Adaptec, Steel Partners continue to battle over control, CEO's job

By Lisa Kerner

Charlotte, N.C., Oct. 26 - Steel Partners II, LP once again urged fellow Adaptec, Inc. shareholders to follow the recommendation of RiskMetrics Group/ISS and Proxy Governance, Inc. to consent to the removal of Adaptec chief executive officer S. "Sundi" Sundaresh and legacy director Robert J. Loarie by signing, dating and returning the white consent card before the Nov. 2 deadline.

According to Steel Partners, the support of the proxy advisory firms validates Steel Partners' "call for changes to the Adaptec board" and "invalidates the legacy directors' personal attacks on Steel Partners and their attempts to distract stockholders from the real issues facing the company."

In the letter to Adaptec's shareholders on Monday, Steel Partners said Sundaresh's business plan "is not gaining any traction."

While Sundaresh and the legacy directors have had four years to turn Adaptec around, "all they have to show for it is a horrendous track record of stockholder value destruction," the letter said.

Adaptec fires back

Adaptec, in response to Steel Partners' actions, said the shareholder is trying to control Adaptec's board to prevent the company from making a cash distribution.

Joseph Kennedy, chairman of Adaptec's board, said, "Adaptec stockholders should understand that Steel has demonstrated, once again, that Steel's first step toward its secret plan appears to be to hoard Adaptec's cash - and intimidate the majority of the board into inaction - until it can gain control."

Adaptec's board wants shareholders to follow the recommendation of Glass, Lewis & Co. and revoke consent for Steel's proposals using the gold card.

"The bottom line for stockholders is that they can choose between a board majority and a CEO who have track records of objectively exploring all options to create value for stockholders - or they can choose a hedge fund with a dismal recent investment track record committed to its own strategy, whatever that may be," Kennedy said.

Adaptec is a Milpitas, Calif., data storage company.

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