Vinod Gupta, CEO of infoUSA Inc., has issued a statement in response to what he said were continued attacks on the company by hedge fund Dolphin Limited Partnership and its principal Donald Netter.
Dolphin Limited Partnership and Dolphin Financial Partners, which together own 2 million shares or 3.6 percent of infoUSA, published a statement May 29 that said Institutional Shareholder Services, a proxy advisory service, has recommended that shareholders withhold on all infoUSA management nominees, vote against the 2007 Omnibus Incentive Plan and support the Shareholder Bill of Rights. Earlier this month, Dolphin sent a letter to all shareholders asking them to do the same.
“Dolphin is an opportunistic hedge fund that typifies what’s wrong with Wall Street these days,” Mr. Gupta said in his statement, also dated May 29. “Claiming to be crusading for the interests of investors, waving the banner of ‘corporate governance,’ Dolphin looks to make a quick buck. It is no wonder ordinary investors are cynical about hedge funds, with their greenmail tactics and efforts to trade on inside information.
“Certainly it is disconcerting to receive communications from Dolphin claiming to know what is best for the future of infoUSA,” the statement said. “Then to be confronted with the reality that, according to Thompson Financial in the first quarter of this year, Dolphin reduced its holdings in infoUSA by 185,301 shares. Mr. Netter is talking out of both sides of his mouth.”
Stamford, CT-based Dolphin last year pushed for plans to possibly sell Omaha, NE-based infoUSA and unsuccessfully tried to unseat board members with a dissident slate. InfoUSA and the hedge fund mounted a bitter proxy battle.
“For two consecutive years, ISS has fully supported Dolphin’s positions after meeting independently with both management and Dolphin,” Dolphin said in its May 29 statement. “In last year’s election, Dolphin received a clear mandate of unaffiliated shareholders with over 90 percent of these votes. It is as clear as ever that Mr. Vinod Gupta and the infoUSA board still require ‘an injection of objectivity, accountability and fairness towards all shareholders.’
“If the CEO and the board have been unable to generate a meaningful return for shareholders in 10 years, then it appears that we either need a new CEO or an alternative strategic process that will maximize value for all shareholders,” the statement said.
Dolphin continued: “Given the overwhelming factual evidence concerning Mr. Vinod Gupta’s and the board’s disregard for unaffiliated shareholders, it appears that the logical imperative for all unaffiliated infoUSA shareholders is to withhold votes from all of management’s nominees, vote against the 2007 Omnibus Incentive plan and support the infoUSA Shareholder Bill of Rights.”
Mr. Gupta in his defense thought Mr. Netter’s attacks were unwarranted.
“It is ironic that Mr. Netter should direct his attacks at me – the true ‘loyal shareholder.’ I am the founder of the company and my financial fate, and that of my family, quite literally depends on the company’s success,” Mr. Gupta said in the letter.
“InfoUSA shares are not some small piece of a million-dollar fund that I manage,” he said. “Unlike Mr. Netter, I am not a quick-buck artist who can profit from damaging the reputation of the company. The only way I can succeed is by truly enhancing the value of the company over the long term. It seems to me easy to tell who really has the interests of all shareholders at heart.”
The infoUSA annual meeting of shareholders will take place June 7.