sec document
UNITED STATES
SECURTIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant / /
Filed by a Party other than the Registrant //
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Under Rule 14a-12
A. SCHULMAN, INC.
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(Name of Registrant as Specified in Its Charter)
STARBOARD VALUE AND OPPORTUNITY MASTER FUND LTD.
STARBOARD VALUE & OPPORTUNITY FUND, LLC
RCG ENTERPRISE, LTD
PARCHE, LLC
RCG STARBOARD ADVISORS, LLC
RAMIUS CAPITAL GROUP, L.L.C.
C4S & CO., L.L.C.
PETER A. COHEN
MORGAN B. STARK
JEFFREY M. SOLOMON
THOMAS W. STRAUSS
MARK R. MITCHELL
MICHAEL CAPORALE, JR.
LEE MEYER
YEVGENY V. RUZHITSKY
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(Name of Persons(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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/ / Fee paid previously with preliminary materials.
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/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
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PERSONS WHO ARE TO RESPOND TO THE COLLECTION OF INFORMATION CONTAINED
IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A
CURRENTLY VALID OMB CONTROL NUMBER.
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PRELIMINARY COPY SUBJECT TO COMPLETION
DATED NOVEMBER 8, 2007
STARBOARD VALUE AND OPPORTUNITY MASTER FUND LTD.
______________, 2007
Dear Fellow Stockholder:
Starboard Value and Opportunity Master Fund Ltd. ("Starboard") and the
other participants in this solicitation (collectively, the "Ramius Group") are
the beneficial owners of an aggregate of 2,062,795 shares of common stock of A.
Schulman, Inc. (the "Company"), representing approximately 7.4% of the
outstanding shares of common stock of the Company. For the reasons set forth in
the attached Proxy Statement, the Ramius Group believes that the Board of
Directors of the Company is not acting in the best interest of its stockholders.
The Ramius Group is therefore seeking your support at the annual meeting of
stockholders scheduled to be held at _____________ located at _____________,
_______, _______, ________, on ___________ __, 2007 at _______ _.m.,
___________, for the following:
1. To elect Starboard's slate of four nominees to the Board of Directors
to serve as Class III directors for a three-year term expiring in 2010;
2. To adopt a resolution previously submitted by Starboard Value &
Opportunity Fund, LLC, an affiliate of Starboard, for inclusion in the
Company's proxy statement recommending that the Board of Directors
immediately set up a special committee consisting solely of independent
directors that would engage the services of a nationally recognized
investment banking firm to evaluate alternatives that would maximize
stockholder value, including, but not limited to, a sale of the North
American business, a merger or an outright sale of the Company; and
3. To ratify the selection of PricewaterhouseCoopers LLP as the Company's
independent registered public accountant for the fiscal year ending
August 31, 2008.
The Ramius Group urges you to carefully consider the information contained
in the attached Proxy Statement and then support its efforts by signing, dating
and returning the enclosed GOLD proxy card today. The attached Proxy Statement
and the enclosed GOLD proxy card are first being furnished to the stockholders
on or about [___________ __], 2007.
If you have already voted for the incumbent management slate, you have
every right to change your vote by signing, dating and returning a later dated
proxy.
If you have any questions or require any assistance with your vote, please
contact Innisfree M&A Incorporated, which is assisting us, at their address and
toll-free numbers listed on the following page.
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Thank you for your support.
Mark R. Mitchell
Starboard Value and Opportunity Master
Fund Ltd.
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IF YOU HAVE ANY QUESTIONS, REQUIRE ASSISTANCE IN VOTING YOUR GOLD PROXY CARD,
OR NEED ADDITIONAL COPIES OF STARBOARD'S PROXY MATERIALS, PLEASE CALL
INNISFREE M&A INCORPORATED AT THE PHONE NUMBERS LISTED BELOW.
--------------------------------------------------------------------------------
INNISFREE M&A INCORPORATED
501 MADISON AVENUE, 20TH FLOOR
NEW YORK, NY 10022
STOCKHOLDERS CALL TOLL-FREE AT: (888) 750-5834
BANKS AND BROKERS CALL COLLECT AT: (212) 750-5833
2007 ANNUAL MEETING OF STOCKHOLDERS
OF
A. SCHULMAN, INC.
-------------------------
PROXY STATEMENT
OF
STARBOARD VALUE AND OPPORTUNITY MASTER FUND LTD.
-------------------------
PLEASE SIGN, DATE AND MAIL THE ENCLOSED GOLD PROXY CARD TODAY
Starboard Value and Opportunity Master Fund Ltd., a Cayman Islands
exempted company ("Starboard"), Starboard Value & Opportunity Fund, LLC, a
Delaware limited liability company ("Starboard Value"), Parche, LLC, a Delaware
limited liability company ("Parche"), RCG Enterprise, Ltd, a Cayman Islands
exempted company ("RCG Enterprise"), RCG Starboard Advisors, LLC, a Delaware
limited liability company ("RCG Starboard Advisors"), Ramius Capital Group,
L.L.C., a Delaware limited liability company ("Ramius Capital"), C4S & Co.,
L.L.C., a Delaware limited liability company ("C4S"), Peter A. Cohen ("Mr.
Cohen"), Morgan B. Stark ("Mr. Stark"), Thomas W. Strauss ("Mr. Strauss"),
Jeffrey M. Solomon ("Mr. Solomon"), Mark Mitchell ("Mr. Mitchell"), Michael
Caporale, Jr. ("Mr. Caporale Jr.") and Lee Meyer ("Mr. Meyer") (collectively,
the "Ramius Group") are significant stockholders of A. Schulman, Inc., a
Delaware corporation ("Schulman" or the "Company"). The members of the Ramius
Group, as well as Yevgeny V. Ruzhitsky ("Mr. Ruzhitsky"), are participants in
this solicitation. The Ramius Group believes that the Board of Directors of the
Company (the "Board") is not acting in the best interest of its stockholders.
The Ramius Group is therefore seeking your support at the annual meeting of
stockholders scheduled to be held at ___________ located at _____________,
_______, _______, ________, on __________ __, 2007 at _______ _.m., ___________,
including any adjournments or postponements thereof and any meeting which may be
called in lieu thereof (the "Annual Meeting"), for the following:
1. To elect Starboard's slate of four nominees to the Board to serve as
Class III directors for a three-year term expiring in 2010 (the "Ramius
Nominees");
2. To adopt a resolution previously submitted by Starboard Value for
inclusion in the Company's proxy statement recommending that the Board
of Directors immediately set up a special committee consisting solely
of independent directors that would engage the services of a nationally
recognized investment banking firm to evaluate alternatives that would
maximize stockholder value, including, but not limited to, a sale of
the North American business, a merger or an outright sale of the
Company (the "Ramius Proposal"); and
3. To ratify the selection of PricewaterhouseCoopers LLP as the Company's
independent registered public accountant for the fiscal year ending
August 31, 2008.
As of ________ __, 2007, the approximate date on which this Proxy
Statement is being mailed to stockholders, the members of the Ramius Group were
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the beneficial owners of an aggregate of 2,062,795 shares of common stock of the
Company, par value $1.00 per share (the "Shares"), which currently represent
approximately 7.4% of the issued and outstanding Shares, all of which are
entitled to be voted at the Annual Meeting.
Schulman has set the record date for determining stockholders entitled to
notice of and to vote at the Annual Meeting as [___________], 2007 (the "Record
Date"). The mailing address of the principal executive offices of Schulman is
3550 West Market Street, Akron, Ohio 44333. Stockholders of record at the close
of business on the Record Date will be entitled to vote at the Annual Meeting.
According to Schulman, as of the Record Date, there were [_______] Shares
outstanding and entitled to vote at the Annual Meeting. The participants in this
solicitation intend to vote all of their Shares FOR the election of the Ramius
Nominees and FOR the Ramius Proposal.
THIS SOLICITATION IS BEING MADE BY THE RAMIUS GROUP AND NOT ON BEHALF OF THE
BOARD OF DIRECTORS OR MANAGEMENT OF THE COMPANY. THE RAMIUS GROUP IS NOT AWARE
OF ANY OTHER MATTERS TO BE BROUGHT BEFORE THE ANNUAL MEETING. SHOULD OTHER
MATTERS, WHICH THE RAMIUS GROUP IS NOT AWARE OF A REASONABLE TIME BEFORE THIS
SOLICITATION, BE BROUGHT BEFORE THE ANNUAL MEETING, THE PERSONS NAMED AS PROXIES
IN THE ENCLOSED GOLD PROXY CARD WILL VOTE ON SUCH MATTERS IN THEIR DISCRETION.
THE RAMIUS GROUP URGES YOU TO SIGN, DATE AND RETURN THE GOLD PROXY CARD IN FAVOR
OF THE ELECTION OF THE RAMIUS NOMINEES AND THE RAMIUS PROPOSAL.
IF YOU HAVE ALREADY SENT A PROXY CARD FURNISHED BY SCHULMAN MANAGEMENT TO
SCHULMAN, YOU MAY REVOKE THAT PROXY AND VOTE FOR THE ELECTION OF THE RAMIUS
NOMINEES AND FOR THE RAMIUS PROPOSAL BY SIGNING, DATING AND RETURNING THE
ENCLOSED GOLD PROXY CARD. THE LATEST DATED PROXY IS THE ONLY ONE THAT COUNTS.
