Release Date: August 23, 2004
New York, NY Amalgamated Bank is urging shareholders of Orthodontic Centers of America (NYSE: OCA) to vote in favor of its proposal on board independence at this week's special shareholder meeting. Filed by the bank's LongView SmallCap 600 Index Fund, the measure asks the OCA board to adopt a policy of nominating independent director candidates who, if elected by the shareholders, would constitute two-thirds of the board.
The 10-member OCA board currently includes two employees of the company and three directors who have other business ties to the company. LongView's shareholder resolution proposes a standard of two-thirds independence as recommended by the Council of Institutional Investors (CII), an organization of pension funds representing over $3 trillion in assets.
"The job of the board is to provide independent oversight on behalf of shareholders," said Chief Economist Melissa Moye of Amalgamated's Trust & Investment Group. "OCA's persistent poor performance indicates a need to provide a fresh perspective from the boardroom."
For 2003, the company showed one-year declines in fee revenue (-15%), operating income
(-18%), and net income (-16%). Long-term performance has also lagged, with the market value of $10,000 invested in OCA five years ago at $5,736.
In addition to weak performance, the company has faced criticism over its accounting practices. The 2003 external auditor's report to the board's audit committee indicated a "material weakness in internal controls." Though OCA has pledged to change its reporting practices in critical areas, the audit committee responded to the auditor's report by dismissing its auditor, Ernst & Young, LLP, in April 2004.
"Unfortunately for long-term holders of OCA stock, the committee's responseto dismiss the messengerhas not inspired investor confidence," observed Cornish Hitchcock, counsel for Amalgamated Bank.
Also this year, OCA neglected to include Amalgamated Bank's proposal in its proxy statement for the company's annual shareholder meeting, though SEC rules do not permit this unilateral action. "This is the first company we have encountered to simply ignore our shareholder proposal," observed Hitchcock.
The LongView Funds currently hold over 21,000 shares of Orthodontic Centers of America common stock. The special shareholder meeting will be held Thursday morning in Metairie, Louisiana.
Founded in 1923, Amalgamated Bank invests workers' retirement savings through its LongView Funds. With $9 billion in assets under management, LongView works to enhance shareholder value through corporate governance reforms at portfolio companies. Amalgamated Bank is available online at www.amalgamatedonline.com.
