Back in 2001, Warren Lichtenstein and his Steel Partners were the outsiders at SL Industries Inc., trying to convince other investors that the financially ailing Mount Laurel company should be sold.
In 2002, Lichtenstein and his New York hedge fund won control of a majority of the seats on the board and fired the CEO after a difficult year. SL lost $10.7 million, or $1.87 per share, on revenues of $112.9 million in 2001.
But instead of selling off the entire company, SL shed certain business units and even bought other companies. Lichtenstein, who’d assumed the duties of CEO, even promoted an SL executive, James C. Taylor, to serve as president and CEO in August 2005.
The turnaround seemed to work. By the end of 2007, revenue had grown to $200.9 million and net income had reached $8.4 million, or $1.43 per share. SL’s share price topped out at $23.88 on Sept. 24, 2007.
But the global recession cooled growth for the maker of power electronics and motion control equipment. Revenue slipped to $147.6 million in 2009 from $186.0 million the previous year. Thanks to cost cuts, net income rose to $2.9 million, or 49 cents per share, from $2.3 million, or 39 cents per share, in 2008.
Still, nothing seemed unusual when on March 30 SL said that Lichtenstein, who’d stepped down from the board in 2008, was returning temporarily to fill a vacancy created by the resignation of James R. Henderson, who cited “other business commitments.”
A two-sentence filing by SL with the Securities and Exchange Commission on June 18 was the first sign that something more might be up. It said Taylor and chief financial officer David Nuzzo were “no longer employed” by SL.
Two days later, longtime SL board member Dwane Baumgardner resigned. In a letter, filed with the SEC on June 21, he cited the “treatment” of Taylor and Nuzzo given the “positive performance of the company under their direction.”
“To be clear, I consider myself to have a fundamental disagreement with SL, and in particular, the board’s practices,” wrote Baumgardner, a member of the auditing committee and the nominating and corporate governance committee.
Just how fundamental was clear on June 29, when SL said it had hired William T. Fejes Jr., 54, as president and CEO, effective immediately.
SL shares have barely budged from the $11.75 per share at which they were trading before Fejes’ hiring. But after closing down 1 cent Thursday at $12, SL shares are 32.6 percent higher since Lichtenstein rejoined the board.