and the community-at-large, and is operating the company
for the sake of "image" and "pride," as a de facto not-for-profit institution,
and 4) there is no interest in entertaining reasonable and bonafide offers for
the company, because Mr. Goldstein can't bear the notion of losing it. One
thing is for sure: Without having outsiders with substantial share ownership
on the board, there is absolutely no way to TELL whether Mr. Goldstein is oper-
ating the company in his own self-interest, or not.
To repeat: The Board's failure to make material reforms PRIOR to the
issuance of the proxy statement (despite the clarity of my presentation, and
legitimacy of the concerns I have expressed), evidences to me that the Board
does not appreciate the weightiness of the array of concerns. As a result, in
the interest of protecting my investment in our company, and what I see as the
interest of all outside shareholders, the Board has compelled me to draw
public attention to these matters. I CAN BEST DO THIS BY ANNOUCING MY INTENT
TO WITHHOLD ALL INCUMBENT DIRECTORS, EXCEPT MR. LABER, AT THE MAY 18TH ANNUAL
MEETING, AND TO VOTE AGAINST THE PROPOSAL TO INCREASE THE NUMBER OF SHARES
AVAILABLE IN THE COMPANY'S 2005 INCENTIVE PLAN.
I want to emphasize my frustration with the Board. I would have preferred
to have kept these matters discreet...and I asked you to work with me in
private, because I didn't believe our company needs this kind of public
attention at this time. However, I also cautioned you that I was not willing
to let a board, consisting mainly of Goldstein loyalists, shirk its
responsibilities, and continue to allow Mr. Goldstein to be generously
compensated, country club memberships and all, for causing the company to
suffer a slow and painful death, year in and year out. The fact that Mr.
Goldstein hasn't been "kicked upstairs" by now (to an emeritus position), is a
tremendous embarrassment to this Board. The notion that NO ONE could have
done better as CEO, over the last 13 years (as I was told is the board's
stance) is preposterous, on its face. It is also suggestive
that the Board does not take its fiduciary duty seriously, and that Mr.
Goldstein is incapable of separating, in his mind, his duty as Chairman of the
Board to hire the most effective CEO possible, with his own self-interest to
"get the goodies," and remain the CEO. Will the board finally get off its
duff, and force Mr. Goldstein to confront this conflict-of-interest? Or the
conflict-of-interest of taking $400,000 a year in compensation out of the
company, when he has been destroying its equity value, and its brand value,
for more than a decade?
This is why I say that it is time for major reform at SLGD. It is my
hope that my withholding the entire board (except for Mr. Laber) will serve,
most importantly, to draw the necessary attention to the strong evidence that
Mr. Goldstein has a "lock" on the Scott's Liquid Gold Board...and that there
is an unacceptable willingness of a majority of the board to countenance this
untenable situation, inappropriately "enabling" Mr. Goldstein, without
witness or consequence.
I hope the Board will not take an "adversarial" stance towards me, but
instead will realize that I am trying, in good faith, to save our company from
ITSELF, and save (and build) value for all the shareholders, and not just Mr.
Goldstein. It is time the Board take as much of an interest in protecting the
assets of the company (and they would, if they had material share ownership
positions), as an outside shareholder such as myself does. In fact, I am doing
a huge service to our board, and our company, by "liberating" them to be free
to face the "white elephant" in the (board) room that, it is clear to me, they
are simply terrorized to face.
I look forward to meeting the entire board at the annual meeting. I hope
the discussion will be substantive, frank, and open, for all shareholders
present...and that members of the board will reach out, and start caring about
the image of our company, and the troubling reality of our company, vis a vis
its outside shareholder base. I hold no personal animus towards Mr. Goldstein,
the Goldstein family, or any member of the board. However, I do believe that
it is time that Mr. Goldstein take direct responsbility for the need for a
bonafide independent board, even if it means he has to accept in his mind
that SLGD is not "his Company."
I respectfully submit all of the above comments and requests in the
interests of a better Scott's Liquid Gold, for all of the company's
shareholders. I again repeat my willingness to serve on the SLGD board of
directors. And I again repeat my intent to WITHHOLD my vote for Directors
Mark Goldstein, Jeffrey Hinkle, Carl Bellini, Dennis Field, and Jeffry
Johnson, at the May 18th Annual Meeting, and to WITHHOLD my vote on Proposal
#2.
Very truly yours,
Timothy J. Stabosz