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| EX-99.1 - PRESIDENTIAL LIFE CORP | v168659_ex99-1.htm |
| 8-K - PRESIDENTIAL LIFE CORP | v168659_8k.htm |
Presidential
Life Commences Mailing of Consent Revocation Materials
to Stockholders
·
Warns stockholders to disregard
Herb Kurz’s attempt to appoint his handpicked Board of Directors and regain the
CEO position at the age of 89
·
Sends letter to stockholders urging
them to reject Mr. Kurz’s proposals
Nyack, N.Y.
(December 7, 2009)
— Presidential Life Corporation (“Presidential Life” or “the Company”)
(Nasdaq: PLFE), a leading life insurance company, today announced that it has
filed a Definitive Consent Revocation Statement with the Securities and Exchange
Commission urging stockholders to reject the proposals put forward by Mr.
Herbert Kurz. The Company also mailed copies of the Statement to all
stockholders of record together with a GOLD Consent Revocation
Card. Included in the mailing is a letter to stockholders from
William M. Trust, Jr., Presidential Life’s Lead Independent Director, a copy of
which follows this press release.
In light
of the inherent conflicts involved in responding to the Kurz Consent
Solicitation Statement, given Herbert Kurz’s position as a director of the
Company, the Board delegated to the Independent Committee the authority to
respond to the Kurz Consent Solicitation. The Independent Committee is comprised
of all seven independent directors of the Company.
William
M. Trust, Jr., presiding lead independent director of the Company, commented:
“When Mr. Kurz stepped down as CEO in May this year, he pledged his full support
for his agreed successor, Donald Barnes, so we are surprised that he has now
initiated this disruptive and costly consent solicitation. I have
great confidence in the strength of our board of directors and senior management
team and, despite this self-serving distraction by Mr. Kurz, we are committed to
delivering against our strategic plan for the benefit of all our
stockholders.”
The
Independent Committee believes that Mr. Kurz’s actions are not in the best
interests of the Company’s stockholders. Accordingly, the Independent Committee
urges you to reject Mr. Kurz’s efforts to remove your Board and NOT to sign any
White consent card sent to you by Mr. Kurz, but instead to sign, date and return
the GOLD Consent Revocation Card.
1
Presidential
Life also announced that, in connection with its intended solicitation of
consent revocations, it has retained Proskauer Rose LLP as its legal advisor and
Innisfree M&A Incorporated as its solicitor for consent
revocations.
About
Presidential Life
Presidential
Life Corporation, through its wholly owned subsidiary Presidential Life
Insurance Company, is a leading provider of fixed deferred and immediate
annuities and life insurance products to financial service professionals and
their clients. Headquartered in Nyack, New York, the Corporation was founded in
1969 and, through the Insurance Company, markets its product in 49 states and
the District of Columbia. For more information, visit our website
www.presidentiallife.com.
Contacts
Presidential
Life
Donald
Barnes
Chief
Executive Officer
Presidential
Life Corporation
(845)
358-2300 ext. 250
Or
Brunswick
Group
Stan Neve
/ Greg Faje
212-333-3810
Copy of
letter to stockholders from William M. Trust, Jr., Presidential Life’s Lead
Independent Director follows:
December
7, 2009
Dear
Fellow Stockholder:
The Board
of Directors and management of Presidential Life Corporation (the ‘‘Company’’)
are focused on growing the business, improving performance and generating
enhanced value for all stockholders. We have a strong team, the right plan
and good business momentum. Under the leadership of our new Chief
Executive Officer and President, Donald L. Barnes, we have introduced the
Company’s first strategic plan and, in the six months since Mr. Barnes was
appointed, we have made good progress in delivering against that plan. In
addition, we have made significant progress over the past year in enhancing our
corporate governance structure and practices, including the appointment of five
new independent directors to our Board of Directors (‘‘Board’’) in 2008 and the
appointment of William M. Trust, Jr., as lead independent director in
2009.
2
Notwithstanding
the significant achievements of the Board you elected six months ago, Mr.
