UNITED STATES SECURITIES 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 /X/ Check the appropriate box: / / Preliminary Proxy Statement / / Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) / / Definitive Proxy Statement /x/ Definitive Additional Materials / / Soliciting Material Pursuant to Section 240.14a-12 BKF CAPITAL GROUP, INC. - -------------------------------------------------------------------------------- (Name of Registrant as Specified in Its Charter) STEEL PARTNERS II, L.P. STEEL PARTNERS, L.L.C. WARREN G. LICHTENSTEIN RONALD LABOW KURT SCHACHT - -------------------------------------------------------------------------------- (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. (1) Title of each class of securities to which transaction applies: - -------------------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: - --------------------------------------------------------------------------------(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): - -------------------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: - -------------------------------------------------------------------------------- (5) Total fee paid: - -------------------------------------------------------------------------------- / / Fee paid previously with preliminary materials: - -------------------------------------------------------------------------------- / / 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. (1) Amount previously paid: - -------------------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: - -------------------------------------------------------------------------------- (3) Filing Party: - -------------------------------------------------------------------------------- (4) Date Filed: -2- Steel Partners II, L.P. ("Steel") is filing materials contained in this Schedule 14A with the Securities and Exchange Commission in connection with the solicitation of proxies in support of the election of the nominees of Steel to the Board of Directors of BKF Capital Group, Inc. (the "Company") and other business proposals at the 2005 annual meeting of the stockholders of the Company scheduled to be held on June 23, 2005, or any other meeting of stockholders held in lieu thereof, and any adjournments, postponements, reschedulings or continuations thereof (the "Annual Meeting"). Item 1: On June 9, 2005, Steel issued the following press release, including a letter to the Company's stockholders, regarding the Annual Meeting. FOR ADDITIONAL INFORMATION, PLEASE CONTACT: Media: Sitrick And Company Investors: Morrow & Co., Inc. New York John Ferguson Mike Sitrick (800) 654-2468 Jeff Lloyd steel.info@morrowco.com (212) 573-6100 Los Angeles Terry Fahn (310) 788-2850 FOR IMMEDIATE RELEASE STEEL PARTNERS SAYS REAL ISSUE CONFRONTING BKF'S SHAREHOLDERS IS BKF'S DISMAL PERFORMANCE AND FAILURE TO ALIGN COMPENSATION WITH SHAREHOLDER INTERESTS NEW YORK, NY - JUNE 9, 2005 -- Steel Partners II, L.P. today called the last-minute postponement of BKF Capital Group's (NYSE: BKF) 2005 Annual Meeting a thinly-veiled attempt to cloud the real issues in the election of corporate directors, namely the Company's miserable operating performance and failure to tie compensation with the interests of shareholders. "While we welcome the admission by this Board into the modern world of corporate governance through the sudden adoption of corporate governance measures, the issue of the Company's continuing substandard financial performance still remains of paramount concern," said Warren G. Lichtenstein, the managing member of Steel Partners. "The fact that the Board has once again attempted to get by with as little as possible to maintain the status quo, we believe, more than ever demonstrates the need for BKF's shareholders to elect independent directors who will adopt a real plan for cutting expenses, aligning compensation with shareholders' interests, and eliminating related party transactions, all with the objective of enhancing profitability," he stated. In the attached letter that is being sent to all BKF shareholders, Steel Partners documents how BKF's performance has been unacceptable, compared to its peers. And yet, despite this miserable performance, BKF continues to generously reward its senior management and, on June 1, 2005, it granted golden parachutes to its General Counsel and Chief Financial Officer. Commenting on the corporate governance changes that were suddenly announced by BKF, Mr. Lichtenstein said, "The fact that BKF has