CVR Energy, Inc. (NYSE: CVI) today released the following open
letter to Uzi Yemen, Chairman of the Board of Delek US Holdings,
Inc. (NYSE: DK):
March 19, 2021
Via Email Uzi YeminChairman of
the BoardDelek US Holdings, Inc.7102 Commerce WayBrentwood, TN
37027
|
Re: |
An Open Letter to Uzi (Mr. 5%) Yemin: |
|
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You Can Run But You Can’t Hide (from Your
Stockholders) |
Dear Uzi:
On March 1, 2021, we sent Delek US Holdings,
Inc. (“Delek” or the “Company”) a letter asking for information
relating to your compensation from Delek and its subsidiary, Delek
Logistics Partners (“Logistics”).
We did so because in our opinion the publicly
available information on your compensation is—to put it mildly—both
highly unsettling and murky.
Delek’s public filings indicate that you
received total compensation of nearly $54 million
from 2013 to 2020. We believe that is an enormous amount of
compensation for the Chief Executive of a company that has made as
many apparent blunders as Delek has made over those years.
But what makes that number even more incredible
in our view is that it apparently does not include the approximate
$27 million you received (apparently in cash) from
the 5% general partnership stake in Logistics that was somehow
given to you. Since you were paid extremely well by Delek, it seems
impossible to understand why you also received an ultimate 5%
general partner interest in Logistics—a subsidiary of Delek.
Obviously, you wanted more than you were already being paid by the
Company, but since part of your responsibilities to the Company was
to manage Logistics as well, why should you have been paid
additional sums for that? Moreover, not only did you receive yearly
partnership distributions for your 5% stake, but when the Company
and Logistics fixed some of the more egregious aspects of their
relationship, you apparently ended up pocketing over $21 million
for your stake.
As we noted in our March 1st and prior letters,
while the stockholders of Delek have suffered through a series of
poor management decisions, you personally have done extremely well.
Particularly troublesome are decisions to drop down assets to
Logistics at what seem to us to be very low valuations. Such drop
downs are not in the interest of Delek’s stockholders. They were,
however, in your personal economic interest because they swelled
the coffers of Logistics’ general partner—of which you held 5%. And
it appears that they also served to spike the value of that
interest in the months before the Company repurchased it for over
$21 million.
Delaware law allows stockholders to inspect the
books and records of corporations so that they can better
understand whether their company is being managed properly. We
followed that law to ask Delek to produce a reasonable number of
documents that would allow us to better understand why you were
paid so much and why you received, and so greatly benefited from,
the 5% interest.
Among other things, we thought these documents
would allow us—and our fellow stockholders—to better assess whether
Delek’s supposedly independent directors are doing their jobs well,
or whether, as we believe is likely, you tend to steamroll over
them, almost inevitably getting your way. If the latter is the
case, then the Company clearly needs directors with far more
backbone; directors who are willing to tell you “no” no matter how
much pressure you apply to them.
We understand that you claim this is all
nonsense—that you are actually underpaid; that the independent
directors are fully willing to challenge your pay demands; that the
Company is well managed and that its economic failings are the
fault of market conditions or the mistakes of others or other
problems totally unrelated to your actions.
But if that is the case, what do you
have to hide? Why not simply produce the documents if they should
back your position? Why hire legions of lawyers billing at close to
$2,000 per hour to fight our request? Why not show us the
documents—we agreed up front not to share any documents you think
are confidential without permission from the Company or the
approval by a court?
Yet, as of right now, the Company is
refusing to produce even the most innocuous documents to
us. For example, it will not even produce documents
showing us the Company’s calculations of your total compensation
over this period. That can’t be secret, can it? But for some reason
you are saying “No.” That response, Mr. Yemin, causes
us—and we suspect other stockholders—to ask, “what is he
hiding?”
It also raises other questions. For example,
have the “independent” directors on your board agreed to
this? Have you even asked them? Do they know about the
large legal bills that Delek is now incurring to keep from
producing even one document? Do they really think that this
information is too secret for stockholders to know? Or perhaps do
all of you view it as being simply too embarrassing? Or is it
perhaps the case that you are unilaterally making these decisions
without seeking input?
