a noted poison pen, part i
This stuff is totally tangential.
– a loeb hedge fund investor (referring to Mr. Loeb’s letters). via nytimes, ‘a noted poison pen‘
- Third Point LLC (“Third Point”) advises certain entities that hold 1,945,500 common units in Star Gas Partners L.P. (“Star Gas” or the “Company”) (NYSE: SGU). Our 6% interest in the common units of the Company makes us your largest unitholder. Unlike the poor, hapless retail investors “stuffed” with purchases at the $24 level (many of whom are party to class action lawsuits against you personally and against the Company), we purchased our stake around these levels and took profits on about 500,000 shares near the $7.00 per unit level.
- Sadly, your ineptitude is not limited to your failure to communicate with bond and unit holders. A review of your record reveals years of value destruction and strategic blunders which have led us to dub you one of the most dangerous and incompetent executives in America. (I was amused to learn, in the course of our investigation, that at Cornell University there is an “Irik Sevin Scholarship.” One can only pity the poor student who suffers the indignity of attaching your name to his academic record.)
- Furthermore, a careful reading of the small print in the Company’s most recent Form 10-K reveals a further record of abysmal corporate governance. In particular, your $650,000 salary for a company your size is indefensible given the spectacular proportions of your failure as an executive.
- Furthermore, given the magnitude of your salary, perhaps you can explain why the Company paid $41,153 for your professional fees in 2004 and why the Company is paying $9,328 for the personal use of company owned vehicles. We questioned Mr. Trauber about the nature of this expense, and I was frankly curious about what kind of luxury vehicle you were tooling around in (or is it chauffeured?). He told us that you drive a 12 year old vehicle. If that is so, then how is it possible that the company is spending so much money on the personal use of a vehicle that is 12 years old? Additionally, your personal use of a Company car appears to violate the Company’s Code of Conduct and ethics which states that “All Company assets (e.g. phones, computers, etc) should be used for legitimate business purposes.”
- The Company’s Code of Conduct and Ethics also clearly states under the section on Conflicts of Interest, that a “conflict occurs when an individual’s private interest interferes or even appears to interfere in any way with the person’s professional relationships and/or the interests of SGP. You are conflicted if you take actions or have interests that may make it difficult for you to perform your work for SGP objectively and effectively. Likewise, you are conflicted if you or a member of your family receives personal benefits as a result of your position in SGP…You should avoid even the appearance of such a conflict. For example, there is a likely conflict of interest if you: 1. Cause SGP to engage in business transaction with relatives or friends…”
- By this clearly stated policy, how is it possible that you selected your elderly 78-year old mom to serve on the Company’s Board of Directors and as a full-time employee providing employee and unitholder services? We further wonder under what theory of corporate governance does one’s mom sit on a Company board. Should you be found derelict in the performance of your executive duties, as we believe is the case, we do not believe your mom is the right person to fire you from your job. We are concerned that you have placed your greed and desire to supplement your family income – through the director’s fees of $27,000 and your mom’s $199,000 base salary – ahead of the interests of unitholders.
- Irik, at this point,… It seems that Star Gas can only serve as your personal “honey pot” from which to extract salary for yourself and family members, fees for your cronies and to insulate you from the numerous lawsuits that you personally face due to your prior alleged fabrications, misstatements and broken promises. I have known you personally for many years and thus what I am about to say may seem harsh, but is said with some authority. It is time for you to step down from your role as CEO and director so that you can do what you do best: retreat to your waterfront mansion in the Hamptons where you can play tennis and hobnob with your fellow socialites. The matter of repairing the mess you have created should be left to professional management and those that have an economic stake in the outcome.
Sincerely, /s/ Daniel S. Loeb //