SOURCE: Echo Lake Capital

February 05, 2013 08:00 ET

Ephraim Fields of Echo Lake Capital Issues Letter to CEO of Edgewater Technology, Inc.

NEW YORK, NY--(Marketwire - Feb 5, 2013) -

  • Congratulates her on her 11 year anniversary as CEO
  • Stock declined by 27.4% since she was named CEO to the end of 2011
  • Stock underperformed S&P 500 by 59.2% during this period
  • CEO received approximately $5.5 million of compensation during this period

Mr. Ephraim Fields of Echo Lake Capital today announced he had issued the following letter to Ms. Shirley Singleton, the CEO of Edgewater Technology, Inc., which is traded on the Nasdaq Global Market Exchange.

February 5, 2013

Dear Ms. Singleton:

As another year has passed we wanted to congratulate you on retaining your job as Chairman and CEO of Edgewater Technology, Inc. (NASDAQ:EDGW). You have now been CEO for over 11 years which is a remarkable accomplishment considering how poorly the company has performed under your leadership.

In our previous letter dated November 19, 2012, we illustrated how from 2007 to 2011 you received significant compensation during a period when EDGW's stock price performance was, in a word, pathetic, with EDGW's stock declining by 54.8% and significantly underperforming its peers. 

Perhaps going back only five years was not long enough to properly assess your performance. So, to be fair, we decided to also examine your compensation and EDGW's stock performance since you became CEO in January 2002.

The below table illustrates EDGW's stock price performance from the day before you were named CEO to the end of 2011 (the last date for which your compensation has been disclosed).

   
Total Return: 1/8/2002 - 12/31/2011
  EDGW -27.4%
  S&P 500 31.8%
   
EDGW Over/(Under)Performance: -59.2%
   

Unfortunately for EDGW shareholders, during this ten year period EDGW's stock price materially underperformed on both an absolute and relative basis, just as it did during the five year period. During the ten year period, EDGW's stock price declined by 27.4% while the S&P 500 appreciated 31.8%, implying a 59.2% underperformance.

It is even more infuriating that, while EDGW's shareholders suffered during this ten year period, you were fortunate to have been granted by the Board of Directors total compensation of approximately $5.5 million. We consider this compensation excessive and wonder how any reasonable person can justify such compensation considering your poor performance. 

Rarely do we see an executive perform so poorly over such an extended period of time and still get paid so generously. For the record, we believe you have been performing your job poorly not just because of the terrible long-term performance of EDGW's stock price but also because of the overwhelmingly negative feedback we have received about you from former EDGW employees and industry participants.

Our letter today only highlights the excessive compensation you have received over the past 10 years, but obviously we can, and if necessary will, also highlight the excessive compensation that other members of EDGW's senior management have received. We also remind EDGW's longstanding outside Board Directors that they too may be subject to closer scrutiny as they have been highly compensated and in our opinion, have failed, on many accounts, to act in the best interest of shareholders

You and the Board of Directors have clearly failed to create value for your shareholders. While you have successfully managed to personally enrich yourself, you have done so on the back of your long-suffering shareholders. It is apparent to us, other EDGW shareholders and other industry participants that there are ways for you to easily create significant value for shareholders. Unfortunately, you refuse to implement these initiatives. Furthermore, you continue to embark on strategies that for the past ten years have clearly failed. How much longer of a track record do you need before you are convinced of your misguided ways

Sincerely,

Ephraim Fields

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