SAN DIEGO — A group that includes former Securities and Exchange Commission Chairman Roderick M. Hills, former U. S. Atty. General Elliot L. Richardson and San Diego Economic Development Corp. Chairman George W. Leisz has begun a proxy fight aimed at unseating five of San Diego-based Oak Industries' eight board members.
The dissident group, which calls itself the Committee to Improve Shareholder Value of Oak Industries Inc., will sponsor a board slate that would be "independent" of current Oak Chairman E. L. McNeely, according to a prepared release issued Tuesday by Hills.
Hills, nominated to Oak's board by McNeely in 1985, said it is "unfortunate that . . . my frustration with the direction of the company and its chairman has left me no alternative" but to challenge McNeely for control of the company. McNeely was out of town and unavailable for comment Tuesday.
Hills evidently is upset that Oak stock has continued to trade at about $1 for more than a year. The proxy fight was undertaken because "Oak keeps on raising cash and losing it through operations," according to a source associated with the dissident group. "For the first time in some time, Oak Industries shareholders will have a real choice, will have something to say" about the board's makeup. Oak's annual meeting is scheduled for June 6 in San Diego.
Oak, a high-flying media conglomerate that owned several television stations during the late 1970s, fell on hard times in the early 1980s, and reported $300 million in net losses between 1981 and 1987. McNeely, who was named chairman in 1985, has been trying to orchestrate a turnaround at the company, which now owns several electronics components companies.
Oak reported a $12.8-million profit on $197.8 million in revenue for the year ended Dec. 31. However, that profit was largely attributable not to operations but to $14.1 million in legal settlements, gains from the sale of property and the reversal of certain reserves.
Shareholder equity rose by 17% to $91.9 million at the end of 1988, up from $78.8 million at the end of 1987. McNeely said in a preparted statement in March that the company was "sustaining its continuing turnaround and (its) return to profitable operations.
Hills, now chairman of Manchester Group Ltd., an investment banking firm, recently was elected to the board of directors of Drexel Burnham Lambert.
The newly formed committee will introduce a board slate that will include Hills; Richardson; Leisz; Gilbert E. Matthews, a senior managing director of Bear, Stearns & Co. Inc., and Daniel W. Derbes, former executive vice president of Allied-Signal Inc. and former president of Allied-Signal International.
"I could have simply resigned from the board, but that would mean abandoning the shareholders at a critical juncture in Oak's history," Hills said in the prepared statement.