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French and Coulson Criticize SLAM's Governance "smokescreen".


Business Editors

NEW YORK--(BUSINESS WIRE)--May 7, 2001

Ray French and Paul Coulson, who are waging a proxy contest Proxy contest

A battle for the control of a firm in which a dissident group seeks, from the firm's other shareholders, the right to vote those shareholders' shares in favor of the dissident group's slate of directors. Also called proxy fights.
 for election to the board of Suburban Lodges of America, Inc. (NASDAQ NASDAQ
 in full National Association of Securities Dealers Automated Quotations

U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on
:SLAM), today called on Suburban Lodges to make meaningful and permanent changes to the company's corporate governance Corporate Governance

The relationship between all the stakeholders in a company. This includes the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy, and rule of law.
 structure.

Last Friday the company announced that it had removed the `dead hand' provisions from its poison pill A defensive strategy based on issuing special stock that is used to deter aggressors in corporate takeover attempts.

The poison pill is a defensive strategy used against corporate takeovers.
, but the board retained the poison pill itself and the right to reinstate To restore to a condition that has terminated or been lost; to reestablish.

To reinstate a case, for example, means to restore it to the same position it had before dismissal.
 the dead hand provisions at any time without shareholder approval.

"The fact that the board did not make this change permanent, makes it meaningless. If the Board had been serious about fixing the Company's poison pill," Mr. French said, "they would have made the pill "chewable" and eliminated the right of the Board to reinstate the dead hand by amending the pill. The way things stand now, anytime the board feels threatened by a possible bid for the company, they can reinstate the dead hand. Their action last Friday was nothing more than a smokescreen. I have a lot of confidence in the Company's shareholders, and I'm sure they won't be fooled by this pre-election ploy ploy  
n.
An action calculated to frustrate an opponent or gain an advantage indirectly or deviously; a maneuver: "A typical ploy is to feign illness, procure medicine, then sell it on the black market" 
."

Mr. French said, "Instead of offering minimal cosmetic changes, the Board needs to get serious about addressing the Company's corporate governance problems. Serious changes are needed if shareholders are to have a stronger voice in major decisions about the Company's future:"
-- Need for Independent Directors. Two members of the Audit and Compensation
Committees and members of their families have business relationships with the
Company that, Mr. French and Mr. Coulson believe, should disqualify them from
serving on these Committees. These two directors are also Mr. French's and Mr.
Coulson's opponents for election to the Board.

-- Elimination of Staggered Board. Their current staggered board serves to
prevent the stockholders of the company from electing an entirely new Board
selected by them at any single Annual Meeting.

-- Chewable Poison Pill with No Dead Hand - Ever. Not only was it wrong for the
Board to reserve the right to reinstate the dead hand, Mr. French said, they
should have made the pill `chewable' so that the stockholders would be given
the choice to redeem it if the company received a takeover offer at a premium
that they wanted to accept.

-- No Opt-Out of Georgia Anti-Takeover Law. They have not chosen to opt out of
the Georgia anti-takeover law, thereby making it more difficult for another
company to acquire Suburban Lodges.


Mr. French said: "The company has a strong arsenal of anti-takeover defenses Noun 1. anti-takeover defense - resistance to or defense against a hostile takeover
opposition, resistance - the action of opposing something that you disapprove or disagree with; "he encountered a general feeling of resistance from many citizens"; "despite
 that can allow current management to reject a takeover offer, even if it provides a significant premium to shareholders. If elected, we intend to replace those defenses with a corporate governance structure that gives the shareholders themselves the ability to reject or accept takeover offers for their shares. In fact, as Directors committed to an unlocking of shareholder value, we will encourage potential buyers to make premium-to-market offers for the Company."

Dead Hand Poison Pill dead hand poison pill

A special type of poison pill antitakeover defense in which only ousted directors can rescind the poison pill. Poison pill plans are put in place in order to make a hostile takeover prohibitively expensive by issuing a huge number of
. The term "dead hand poison pill" refers to a provision that allows only "continuing directors" to redeem the pill. Continuing directors are directors who were in office at a particular point in time (such as when the pill was adopted) or are nominated by Continuing Directors. If a poison pill has a dead hand feature, shareholders who favor an acquisition proposal opposed by the board can not neutralize neutralize

to render neutral.
 the pill by electing a new board majority who, subject to their fiduciary duties Noun 1. fiduciary duty - the legal duty of a fiduciary to act in the best interests of the beneficiary
legal duty - acts which the law requires be done or forborne
, will redeem the pill in order to sell the Company at the highest available price.

The dead hand pill is widely considered to be one of the most egregious e·gre·gious  
adj.
Conspicuously bad or offensive. See Synonyms at flagrant.



[From Latin
 anti-takeover defenses, and, although legal in Georgia, is not even enforceable in many states, such as Delaware.

"If Suburban Lodges' nominees for Director are elected," Mr. French said," there will be nothing to stop them from reinstating an even stronger version of the `dead hand' pill after the Annual Meeting if the company were the target of a takeover, even if shareholders supported such a takeover. It is very telling that, prior to our proxy contest, the current board never showed any indication whatsoever of instituting shareholder-friendly corporate governance improvements."

If elected, Ray French and Paul Coulson are committed to pushing for meaningful and permanent improvements in the Company's corporate governance. French and Coulson believe the first and most important of these improvements is the achievement of a Board with a majority of independent Directors who will put shareholders' interests, and only shareholders' interests, first. Shareholders who want a Board free of conflicts of interest, and committed only to their best interests, should send in their GOLD proxy cards A proxy card is an easily-acquired or home-made substitute for a collectible card. A proxy is used when a collectible card game player does not own a card, and it would be impractical for such purposes to acquire the card.  and discard the white proxy card mailed by management.

French and Coulson encourage shareholders to call their proxy solicitor Proxy Solicitor

A specialist (firm) hired to gather proxy votes.
 MacKenzie Partners, at (212) 929-5500 (call collect) or (800) 322-2885 (toll-free) with any questions they might have about how to vote their GOLD proxy cards. Or, if shareholders would like to speak with Ray French directly, he can be reached at (212) 582-0900 or (516) 924-1176.
COPYRIGHT 2001 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2001, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Publication:Business Wire
Date:May 7, 2001
Words:845
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