Herbert Kurz, Presidential Life’s Chairman and former CEO, has initiated a
consent solicitation to remove eight of those nine directors (all of the
directors other than Mr. Kurz), without cause, and
reinsert himself as CEO and President at the age of 89. In doing so, Mr. Kurz is
trying to overturn the Company’s carefully considered and unanimously adopted
succession plan, which he himself approved, for what appear to be purely
self-serving reasons. We are
convinced that Mr. Kurz’s takeover would interfere with the strategic plan that
is already producing value for stockholders. For the reasons detailed
below, the Independent Committee1, acting on behalf of Presidential Life’s Board
of Directors, has determined that Mr. Kurz’s consent solicitation is not in the
best interests of Presidential Life or its stockholders.
We urge you to promptly sign, date
and return the enclosed GOLD Consent Revocation Card today. Please do not
return any White consent card you may receive from Mr. Kurz.
MR.
KURZ, IT’S TIME TO LET THE SUCCESSION PLAN SUCCEED!
Presidential
Life’s current CEO and President, Don Barnes, assumed the role in May 2009 in
accordance with a succession plan demanded by ratings agencies. The succession
plan was unanimously approved by the Board of Directors in April 2008 after
extensive consultation between the Board and Mr. Kurz. Mr. Kurz chose Mr. Barnes
as his successor, voted in favor of his appointment and made numerous public
statements emphasizing his full support for his designated
successor.
The
Independent Committee believes that Mr. Kurz’s attempts to reinsert himself into
the day-to-day business activities of the Company, at the age of 89, are
impractical and simply not in the best interests of the Company; rather, they
are a misguided response to his personal unhappiness at no longer running the
company he founded.
We do not
believe stockholders should humor Mr. Kurz, nor simply ignore the issue of his
advanced age. The Independent Committee believes that, due to his years, Mr.
Kurz is no longer capable of the demands of full-time, hands-on management of a
public company. We note that only 1% of S&P 500 companies have a CEO who is
70 or older, and none have appointed a new CEO over the age of 70. Mr. Kurz will
turn 90 in
March 2010.2
3
The
Independent Committee is concerned that Mr. Kurz’s return as the Company’s CEO
and President would reverse the progress already made and jeopardize the
financial strength rating of the Company. Several ratings agencies — Moody’s,
S&P and A.M. Best — all expressed concern regarding Mr. Kurz’s advanced age
and the absence of a succession plan when previously assessing the Company’s
financial strength. It is clear that Mr. Kurz’s age would be a significant
disadvantage to the Company as we focus on our goal of raising A.M. Best’s
rating to the ‘‘A’’ category.
While Mr.
Kurz states that he will only serve as ‘‘interim’’ CEO and President, we note
that he makes no affirmative commitment to hire a permanent replacement or to do
so within any identified time frame. We in fact question whether he has the
focus and stamina required for such a task. Importantly, there would be no ready
successor if Mr. Kurz were to become ill or otherwise unable to fulfill his
duties — as was the case in 2002 when Mr. Kurz suffered a broken hip and Mr.
Barnes (then President of the insurance company) was required to shoulder much
of the day-to-day responsibility for running the Company.
THE
CURRENT BOARD AND MANAGEMENT ARE ALREADY DELIVERING
ON
THE BOARD-APPROVED STRATEGIC PLAN TO
BUILD
LONG-TERM VALUE FOR ALL
STOCKHOLDERS
You
should be aware that your Company’s first and only strategic plan was approved
by the full Board in November 2008. The priority of your Board of Directors and
management team over the past six months has been and will continue to be to
diligently implement that three-year plan, positioning the Company for
additional growth opportunities. Key strategic goals set for 2009
include:
•
Increasing new premiums at an annualized rate of 30% in 2009
•
Increasing profitable deferred immediate and immediate annuity
sales
•
Diversifying our lines of business
• Raising
our A.M. Best financial strength rating to ‘‘A’’ category in approximately three
years
•
Continuing to optimize the investment portfolio with a disciplined
approach
Our
recent third quarter results demonstrate the business momentum that has already
been generated, with total revenues up 22.9% for the first nine months of 2009
from the prior year. Revenues from sales of single premium annuities are up
28.5%, with $175.1 million in new premiums year-to-date, representing 90% of our
strategic goal for the full year 2009. We have also made good progress in
diversifying our lines of business with the introduction of two new products
since May (Simplified Issue Whole Life Policy in May and Dental Insurance Policy
in November 2009). Our investment portfolio has already recovered significantly,
in line with the broader market, following an extremely difficult period of
global economic turmoil.