ANY PROXY MAY BE REVOKED AT ANY TIME PRIOR TO THE ANNUAL MEETING BY DELIVERING A
WRITTEN NOTICE OF REVOCATION OR A LATER DATED PROXY FOR THE ANNUAL MEETING TO
THE RAMIUS GROUP, C/O INNISFREE M&A INCORPORATED WHICH IS ASSISTING IN THIS
SOLICITATION, OR TO THE SECRETARY OF SCHULMAN, OR BY VOTING IN PERSON AT THE
ANNUAL MEETING.
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IMPORTANT
YOUR VOTE IS IMPORTANT, NO MATTER HOW FEW SHARES YOU OWN. THE RAMIUS GROUP
URGES YOU TO SIGN, DATE AND RETURN THE ENCLOSED GOLD PROXY CARD TODAY TO VOTE
FOR THE ELECTION OF THE RAMIUS NOMINEES AND FOR THE RAMIUS PROPOSAL.
o If your Shares are registered in your own name, please sign and date
the enclosed GOLD proxy card and return it to the Ramius Group, c/o
Innisfree M&A Incorporated, in the enclosed envelope today.
o If your Shares are held in a brokerage account or bank, you are
considered the beneficial owner of the Shares, and these proxy
materials, together with a GOLD voting form, are being forwarded to
you by your broker or bank. As a beneficial owner, you must instruct
your broker, trustee or other representative how to vote. Your
broker cannot vote your Shares on your behalf without your
instructions.
o Depending upon your broker or custodian, you may be able to vote
either by toll-free telephone or by the Internet. Please refer to
the enclosed voting form for instructions on how to vote
electronically. You may also vote by signing, dating and returning
the enclosed voting form.
Since only your latest dated proxy card will count, we urge you not to
return any proxy card you receive from the Company. Even if you return the
management proxy card marked "withhold" as a protest against the incumbent
directors, it will revoke any proxy card you may have previously sent to the
Ramius Group. Remember, you can vote for our four nominees only on our GOLD
proxy card. So please make certain that the latest dated proxy card you return
is the GOLD proxy card.
If you have any questions regarding your proxy,
or need assistance in voting your Shares, please call:
INNISFREE M&A INCORPORATED
501 MADISON AVENUE, 20TH FLOOR
NEW YORK, NY 10022
STOCKHOLDERS CALL TOLL-FREE AT: (888) 750-5834
BANKS AND BROKERS CALL COLLECT AT: (212) 750-5833
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REASONS FOR THE SOLICITATION
The Ramius Group believes that the intrinsic value of the Company's assets
is not reflected in the current market price. In our opinion, the Company's
stock is undervalued due to continued disappointing operating performance, which
is a direct result of a misguided growth strategy, lack of management execution
and poor capital allocation decisions.
Given the precipitous decline in operating performance and continued
losses in the North American segment, we believe that a sale of the Company is
the best way to maximize stockholder value. Therefore, we believe the Company
should immediately hire a nationally recognized investment bank to explore
strategic alternatives as part of a public process, including evaluating whether
to split the Company and sell the European and North American segments
separately, or alternatively to sell the entire Company.
THE COMPANY'S POOR OPERATING RESULTS INDICATE THAT MANAGEMENT'S BUSINESS
STRATEGY IS NOT EFFECTIVE.
Our analysis of Schulman's ten-year operating results (summarized in the
table below) shows a steady deterioration of gross and operating margins in both
the European and the North American segments. We view the continued losses in
the North American segment as particularly troubling.
Fiscal Year ending 10-YEAR
August 31 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 CAGR
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
NORTH AMERICA
Revenue $446.8 $421.2 $424.1 $438.5 $395.5 $387.9 $393.6 $410.2 $439.4 $ 493.6 $ 477.1 0.7%
% Growth (5.7%) 0.7% 3.4% (9.8%) (1.9%) 1.5% 4.2% 7.1% 12.3% (3.4%)
Gross Profit 56.4 65.4 68.0 61.0 41.9 54.2 36.4 43.9 46.3 56.1 41.8 (3.0%)
% Gross Margin 12.6% 15.5% 16.0% 13.9% 10.6% 14.0% 9.3% 10.7% 10.5% 11.4% 8.8%
---------------------------------------------------------------
Operating Income 18.1 20.8 17.1 14.4 (7.3) 2.6 (18.8) (7.5) (11.0) (9.1) (19.1) NM
---------------------------------------------------------------
% Operating Margin 4.0% 4.9% 4.0% 3.3% (1.8%) 0.7% (4.8%) (1.8%) (2.5%) (1.8%) (4.0%)
EUROPE
Revenue $549.5 $572.2 $561.5 $594.0 $579.8 $578.7 $706.8 $828.9 $993.8 $1,122.7 $1,310.0 9.1%
% Growth 4.1% (1.9%) 5.8% (2.4%) (0.2%) 22.1% 17.3% 19.9% 13.0% 16.7%
Gross Profit 106.6 104.2 112.6 106.1 91.4 106.2 123.9 139.6 146.4 163.8 171.1 4.8%
% Gross Margin 19.4% 18.2% 20.1% 17.9% 15.8% 18.3% 17.5% 16.8% 14.7% 14.6% 13.1%
Operating Income 66.6 64.6 62.7 58.3 46.2 58.5 65.9 67.0 62.8 79.1 73.3 1.0%
-------------------------------------------------------
% Operating Margin 12.1% 11.3% 11.2% 9.8% 8.0% 10.1% 9.3% 8.1% 6.3% 7.0% 5.6%
-------------------------------------------------------
Source: Public company filings.
OVER THE LAST TEN YEARS, THE OPERATING MARGINS OF SCHULMAN'S EUROPEAN AND
NORTH AMERICAN SEGMENTS HAVE DECLINED BY APPROXIMATELY 650 AND
800 BASIS POINTS, RESPECTIVELY.
Since fiscal year 1997, the operating margin of the European segment has
declined by approximately 650 basis points, from 12.1% to 5.6%. During this same
period, the operating margin of the North American segment has declined
approximately 800 basis points, to negative 4.0% from positive 4.0%, and has
declined approximately 890 basis points from the high of 4.9% reached in fiscal
year 1998.
MANAGEMENT HAS REPEATEDLY FAILED TO EXECUTE ON ITS RESTRUCTURING OF THE NORTH
AMERICAN SEGMENT.
Notwithstanding the latest restructuring effort and despite recording
restructuring charges in four out of the last five fiscal years, the North
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American segment remains unprofitable. Excluding the one-time $1.5 million
Katrina insurance settlement benefit, the North American segment's reported
operating loss in the fourth quarter of fiscal year 2007 was $1.7 million,
showing little improvement over the $2.2 million operating loss reported in the
fourth quarter of fiscal year 2006. That is five straight years of net operating
losses in North America, totaling $65.5 million.
WE BELIEVE SCHULMAN'S POOR OPERATING PERFORMANCE IS LARGELY ATTRIBUTABLE TO A
MISGUIDED GROWTH STRATEGY, LACK OF MANAGEMENT EXECUTION AND POOR CAPITAL
ALLOCATION DECISIONS.
Industry consolidation has negatively impacted the pricing and purchasing
power of compounders like Schulman. We believe that focusing on value-added,
specialized products and proactively streamlining cost structure with the goal
of becoming a low-cost producer can be effective strategies for compounders like
Schulman to combat mounting margin pressures. In our opinion, Schulman's strong
revenue growth and lack of corresponding growth in operating income clearly
indicate that management chose to focus on revenue growth at the expense of
profitability.
($ In Millions)
------------------------------------------------------------------------------------------------------------------------------------
Fiscal Year ending 10-Year
August 31 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 CAGR
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Revenue $996.4 $993.4 $985.6 $1,032.5 $975.2 $966.6 $1,100.5 $1,239.1 $1,433.2 $1,616.4 $1,787.1 6.0%
% Growth (0.3%) (0.8%) 4.8% (5.5%) (0.9%) 13.8% 12.6% 15.7% 12.8% 10.6%
Operating Income 84.7 85.4 79.8 72.8 38.9 61.1 47.0 59.6 51.8 70.1 54.1 (4.4%)
% Operating Margin 8.5% 8.6% 8.1% 7.0% 4.0% 6.3% 4.3% 4.8% 3.6% 4.3% 3.0%
Source: Company public filings and Ramius Group estimates.
MANAGEMENT HAS REPEATEDLY FAILED TO PROACTIVELY RATIONALIZE MANUFACTURING
CAPACITY AND REDUCE OPERATING EXPENSES.
Despite reducing operating capacity by 42% through numerous restructuring
efforts, North America has remained unprofitable for five straight years, and
six of the last seven years. In our opinion, North America's poor operating
performance highlights management's inability to accurately forecast expected
customer demand and illustrates management's failure to proactively rationalize
capacity and reduce operating expenses in light of changing industry dynamics.
MANAGEMENT MISSED ITS FISCAL YEAR 2007 NET INCOME GUIDANCE BY 30.9%.
On the fourth quarter 2007 earnings call, Schulman's CEO, Terry Haines,
said, "But in the full year, we fully expect, however, to report growth on our
income, on a year-over-year basis on 2007, compared to our past 2006 fiscal
year."(1) Schulman's reported fiscal year 2006 net income was $32.7 million.
Although Schulman reported disappointing first quarter earnings per share
("EPS") of $0.09 and missed the first call consensus EPS estimate by $0.24(2),
on the first quarter earnings call Schulman's CFO, Paul Desantis, reaffirmed the
--------------------
(1) Source: Thomson StreetEvents.
