Leading Independent Proxy Advisory Firms ISS Glass Lewis AGAIN Recommend That DATATRAKs Shareholders Vote FOR DATATRAKs Entire Slate of Director Nominees on the WHITE Card
DATATRAK International, Inc. (OTCQX: DTRK), the leader in developing cloud-based, unified dClinical™ technologies and delivering related services for the clinical trials industry, today announced that both Institutional Shareholder Services Inc. ("ISS") and Glass, Lewis & Co., LLC ("Glass Lewis"), have re-reviewed the full timeline of events and all of the assertions made by each party and have RECOMMENDED FOR A SECOND TIME that the Company's shareholders vote FOR the election of DATATRAK's nominees, Laurence P. Birch, William C. Coates, and Nicholas A. Loiacono as directors on the WHITE proxy card. ISS and Glass Lewis are the two leading independent proxy advisory firms, which have never been paid by the Company and are renowned for their critical evaluation of corporate governance practices.
Commenting on the news, Laurence Birch, the Company's President and CEO said, "Two truly independent corporate governance firms, that DATATRAK has never had a financial relationship with, have on two separate occasions loudly urged our shareholders that these short-term activists have no plan for change. The reality is that Arosa/Mr. Tabatabai are impairing our business and our shareholder value on a daily basis. Since their attack on the Company, our stock has declined over fifty percent as employees, customers and shareholders are truly concerned. I urge our shareholders to take this very seriously. The addition of short-term dissidents to our Board, with no strategy or industry experience, threatens the financial health of DATATRAK on both a short-term and long-term basis. It is absolutely critical that we put this distraction behind us and get back to focusing on signing large and influential clients/partners, such that we can drive significant future growth in the future. Do not let your Company get stolen by parties that have only their own self-interest in mind and who have engaged in inappropriate and reckless behavior in an effort to win this election at any costs, even if it damages the company's relationships with partners and customers."
Highlights from ISS' Report:
With regard to total shareholder return (TSR) under the leadership of current CEO Laurence Birch, while Arosa has erroneously and misleadingly focused its TSR calculation on periods where the current management team was not in place, ISS said:
"In the two years prior to the Jan. 21, 2009 appointment of CEO Birch, the company's shares declined 97.2 percent, 55.9 percentage points below the Russell 3000 Index. However, since the CEO's appointment through the Oct. 9, 2015 unaffected date [i.e. prior to the attack], the company's shares have increased 210.1 percent, 69.0 percentage points above the Russell 3000 Index… The Company has outperformed its peer group by 50.7% over the past three years."
With regard to the operational performance of the Company under CEO Laurence Birch, which Arosa has criticized, ISS said:
"According to the dissident [Arosa], the company's net losses suggest that change is needed at the board level. However, revenue and cash from operations have been growing since the current CEO took office in 2009. Since 2010, revenue and cash from operations have grown at a compound annual rate of 10.4 percent and 73.6 percent, respectively."
Moreover, ISS stated: "The company was at risk of insolvency in 2008. It appears that management guided a significant turnaround from near bankruptcy and continues to show progress moving forward.
Cash from operations, revenue, and backlog are all trending in a positive direction."
With regard to Executive Compensation, which Arosa has repeatedly mischaracterized, ISS issued a direct reprimand to Arosa:
"According to the 2014 Annual Report, the company paid CEO Birch and CFO Mabe base salaries of $357,231 and $181,809, respectively. Therefore, the cash paid to the CEO and CFO does not appear to be as problematic as stated by the dissident."
With regard to Arosa's vague "plan" for DATATRAK, ISS once again rebuked Arosa's claims:
"The fact that the dissident's own plan for the company highlights the need to invest in sales & marketing does not seems to support claims that current capital allocation is inappropriate. As evidenced by the year-over-year increase in backlog, management already appears to be executing a strategy that addresses several objectives of the dissident plan."
Highlights from Glass Lewis' Report:
In response to Arosa/Mr. Tabatabai's disingenuous behavior and decision to engage in a proxy fight and attempt take control of the Board without paying shareholders a premium, Glass Lewis said:
"We note that based on the available disclosure, the Dissident appears to us to have abruptly decided to pursue a proxy contest without first bringing their concerns to the board. We believe that these factors raise significant questions regarding the Dissident's motives for pursuing a proxy contest at this time."
In response to Arosa/Mr. Tabatabai's attempt to take control of the Board without a plan in place that would put the Company in a better position than it is today, Glass Lewis said:
"We also believe that the Dissident's plans for the Company are extremely vague and lack sufficient depth and detail. The Dissident's plan for the Company can effectively be distilled down to simply wanting to conduct a host of internal reviews and exploring strategic alternatives. In our view, nothing about the Dissident's stated plan would suggest that the Dissident is offering a superior or compelling alternative to the Company's current business plan."
With regard to Arosa/Mr. Tabatabai's unqualified Director Nominees, Glass Lewis agrees with DATATRAK's assessment of the dissident candidates:
"We agree with the board (DATATRAK) that most of the Dissident Nominees lack relevant industry experience that could be particularly applicable to the Company. While Dissident Nominee Ward may have some pertinent expertise, we believe that his controversial past with the Company may not make him a particularly appropriate director candidate for the Company."
