101 0 Kommentare Aerojet Rocketdyne Executive Chairman and Aligned Shareholder Warren Lichtenstein Issues Statement Following Trial Pertaining to Conduct of Chief Executive Officer Eileen Drake

Aerojet Rocketdyne Holdings, Inc. (NYSE: AJRD) (“Aerojet Rocketdyne” or the “Company”) Executive Chairman Warren Lichtenstein, who collectively with his affiliates and the participants in his solicitation owns approximately 5.5% of the Company's outstanding shares, today issued the following statement regarding the trial pertaining to Aerojet Rocketdyne Chief Executive Officer Eileen Drake’s alleged misuse of corporate resources, which concluded yesterday in the Delaware Court of Chancery (the “Court”):

“As I have repeatedly stated, the contest for the future of Aerojet Rocketdyne comes down to two factors: credibility and vision. The Company’s shareholders deserve leadership that has credibility and a well-articulated vision for stabilizing the business and unlocking long-term value. This week’s trial and recent events demonstrate that Ms. Drake no longer possesses these vital qualifications and, in turn, should not lead Aerojet Rocketdyne. Regrettably, I view Ms. Drake’s continued leadership of Aerojet Rocketdyne as the single biggest threat to shareholder value.

Fortunately, there is a clear alternative proposed by my slate of director candidates: installing Mark Tucker, the Company’s former Chief Operating Officer and a four-decade veteran of the aerospace industry, as the next Chief Executive Officer. Mr. Tucker has immense integrity and a viable strategy for enhancing cash flows, margins and revenues through precise execution. He is a known entity that led Aerojet Rocketdyne’s growing operations and oversaw rigorous execution during a period of significant value creation from 2015 through 2020. He is ready to engage with all investors, and simply wants to be judged based on his ability to execute and vision for a new day at Aerojet Rocketdyne. Now that the trial over Ms. Drake’s actions has concluded, I encourage shareholders to begin comparing Ms. Drake and Mr. Tucker, so that we can collectively determine which leader is best equipped to start executing and producing tangible results for customers, employees and investors.

I feel it is especially important to take note of the following when considering Ms. Drake:

An Apparent Focus on a Financial Payout – Since the Company’s entry into a merger agreement with Lockheed Martin Corporation (“Lockheed Martin”), Ms. Drake has been intently focused on receiving a payout equal to – or far greater than – her ‘Change in Control’ payment of roughly $25 million. It seems Ms. Drake is more interested in leveraging her campaign to achieve this singular goal rather than enhancing value for shareholders.

Playing Numbers Games – Given that Ms. Drake's compensation is impacted by the Company’s bookings, I contend she has continuously made short-sighted capital allocation decisions that prioritize triggering her discretionary compensation at the expense of long-term shareholder value. Further, I believe that lagging cash flows, margins and revenue are the direct result of Ms. Drake’s limitations as an operator, including oversight of on-time delivery and production timelines. The Company’s declining cash position is evidence of Ms. Drake’s focus on near-term sales and paper earnings. Her lapses have weakened the Company to the point where operational improvements are required to unlock enhanced value on a standalone basis or any future review of sale opportunities.

Mounting Talent Retention Issues – Ms. Drake lacks the ability to retain talent, as evidenced by high rates of historic employee attrition and the recent departure of key C-suite individuals such as her chief operating officer and general counsel. I estimate the Company currently has hundreds of job vacancies, which are impacting production and delivery timelines.

Unacceptable Underperformance – Ms. Drake presided over significant underperformance relative to the targets set by her management team in last year’s proxy statement for the transaction. Rather than accept accountability for these misses and the Company’s poor cash flow situation, she is apparently telling investors that there are no clear opportunities for enhancing margins and optimizing operations.

Poor Contingency Planning – Ms. Drake neglected to engage in robust contingency planning as the Lockheed Martin transaction faced months of mounting regulatory headwinds. I made repeated requests over the course of 2021 that the Company put in place a comprehensive plan to ensure that it could continue to operate as a standalone entity in the event that the transaction could not be consummated. Ms. Drake ignored these requests.

Unprofessional Threats and Unsubstantiated Claims of ‘Bullying’ – Ms. Drake has repeatedly threatened to quit and take her executive team with her, reflecting her seemingly vindictive management style. She also has consistently implied that the Company’s directors, including her own nominees, would be subject to litigation risks if they did not adopt her recommendations and views. This is in addition to her responding to my requests for robust contingency planning with accusations of ‘bullying’ and calls for an ‘investigation’ into my conduct – an investigation which did not substantiate or corroborate her claims.

Self-Serving and Wasteful Investigation – After I expressed concerns to the Board about Ms. Drake’s lack of contingency planning, she spent much of 2021 launching a costly, distracting and unnecessary investigation in retaliation against me – which had nothing to do with sexual harassment, operations, financial reporting or unlawful conduct. I find it perplexing that any corporate fiduciary could be investigated for pressing a direct report to engage in comprehensive contingency planning when the potential transaction was facing obvious regulatory headwinds.

Misuse of Resources – As disclosed, Ms. Drake and her boardroom allies were effectively rebuked by the Court’s entry of a temporary restraining order and its rejection of her request for authorization to use up to $10 million of Company money to support her proxy fight, and additional uncapped funds to launch meritless litigation against me. I believe there is clear evidence that Ms. Drake and her faction went on to violate the Court’s order, and this evidence was presented at trial this week.

Weak Alignment with Shareholders – As far as I can tell, Ms. Drake has never – in all her years with the Company – purchased any shares on the open market. It seems outrageous for her to now seek full control of the Company when she will not even spend any of her millions of dollars in earnings to buy shares and improve her alignment with shareholders.