(2) Source: Thomson ONE.
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Company's guidance, stating, "Despite the unfavorable quarter, we're seeing
significant favorability from the euro and we expect that fiscal '07 net income
will meet or exceed fiscal '06 net income of $32.7 million."(1)
After reporting second quarter EPS of $0.06 and missing the consensus
estimate yet again, this time by $0.10(2), on the second quarter earnings call
Paul Desantis lowered guidance, stating, "As a result, we are now expecting net
income to be between 25 and 30 million, lower than our initial guidance of 32.7
million." (1)
Finally, prior to reporting the third quarter results, the Company issued
a press release on June 12, 2007, lowering guidance yet again. In the press
release, the Company stated "A. Schulman, Inc. (Nasdaq: SHLM) announced today
that net income for the fiscal year ending August 31, 2007 is now expected to be
in the range of $17-$23 million. This is below prior guidance that fiscal 2007
net income would fall in the range of $25-$30 million."
For the year, Schulman reported net income of $22.6 million, 30.9% lower
than the guidance of at least $32.7 million given at the start of the year. The
frequency and magnitude of the earnings misses clearly illustrates, we believe,
that management has not been able to accurately forecast the business. We were
surprised to see the Company put a positive `spin' on its fiscal 2007 earnings
by stating that $22.6 million was "at the high end of our range of $17-23
million" in an investor presentation filed with the SEC on November 1, 2007.
WE QUESTION WHETHER MANAGEMENT AND THE BOARD KNOW THE RIGHT STEPS TO TAKE TO
FIX THE NORTH AMERICAN SEGMENT.
Having repeatedly failed at returning the North American segment to
profitability through capacity and other cost reductions, we are puzzled by the
Board's recent decision to spend $24 million to now significantly expand
capacity. In our opinion, not only is the capacity expansion strategy inherently
more risky, but this management team has also proven that it cannot deliver
profits on the larger manufacturing capacity base.
WHILE MANAGEMENT SEEMS SATISFIED WITH RESULTS, WE ARE NOT.
On the fourth quarter 2007 earnings call Schulman's CEO, Terry Haines, seemed
encouraged by results:
"...But in general I would say that WE WERE PLEASED WITH THE FOURTH
QUARTER RESULTS. It was a pretty decent finish to what was a very, very
difficult fiscal year, starting out with very weak demand and margins and
issues that throughout the year that we made sequential improvement in
performance quarter-to-quarter for the year as we moved through it. So it
was a decent close, somewhat what we expected. OUR EUROPEAN BUSINESS WAS
RELATIVELY STRONG IN THE FOURTH QUARTER. Typically stronger maybe in
volume than we've seen in past years. We certainly have a concern on
whether the markets in Europe are going to remain at levels we see today,
but in general WE'RE PRETTY PLEASED WITH THE OVERALL PERFORMANCE FOR
EUROPE and hoping that that demand continues through our new fiscal year.
--------------
(1) Source: Thomson StreetEvents.
(2) Source: Thomson ONE.
-7-
In North America, of corse, we're seeing the weak demand in automotive and
construction. Manufacturing in general is at a weak level, BUT WE HAD GOOD
PERFORMANCE NUMBERS, I THINK, IN NORTH AMERICA because of the programs we put
in for cost cutting and going to have to do some detail to that as we move
through our report here." (1) (emphasis added)
Why are declining margins in Europe and continued losses in North America
viewed positively by management?
WE BELIEVE THAT SCHULMAN'S POOR OPERATING PERFORMANCE IS NOT AN INDUSTRY-WIDE
PROBLEM.
In the last decade, Schulman's three public company peers, ICO Corporation,
PolyOne Corporation and Spartech Corporation have grown net income at a compounded
annual growth rate (CAGR) of approximately 12.3%, 6.5% and 3.4%, respectively.(3),
(4) By way of comparison, Schulman's ten-year net income compounded annual growth
rate is negative 7.6%.
In North America, ICO's Bayshore Industrial segment, Spartech's Color and
Specialty Compound segment and PolyOne's All Other segment are all profitable, with
last twelve month (LTM) operating margins of 16.1%, 6.1% and 1.6%, respectively,
while Schulman's North American business is grossly underperforming, reporting a
loss of $19.1 million, which translates to an operating margin of negative 4.0%(5).
WHILE BOTH MANAGEMENT AND THE BOARD HAVE HIGH EXPECTATIONS FOR THE SUCCESS OF THE
INVISION PRODUCT, WE ARE NOT CONVINCED THAT THE POTENTIAL SUCCESS OF THIS PRODUCT
IS ADEQUATE JUSTIFICATION FOR THE COMPANY TO REMAIN A STAND-ALONE ENTITY.
Although Invision was launched with high hopes in 2005, Schulman has been
able to sign up only two customers to date. Even if management meets its sales
target of $10 million for the 2008 fiscal year, Invision would represent less than
0.6% of fiscal year 2007 sales and based on management projections would still
generate a $4.6 million loss. In our opinion, the market acceptance of Invision is
uncertain, and therefore we don't believe that the potential success of Invision is
a good reason for Schulman to remain a stand-alone entity.
IN OUR VIEW, BOTH MANAGEMENT AND THE BOARD HAVE HAD AMPLE OPPORTUNITY TO
ADDRESS THE COMPANY'S KEY STRATEGIC AND OPERATIONAL ISSUES.
Terry Haines has been the CEO of Schulman since 1991. Five out of twelve
directors have been on the Board since at least 1995, two additional directors have
been on the Board since 2000, and one has been on the Board since 2003. Over their
tenure, Terry Haines and these directors, which constitute a majority of the Board,
----------
(1) Source: Thomson StreetEvents.
(3) Source: Public company filings.
(4) Numbers are Ramius Group estimates and are pro-forma for non-recurring
charges.
(5) Numbers are as reported in public company filings.
-8-
have overseen a precipitous decline in operating performance. Even after facing
two proxy contests and the establishment of a special committee of the Board
responsible for overseeing the creation and/or completion of a detailed
operating budget and business plan to improve the Company's operations and
profitability under the October 2006 settlement agreement with the Barington
Group the operating performance has continued to deteriorate.
IN OUR OPINION, THE COMPANY'S POOR PERFORMANCE, WHICH SPANS A DECADE,
REQUIRES A CHANGE IN STRATEGY. Accordingly, we think that the Board should
pursue a sale of the Company and believe that a sale of the Company is the best
way to maximize stockholder value.
WE BELIEVE THE RAMIUS NOMINEES HAVE THE EXPERIENCE NECESSARY TO OVERSEE AN
EFFORT TO MAXIMIZE STOCKHOLDER VALUE.
The Ramius Group, as a significant stockholder of Schulman, has a vested
financial interest in the maximization of the value of your shares. Our
interests are aligned with the interests of all stockholders. The Ramius
Nominees have extensive experience in the chemicals and plastics industries,
private and public investment and mergers and acquisitions, as further discussed
in their biographical extracts below. If elected to the Board, the Ramius
Nominees will endeavor to use their collective experience to oversee the Company
with a goal of implementing the strategic and operational changes espoused by
the Ramius Group as well as exploring any other viable alternatives to maximize
stockholder value. There can be no assurance that these goals will be achieved
if the Ramius Nominees are elected.
The Ramius Nominees, if elected, will represent a minority of the Board.
If elected, the Ramius Nominees will, subject to their fiduciary duties as
directors, work with the other members of the Board to take those steps that
they deem are necessary to maximize stockholder value. Although the Ramius
Nominees will not be able to adopt any measures without the support of at least
some members of the current Board, we believe that the election of the Ramius
Nominees will send a strong message to the Board that changing the strategic
direction of the Company's business is required in order to unlock the Company's
intrinsic value.
SCHULMAN HAS MAINTAINED SUB-STANDARD CORPORATE GOVERNANCE PRACTICES.
The Ramius Group believes that Schulman has maintained poor corporate
governance practices that inhibit the accountability of management and directors
to the stockholders. The following are examples of the sub-standard corporate
governance practices of Schulman:
SEPARATION OF THE ROLE OF Consolidation of power in combining the
CHAIRMAN OF THE BOARD, position of Chairman, President and Chief
PRESIDENT AND CHIEF EXECUTIVE Executive Officer.
OFFICER:
STAGGERED BOARD: For years, Schulman has maintained a
"staggered" or classified board -- a policy
that a 2002 study by Harvard University
professors, Lucian Bebchuk, John Coates and
Guhan Subramainian found nearly doubles the
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likelihood of a company remaining
independent and typically results in an 8%
to 10% loss of value in companies targeted
for acquisition by an uninvited suitor.
SUPERMAJORITY VOTING A supermajority vote is required for
PROVISIONS: stockholders to amend certain provisions of
the Company's Amended and Restated
Certificate of Incorporation and Amended and
Restated Bylaws, including rescinding the
classified Board.
INABILITY TO CALL SPECIAL Stockholders are prohibited from calling
MEETINGS OF STOCKHOLDERS: Special Meetings of stockholders.
NO WRITTEN CONSENT: Stockholders are prohibited from taking
action by written consent.
Governance provisions such as these are contrary to the guidelines for
corporate governance best practices issued by leading advocates of stockholder
democracy, such as Institutional Shareholder Services (ISS) and Glass, Lewis &
Co. ISS, for example, in its 2007 proxy guidelines, recommends against proposals
to classify a company's board of directors. Furthermore, commentators and
corporate governance experts disagree on the propriety and utility of such
governance provisions. What these provisions do provide, in our opinion, is
insulation to the incumbent Board and few avenues for change to stockholders
dissatisfied with the status quo.
