Handleman Company Shareholder Expresses Need for Board to Hold Management Accountable for Failed Five-Year Plan and Continuing Lethargy

Handleman Company Shareholder Expresses Need for Board to Hold Management Accountable for Failed Five-Year Plan and Continuing Lethargy

BIRMINGHAM, Mich., Aug. 23 /PRNewswire/ -- Philip Handleman, a shareholder of the consumer products distributor Handleman Company and a descendant of the family that founded it, expressed the need for the Company's Board of Directors to hold management accountable for the ongoing lackluster performance including the latest strategic plan that ended in failure.

Mr. Handleman stated, "In 2000, the Company's CEO, Stephen Strome, publicly announced his five-year 'strategic growth plan' in which the main goal was to achieve annual revenue of $2 billion by fiscal 2005. Now that the 2005 fiscal year is over and the results can be tallied, it is clear that the CEO did not even come close to meeting his plan's primary objective. In fact, annual revenue hardly budged, inching from $1.137 billion to $1.260 billion in the five years. The $740 million variance between the goal and the reality is so gaping that the plan's outcome can only be described as a total flop. Moreover, net income actually declined over the same period. Disturbingly, the CEO's message to shareholders in the Company's recently released annual report made no reference whatever to this five-year plan as if ignoring it would somehow excuse its failure."

Mr. Handleman also stated, "This latest performance shortfall is another disappointment in a long string of failed plans and initiatives. Since Mr. Strome became the CEO approximately 15 years ago, the Company's net income is down, dividend payout is down, and share price is down. During the last several years, the CEO has opted to promote massive share repurchase programs as an ostensible method to return value to investors. However, the per-share price in recent days has been far below the level of even 15 years ago and the aggregate market value has shrunk by more than $400 million or about 60 percent during the same period. Despite the costly share repurchase programs, the Company's shares have traded recently at a level equivalent to mere book value. These highly touted programs are not a growth strategy, but a maneuver that fails to address the basic problems underlying the Company's antiquated business model. Barring fundamental change, lethargy will persist, share repurchases or not. To reverse the malaise, the shareholders need a viable growth plan and a team that can deliver it."

Mr. Handleman concluded, "It is high time for the Board to hold management accountable rather than to continue to boost CEO compensation in ever inventive ways as the shareholders' fortunes continue to diminish. It is not the job of the Board to protect and reward the CEO when key metrics decline or when strategic plans turn into utter fiascos. Platitudes on governance and ethics that fill a corporate Web site and proxy statement to overflowing do not substitute for enlightened and effective stewardship. I expect and my fellow shareholders deserve the Company's Board members to fulfill their fiduciary duties by serving as the stalwart overseers of our interests."

Source: Handleman Filmworks

CONTACT: Philip Handleman of Handleman Filmworks, +1-248-642-5689

-------
Profile: intent