Barton Winokur, the former head of Dechert and a longtime member of the board of directors at Philadelphia-based CDI Corp., is facing a public call for his resignation from the company’s board by two shareholders.
In an open letter released last week, investor Joshua Schechter and investor Bradley Radoff and his affiliates called on Winokur to step down from his role on CDI’s board. They allege that Winokur has “serious conflicts of interest,” given his partnership at Dechert and the fact that CDI has retained the firm for millions of dollars in legal work.
“After 48 years on the board of directors of CDI Corp., it is time for you to resign,” Radoff and Schechter wrote to Winokur. “Your tenure has been marked by abysmal shareholder returns and serious conflicts of interest which have transferred wealth from CDI shareholders to you and to Dechert LLP, the law firm at which you have long served as partner, chairman and CEO.”
Winokur was Dechert’s chairman and CEO from 1996 to 2011. Dechert did not immediately respond to a request for comment.
Citing CDI’s proxy statements, the investors’ letter said that over 15 years Winokur has received $2 million in director fees, and Dechert has billed more than $11 million to CDI.
They also noted that CDI’s general counsel, Brian Short, is a former Dechert partner.
In a statement Thursday, a spokesman for CDI said the company is “obviously aware of the statements made by Mr. Radoff and Mr. Schechter” and values the constructive views of all its shareholders.
“The company is not responding separately to each tactic of this particular investor,” the spokesman said. “Also note that the services provided by Dechert, one of the company’s various law firms, have been part of the company’s regular public disclosure.”
Radoff, his affiliates and Schechter own about 7.9 percent of CDI’s outstanding shares, according to their release, and have owned stock in the company for several years. They purchased 1.1 million shares in September because they thought the shares were undervalued and presented an opportunity for investment, a U.S. Securities and Exchange Commission report said.
The investors also aired their concerns about Winokur in their September SEC filing. The two businessmen cited general concerns about CDI’s management, which they said they sent in a letter to the company more than two years before, in July 2014.
“The reporting persons believe that the size of the board should be reduced, board compensation should be brought in line with the issuer’s market cap and performance, ties with Mr. Winokur and his law firm should be severed and the issuer should pursue a strategic alternatives review process,” according to the SEC filing.
Since then, Radoff and Schechter have also published open letters to Walter R. Garrison, CDI’s chairman, and Anna M. Seal, chair of CDI’s nominating and corporate governance committee. Both of those letters called out Winokur and Dechert specifically.
They wrote to Seal that CDI’s “disturbing relationship” with Winokur is “one of the most blatant governance failures.” In the letter to Garrison, they said Winokur is “hopelessly conflicted to a level that we have not seen in over 20 years of successful public company investing.”
But Radoff and Schechter are not only seeking Winokur’s exit. They wrote in the Dec. 14 letter to Garrison that they intend to nominate multiple candidates to the company’s board of directors at a 2017 annual shareholders meeting. In their September SEC filing, the duo said a majority of CDI’s board is over-tenured, with five of the eight members having served for at least 13 years.
CDI, headquartered in Philadelphia, was established in 1950. The engineering, information technology and staffing company had $1 billion in revenue in 2015, according to its website, and 7,500 employees globally. CDI’s market capitalization was $148 million as of Thursday.
Contact Lizzy McLellan at firstname.lastname@example.org. On Twitter: @LizzyMcLellTLI