Additionally, we were surprised to learn that after Robert Stefanko, the
Company's former Chairman, retired in April 2006, the Board elected Mr. Haines
as Chairman rather than appoint an independent Chairman as most independent
proxy advisory firms and corporate governance advocacy groups would have
strongly recommended.
In its November 1, 2007 investor presentation to stockholders, the Company
takes credit for having "implemented numerous corporate governance policy and
practice improvements." We assume the "improvements" that the Company is
referring to include the redemption of its "poison pill," the establishment of a
"lead independent director" and putting to a stockholder vote an amendment to
the Company's certificate of incorporation that removed a supermajority voting
provision relating to certain business combinations and other transactions. We
believe it is disingenuous for the Company to tout these corporate governance
reforms that came about only in the face of proxy contests, especially since the
Company was required to implement each of these reforms pursuant to the terms of
settlement agreements with the Barington Group.
In the event that the Board attempts to use new bylaws or amended bylaws
to prevent the stockholders, including the Ramius Group, from accomplishing the
objectives described in this Proxy Statement, the Ramius Nominees, if elected,
will seek to work with the other Board members to repeal any new or amended
bylaws having such an effect, to the extent that the Ramius Nominees determine
that such new or amended bylaws are not aligned with the stockholders' best
interests.
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The following is a chronology of events leading up to this proxy
solicitation:
o On April 2, 2007, the members of the Ramius Group (excluding Messrs.
Mitchell, Caporale and Meyer) filed with the SEC a statement on
Schedule 13D disclosing that (i) such members of the Ramius Group
ceased to be members of a Section 13(d) reporting group with Barington
Investments, L.P., RJG Capital Partners, L.P., D.B. Zwirn Special
Opportunities Fund, L.P. and certain of their respective affiliates and
(ii) that as of March 30, 2007, the members of the Ramius Group ceased
to be the collective beneficial owners of 5% or more of the Company's
Shares and, as such, would no longer be filing statements on Schedule
13D.
o On May 31, 2007, certain representatives of Ramius Capital met with
Terry Haines and other members of the management team at the Company's
Invision facility to get an introduction to the Invision product, tour
the Invision manufacturing facility and to discuss the general business
trends and the overall strategic direction of the Company.
o On July 5, 2007, Starboard Value delivered a letter to the Corporate
Secretary of Schulman submitting, pursuant to Rule 14a-8 of the
Securities Exchange Act of 1934, as amended, a proposal recommending
that the Board immediately set up a special committee consisting solely
of independent directors that would engage the services of a nationally
recognized investment banking firm to evaluate alternatives that would
maximize stockholder value, including, but not limited to, a sale of
the North American business, a merger or an outright sale of the
Company.
o On July 31, 2007, the Company confirmed to Starboard Value that it
intended to include the 14a-8 Proposal in the Company's proxy statement
for the Annual Meeting.
o On October 3, 2007, Starboard delivered a letter to the Corporate
Secretary of Schulman in accordance with the Company's advance notice
bylaw provision nominating Michael Caporale, Jr., Lee Meyer, Mark
Mitchell, and Jeffrey Solomon as Class III Nominees for election to the
Board at the Annual Meeting (the "Nomination Letter").
o On October 22, 2007, the members of the Ramius Group filed with the SEC
a statement on Schedule 13D disclosing that such members of the Ramius
Group had acquired in excess of 5% of the Shares.
o On October 25, 2007, certain representatives of Ramius Capital met with
certain representatives of Barington Capital Group, L.P., including
James Mitarotonda, to discuss issues relating to the Annual Meeting.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Ramius Group is seeking your support at the Annual Meeting to elect
the Ramius Nominees in opposition to Schulman's director nominees. The Board is
currently composed of twelve directors divided into three classes, Class I,
Class II and Class III. The Ramius Group believes the four Class III directors'
terms expire at the Annual Meeting. We are seeking your support at the Annual
Meeting to elect the Ramius Nominees in opposition to the four Schulman Class
III director nominees. Your vote to elect the Ramius Nominees will have the
legal effect of replacing four incumbent directors of the Company with the
Ramius Nominees. If elected, the Ramius Nominees will represent a minority of
the members of the Board.
THE RAMIUS NOMINEES
The Ramius Group has nominated four highly qualified nominees, each of
whom, if elected, will exercise his independent judgment in accordance with his
fiduciary duties as a director in all matters that come before the Board. The
Ramius Nominees are independent of the Company in accordance with the SEC and
Nasdaq Stock Market rules on board independence and would seek to maximize value
for all stockholders. If elected, and subject to their fiduciary duties as
directors, the Ramius Nominees would have the ability to work with the other
members of the Board to take those steps that they deem are necessary or
advisable to unlock the Company's intrinsic value.
Set forth below are the name, age, business address, present principal
occupation, and employment and material occupations, positions, offices, or
employments for the past five years of each of the Ramius Nominees. This
information has been furnished to the Ramius Group by the Ramius Nominees. The
Ramius Nominees are citizens of the United States of America. The Ramius
Nominees have been nominated by Starboard in accordance with the Company's
advance notice bylaw provision.
MICHAEL CAPORALE, JR. (AGE 56) served as President, Chief Executive
Officer and a director of Associated Materials, Inc., a leading North American
manufacturer and distributor of exterior building products ("AMI"), from April
2002 until June 2006 and as Chairman of the Board of AMI from December 2004
until December 2006. Mr. Caporale also served as President, Chief Executive
Officer and a director of Associated Materials Holdings Inc., the direct parent
of AMI ("Holdings"), from April 2002 until June 2006, and as President, Chief
Executive Officer and a director of AMH Holdings, Inc., the direct parent of
Holdings ("AMH"), from March 2004 until June 2006. In December 2004, AMH sold a
50% equity interest in AMH to affiliates of Investcorp S.A. From 2000 until
April 2002, Mr. Caporale served as President and Chief Executive Officer of
AMI's Alside division. In April 2002, AMI was transitioned from a public company
to private ownership following the completion of a $436 million cash tender
offer by Harvest Partners, a private equity firm. Prior to joining AMI, from
1995 through 2000, Mr. Caporale served as President of Great Lakes Window, a
division of Ply Gem Industries, Inc., a building products manufacturer ("Ply
Gem"). From 1992 through 1995, Mr. Caporale served as Vice President, Operations
of Enerpac, a division of Applied Power, Inc., where he developed logistic
systems for the U.S., Asia and Europe markets. Mr. Caporale began his career
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with General Electric, Inc. ("GE") where he spent seventeen years in various
operating positions in GE's Appliance, Jet Engine and Transformer businesses.
Mr. Caporale received a B.S. in Civil Engineering and an M.B.A. from Syracuse
University. The principal business address of Mr. Caporale is 3668 Shetland
Trail, Richfield, Ohio 44286. As of the date hereof, Mr. Caporale does not own
any securities of Schulman nor has he made any purchases or sales of any
securities of Schulman during the past two years.
LEE MEYER (AGE 58) served as President and Chief Executive Officer of Ply
Gem from January 2002 to October 2006. Mr. Meyer previously had been the
President of Variform, Inc. ("Variform"), Ply Gem's Siding and Accessories
business, since 1998. Mr. Meyer joined Variform in 1993 as the Vice President of
Manufacturing, and served as Vice President of Operations from 1994 to 1996 and
as Senior Vice President and General Manager from 1996 to 1998. Prior to joining
Variform, Mr. Meyer held positions at GE Plastics, Borg Warner Chemicals and the
Chemicals Division of Quaker Oats. Mr. Meyer served as a member of the Board of
Directors of PW Eagle, Inc., a polyvinyl chloride (PVC) pipe and fittings
manufacturer, from May 2006 until its acquisition by J-M Manufacturing Company,
Inc. in June 2007. Mr. Meyer has been a member of the Vinyl Siding Institute
("VSI") since 1994, and is currently a member of VSI's Board of Directors and is
the Chairman of VSI's Certification Oversight Committee, which oversees
voluntary minimum standards for vinyl siding products. Mr. Meyer received a B.S.
in Chemical Engineering and an M.B.A. in Finance and Economics from the
University of Nebraska. Mr. Meyer is also a Registered Professional Engineer.
The principal business address of Mr. Meyer is 208 Shawna Drive, Kearney,
Missouri 64060. As of the date hereof, Mr. Meyer does not own any securities of
Schulman nor has he made any purchases or sales of any securities of Schulman
during the past two years.
MARK MITCHELL (AGE 46) is a partner of Ramius Capital Group, L.L.C., a
private investment management firm ("Ramius Capital"), a position he has held
since February 2007, and is a member of Ramius Capital's Management Board. Prior
to February 2007, Mr. Mitchell served as an Executive Managing Director of
Ramius Capital since July 2006 and as a Managing Director since 1999. He is a
member of the board of directors of CPI Corporation, an NYSE-listed company, and
I-many, Inc., a Nasdaq-listed company. Mr. Mitchell has over 23 years of
investment management experience and currently heads Ramius Capital's merger
arbitrage business and co-heads Ramius Capital's opportunistic value investing
business. Mr. Mitchell holds a B.S. in Economics from the University of
Pennsylvania, Wharton School of Business, and an M.B.A. from New York
University, Stern School of Business. The principal business address of Mr.
