CHICAGO - (Business Wire) In a series of public letters and filings with the Securities and Exchange Commission, Discovery Group (
“Discovery
”) urged the shareholders of Spanish Broadcasting System (
“SBS
”) to withhold their vote for SBS
’s director nominees at the 2008 Annual Shareholder Meeting that took place on June 3, 2008. The results of that election reveal an overwhelming dissatisfaction with the Board and management team of SBS. According to officials at Discovery, holders over 80% of the Class A Common Stock withheld their vote for SBS
’s slate of director nominees, excluding the likely votes of SBS insiders and CBS Corporation. SBS had delayed disclosure of the results until Discovery filed a
“demand letter
” last week seeking immediate disclosure.
“The message to the Board is clear. Public shareholders refuse to tolerate the blatant lack of director independence, egregious pay and benefits lavished on company insiders, and a history of terrible operating performance,” said Daniel J. Donoghue, Managing Partner at Discovery. To remedy the situation Discovery has recommended that the Board establish a Special Committee to hire an investment bank to pursue three specific options; going private, a sale of the company, and a revamping of the Company’s corporate governance. Discovery is one of the largest shareholders in SBS owning 9.8% of the Company’s Class A common stock.
| | Likely Public Shareholder |
| Director Nominee | | Votes Withheld |
| | |
| Raul Alarcon, Jr. | | 75.95% |
| Pablo Raul Alarcon, Sr. | | 81.99% |
| Joseph A. Garcia | | 71.83% |
| Antonio S. Fernandez | | 75.99% |
| Jose A. Villamil | | 71.83% |
| Mitchell A. Yelen | | 75.48% |
| Jason L. Shrinsky | | 79.04% |
| | | |
| Total Votes Cast | | 76.02% |
Note: Likely Public Shareholder Votes Withheld is calculated assuming that SBS insider shares and CBS Corporation shares were voted in favor of the director nominees.
Discovery’s campaign received an important element of support when the leading proxy advisory firm ISS Governance Services, a division of RiskMetrics Group, recommended that institutional shareholders withhold their votes for all the director nominees. The landslide of negative shareholder sentiment did not stop the confirmation of the company’s director nominees because of the super-majority voting structure bestowed on the current Chairman and Chief Executive Officer, Mr. Raul Alarcon, Jr. that allows him to control the outcome of the election.
Discovery maintains that the Board cannot simply ignore these results. Analysts and investors have been asking management to respond to the issues raised by Discovery on recent earnings calls. In light of these voting results, the investment community will feel they have established a mandate to further press the Board to take action.
Where to Find Additional Information
All materials related to Discovery’s “Just Vote No” campaign including letters to SBS’s Board of Directors are available at no charge at the SEC’s website www.sec.gov and at Discovery’s website www.thediscoverygroup.com/sbsa.htm.
About The Discovery Group
Discovery Group is a merchant banking firm that manages private partnerships in highly specialized investment strategies and conducts corporate merger and advisory services. The business was founded in 2002 and is based in Chicago. Affiliates of Discovery Group manage approximately $200 million in assets. Investors in these funds include several large university endowments, nationally-recognized charitable foundations and a variety of trusts, family offices and wealth advisors. Discovery’s corporate finance expertise extends to public and private companies in a broad range of industries.
The Discovery Group
Meghan O’Callaghan
312-265-9596
mocallaghan@thediscoverygroup.com