belatedly adopted many of the proposals and positions that we advocated much earlier demonstrates that Steel's advocacy is already yielding benefits for the Company's shareholders. We believe that BKF has wasted corporate assets by resisting these corporate governance initiatives and then suddenly reversing its position and adopting these initiatives one day before the Annual Meeting." SHAREHOLDERS ARE URGED TO VOTE THE GOLD PROXY CARD FOR STEEL PARTNERS' THREE INDEPENDENT NOMINEES AND FOR EACH OF THE BUSINESS PROPOSALS DESCRIBED IN ITS PROXY STATEMENT. SHAREHOLDERS OF BKF ARE ADVISED TO READ THE DEFINITIVE PROXY STATEMENT AND OTHER DOCUMENTS RELATED TO THE SOLICITATION OF PROXIES BY STEEL PARTNERS II, L.P. AND THE OTHER PARTICIPANTS IN THE SOLICITATION FOR USE AT BKF'S ANNUAL MEETING SCHEDULED TO BE HELD ON JUNE 23, 2005. THE DEFINITIVE PROXY STATEMENT IS AVAILABLE AT NO CHARGE AT THE SECURITIES AND EXCHANGE COMMISSION'S WEB SITE AT WWW.SEC.GOV OR BY CALLING MORROW & CO., INC., TOLL FREE AT (800) 607-0088. THE TEXT OF THE LETTER FROM STEEL PARTNERS TO THE BKF SHAREHOLDERS FOLLOWS: A CRITICAL MESSAGE TO BKF CAPITAL GROUP, INC. STOCKHOLDERS FROM STEEL PARTNERS II, L.P. DO NOT LET BKF'S LAST MINUTE FLIP-FLOP ON CORPORATE GOVERNANCE REFORMS CONFUSE THE REAL ISSUE AT THE 2005 ANNUAL MEETING - BKF HAS FAILED TO ADDRESS ITS DISMAL OPERATING PERFORMANCE AND ALIGN COMPENSATION WITH STOCKHOLDER INTERESTS June 9, 2005 Fellow Stockholders: Steel Partners II, L.P. has previously written to you seeking your support at the 2005 Annual Meeting of BKF Capital Group, Inc. We are now writing in response to BKF's disturbing, last-minute postponement of the Annual Meeting originally scheduled to be held on June 9, 2005. Just one day before the Annual Meeting, BKF announced that the Board of Directors had suddenly adopted corporate governance changes that it had previously failed to address despite repeated stockholder demands. The Board has postponed the Annual Meeting to purportedly allow stockholders more time to consider the election of directors. We can only speculate as to their true motives in delaying the Annual Meeting and adopting last minute corporate governance reforms. WOULD ANY OF THESE CORPORATE GOVERNANCE REFORMS HAVE BEEN ADOPTED WITHOUT STEEL PARTNERS COMMENCING ITS PROXY CONTEST? YOUR SUPPORT FOR OUR NOMINEES IS ESSENTIAL IN ORDER TO CONTINUE TO HOLD BKF AND ITS BOARD ACCOUNTABLE. Due to your support for our nominees and the corporate governance initiatives that we are advocating, BKF's Board has been dragged kicking and screaming, against their will, into the modern world of corporate governance reform. BKF's Board is telling you that they are making these changes at the last minute due to some recent conversations with stockholders. If they had listened earlier to some of their largest stockholders, including Steel Partners, they may have been able to make significant changes without a proxy contest. We believe that BKF wasted corporate assets by fighting these corporate governance initiatives and then suddenly reversing its position and adopting these initiatives one day before the Annual Meeting. The Board stated that we don't have a business plan. We believe the real story is they simply don't want three independent directors on their board who will press them to adopt a real plan for cutting expenses, aligning compensation with stockholders' interests, and eliminating related party transactions, all with the objective of enhancing profitability. WE BELIEVE THEY DON'T WANT ANYONE ON THEIR BOARD THAT WILL MAKE THEM TOE THE LINE IN ORDER TO ENHANCE THE BOTTOM LINE. The fact that BKF has belatedly adopted many of our proposals and positions that we advocated much earlier we believe demonstrates that our advocacy is already yielding benefits for BKF's stockholders. THERE IS STILL MORE TO BE ACCOMPLISHED. BKF'S BOARD STILL DOES NOT UNDERSTAND THAT THE MAIN ISSUES IN THIS ELECTION CONTEST ARE IMPROVING OPERATING PERFORMANCE AND ALIGNING COMPENSATION WITH STOCKHOLDER INTERESTS! WHY IS BKF'S BOARD UNWILLING TO TIE COMPENSATION TO PERFORMANCE? We believe it is clear from the timing of BKF's June 8 announcement that the corporate governance reforms were adopted as a desperate measure to delay the 2005 Annual Meeting and cloud the real issues in this election. Corporate governance reform is important, achieving consistent profitability is paramount. BKF's June 8 announcement does not address the company's miserable operating performance. The following