Daniel Loeb of Third Point LLP is known for writing, well, somewhat over-the-top letters to underperforming CEOs of firms in which he has an equity position. That said, his letter to Star Gas Partners CEO Irik Sevin is a classic of its rare kind. The anti-Sevin screed goes on for a couple of pages, while Loeb name-calls, hectors, criticizes, and generally tells Sevin to take a hike so that shareholders can finally make some money.
But the delight is in the details. There is the car issue:
…perhaps you can explain why the Company paid $41,153 for your professional fees in 2004 and why the Company is paying $9,328 for the personal use of company owned vehicles. We questioned Mr. Trauber about the nature of this expense, and I was frankly curious about what kind of luxury vehicle you were tooling around in (or is it chauffeured?). He told us that you drive a 12 year old vehicle. If that is so, then how is it possible that the company is spending so much money on the personal use of a vehicle that is 12 years old?
And the mom-on-the-board problem:
…how is it possible that you selected your elderly 78-year old mom to serve on the Company’s Board of Directors and as a full-time employee providing employee and unitholder services? We further wonder under what theory of corporate governance does one’s mom sit on a Company board. Should you be found derelict in the performance of your executive duties, as we believe is the case, we do not believe your mom is the right person to fire you from your job.
All of this leads, inexorably, to a somewhat unusual closing call for action:
It is time for you to step down from your role as CEO and director so that you can do what you do best: retreat to your waterfront mansion in the Hamptons where you can play tennis and hobnob with your fellow socialites. The matter of repairing the mess you have created should be left to professional management and those that have an economic stake in the outcome.