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GrafTech International Ltd. (NYSE:GTI) (“GrafTech”) today issued the following statement regarding a May 2, 2014 report by Institutional Shareholder Services (“ISS”) relating to the election of GrafTech’s seven highly-qualified and experienced nominees to its Board of Directors at the Company’s May 15, 2014 Annual Meeting of Stockholders.
ISS’s conclusion not to recommend the election of GrafTech’s seven highly qualified and experienced director nominees demonstrates a complete disregard for both the results of an independent investigation and for its own standards of ethical conduct and corporate governance. Moreover, it is clear that ISS does not fully grasp the long-term negative impact that the Milikowsky Group’s market-share focused commodity pricing strategy would have on GrafTech’s margins and how severely it could erode stockholder value.
ISS Shows Complete Disregard for Key Governance Issues
As an organization charged with the responsibility of advising its clients on issues regarding corporate governance and appropriate director conduct, we are appalled by ISS’s mischaracterization of the steps the GrafTech Board properly took to investigate leaks of proprietary information to a hedge fund and response to director misconduct, as well its misrepresentation of the Milikowsky Group’s proposed offer to submit to a review of that investigation.
Most notably, ISS incorrectly reported that, under the proposed offer, Nathan Milikowsky “would not take a board seat” until after such a review concluded that he did not violate his fiduciary duties. In fact, Nathan Milikowsky proposes that he be restored to the Board prior to the conduct of such a review.
Further, ISS failed to mention or consider that, under the proposed offer, Nathan Milikowsky could not be removed from the Board if—once again—he did not like or disagreed with the results of that review. In addition, ISS failed to mention or consider that the Milikowsky Group’s argument that the Company’s proposed structure for the review could take as long as two years is completely false and could actually be completed in three to six months—assuming that Nathan Milikowsky himself fully cooperates this time.