More Opinion and Commentary regarding the Advanced Photonix (API) proxy vote and controversy

(The following commentary is my personal opinion. It is not offered as financial,legal or other advice. Perform your own due diligence in making your own informed decisions)
Last night I posted the Advanced Photonix (API) response letter to the earlier letter sent by private investor Charles Knowles.  Mr. Knowles sent his proxy letter to API investors regarding the proxy vote to be concluded at the annual shareholders meeting tomorrow, in Ann Arbor Michigan. I promised to share my thoughts and opinions about the API response with readers of this blog (for whatever my personal opinion is worth). 

Frankly, I don't believe the API letter, authored under the signature of Richard Kurtz, API CEO, President and Chairman of the Board, provides shareholders with any plausible reasons or explanation why API management opposes Proxy issue 6, which would allow shareholders owning 1%, the right to nominate candidates for election to the API Board of Directors.

Much is made in the letter about Mr. Knowles requests to API that Former General Dr. Robert Fogelsong, be considered as a candidate for election to the Board of Directors, with the API response noting it did consider Dr. Fogelsong, and determined it didn't find he suited the Board's needs. API states that Knowles misstated the facts about Fogelsong's application for consideration as a Board member, in his letter. 

From my perspective this is ancient history. Dr. Fogelsong's name is not on the ballot this year. If proxy issue 6 passes his name might be on the proxy next year. That's the real issue. Why doesn't management want to give shareholders a right to nominate qualified individuals to the Board? From what I can determine none of the current Directors have any real educational or technical background in Terahertz, High Speed Optical Receivers or Photonics in general. I would like to see at least one individual on the Board of Directors, who brings cutting edge expertise to the Board such as Dr. Daniel Mittleman from Rice University. (I am not saying Dr. Mittleman would serve, but that's the caliber of Director that we need in my opinion. Dr. Foglesong, is another example of  an outside individual who would bring new ideas and a world of new contacts to API.) Let Shareholders help solicit and find such quality persons, and then let's vote. IN THE FINAL ANALYSIS THIS IS THE AMERICAN WAY. I continue to urge shareholder to support issue 6 on the proxy. 

The issues presented by API's response in regard to proxy issue 4, are more complex. To be clear, I have no problem with a publicly traded company,  paying a hard working Board of Director for their time, and expertise,(?) so long as the efforts translate to the bottom line for the company and shareholders. Rick Kurtz, in his response  details the substantial improvement the company has made at a number of levels, (note: it's no secret that I have often been the biggest cheerleader for management on financial message boards) that have been accomplished by management over the last decade. The company in my opinion appears to be back on the cusp of real growth and success. Unfortunately, this potential has not yet been actualized and the company first needs to establish a track record of GAAP profitability before management can claim any success. If sustained profitability is realized in 2014, then I would be a vocal supporter of the proposed financial incentive plan. (Funds to pay and maintain the technical expertise found at the company is much, much more critical than paying independent board which has never obtained sustained profitability). Why can't the BOD wait a year?
There is one other thing about issue 4 I want to mention, which is the unmentioned,White Elephant, lurking in the corner of the Schedule 14A, and is found on page 42, regarding Discretionary Director grants of stock to themselves;
7.(b) 
Limit on all Awards. The number of shares of Stock as to which an Awardee may be granted Awards under the Plan during any calendar year shall not exceed 300,000 subject to the provisions of Section 10. 

This language alone is enough to convince me to vote against proxy issue 4. The Directors in their sole unfettered discretion have a right to give themselves up to an additional 300,000 shares,a year.

(If my understanding of this issue is incorrect, I will post any explanation/clarification/response by management)

Lastly, I note that the entire first portion of the API Response relating to the status and purpose of Lighthouse Services Inc.  seems irrelevant and immaterial in my mind in relation to the important issues surrounding the proxy vote. Based upon the company response, it sounds to me like Mr. Knowles, misstated, or misunderstood the role and relation of Lighthouse to the company. Score a meaningless point for management on issue one. Big Deal.

To restate, I suggest you consider a strong FOR #6, AGAINST #4!
Do your own research and make up your own mind!
 

Please share your thoughts and comments. Good luck to all API shareholders. Cast your vote as you deem fit, but please vote!

Now back to THz!.