Mitchell is c/o Ramius Capital Group, L.L.C., 666 Third Avenue, 26th Floor, New
York, New York 10017. As of the date hereof, Mr. Mitchell does not own any
securities of Schulman, nor has he made any purchases or sales of any securities
of Schulman during the past two years.
JEFFREY M. SOLOMON (AGE 41) is a Managing Member of Ramius Capital and a
member of Ramius Capital's Executive Committee and Management Board. Mr. Solomon
is jointly responsible for overseeing Ramius Capital's multi-strategy and single
strategy investment platforms. Mr. Solomon was previously responsible for
managing a number of specific investment portfolios at Ramius Capital and, until
recently, was also responsible for overseeing Ramius Capital's technology,
operations and finance functions. Mr. Solomon joined Ramius Capital when it was
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founded in 1994. From 1991 to 1994, Mr. Solomon was at Republic New York
Securities Corporation, the brokerage affiliate of Republic National Bank (now
part of the HSBC Group) ("Republic"). As head of Corporate Development and
Strategic Planning, Mr. Solomon coordinated the budget process and marketing
effort of Republic and directed its numerous regulatory filings with the Federal
Reserve Board. In 1993, Mr. Solomon supervised Republic's expansion into Europe
by overseeing the creation of its U.K. affiliate. He was named Republic's Chief
Administrative Officer and was responsible for supervising the integration of
systems and operations on a worldwide basis. He was also a member of the Credit
Committee of Republic's Board of Directors. Prior to joining Republic, Mr.
Solomon was in the Mergers and Acquisitions Group at Shearson Lehman Brothers.
Mr. Solomon was also part of the internal corporate finance team at Shearson
Lehman Brothers that worked closely with senior management in evaluating the
company's operations, capital usage and investment strategies, including the
acquisition and disposition of corporate assets. Currently, Mr. Solomon serves
on the Board of Directors of Hale & Hearty Soups, a New York based restaurant
chain and NuGo Nutrition, the manufacturer of NuGo Nutrition Bars. Mr. Solomon
received a B.A. in Economics from the University of Pennsylvania. The principal
business address of Mr. Solomon is c/o Ramius Capital Group, L.L.C., 666 Third
Avenue, 26th Floor, New York, New York 10017. As of the date hereof, as a
Managing Member of Ramius Capital, Mr. Solomon may be deemed to beneficially own
1,335,150 shares of Common Stock of Schulman. For information regarding
purchases and sales during the past two years by Ramius Capital and its
affiliates in securities of Schulman (without conceding that any such
information is required to be disclosed in this Notice), please see EXHIBIT A.
RCG Starboard Advisors, a subsidiary of Ramius Capital, and two of the
Ramius Nominees, Mr. Meyer and Mr. Carporale, Jr., have entered into
compensation letter agreements (the "Compensation Letter Agreements") regarding
compensation to be paid to such Ramius Nominees for their agreement to be named
and to serve as a Ramius Nominee and for their services as a director of
Schulman, if elected. Pursuant to the terms of the Compensation Letter
Agreements, Messrs. Meyer and Carporale, Jr. will receive $5,000 in cash from
RCG Starboard Advisors as a result of the submission by Starboard of its
nomination of the Ramius Nominees. Upon the Ramius Group's filing of a
definitive proxy statement with the SEC relating to a solicitation of proxies in
favor of each nominee's election as a director at the Annual Meeting, RCG
Starboard Advisors has agreed to allow Messrs. Meyer and Carporale, Jr. to
receive a profit participation with respect to the profit, if any, actually
realized on the sale by RCG Starboard Advisors of the last $20,000 worth of
Shares (the "Participation Shares") beneficially owned by RCG Starboard Advisors
or one of its affiliates to a third party unaffiliated with any member of the
Ramius Group. The number of Participation Shares shall be determined by dividing
$20,000 by the closing price of the Company's common stock on the date of the
definitive proxy filing. Messrs. Meyer and Carporale, Jr. will receive cash
payments equal to the amount, if any, by which the proceeds received by RCG
Starboard Advisors from the sale of the Participation Shares exceeds $20,000 in
the aggregate.
Ramius Capital and certain of its affiliates have signed a letter
agreement pursuant to which they agree to indemnify the Ramius Nominees against
claims arising from the solicitation of proxies from Schulman's stockholders in
connection with the Annual Meeting and any related transactions. Other than as
stated herein, there are no arrangements or understandings between members of
the Ramius Group and any of the Ramius Nominees or any other person or persons
-14-
pursuant to which the nomination of the Ramius Nominees described herein is to
be made, other than the consent by each of the Ramius Nominees to be named in
this Proxy Statement and to serve as a director of Schulman if elected as such
at the Annual Meeting. None of the Ramius Nominees are a party adverse to
Schulman or any of its subsidiaries or has a material interest adverse to
Schulman or any of its subsidiaries in any material pending legal proceedings.
The Ramius Group does not expect that the Ramius Nominees will be unable
to stand for election, but, in the event that such persons are unable to serve
or, for good cause, will not serve, the Shares represented by the enclosed GOLD
proxy card will be voted for substitute nominees. In addition, Starboard
reserves the right to nominate substitute persons if Schulman makes or announces
any changes to its Amended and Restated Bylaws or takes or announces any other
action that has, or if consummated would have, the effect of disqualifying the
Ramius Nominees. In any such case, Shares represented by the enclosed GOLD proxy
card will be voted for such substitute nominees. Starboard reserves the right to
nominate additional persons if Schulman increases the size of the Board above
its existing size or increases the number of directors whose terms expire at the
Annual Meeting. Additional nominations made pursuant to the preceding sentence
are without prejudice to the position of Starboard that any attempt to increase
the size of the current Board or to reconstitute or reconfigure the classes on
which the current directors serve constitutes an unlawful manipulation of the
Company's corporate machinery.
YOU ARE URGED TO VOTE FOR THE ELECTION OF THE RAMIUS NOMINEES ON THE ENCLOSED
GOLD PROXY CARD.
-15-
PROPOSAL NO. 2
STARBOARD VALUE'S PROPOSAL THAT THE BOARD IMMEDIATELY ENGAGE THE SERVICES OF
AN INVESTMENT BANKING FIRM
On July 5, 2007, Starboard Value delivered a letter to Schulman submitting
a proposal for inclusion in the Company's proxy statement at the Annual Meeting
pursuant to Rule 14a-8 of the Securities Exchange Act of 1934, as amended.
In accordance with Rule 14a-8, Starboard Value submitted to Schulman the
following resolution and supporting statement that Schulman will also be
required to include in its proxy statement for approval at the Annual Meeting:
RESOLUTION
RESOLVED, that the stockholders of A. Schulman, Inc. hereby request that
the Board of Directors immediately set up a special committee consisting
solely of independent directors that would engage the services of a
nationally recognized investment banking firm to evaluate strategic
alternatives that would maximize stockholder value, including, but not
limited to, a sale of the North American business, or a merger or an
outright sale of the Company.
SUPPORTING STATEMENT:
This proposal provides stockholders with the opportunity to advise the Board of
Directors of their concerns regarding Schulman's strategic direction and to
express their desire to realize the full value of their investment in Schulman.
As an owner, together with our affiliates, of approximately 3.0% of Schulman's
common shares outstanding, we believe that in order to maximize stockholder
value the North American business or the Company should be sold.
In our view, the Company is significantly undervalued due to steadily declining
gross profit and operating margins, which represent management's failure to
proactively rationalize manufacturing capacity and reduce operating expenses in
light of changing industry dynamics. We believe management's focus on top line
growth at the expense of maximizing return on invested capital has weakened the
Company's competitive position.
The recent operating performance provides little hope for improvement in the
status quo. Since fiscal year 2003, despite recording restructuring charges
totaling approximately $8.2M in four of the last five fiscal years, the North
American segment has remained unprofitable, generating a cumulative operating
loss of approximately $63.1M, including $18.9M in the first nine months of
fiscal 2007.
We do not believe this is an industry problem. In the last decade, Schulman's
two closest public company peers, Spartech Corporation (SEH) and PolyOne
-16-
Corporation (POL), have grown net income at a compounded annual growth rate of
approximately 7.0% and 15.3%, respectively(6). By way of comparison, Schulman's
ten-year net income compounded annual growth rate is negative 7.9%.
This performance, spanning a decade, necessitates a change in strategy. In our
opinion, Schulman has a portfolio of valuable assets, the intrinsic value of
which is not reflected in the current market value. Given management's track
record, we do not believe the current management is capable of executing the
necessary changes in strategy to realize the full value of the Company's assets.
Given the Board of Directors' fiduciary obligation to maximize stockholder
value, we believe that a sale of the North American business, or the entire
Company, is in the best interest of stockholders at this time. While the
adoption of this proposal will not legally bind the Board of Directors, we trust
that given their fiduciary responsibilities, the Directors will honor their
stockholders' request.
IF YOU BELIEVE THE COMPANY SHOULD IMMEDIATELY EXPLORE OPPORTUNITIES TO
MAXIMIZE THE VALUE OF YOUR SHARES, PLEASE VOTE FOR THIS PROPOSAL.
-------------
(6) Source: Public company documents. Net income numbers are as reported in
Company's public filings.
