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