In response to Arosa/Mr. Tabatabai's erroneous and out of context argument that the stock price has declined over an arbitrary timeframe of five and 10 year periods, Glass Lewis said:
"The Dissident (Arosa) argues that the Company's stock price has declined greatly over a five and 10-year period. However, the Dissident has not provided any relative context as to how the Company's performance stacks up to a comparable industry peer group."
"Meanwhile, the board (DATATRAK) has chosen to highlight the Company's performance over the time period that covers the current tenure of the Company's CEO, which we believe is a reasonable timeframe with which to assess the Company's performance, particularly considering, among other things, the fact that the CEO is standing for reelection at this year's meeting. We note that for the period since the Company appointed Mr. Birch as CEO up to the last trading day before the Dissident first announced its intention to run a proxy contest (i.e., from January 21, 2009 to October 9, 2015), the Company's stock price has increased by approximately 210.5%, outperforming the 155.1% return observed in the Russell 2000 Index and being just slightly under the 218.0% return observed in the S&P composite 1500 Health Care Technology Industry Index (source: S&P Capital IQ)."
In response to Arosa/Mr. Tabatabai's mischaracterization of the Company's executive compensation and ESPP and 401K match, Glass Lewis said:
"In terms of the Company's executive compensation practices, the Dissident argues that the Company excessively rewards its executives, but the Dissident does not offer any relative context as to how the amount of aggregate amount of execution compensation paid by the Company compares with other similarly-sized peers. Thus, we believe that the Dissident has offered insufficient context in regards to this argument."
"Further, we find the Dissident's characterization of the Company's ESPP and 401K equity grants to be disingenuous."
DATATRAK urges stockholders to vote the WHITE proxy and allow us to execute on our strategic plan which both ISS and Glass Lewis, independent proxy advisory firms, acknowledge is working. We strongly believe any disruption to management and the Board would derail the progress we have made. We believe in the future of DATATRAK. Please do not be misled by Arosa. If you have already voted a Blue proxy card, a later dated WHITE proxy card will revoke that vote.
DATATRAK urges shareholders to vote "FOR ALL" of DATATRAK's highly qualified, experienced director nominees: Laurence Birch, William Coates, and Nicholas Loiacono on the WHITE PROXY CARD.
These nominees have a significant track record of aligning themselves with shareholders and are the right individuals to build upon the Company's current momentum.
*permission to use quotations was neither sought nor obtained.
If you have any questions on how to vote your shares, please call Morrow & Co., LLC toll free at (800) 662-5200 or (203) 658-9400.
CAUTION: Any vote for Arosa/ Mr. Tabatabai's slate has the potential to:
Curtail DATATRAK's recent history of success and may place the company back into severe financial distress;
Inhibit important partner and customer relationships
Result in potential gridlock on the Board, which will not advance the pursuit of the Company's strategic objectives.
Don't be fooled, this is not change but rather may create potential chaos.
Do not sign or return any BLUE proxy card sent to you by Arosa/Tabatabai. Simply discard it.
If you have any questions or need assistance in voting your WHITE PROXY CARD, please contact Morrow & Co., our proxy solicitor, toll-free at 800-662-5200, or via E-mail at DTRK@morrowco.com.
DATATRAK is a worldwide technology and consulting Company delivering digital clinical solutions and related services for the clinical trials industry. The Company delivers a portfolio of software solutions through the unified dClinical™ platform, safely accelerating clinical research, from Concept to Cure®.
About DATATRAK
DATATRAK International is a worldwide technology and services Company delivering Unified dClinical™ solutions and related services for the clinical trials industry. DATATRAK built its multi-component,
comprehensive solution on a single, unified platform and expanded this concept to include services delivery via DATATRAK's Clinical and Consulting Services group. The Company delivers a complete portfolio of software products designed to accelerate the reporting of clinical research data from sites to sponsors and ultimately regulatory authorities, faster and more efficiently than loosely integrated technologies. The DATATRAK ONE® software solution, deployed worldwide through an ASP or Enterprise Transfer offering, supports Phase I – Phase IV drug and device studies in multiple languages throughout the world. DATATRAK has offices located in Chicago, IL; Cary Research Triangle Park (RTP), North Carolina; Bryan, Texas; and Cleveland, Ohio. For more information, visit http://www.datatrak.com .
Except for the historical information contained in this press release, the statements made in this release are forward-looking statements. These forward-looking statements are made based on management's expectations, assumptions, estimates and current beliefs concerning the operations, future results and prospects of the Company and are subject to uncertainties and factors which are difficult to predict and, in many instances, are beyond the control of the Company, and which could cause actual results to differ materially from those contemplated in these forward-looking statements. For a list of certain factors that may cause actual results to differ materially from those contemplated in these forward looking statements, please see the Company's report filed with the OTCQX Market on March 13, 2015 announcing its results for the full year period ended December 31, 2014. The Company undertakes no obligation to update publicly or revise any forward-looking statement whether as a result of new information, future events or otherwise.