We cannot know what the answers to these and
similar questions are. All we can do is to note that none of the
documents we’ve requested seems particularly confidential or is
likely to hurt the Company if the information becomes public. Thus,
we have to ask: Why the secrecy? Why all the expensive lawyers?
Calouste Gulbenkian, the original Mr.
5%, was able to refuse to answer questions about the sources of his
income. If he found questions to be offensive, he could
simply board his yacht and steam away to some friendlier
jurisdiction. But Delek is a Delaware corporation; its stockholders
have rights and even the most imperial chief executives are subject
to having their stockholders recall them to their duty. You might
believe that legions of lawyers will protect you but you should
keep in mind, it’s not the lawyers—no matter how overpaid—who vote
in corporate elections. It is the stockholders.
The immortal Joe Louis famously said about an
opponent, “he can run but he can’t hide.” And Mr. Yemin, you can’t
hide here. You are going to have to face your stockholders whether
you like it or not.
In addition, while we have no desire to enrich
your Praetorian Guard of white-shoe lawyers (especially given our
15% ownership of the Company’s stock which means that we will be
effectively paying 15% of their bills), if you continue to refuse
to discuss this matter with us reasonably we will have no choice
but to pursue it in court.
So, we suggest that you pick up the phone, give
us a call and rationally discuss our list of requested documents
with us. We also continue to be willing to try to resolve the
pending proxy contest in a reasonable way that is stockholder
friendly if you want to talk about that.
It’s up to you, Mr. Yemin. The stockholders will
be watching.
Sincerely,
CVR
ENERGY, INC.
/s/
David L. Lamp
David
L. Lamp
President and
Chief Executive Officer
Additional Information and Where to Find
it; Participants in the Solicitation
SECURITY HOLDERS ARE ADVISED TO READ THE PROXY
STATEMENT AND OTHER DOCUMENTS RELATED TO THE SOLICITATION OF
PROXIES BY CVR ENERGY, INC. AND AFFILIATES FROM THE STOCKHOLDERS OF
DELEK US HOLDINGS, INC. FOR USE AT THE 2021 ANNUAL MEETING OF
STOCKHOLDERS OF DELEK US HOLDINGS, INC. WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION, INCLUDING
INFORMATION RELATING TO THE PARTICIPANTS IN SUCH PROXY
SOLICITATION. WHEN COMPLETED, A DEFINITIVE PROXY STATEMENT AND A
FORM OF PROXY WILL BE MAILED TO STOCKHOLDERS OF DELEK US HOLDINGS,
INC. AND WILL ALSO BE AVAILABLE AT NO CHARGE AT THE SECURITIES AND
EXCHANGE COMMISSION'S WEBSITE AT HTTP://WWW.SEC.GOV. INFORMATION
RELATING TO THE PARTICIPANTS IN SUCH PROXY SOLICITATION IS
CONTAINED IN THE PRELIMINARY PROXY STATEMENT FILED BY CVR ENERGY,
INC. AND AFFILIATES WITH THE SECURITIES AND EXCHANGE COMMISSION ON
MARCH 9, 2021.
IMPORTANT DISCLOSURE INFORMATION
THIS LETTER CONTAINS OUR CURRENT VIEWS ON THE
VALUE OF SECURITIES OF DELEK US HOLDINGS, INC. OUR VIEWS ARE BASED
ON OUR OWN ANALYSIS OF PUBLICLY AVAILABLE INFORMATION AND
ASSUMPTIONS WE BELIEVE TO BE REASONABLE. THERE CAN BE NO ASSURANCE
THAT THE INFORMATION WE CONSIDERED AND ANALYZED IS ACCURATE OR
COMPLETE. SIMILARLY, THERE CAN BE NO ASSURANCE THAT OUR ASSUMPTIONS
ARE CORRECT. THE ACTUAL PERFORMANCE AND RESULTS OF DELEK US
HOLDINGS, INC. MAY DIFFER MATERIALLY FROM OUR ASSUMPTIONS AND
ANALYSIS.
