From: Gary Lutin
To: Distribution: Lone Star Forum
Sent: Thursday, July 05, 2001 9:11 AM
Subject: Issues to be addressed
In response to my June 29th letter inviting
both candidates to participate in the Lone Star Forum, the challenger Guy
W. Adams offered to provide any information requested to help shareholders
decide how to vote and, if elected, to participate fully in the Forum
program. I've received no reply from the management candidate, company
CEO Jamie B. Coulter. Management has refused to respond to repeated
information requests, and the company's lawyer withdrew from the
communications he invited after I responded to his information requests.
Whichever candidate wins the vote at
tomorrow's meeting, the Forum's programs should be developed to monitor
the performance of Lone Star's board during the next year. These may
include analyst workshops, shareholder surveys, open meetings, expert
panels, management interviews or other activities to focus on issues
relating to the achievement of potential value enhancement
opportunities in excess of $18 per share:
- Strategic alternatives: define and
evaluate alternatives suggested by management or others, determine levels
of shareholder support for proposals.
- Investor information: assure director
responsibility for provision of reliable information required by
investors, correction of any misleading information.
- Voting rights:
encourage board definition of policies for fair and open presentation of
alternatives to be considered by shareholders, with equal treatment of
legitimate costs (either borne by all candidates, themselves, and by
volunteer contributors, or all candidates and volunteers reimbursed
equally by company so that indirectly borne by all shareholders, ratably).
- Takeover defenses:
determine requirements for deterrence of exploitive raids,
without discouraging legitimate strategic initiatives or depriving
shareholders of property rights.
provide executives with appropriate incentives for competitively superior
management of shareholders' assets.
The Forum will use this case to examine the
responsibilities of directors as well as shareholders, themselves, to
protect essential investor rights. We'll have the opportunity to see what
works and what doesn't work in the interactions among management-aligned
directors, a professional investor who decided to nominate himself for the
board, a couple of activist institutional investors, a few dozen
professional investors with positions in Lone Star stock, and the Forum's
representatives or other participants.
Any suggestions and comments will of course be
appreciated, now and as the Forum evolves during the next year.
GL - 7/5/01