table shows beyond doubt that BKF's performance compared to its peers (measured by operating income and net income) is unacceptable. Employee costs as a percentage of revenue are staggering. What has BKF done in response to its operating performance woes? On June 1, 2005, it granted golden parachutes to its General Counsel and Chief Financial Officer. Twelve Months Ended December 31, 2004 ------------------------------------- Operating Employee Income Employee Cost as a as a Cost as a Percentage Operating Percentage Percentage of of Operating Return on Revenues Income of Revenues Revenues Income Equity -------- ------ ----------- -------- ------ ------ (dollars in millions) Affiliated Managers $660 $268 40.6% 36.6% 90.1% 11.7% Group Inc. Eaton Vance Corp.(1) $687 $235 34.3% 22.3% 65.1% 33.2% Gabelli Asset $255 $99 38.8% 38.1% 98.1% 17.1% Management Inc. Nuveen Investments $506 $255 50.4% 32.7% 64.8% 29.4% Inc. Waddell & Reed $504 $163 34.5% 16.5% 51.0% 51.8% Financial Inc. BKF CAPITAL GROUP, $123 $3 2.4% 76.3% 3,126.7% (1.9)% INC. 1 All figures for Eaton Vance Corp. are for the twelve months ended January 31, 2005. ELECT DIRECTORS WHO ARE COMMITTED TO ENHANCING VALUE FOR ALL BKF STOCKHOLDERS. Steel Partners' primary focus of this proxy contest is to elect directors who are committed to reining in BKF's ever-increasing compensation expenses by aligning compensation with performance and the interests of BKF's stockholders. BKF's Board continues to ignore these issues. By postponing the Annual Meeting, purportedly because of its belated adoption of certain corporate governance initiatives, which we believe BKF never would have adopted on its own initiative, BKF's Board has tried to divert stockholders' attention from these operational issues. 2 Our director nominees are committed to these goals and to bringing BKF's financial results in line with its peers. We call upon BKF's Board to publicly commit to changing BKF's compensation structure so that it is aligned with the interests of BKF's stockholders. We believe BKF's Board should publicly (1) adopt a plan that it reasonably believes would result in BKF achieving operating income as a percentage of revenue of 39.1%, net income as a percentage of revenue of 21.3% and return on equity of 28% for 2005 (which figures represent the median results of the five peer companies in the table above), and (2) commence a search for a chief operating officer whose focus would be on achieving these goals. Unlike BKF's Board, which has flip-flopped on many of the issues raised during this proxy contest, we have remained steadfast in our platform. We urge you to elect our director nominees and to vote in favor of the other proposals on our GOLD proxy card. Although BKF's Board wants you to believe that your vote is moot on certain of these proposals, it is not! Your vote will clearly state to BKF's Board that enough is enough and that corporate governance reforms and an improved plan of operations must be approved and fully implemented. LET'S EXAMINE THE FACTS SURROUNDING THE BKF BOARD'S ACTIONS DISCLOSED IN ITS JUNE 8 ANNOUNCEMENT. ELIMINATION OF RIGHTS PLAN For three years, non-binding stockholder proposals were overwhelmingly adopted by the stockholders demanding that BKF's Board redeem the poison pill. The Board ignored each and every one of these stockholder proposals. In fact, in its proxy statement dated May 10, 2005, the BKF Board stated that "the Board of Directors believes that the Rights Plan as amended is in the best interests of the Company and its stockholders." However, on June 8, 2005, the Board announced that it had approved the full redemption of the rights under the Rights Plan effective on the date on which the Annual Meeting is held. WHAT CHANGED DURING THIS 28-DAY PERIOD? HAS THE BOARD SEEN THE LIGHT, OR IS IT MERELY PANDERING FOR VOTES TO ELECT ITS SLATE OF DIRECTOR NOMINEES? PURPORTED SALE PROCESS In its proxy statement dated May 10, 2005, the BKF Board opposed the stockholder proposal that an investment banking firm be engaged to pursue a sale of the company. How curious! Nowhere in BKF's proxy statement did it state that in 2005 it had retained an investment banking firm to explore a sale of the company. We believe this information should have been disclosed in BKF's original proxy statement. What did BKF do instead? On June 8, 2005, the Board announced that earlier this year it had indeed retained Merrill Lynch and Peter J. Solomon Company to explore strategic alternatives, including