OUR VIEWS AND OUR HOLDINGS COULD CHANGE AT ANY
TIME. WE MAY SELL ANY OR ALL OF OUR LONG POSITIONS, OR INCREASE OUR
LONG EXPOSURE BY PURCHASING ADDITIONAL SECURITIES. WE MAY TAKE ANY
OF THESE OR OTHER ACTIONS REGARDING DELEK US HOLDINGS, INC. WITHOUT
UPDATING THIS LETTER OR PROVIDING ANY NOTICE WHATSOEVER OF ANY SUCH
CHANGES (EXCEPT AS OTHERWISE REQUIRED BY APPLICABLE LAW).
THE INFORMATION CONTAINED ABOVE IS NOT AND
SHOULD NOT BE CONSTRUED AS INVESTMENT ADVICE AND DOES NOT PURPORT
TO BE AND DOES NOT EXPRESS ANY OPINION AS TO THE PRICE AT WHICH THE
SECURITIES OF DELEK US HOLDINGS, INC. MAY TRADE AT ANY TIME. THE
INFORMATION AND OPINIONS PROVIDED ABOVE SHOULD NOT BE TAKEN AS
SPECIFIC ADVICE ON THE MERITS OF ANY INVESTMENT DECISION. INVESTORS
SHOULD MAKE THEIR OWN DECISIONS REGARDING DELEK US HOLDINGS, INC.
AND THEIR PROSPECTS BASED ON SUCH INVESTORS’ OWN REVIEW OF PUBLICLY
AVAILABLE INFORMATION AND SHOULD NOT RELY ON THE INFORMATION
CONTAINED ABOVE. NEITHER CVR ENERGY, INC. NOR ANY OF ITS AFFILIATES
ACCEPTS ANY LIABILITY WHATSOEVER FOR ANY DIRECT OR CONSEQUENTIAL
LOSS HOWSOEVER ARISING, DIRECTLY OR INDIRECTLY, FROM ANY USE OF THE
INFORMATION CONTAINED ABOVE.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this letter are
forward-looking statements including, but not limited to,
statements that are predictions of or indications of future events,
trends, plans or objectives. Undue reliance should not be placed on
such statements because, by their nature, they are subject to known
and unknown risks and uncertainties. Forward-looking statements are
not guarantees of future performance or activities and are subject
to many risks and uncertainties. Due to such risks and
uncertainties, actual events or results or actual performance may
differ materially from those reflected or contemplated in such
forward-looking statements. Forward- looking statements can be
identified by the use of the future tense or other forward-looking
words such as “believe,” “expect,” “anticipate,” “intend,” “plan,”
“estimate,” “should,” “may,” “will,” “objective,” “projection,”
“forecast,” “continue,” “strategy,” “position” or the negative of
those terms or other variations of them or by comparable
terminology.
Important factors that could cause actual
results to differ materially from the expectations set forth in
this letter include, among other things, the factors identified
under the sections entitled “Risk Factors” in Delek US Holdings,
Inc.’s Annual Report on Form 10-K for the year ended December 31,
2020, filed by Delek US Holdings, Inc. with the Securities and
Exchange Commission on March 1, 2021, as well as the factors
identified in Delek US Holdings, Inc.’s other public filings,
including the Preliminary Proxy Statement filed by Delek US
Holdings, Inc. with the Securities and Exchange Commission on March
3, 2021 with respect to its 2021 Annual Meeting of Stockholders.
Such forward-looking statements should therefore be considered in
light of such factors, and we are under no obligation, and
expressly disclaim any intention or obligation, to update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by
law.
About CVR Energy, Inc.
Headquartered in Sugar Land, Texas, CVR Energy
is a diversified holding company primarily engaged in the petroleum
refining and marketing business through its interest in CVR
Refining and the nitrogen fertilizer manufacturing business through
its interest in CVR Partners, LP. CVR Energy subsidiaries serve as
the general partner and own 36 percent of the common units of CVR
Partners.
For further information, please contact:
Investor Contact:Richard RobertsCVR Energy,
Inc.(281) 207-3205InvestorRelations@CVREnergy.com
Media Relations:Brandee StephensCVR Energy,
Inc.(281) 207-3516MediaRelations@CVREnergy.com
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