Founder and former CEO readies for proxy battle with SM&A

By Lisa Kerner

Charlotte, N.C., March 25 - SM&A's largest shareholder, Steven S. Myers, said the company's rejection of a shareholder presence on its board of directors "speaks volumes about the intransigence" of the current board.

Myers is also SM&A's founder and retired chairman and chief executive officer.

"I do not expect the board's ill-conceived attempt to deflect from itself responsibility for the substantial deterioration in the company's stock price over the past year to sit well with SM&A shareholders," Myers said in a statement released on Tuesday.

"As for the board's concern about the cost and distraction of a proxy fight, that was its choice when it refused to nominate the partial board slate I proposed," Myers added.

Myers was responding to a March 20 letter from SM&A chairman Dwight L. Hanger expressing disappointment in Myers' attempt to elect himself and three others to the company's nine-member board in lieu of four current directors.

The chairman said that "any proposal to nominate an alternate slate of directors will not succeed," noting that a costly proxy battle will be "disruptive, distracting and expensive for everyone involved."

According to Hanger's letter, Myers proposed that the newly constituted board would evaluate expenses and re-evaluate the current management team.

Hanger cited a meeting during which Myers voiced several concerns but, according to Hanger, failed to offer any suggestions for improvements.

Myers' concerns included SG&A expenses and their impact on earnings per share, as well as the quality of SM&A's communications with shareholders and analysts, Hanger said in his letter.

Despite Myers' complaints, Hanger said "we cannot and will not manage the company with a short term view towards the stock price and any individual shareholder."

Hanger referred Myers to the company's public filings for an explanation of SM&A's financial performance.

In his letter, Hanger expressed confidence in the ability of company president and CEO Cathy McCarthy and new chief financial officer Jim Eckstaedt to implement SM&A's strategic plan.

Hanger said SM&A values Myers' support and would welcome a meeting to discuss specific proposals and suggestions.

SM&A, based in Newport Beach, Calif., provides competition management and program support services to industrial customers in the aerospace and defense, information technology, telecommunications and other industries.

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