International Datacasting Board's Dirty Tactics Backfire
FOR: ADAM E. ADAMOU
JUL 13, 2012 - 10:04 ET
TORONTO, ONTARIO--(Marketwire - July 13, 2012) - The board of International Datacasting Corporation ("IDC") turned negative in a press release issued yesterday. IDC director Adam Adamou responded by redirecting the focus back to his growth strategy and future plans. He also noted that the dissident group seeking Positive Change for IDC has had an overwhelming response from shareholders that have called, texted, posted and emailed their support for our strategy and our shared vision for the future.
"In the face of these very personal and negative attacks coming from certain members of the IDC board we will continue to push our strategy of Positive Change for IDC", said Adam Adamou, IDC Director. "This kind of approach by the IDC board is simply an attempt to distract shareholders from focusing on the real issues of strategy, revenues, growth and the future. We don't think it will work. Shareholders are telling us that they are embarrassed by these negative releases and that they see them as an inappropriate use of corporate funds by an embedded board using company resources to maintain control at all costs."
"We have already covered all of the points raised by IDC in our Circular for Positive Change and we did so in a tactful and professional way," added Mr. Adamou. "This most recent release demonstrates clearly the dysfunction that we have been describing. The fact that the board supported all of the actions that they are now attacking shows the true nature of this dysfunctionality. The fact they have chosen to make personal, negative, and in our view misleading statements demonstrates a lack of professionalism that does not serve the interests of the company, its customers, its employees or its shareholders."
We address the points here:
-- The shareholder loan and the deferred stock unit plan for Adamou and others were both unanimously approved by the board and overwhelmingly supported by shareholders at our annual meeting in July 2011. Each element of the plan is structured to reward performance either through the acquisitions program or in the profitability of the company, and hopefully through both. The plans are structured so that it is impossible for IDC employees to benefit under these plans unless IDC shareholders benefit. Mr. Ruffolo was the Chairman of the Compensation Committee and negotiated both agreements on behalf of IDC. It was a condition of Mr. Adamou's employment that he accept the terms of the share loan.
-- In June 2012, while indicating he would not be included in the management slate, the IDC Board proposed to renegotiate the terms of the shareholder loan with Mr. Adamou, seeking to reward him in exchange for a "standstill" agreement that would compel Mr. Adamou to support the IDC Board slate. This would have secured the election of the embedded IDC board. Mr. Adamou declined the offer.
-- Adam Adamou was compensated as an employee during his employment at IDC. The Board unanimously appointed Adam Adamou as Executive Chairman. The Board further determined that President & CEO Fred Godard would report directly to Mr. Adamou. It was a condition of Mr. Adamou's employment that he travel weekly to Ottawa from Toronto to monitor and supervise Mr. Godard. Mr. Adamou offered to temporarily relocate to the Ottawa region at no expense to the company but the board rejected Mr. Adamou's offer.
-- According to the Company's own public filings, Mr. Adamou received compensation of $1,308 in fiscal year 2010, $146,673 in 2011 and $230,520 in 2012. These are below market levels of compensation for individuals performing similar duties with similar levels of responsibility and experience. The compensation structures were specifically designed such that Mr. Adamou would benefit instead based on the performance of the company's shares as a result of his stewardship of the acquisitions strategy through the share loan. This was described to shareholders in the management information circular for the special meeting of the shareholders in 2011. The board then de-emphasized this strategy after concluding these negotiations.
-- Our statements in the Circular for Positive Change respecting the business acquisitions strategy are based on the facts in the public record and company filings as required by securities regulations. The business acquisitions strategy was adopted unanimously by the Board on December 10, 2010, approved by shareholders in July 2011, modified in September 2011, formally deemphasized in October 2011, and announced as deemphasized in January 2012. Mr. Adamou resigned as Executive Chairman "without cause" since the board had no intention of continuing to execute on the strategy. Mr. Adamou resigned as Chairman on February 13, 2012 in favour of Mr. Hall.
-- A well thought out and structured acquisitions strategy requires planning, due diligence, access to transactions, resources and more than anything: time. The fact that the IDC Board considers the acquisitions strategy as "unsuccessful" after only a few months while at the same time instructing shareholders that they should not pursue it because of risk underlines our position that our board is dysfunctional and incapable of following through on any vision.
-- During recent prospective merger discussions with a third party that were unanimously approved by the IDC board, a Joint Nominating Committee of representatives of each of the company boards was established to make an independent recommendation with respect to the "go-forward" merged company board. Ruffolo was not selected, threatened to scuttle the transaction and attempted to bully IDC directors that opposed his nomination. Ruffolo subsequently changed his mind and offered to instead resign from the board. The transaction proceeded on the basis that Ruffolo intended to resign. Mr. Ruffolo then changed his mind again and insisted on being placed on the combined board slate. The transaction was subsequently terminated.
-- Any acquisitions transactions that were contemplated by IDC were high quality, accretive transactions that would have generated value for IDC shareholders. These transactions were not completed primarily due to dysfunctionality at the Board level. This is discussed in my letter to shareholders and in our Circular for Positive Change.
-- All of the Nominees for Positive Change are behind our strategy and vision and committed to the growth of IDC and in ensuring that the board follows proper corporate governance practices in the best interests of all shareholders. Our credentials, records of success and background are widely known and available for shareholders to review and our networks of contacts are vast.
"Our shares are at multi-year lows, our trading volumes are at all time lows and yet this board chooses to hurl insults rather than ideas" added Adam Adamou. "This is exactly why I took it upon myself to reject this slate, to warn shareholders of the board's dysfunctionality and to propose an alternative and positive slate that will provide the vision and the energy needed to right this ship."
We encourage all IDC shareholders who share our vision, and our disappointment to please vote your shares by completing, signing and returning the form of proxy or voting instruction form available on http://www.sedar.com. Only our "universal" BLUE proxy and voting instruction form includes the names of the entire director Nominees for Positive Change and other matters to be considered at the meeting.
-- Voting in favour of our Nominees for Positive Change may be the single most important vote that you ever make as a shareholder of International Datacasting Corporation --
WE URGE YOU TO IGNORE THE IDC BOARD PROXY OR VOTING INSTRUCTION FORM SENT TO YOU BY IDC AS IT WILL NOT ALLOW YOU TO VOTE FOR THE NOMINEES FOR POSITIVE CHANGE.
For up to date information, follow us on twitter @IDC_Positive or send your questions to IDCrising@gmail.com or call our IDC Positive Change Hotline at 1-647-261-7289. Full instructions on how to vote are set out in the enclosed proxy materials and can also be found at http://IDC-Positive-Change.tumblr.com.
Let's put IDC together again,
Adam E. Adamou,
Director, International Datacasting Corporation.
FOR FURTHER INFORMATION PLEASE CONTACT:
IDC Positive Change Hotline