-17-
PROPOSAL NO. 3
COMPANY PROPOSAL TO RATIFY APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
As discussed in further detail in the Company's proxy statement, the Audit
Committee of the Board has selected PricewaterhouseCoopers LLP as its
independent registered public accountant to examine the books, records and
accounts of the Company and its subsidiaries for the fiscal year ending August
31, 2008. The Audit Committee and the Board each recommends that stockholders
ratify such selection.
We make no recommendation as to the ratification of the appointment of
PricewaterhouseCoopers LLP as independent registered public accountant to
examine the books, records and accounts of the Company and its subsidiaries for
the fiscal year ending August 31, 2008.
We are not aware of any other proposals to be brought before the Annual
Meeting. However, we intend to bring before the Annual Meeting such business as
may be appropriate, including without limitation nominating additional persons
for directorships, or making any proposals as may be appropriate to address any
action of the Board not publicly disclosed prior to the date of this proxy
statement. Should other proposals be brought before the Annual Meeting, the
persons named as proxies in the enclosed GOLD proxy card will vote on such
matters in their discretion.
-18-
VOTING AND PROXY PROCEDURES
Only stockholders of record on the Record Date will be entitled to notice
of and to vote at the Annual Meeting. Each Share is entitled to one vote.
Stockholders who sell Shares before the Record Date (or acquire them without
voting rights after the Record Date) may not vote such Shares. Stockholders of
record on the Record Date will retain their voting rights in connection with the
Annual Meeting even if they sell such Shares after the Record Date. Based on
publicly available information, the Ramius Group believes that the only
outstanding class of securities of Schulman entitled to vote at the Annual
Meeting is the Shares.
Shares represented by properly executed GOLD proxy cards will be voted at
the Annual Meeting as marked and, in the absence of specific instructions, will
be voted FOR the election of the Ramius Nominees to the Board and in the
discretion of the persons named as proxies on all other matters as may properly
come before the Annual Meeting.
You are being asked to elect the Ramius Nominees and vote for the Ramius
Proposal. The enclosed GOLD proxy card may only be voted for the Ramius Nominees
and does not confer voting power with respect to the Company's nominees.
Accordingly, you will not have the opportunity to vote for any of the Company's
nominees by using this proxy card. You can only vote for the Company's nominees
by signing and returning a proxy card provided by the Company or by voting at
the Annual Meeting in person. Stockholders should refer to the Company's proxy
statement for the names, backgrounds, qualifications and other information
concerning the Company's nominees. The participants in this solicitation intend
to vote all of their Shares in favor of the Ramius Nominees and for the Ramius
Proposal.
QUORUM
According to the Company's proxy statement, the required quorum for the
transaction of business at the Annual Meeting will be at least [________] Shares
represented in person or by proxy.
VOTES REQUIRED FOR APPROVAL
VOTE REQUIRED FOR THE ELECTION OF DIRECTORS. The election of the director
nominees requires the favorable vote of a plurality of all votes cast by the
holders of Shares at a meeting at which a quorum is present. Broker non-votes
and proxies marked "Withhold Authority" will not be counted toward the election
of directors or toward the election of individual nominees specified in the form
of proxy and, thus, will have no effect other than that they will be counted for
establishing a quorum. A stockholder may cast votes for the Ramius Nominees
either by so marking the ballot at the Annual Meeting or by specific voting
instructions sent with a signed proxy to either the Ramius Group in care of
Innisfree M&A Incorporated at the address set forth on the back cover of this
Proxy Statement or to Schulman at 3550 West Market Street, Akron, Ohio 44333, or
any other address provided by Schulman.
VOTE REQUIRED FOR APPROVAL OF THE RAMIUS PROPOSAL. For ratification, the
Ramius Proposal will require the affirmative vote of the holders of a majority
of the Shares represented at the Annual Meeting in person or by proxy. Votes on
the ratification of the Ramius Proposal marked "abstain" and broker non-votes
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will not be counted as votes cast, but will count toward the determination of
the presence of a quorum and have the same effect as votes cast against the
Ramius Proposal.
VOTE REQUIRED FOR THE RATIFICATION OF THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP. For ratification, this proposal will require the
affirmative vote of the holders of a majority of the Shares represented at the
Annual Meeting in person or by proxy. Votes on the ratification of
PricewaterhouseCoopers LLP marked "abstain" and broker non-votes will not be
counted as votes cast, but will count toward the determination of the presence
of a quorum and have the same effect as votes cast against the proposal.
DISCRETIONARY VOTING
Shares held in "street name" and held of record by banks, brokers or
nominees may not be voted by such banks, brokers or nominees unless the
beneficial owners of such Shares provide them with instructions on how to vote.
REVOCATION OF PROXIES
A proxy may be revoked at any time before a vote is taken or the authority
granted is otherwise exercised. Revocation may be accomplished by the execution
of a later dated proxy, or a later casted Internet or telephone vote, with
regard to the same shares or by giving notice in writing or in open meeting. The
delivery of a subsequently dated proxy which is properly completed will
constitute a revocation of any earlier proxy. The revocation may be delivered
either to the Ramius Group in care of Innisfree M&A Incorporated at the address
set forth on the back cover of this Proxy Statement or to Schulman at 3550 West
Market Street, Akron, Ohio 44333, or any other address provided by Schulman.
Although a revocation is effective if delivered to Schulman, the Ramius Group
requests that either the original or photostatic copies of all revocations be
mailed to the Ramius Group in care of Innisfree M&A Incorporated at the address
set forth on the back cover of this Proxy Statement so that the Ramius Group
will be aware of all revocations and can more accurately determine if and when
proxies have been received from the holders of record on the Record Date and the
number of outstanding Shares represented thereby. Additionally, Innisfree M&A
Incorporated may use this information to contact stockholders who have revoked
their proxies in order to solicit later dated proxies for the election of the
Ramius Nominees.
IF YOU WISH TO VOTE FOR THE ELECTION OF THE RAMIUS NOMINEES TO THE BOARD OR FOR
THE RAMIUS PROPOSAL, PLEASE SIGN, DATE AND RETURN PROMPTLY THE ENCLOSED GOLD
PROXY CARD IN THE POSTAGE-PAID ENVELOPE PROVIDED.
SOLICITATION OF PROXIES
The solicitation of proxies pursuant to this Proxy Statement is being made
by the Ramius Group. Proxies may be solicited by mail, facsimile, telephone,
telegraph, Internet, in person and by advertisements.
-20-
Starboard has entered into an agreement with Innisfree M&A Incorporated
for solicitation and advisory services in connection with this solicitation, for
which Innisfree M&A Incorporated will receive a fee not to exceed $[__________],
together with reimbursement for its reasonable out-of-pocket expenses, and will
be indemnified against certain liabilities and expenses, including certain
liabilities under the federal securities laws. Innisfree M&A Incorporated will
solicit proxies from individuals, brokers, banks, bank nominees and other
institutional holders. Starboard has requested banks, brokerage houses and other
custodians, nominees and fiduciaries to forward all solicitation materials to
the beneficial owners of the Shares they hold of record. Starboard will
reimburse these record holders for their reasonable out-of-pocket expenses in so
doing. It is anticipated that Innisfree M&A Incorporated will employ
approximately [__] persons to solicit Schulman's stockholders for the Annual
Meeting.
The entire expense of soliciting proxies is being borne by the Ramius
Group. Costs of this solicitation of proxies are currently estimated to be
approximately $___,000.00. The Ramius Group estimates that through the date
hereof its expenses in connection with this solicitation are approximately
$___,000.00.
ADDITIONAL PARTICIPANT INFORMATION
The Ramius Nominees, the other members of the Ramius Group and Mr.
Ruzhitsky are participants in this solicitation. The principal business of
each of Starboard, Starboard Value and Parche is serving as a private
investment fund. Each of Starboard, Starboard Value and Parche has been
formed for the purpose of making equity investments and, on occasion, taking
an active role in the management of portfolio companies in order to enhance
stockholder value. The principal business of RCG Starboard Advisors is
acting as investment manager of Starboard and managing member of Starboard
Value and Parche. The principal business of RCG Enterprise is serving as a
private investment fund. Parche is a subsidiary of RCG Enterprise. Ramius
Capital is engaged in money management and investment advisory services for
third parties and proprietary accounts. C4S serves as managing member of
Ramius Capital. Mr. Cohen, Mr. Strauss, Mr. Stark and Mr. Solomon serve as
co-managing members of C4S. Mr. Ruzhitsky serves as a Vice President of
Ramius Capital.
The address of the principal office of each of Starboard Value, Parche,
RCG Starboard Advisors, Ramius Capital, C4S, Mr. Cohen, Mr. Stark, Mr.
Strauss, Mr. Solomon, Mr. Smith and Mr. Ruzhitsky is 666 Third Avenue, 26th
Floor, New York, New York 10017. The address of the principal office of
Starboard and RCG Enterprise is c/o Citco Fund Services (Cayman Islands)
Limited, Corporate Center, West Bay Road, Grand Cayman, Cayman Islands,
British West Indies.
As of the date hereof, Starboard beneficially owns 998,073 Shares,
Starboard Value beneficially owns 736,984 Shares and Parche beneficially owns
327,738 Shares. As of the date hereof, RCG Starboard Advisors (as the
investment manager of Starboard and the managing member of each of Starboard
Value and Parche) is deemed to be the beneficial owner of the 998,073 Shares
owned by Starboard, the 736,984 Shares owned by Starboard Value and the
327,738 Shares owned by Parche. As of the date hereof, RCG Enterprise (as
the sole non-managing member of Parche and owner of all economic interests
therein) is deemed the beneficial owner of the 327,738 Shares owned by
Parche. As of the date hereof, Ramius Capital (as the sole member of RCG
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Starboard Advisors), C4S (as the managing member of Ramius Capital) and Mr.
