Ladies and Gentlemen,
I am Justin Howell and I represent Cascade Investment and the Bill & Melinda Gates Foundation Trust.
I first wish to congratulate Sika’s management, board, and employees for their continued outstanding performance despite the overhang of the hostile takeover attempt by Saint-Gobain. Our opposition to the proposed transaction is more about the principles we believe in than the money we make. We have held Sika for 7 years and have earned a substantial return thanks to the outstanding work of Sika’s management, board, and employees.
If this were only about money we could have sold our shares and moved on. But this is not about money. It is about the rule of law trumping individual greed and ensuring respect for the shareholder protections put in place by previous generations of the Burkard family. They understood that Sika’s independent board members should decide if a change of ownership was in the best interest of the company and all shareholders.
The duty of independent directors is to provide an impartial assessment of decisions important to Sika and its stakeholders. If the Burkards respected independence they would accept the possibility that the board would justifiably disagree with them. They would not have conducted a secret sale process, ignored the board’s serious concerns or attempted to remove the independent directors. Nor would they have exposed those directors to distress in their personal lives by suing them, taking away their compensation and embarking on a campaign of intimidation.
Instead of continuing the legacy of board independence and stewardship his parents set in motion, Urs Burkard has ignored this legacy by appointing himself the sole decision-maker for Sika. Mr. Burkard claims that he knows better than anyone what is best for Sika: better than the independent board members, better than management, better than public shareholders and better than the employees who come to work at Sika every day. He claims that he and the family alone should decide Sika’s future. He claims this despite publicly admitting that he and the family "…do not have good knowledge of the business."
For their part, Saint-Gobain management claims their transaction will produce synergies in spite of the mistrust and hostility their actions have engendered amongst Sika’s management and employees. Saint-Gobain management created their synergy numbers without any consultation with Sika’s management or independent board members – the very people responsible for Sika’s success. Saint-Gobain concludes that it knows more about Sika than the management team that has generated a total shareholder return in excess of 157% since 2006. This is outrageous when one considers that Saint-Gobain management generated a negative 9% return in that same time period.
Saint-Gobain fundamentally misunderstands what makes Sika Sika. Sika’s success is a result of the Sika Spirit where employees, the management team, and the independent board work as a single unit. You cannot discard the board and management and alienate employees and expect Sika to continue its outstanding performance. Saint-Gobain says it plans to fully consolidate Sika. But votes alone are not sufficient for this purpose. Saint-Gobain will also need to take control of the board. In spite of that, Saint-Gobain management continues to promise "independent representation" on the board. Without a majority of independent directors it simply does not matter.