That is why we have nominated an outstanding group of professionals capable of reversing the mistakes of the past and of guiding the Company more thoughtfully in the future. If elected, stockholders will not need to fear another strategic diversion, or an ill-conceived acquisition, or an acquisition with improper diligence, or an acquisition in a country run by a despot, or wasted marketing expenditures, or bloating overhead costs, or violations of the Company's equity plans, or inefficient corporate financing transactions. Perhaps most importantly, stockholders will know that every new project – such as the development of the Marathon project in Canada – will be reviewed objectively without the incentive to cover-up prior diligence mistakes with rosy projections and the expenditure of significant additional dollars.
Board has finally decided it will attempt to defend a portion of its track record. In a recent presentation, it claims that if stockholders ignore two years of Mr.
's tenure, Mr.
has matched the PGM basket price with stock performance. (Meanwhile, of course, the Company gives our nominee,
, no credit for the significant price appreciation and even more substantial out-performance relative to the basket price during his entire CEO tenure at the Company.) But, you can claim anything with a stock chart when you get to cherry pick the starting and ending dates. We see no reason why Mr.
should get a two-year free pass on his performance.
The Company also now claims that it has an "exceptional cost containment record." Meanwhile, cash costs associated with mining PGMs have increased from
per ounce in 2011 to a projected
in 2013, an increase of 32% in just two years.  On the G&A side, the Board is quick to "adjust" away for purposes of its analysis more than 25% of the actual cash costs it incurs as being "inappropriate" for measuring the costs of the business; the Board ignores, for example, all of the ongoing operating costs it agreed to take on when it acquired Marathon and Peregrine. Even with the Board's adjustments, there is a 17% increase in G&A from 2010 to 2012 while production is up just 3%.
More telling are the things the Board does not even attempt to justify in its new 12-page presentation. The Board does not ever say that its selection of a convertible bond for financing in
was the right approach. How could it? A non-convertible, high-yield bond would have been less expensive to the Company if the Board believed the common stock price would appreciate at least 8.5% per year during the seven years after the financing.  In other words,
to justify the convert, the Board must have a dour view of the stock, the Board's ability to create value for stockholders and the Company's prospects
. No wonder the Board has not attempted to justify the financing. But make no mistake: we are bullish on the Company and our nominees are confident of their ability to create value for stockholders. We would not therefore have done a financing that works best if the stock stays flat or increases only modestly.
The words "Marathon" and "Peregrine" – the two value-destructive acquisitions the incumbent Board approved – are
not even mentioned in its 12-page slide deck
, which supposedly responds to our complaints. No comment from the Board on its decision to pay a 259% premium for Marathon PGM, an acquisition that was completed after faulty diligence, or on its decision to pay a 290% premium for Peregrine Metals, an acquisition the CEO says he regrets. In the last ten years,
there have only been four acquisitions by US public companies with an acquisition premium over 250%
. Our beloved Company,
Stillwater, did two of them
.  One could only justify such a premium if there were identified, significant cost savings in a combination; no such opportunity even exists here.
While it cannot justify betting against reasonable growth in the Company's stock or spending the stockholders' precious capital on two large ill-conceived acquisitions, the Board is willing to criticize us and attempt to throw up dust about our nominees. Their latest foray into this dishonorable territory is to disingenuously claim we have proposed various "inconsistent" things that do not amount to a "solid business plan." We encourage stockholders to read our presentation (available on
) and decide for themselves. We believe we have laid out a course forward for the Company that will lead to the creation of significant stockholder value by focusing on the
assets. We are objective and prepared to reevaluate openly the Company's past corporate finance, capital allocation and acquisition strategies, among other things. We recognize we cannot go down every possible path at once (and, of course, never suggested doing so), but we are committed to analyzing them all carefully.
The Board also demands that Dr. Engles, one of our seven nominees explain why he left the Stillwater CEO post more than 16 years ago. What I know is that Dr. Engles was the founding visionary for
, the stock price appreciated rapidly on his watch and that his integrity, intelligence, honesty and commitment to the Company have been vouched for by every person who knew him or worked with him at the Company with whom I have spoken, including many of the former senior officers. I also know that three months after Dr. Engles left the Company, stockholders successfully replaced three directors on the Board who had opposed his efforts to complete the expansion plan and begin early work on the East Boulder mine.
Stockholders should demand that the incumbent Board explain their track record – all of it – before it attempts to cast aspersions on others. While it is unlikely that the incumbent Board would again pay a 250% premium or bet against the growth in their stock with a convertible bond offering, how much confidence can we have that they will not make a similarly devastating mistake? We respectfully suggest that a Board that has not dispatched its responsibilities with distinction is unlikely to reform itself and do so in the future.