Cohen, Mr. Stark, Mr. Strauss and Mr. Solomon (as the managing members of
C4S) are deemed to be the beneficial owners of the 998,073 Shares owned by
Starboard, the 736,984 Shares owned by Starboard Value and the 327,738 Shares
owned by Parche. Mr. Cohen, Mr. Stark, Mr. Strauss and Mr. Solomon share
voting and dispositive power with respect to the Shares owned by Starboard,
Starboard Value and Parche by virtue of their shared authority to vote and
dispose of such Shares. Messrs. Cohen, Stark, Strauss and Solomon disclaim
beneficial ownership of such Shares except to the extent of their pecuniary
interest therein. Messrs. Mitchell, Meyer, Caporale Jr. and Ruzhitsky, as
members of a "group" for the purposes of Rule 13d-5(b)(1) of the Securities
Exchange Act of 1934, as amended, are each deemed to be a beneficial owner of
all 2,062,795 Shares collectively owned by the Ramius Group. Messrs.
Mitchell, Meyer, Caporale Jr. and Ruzhitsky each disclaim beneficial
ownership of Shares that they do not directly own.
For information regarding purchases and sales of securities of Schulman
during the past two years by the members of the Ramius Group, including the
Ramius Nominees and Mr. Ruzhitsky, see Schedule I.
On October 22, 2007, the members of the Ramius Group entered into a Joint
Filing and Solicitation Agreement (as amended by Amendment No. 1 thereto, dated
as of November 8, 2007) in which each member of the Ramius Group agreed to the
joint filing on behalf of each of them of Statements on Schedule 13D and agreed
to form the Ramius Group for the purpose of soliciting proxies or written
consents for the election of the Ramius Nominees to the Board at the Annual
Meeting and for the purpose of taking all other actions incidental to the
foregoing. The Ramius Group intends to seek reimbursement from Schulman of all
expenses it incurs in connection with the Solicitation. The Ramius Group does
not intend to submit the question of such reimbursement to a vote of security
holders of the Company.
Except as set forth in this Proxy Statement (including the Schedules
hereto), (i) during the past 10 years, no participant in this solicitation has
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors); (ii) no participant in this solicitation directly or indirectly
beneficially owns any securities of Schulman; (iii) no participant in this
solicitation owns any securities of Schulman which are owned of record but not
beneficially; (iv) no participant in this solicitation has purchased or sold any
securities of Schulman during the past two years; (v) no part of the purchase
price or market value of the securities of Schulman owned by any participant in
this solicitation is represented by funds borrowed or otherwise obtained for the
purpose of acquiring or holding such securities; (vi) no participant in this
solicitation is, or within the past year was, a party to any contract,
arrangements or understandings with any person with respect to any securities of
Schulman, including, but not limited to, joint ventures, loan or option
arrangements, puts or calls, guarantees against loss or guarantees of profit,
division of losses or profits, or the giving or withholding of proxies; (vii) no
associate of any participant in this solicitation owns beneficially, directly or
indirectly, any securities of Schulman; (viii) no participant in this
solicitation owns beneficially, directly or indirectly, any securities of any
parent or subsidiary of Schulman; (ix) no participant in this solicitation or
any of his/its associates was a party to any transaction, or series of similar
transactions, since the beginning of Schulman's last fiscal year, or is a party
to any currently proposed transaction, or series of similar transactions, to
which Schulman or any of its subsidiaries was or is to be a party, in which the
amount involved exceeds $120,000; (x) no participant in this solicitation or any
-22-
of his/its associates has any arrangement or understanding with any person with
respect to any future employment by Schulman or its affiliates, or with respect
to any future transactions to which Schulman or any of its affiliates will or
may be a party; and (xi) no person, including the participants in this
solicitation, who is a party to an arrangement or understanding pursuant to
which the Ramius Nominees are proposed to be elected has a substantial interest,
direct or indirect, by security holdings or otherwise in any matter to be acted
on at the Annual Meeting.
OTHER MATTERS AND ADDITIONAL INFORMATION
The Ramius Group is unaware of any other matters to be considered at the
Annual Meeting. However, should other matters, which the Ramius Group is not
aware of a reasonable time before this solicitation, be brought before the
Annual Meeting, the persons named as proxies on the enclosed GOLD proxy card
will vote on such matters in their discretion.
STOCKHOLDER PROPOSALS
Any stockholder who intends to present a proposal at the annual meeting in
the year 2008 must deliver the proposal to the Corporate Secretary at Schulman:
o Not later than [_________ __], 2008, if the proposal is submitted for
inclusion in the Corporation's proxy materials for that meeting
pursuant to Rule 14a-8 under the Securities Exchange Act of 1934; or
o Not earlier than [___________ __], 2008 and not later than [_________
__], 2008 if the proposal is submitted pursuant to the Company's
Bylaws.
The information set forth above regarding the procedures for submitting
stockholder proposals for consideration at Schulman's 2008 annual meeting of
stockholders is based on information contained in the Company's proxy statement.
The incorporation of this information in this proxy statement should not be
construed as an admission by the Ramius Group that such procedures are legal,
valid or binding.
INCORPORATION BY REFERENCE
THE RAMIUS GROUP HAS OMITTED FROM THIS PROXY STATEMENT CERTAIN DISCLOSURE
REQUIRED BY APPLICABLE LAW THAT IS EXPECTED TO BE INCLUDED IN SCHULMAN'S PROXY
STATEMENT RELATING TO THE ANNUAL MEETING. THIS DISCLOSURE IS EXPECTED TO
INCLUDE, AMONG OTHER THINGS, CURRENT BIOGRAPHICAL INFORMATION ON SCHULMAN'S
CURRENT DIRECTORS, INFORMATION CONCERNING EXECUTIVE COMPENSATION, AND OTHER
IMPORTANT INFORMATION. PLEASE NOTE THAT BECAUSE THE RAMIUS GROUP WAS NOT
INVOLVED IN THE PREPARATION OF SCHULMAN'S PROXY STATEMENT, THE RAMIUS GROUP
CANNOT REASONABLY CONFIRM THE ACCURACY OR COMPLETENESS OF CERTAIN INFORMATION
-23-
CONTAINED THEREIN. SEE SCHEDULE II FOR INFORMATION REGARDING PERSONS WHO
BENEFICIALLY OWN MORE THAN 5% OF THE SHARES AND THE OWNERSHIP OF THE SHARES BY
THE DIRECTORS AND MANAGEMENT OF SCHULMAN.
The information concerning Schulman contained in this Proxy Statement and
the Schedules attached hereto has been taken from, or is based upon, publicly
available information.
THE RAMIUS GROUP
_______________ __, 2007
-24-
SCHEDULE I
TRANSACTIONS IN SECURITIES OF SCHULMAN
DURING THE PAST TWO YEARS
EXCEPT AS OTHERWISE SPECIFIED, ALL PURCHASES AND SALES WERE MADE IN THE OPEN MARKET.
Shares of Common Stock Price Per Date of
Purchased/(Sold) Share($) Purchase/Sale
---------------- -------- -------------
STARBOARD VALUE & OPPORTUNITY FUND, LLC
---------------------------------------
3,114 22.4965 08/21/06
5,430 22.5000 08/21/06
(507) 24.5268 11/09/06
(33,600) 24.5004 11/09/06
(21,000) 24.6002 11/10/06
(2,268) 24.5307 11/13/06
(8,400) 24.4350 11/14/06
(1,688) 24.2575 11/14/06
(10,668) 24.2266 11/14/06
(14,391) 24.1085 11/15/06
(2,480) 23.6113 11/17/06
(10,416) 23.6003 11/17/06
(42,000) 22.7300 11/27/06
(57,120) 20.8111 01/11/07
(26,880) 20.8505 01/12/07
(2,567) 21.1286 01/19/07
(4,200) 20.9000 01/19/07
(16,800) 21.0261 01/23/07
(11,004) 21.0010 01/24/07
(11,629) 21.0000 01/30/07
(9,240) 21.0730 02/01/07
(1,596) 21.0000 02/02/07
(26,964) 21.0115 02/13/07
(28,080) 23.8951 04/03/07
(112,560) 23.3090 04/04/07
(67,620) 22.1172 04/05/07
(25,200) 24.0521 06/06/07
(42,000) 23.6795 06/07/07
67,200 21.5275 06/13/07
84,000 21.2981 06/13/07
33,946 21.1200 06/13/07
I-1
42,000 21.4000 06/14/07
21,000 21.2522 06/14/07
42,000 21.3740 06/15/07
5,336 25.0783 07/10/07
13,020 25.2256 07/11/07
20,160 25.6809 07/12/07
20,284 25.8910 07/16/07
STARBOARD VALUE AND OPPORTUNITY MASTER FUND LTD.