4
Mr. Kurz
never had a strategic plan during his tenure as CEO and President of
Presidential Life and he has not proffered any plan detailing how he and his
nominees will deliver greater value for stockholders than your Board and
management team. Mr. Kurz’s nominees lack the specific qualifications in
insurance operations necessary to achieve growth and deliver value. They have
been hand-picked to fulfill the only ‘‘plan’’ that Mr. Kurz has put forward — to
reinstate himself as CEO!
In
contrast, Presidential Life’s current directors bring a collective wealth of
industry knowledge and have consistently acted in the best interests of all
stockholders. Mr. Kurz’s desire to regain control is no reason to discard that
knowledge and experience. The Independent Committee believes that removing the
directors elected just six months ago — elected with the support of Mr. Kurz’s
votes and the votes of other shareholders — will undo recent gains before the
benefits of the Company’s strategic plan have been fully realized.
YOUR
BOARD OF DIRECTORS HAS WORKED PROACTIVELY TO ENHANCE OUR CORPORATE
GOVERNANCE STANDARDS
During
Mr. Kurz’s tenure as CEO, scant attention was given to implementing good
corporate governance standards. RiskMetrics, a leading corporate governance and
stockholder advisory agency, cited the lack of an independent Board chairman and
failure to identify a Nominating Committee in its recommendations with respect
to the 2009 Annual Meeting of Stockholders. Since Mr. Kurz agreed to relinquish
the CEO position in April 2008, significant corporate governance improvements
have been made by Presidential Life’s Board and management:
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·
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Five
new independent directors have been added to the Company’s
Board
|
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·
|
William
M. Trust, Jr., a highly experienced executive, has been appointed as lead
independent director
|
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A
Nominating and Governance Committee has been appointed, as identified on
the Company’s website
|
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An
independent insurance industry financial expert has been appointed to the
Audit Committee
|
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The
annual director retainer has been reduced by
15%
|
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The
Compensation Committee and Finance/Investment Committee responsibilities
and focus have been redefined
|
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Board
committee charters have been posted on the Company
website
|
The
Independent Committee believes that replacing the Board with Mr. Kurz’s
hand-picked slate of nominees would not be in the interests of sound corporate
governance and would not be beneficial to stockholders.
5
NEW
FACTS INDICATE A PATTERN OF SELF-DEALING BY MR. KURZ
The
Independent Committee has recently become aware of a troubling pattern of
conduct that demonstrates Mr. Kurz’s untrustworthiness and unsuitability to be
the CEO and principal steward of the public company in which you have
invested:
|
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An
investigation into the tax returns for the Kurz Family Foundation, Ltd.,
which holds approximately 20.8% of our outstanding common stock, and of
which Mr. Kurz is a director, reveals that Mr. Kurz has engaged in a
pattern of apparent self-dealing and use of charitable assets for
noncharitable personal expenses. A special committee of the independent
directors of the Company has commenced an internal investigation and has
retained independent counsel. The Company has informed the New York State
Insurance Department (‘‘NYSID’’) of its investigation and is cooperating
with an investigation being conducted by the NYSID. The New York State
Insurance Department has issued a subpoena to the Foundation with respect
to certain expenditures made by the
Foundation.
|
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·
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A
review of the Company’s health insurance plan revealed that Mr. Kurz had
caused his daughter, members of their extended family, his personal aide
and his wife’s personal health care provider to be covered by the plan
even though they were ineligible to participate under the plan because
they were not employees of Presidential Life. The Independent Committee
has caused the Company to notify the individuals and the health insurer
that such participants are not eligible to participate in the plan and
have been removed.
|
Additional
information regarding these matters will be posted on the Company’s website at
http://www.presidentiallife.com/consentrevocation/.
This
pattern of conduct further supports the view of the Independent Committee that
Mr. Kurz’s return to the Company in the CEO role would be harmful to the Company
and its stockholders. We believe Mr. Kurz’s motives are purely self-serving and
his actions would not be in the best interests of all stockholders. In contrast,
our strong Board of Directors and experienced management team are focused on
growing the business, improving performance and generating enhanced value for
all stockholders.
We urge
you to sign, date and return your GOLD Consent Revocation Card
today. Please do not return any White consent card you may receive from Mr.
Kurz.
Thank you
for your support,
William
M. Trust, Jr.
Lead
Independent Director
6