a possible sale of the company. HOW CAN BKF'S BOARD OPPOSE THE STOCKHOLDER PROPOSAL TO ENGAGE AN INVESTMENT BANKING FIRM WHEN THEY HAD ALREADY DONE THAT WHICH WAS BEING ASKED OF THEM? IS THIS THE BOARD YOU WANT TO TRUST TO EXPLORE POTENTIAL STRATEGIC ALTERNATIVES FOR SELLING THE COMPANY? The Board would like you to believe that the stockholder proposal to retain an investment banking firm to explore the sale of the company is moot because of its newly revealed actions. We question this conclusion. Could it be that BKF's Board was never fully committed to a sale process since BKF's June 8 announcement indicates that only a limited number of potential acquirors were contacted? 3 RELATED PARTY TRANSACTIONS We and other stockholders have expressed serious concerns with BKF's history of related party transactions. This pattern continues with the revelation in BKF's June 8 announcement that Peter J. Solomon Company was retained purportedly to assist in the sale of the company. DID THE BKF BOARD BELIEVE THAT MERRILL LYNCH WAS NOT CAPABLE OF PROPERLY EXPLORING THE SALE OF THE COMPANY ON ITS OWN? WHAT SPECIAL INSIGHT OR CONNECTIONS DOES PETER J. SOLOMON COMPANY POSSESS THAT MERITED THE ENGAGEMENT OF A SECOND FIRM? HOW MUCH WILL PETER J. SOLOMON COMPANY BE PAID BY BKF FOR THESE SERVICES? AS CORPORATE GOVERNANCE IS A KEY ISSUE IN THIS PROXY CONTEST, SHOULDN'T THIS ARRANGEMENT HAVE BEEN DISCLOSED IN BKF'S PROXY STATEMENT? IN FACT, SHOULD A RELATED PARTY SUCH AS PETER J. SOLOMON COMPANY HAVE BEEN RETAINED AT ALL? IS BKF'S BOARD FULLY COMMITTED TO OBTAIN THE 80% SUPERMAJORITY VOTE NECESSARY TO APPROVE THE PROPOSAL TO DESTAGGER THE BOARD AND ELIMINATE THE SUPERMAJORITY PROVISIONS FOR CERTAIN FUNDAMENTAL TRANSACTIONS? In order for BKF's charter to be amended to destagger the Board and eliminate the supermajority provisions for certain fundamental transactions, these actions must be approved by the vote of at least 80% of the outstanding shares of common stock. WHY DID BKF ALLOW ONLY APPROXIMATELY 30 DAYS TO SOLICIT VOTES IN FAVOR OF THESE PROPOSALS? WHY HAS BKF'S BOARD NOT PUBLICLY STATED THAT THE MEMBERS OF THE BOARD WILL VOTE THEIR SHARES IN FAVOR OF THESE AMENDMENTS? We question whether these reforms would have been proposed by BKF's Board without pressure from Steel Partners and other stockholders. We continue to view this proxy contest as a means of last resort by which stockholders can hold BKF's Board accountable for its slow, reactionary approach to corporate governance reform. The facts speak for themselves. The Board's binding proposal to destagger the Board was only recommended after we submitted our non-binding proposal to destagger the Board. The Board subsequently revised its proposal so that all directors would serve one-year terms beginning with the 2006 Annual Meeting (instead of the 2008 Annual Meeting) after Steel Partners pointed out this deficiency. WOULD BKF'S BOARD HAVE MADE THIS CRITICAL MODIFICATION TO THE BOARD DECLASSIFICATION PROPOSAL WITHOUT PRESSURE FROM STEEL PARTNERS? Your support for our nominees has proven to be extremely effective in forcing the Board to adopt important changes for the benefit of BKF and all its stockholders. Please help us continue this effort by signing and returning your GOLD proxy card today. Thank you for your support, /s/ Warren Lichtenstein -------------------------------- Warren Lichtenstein 4 ================================================================================ IMPORTANT PLEASE SIGN, DATE AND RETURN THE ENCLOSED GOLD PROXY CARD TODAY IN THE POSTAGE-PAID ENVELOPE PROVIDED. DO NOT SIGN ANY WHITE PROXY CARD THAT YOU MAY RECEIVE FROM THE COMPANY. If your shares are held on your behalf by a broker or bank, please sign, date and return the GOLD proxy in the envelope provided and contact the person responsible for your account and ask them to ensure that your shares are voted on the GOLD card. IF YOU HAVE ANY QUESTIONS, OR NEED ASSISTANCE IN VOTING YOUR SHARES, PLEASE CONTACT THE FIRM ASSISTING US IN THE SOLICITATION OF PROXIES: MORROW & CO., INC. 445 Park Avenue, 5th Floor New York, New York 10022 (212) 754-8000 BANKS AND BROKERAGE FIRMS, PLEASE CALL: (800) 654-2468 STOCKHOLDERS CALL TOLL FREE: (800) 607-0088 E-MAIL: STEEL.INFO@MORROWCO.COM ================================================================================
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DFAN14A Filing
Steel Partners Ii Inactive DFAN14AAdditional proxy materials by non-management
Filed: 9 Jun 05, 12:00am