------------------------------------------------
33,432 22.4403 08/03/07
50,568 21.4353 08/06/07
51,240 20.3694 08/07/07
32,760 20.9462 08/08/07
20,551 19.6331 08/09/07
21,000 19.6393 08/09/07
16,800 20.7000 08/14/07
5,040 20.4494 08/28/07
17,388 20.9393 08/29/07
32,172 21.3533 08/30/07
15,120 21.4671 08/31/07
5,880 21.6181 09/04/07
12,600 21.2534 09/05/07
12,600 21.3691 09/06/07
26,880 19.4678 09/14/07
23,520 19.5483 09/17/07
8,400 19.8122 09/18/07
61,079 20.5071 10/10/07
18,994 20.8627 10/11/07
199,920 20.6000 10/12/07
37,968 20.6670 10/12/07
11,523 20.7981 10/15/07
55,761 20.6334 10/15/07
50,652 21.0207 10/16/07
27,973 21.0000 10/16/07
19,501 21.0283 10/16/07
52,080 21.1000 10/17/07
38,700 21.0050 10/17/07
37,971 20.9549 10/17/07
PARCHE, LLC
-----------
1,035 22.5000 08/21/06
I-2
593 22.4965 08/21/06
(97) 24.5268 11/09/06
(6,400) 24.5004 11/09/06
(4,000) 24.6002 11/10/06
(432) 24.5307 11/13/06
(1,600) 24.4350 11/14/06
(321) 24.2575 11/14/06
(2,032) 24.2266 11/14/06
(2,741) 24.1085 11/15/06
(472) 23.6113 11/17/06
(1,984) 23.6003 11/17/06
(8,000) 22.7300 11/27/06
(10,880) 20.8111 01/11/07
(5,120) 20.8505 01/12/07
(489) 21.1286 01/19/07
(800) 20.9000 01/19/07
(3,200) 21.0261 01/23/07
(2,096) 21.0010 01/24/07
(2,215) 21.0000 01/30/07
(1,760) 21.0730 02/01/07
(304) 21.0000 02/02/07
(5,136) 21.0115 02/13/07
(7,020) 23.8951 04/03/07
(21,440) 23.3090 04/04/07
(12,880) 22.1172 04/05/07
(4,800) 24.0521 06/06/07
(8,000) 23.6795 06/07/07
12,800 21.5275 06/13/07
16,000 21.2981 06/13/07
6,466 21.1200 06/13/07
8,000 21.4000 06/14/07
4,000 21.2522 06/14/07
8,000 21.3740 06/15/07
1,016 25.0783 07/10/07
2,480 25.2256 07/11/07
3,840 25.6809 07/12/07
3,864 25.8910 07/16/07
6,368 22.4403 08/03/07
9,632 21.4353 08/06/07
9,760 20.3694 08/07/07
6,240 20.9462 08/08/07
3,914 19.6331 08/09/07
4,000 19.6393 08/09/07
I-3
3,200 20.7000 08/14/07
960 20.4494 08/28/07
3,312 20.9393 08/29/07
6,128 21.3533 08/30/07
2,880 21.4671 08/31/07
1,120 21.6181 09/04/07
2,400 21.2534 09/05/07
2,400 21.3691 09/06/07
5,120 19.4678 09/14/07
4,480 19.5483 09/17/07
1,600 19.8122 09/18/07
11,634 20.5071 10/10/07
3,618 20.8627 10/11/07
38,080 20.6000 10/12/07
7,232 20.6670 10/12/07
2,195 20.7981 10/15/07
10,621 20.6334 10/15/07
9,648 21.0207 10/16/07
5,328 21.0000 10/16/07
3,715 21.0283 10/16/07
9,920 21.1000 10/17/07
6,300 21.0050 10/17/07
7,232 20.9549 10/17/07
RCG ENTERPRISE, LTD
-------------------
None
RCG STARBOARD ADVISORS, LLC
---------------------------
None
RAMIUS CAPITAL GROUP, L.L.C.
----------------------------
None
C4S & CO., L.L.C.
-----------------
None
PETER A. COHEN
--------------
None
MORGAN B. STARK
---------------
None
I-4
JEFFREY M. SOLOMON
------------------
None
THOMAS W. STRAUSS
-----------------
None
MICHAEL CAPORALE, JR.
---------------------
None
LEE MEYER
---------
None
MARK R. MITCHELL
----------------
None
YEVGENY V. RUZHITSKY
--------------------
None
I-5
II-1
SCHEDULE II
THE FOLLOWING TABLE IS REPRINTED FROM SCHULMAN'S PROXY STATEMENT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION ON ___________, 2007
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN STOCKHOLDERS
The following table sets forth information as of ________, 2007 (except as
otherwise indicated by footnote) in respect of beneficial ownership of the
Shares by each Director, by each Named Executive Officer, by all Directors and
executive officers as a group, and by each person known to the Company to own
five percent or more of its Shares. Unless otherwise indicated, each beneficial
owner has sole power to vote and dispose of the number of Shares set forth in
the table:
II-1
IMPORTANT
Tell your Board what you think! Your vote is important. No matter how many
Shares you own, please give the Ramius Group your proxy FOR the election of the
Ramius Group's Director Nominees and FOR the Ramius Proposal by taking three
steps:
o SIGNING the enclosed GOLD proxy card,
o DATING the enclosed GOLD proxy card, and
o MAILING the enclosed GOLD proxy card TODAY in the envelope provided
(no postage is required if mailed in the United States).
If any of your Shares are held in the name of a brokerage firm, bank, bank
nominee or other institution, only it can vote such Shares and only upon receipt
of your specific instructions. Accordingly, please contact the person
responsible for your account and instruct that person to execute the GOLD proxy
card representing your Shares. The Ramius Group urges you to confirm in writing
your instructions to the Ramius Group in care of Innisfree M&A Incorporated at
the address provided below so that the Ramius Group will be aware of all
instructions given and can attempt to ensure that such instructions are
followed.
If you have any questions or require any additional information concerning
this Proxy Statement, please contact Innisfree M&A Incorporated at the address
set forth below.
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, NY 10022
Stockholders Call Toll-Free at: (877) 800-5185
Banks and Brokers Call Collect at: (212) 750-5833
PRELIMINARY COPY SUBJECT TO COMPLETION
DATED NOVEMBER 8, 2007
A. SCHULMAN, INC.
2007 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE RAMIUS GROUP
THE BOARD OF DIRECTORS OF THE A. SCHULMAN INC.
IS NOT SOLICITING THIS PROXY
P R O X Y
The undersigned appoints Mark R. Mitchell and Yevgeny V. Ruzhitsky, and each of
them, attorneys and agents with full power of substitution to vote all shares of
common stock of A. Schulman, Inc. ("Schulman" or the "Company") which the
undersigned would be entitled to vote if personally present at the 2007 Annual
Meeting of Stockholders of the Company scheduled to be held at __________
located at _____________, _______, _______, ________, on _______ __, 2007 at
_______ _.m., ___________, and including at any adjournments or postponements
thereof and at any meeting called in lieu thereof (the "Annual Meeting").
The undersigned hereby revokes any other proxy or proxies heretofore given to
vote or act with respect to the shares of common stock of the Company held by
the undersigned, and hereby ratifies and confirms all action the herein named
attorneys and proxies, their substitutes, or any of them may lawfully take by
virtue hereof. If properly executed, this Proxy will be voted as directed on the
reverse and in the discretion of the herein named attorneys and proxies or their
substitutes with respect to any other matters as may properly come before the
Annual Meeting that are unknown to the Ramius Group a reasonable time before
this solicitation.
IF NO DIRECTION IS INDICATED WITH RESPECT TO THE PROPOSAL ON THE REVERSE, THIS
PROXY WILL BE VOTED FOR PROPOSAL 1 AND FOR PROPOSAL 2.
This Proxy will be valid until the sooner of one year from the date indicated on
the reverse side and the completion of the Annual Meeting.
IMPORTANT: PLEASE SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY!
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
[X] PLEASE MARK VOTE AS IN THIS EXAMPLE
THE RAMIUS GROUP STRONGLY RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF
THE NOMINEES LISTED BELOW IN PROPOSAL NO. 1 AND FOR THE STOCKHOLDER PROPOSAL
PROPOSED IN NO. 2.
Proposal No. 1 - The Ramius Group's Proposal to Elect Jeffrey Solomon, Mark
Mitchell, Michael Caporale, Jr. and Lee Meyer as Class III Directors of the
Company.
WITHHOLD FOR ALL
AUTHORITY TO EXCEPT
FOR ALL VOTE FOR ALL NOMINEE(S)
NOMINEES NOMINEES WRITTEN BELOW
Nominees: Jeffrey Solomon [ ] [ ] [ ]
Mark Mitchell ________________
Michael Caporale, Jr. ________________
Lee Meyer ________________
Proposal No. 2 - To ratify the Stockholder proposal that the Schulman Board of
Directors immediately set up a special committee consisting solely of
independent directors that would engage the services of an investment banking
firm to evaluate alternatives that would maximize stockholder value.
|_| FOR |_| AGAINST |_| ABSTAIN
Proposal No. 3 - To ratify the selection of PricewaterhouseCoopers LLP as the
Company's independent registered public accountants for the fiscal year ending
August 31, 2008.
|_| FOR |_| AGAINST |_| ABSTAIN
THE RAMIUS GROUP MAKES NO RECOMMENDATION ON PROPOSAL NO. 3
DATED: ____________________________
____________________________________
(Signature)
____________________________________
(Signature, if held jointly)
____________________________________
(Title)
WHEN SHARES ARE HELD JOINTLY, JOINT OWNERS SHOULD EACH SIGN. EXECUTORS,
ADMINISTRATORS, TRUSTEES, ETC., SHOULD INDICATE THE CAPACITY IN WHICH SIGNING.
PLEASE SIGN EXACTLY AS NAME APPEARS ON THIS PROXY.