Ken Peterman, Former CEO of Comtech, Endorses Michael Porcelain's Full Slate of Director Nominees

Rhea-AI Summary

Ken Peterman, former CEO and Chairman of Comtech Telecommunications Corp. (NASDAQ: CMTL), has publicly endorsed Michael Porcelain's full slate of director nominees for the company's 2024 Annual Meeting of Stockholders. Peterman is the third former CEO calling for a complete Board overhaul to restore stockholder value.

Peterman, who remains a large stockholder, was a driving force behind the One Comtech initiative aimed at accelerating long-term growth. He expressed serious concerns about the current Board's decisions, including a June 2024 financing deal with an effective interest rate exceeding 18.0%.

Peterman praised both Porcelain and Fred Kornberg for their operational and strategic expertise, citing their roles in Comtech's growth and transformation. He emphasized the need for a Board with deep operational expertise and a proven track record of delivering long-term stockholder value.

Positive

• Ken Peterman, former CEO and Chairman, endorses Michael Porcelain's full slate of director nominees
• Three former CEOs are calling for a complete Board overhaul to restore stockholder value
• Peterman remains a large stockholder, indicating confidence in the company's potential
• The One Comtech initiative aimed to accelerate long-term growth and drive efficiencies

Negative

• Current Board's decisions have disrupted progress and impeded stockholder value
• June 2024 financing deal criticized as potentially one of the worst in recent memory, with an effective interest rate exceeding 18.0%
• Board's lack of critical domain expertise in core satellite and NG 911 markets jeopardizes Comtech's future
• Talented executives have been driven away, impacting customer relations

Insights

Corporate Governance Expert

This endorsement by Ken Peterman, a former CEO and Chairman of Comtech, adds significant weight to the call for board restructuring. His support for Michael Porcelain's slate of director nominees, alongside two other former CEOs, indicates a serious governance issue within the company.

Peterman's critique of the current board's decisions, particularly the June 2024 financing deal with its high effective interest rate, raises red flags about financial management. The lack of domain expertise on the board in Comtech's core markets is concerning for the company's strategic direction.

This situation highlights a potential proxy fight brewing, which could lead to significant changes in Comtech's leadership and strategy. Investors should closely monitor the upcoming 2024 Annual Meeting, as its outcome could have substantial implications for the company's future governance and performance.

Financial Analyst

The article reveals serious concerns about Comtech's financial management and strategic direction. The June 2024 financing deal, described as "one of the worst in recent memory," with an effective interest rate exceeding 18%, is particularly alarming. This high-cost financing could significantly impact the company's profitability and financial flexibility.

The endorsement from three former CEOs for a board overhaul suggests a lack of confidence in the current leadership's ability to create shareholder value. This internal conflict and potential for major governance changes create uncertainty, which could negatively affect investor sentiment and stock performance in the short term.

However, if the proposed changes lead to improved governance and strategic execution, it could potentially benefit long-term shareholder value. Investors should carefully weigh the risks and potential rewards of this situation.

Peterman Becomes the Third Former CEO of Comtech Calling for a Complete Board Overhaul to Restore Stockholder Value

WASHINGTON, Oct. 8, 2024 /PRNewswire/ -- Ken Peterman, former CEO of Comtech Telecommunications Corp. (NASDAQ: CMTL) ("Comtech" or the "Company") and Chairman of the Board from July 2022 through March 2024, has publicly declared his personal endorsement for the full slate of director nominees proposed by Michael Porcelain for the Company's upcoming 2024 Annual Meeting of Stockholders.

Mr. Peterman's endorsement comes after reading the open letter to stockholders that was issued by Fred Kornberg and Michael Porcelain on September 23, 2024. That letter detailed the urgent need for board and leadership changes necessary to restore Comtech's shareholder value. Mr. Peterman is the third former CEO of Comtech calling for a fully reconstituted Board of Directors.

Mr. Peterman, who remains a large stockholder of Comtech and who succeeded both Fred Kornberg and Mike Porcelain as CEO, was a driving force behind the One Comtech initiative—a strategic transformation designed to accelerate Comtech's long-term growth by unifying existing businesses into an integrated enterprise. The initiative aimed to cut operating costs, drive efficiencies, and create greater customer value through systems and services, rather than selling individual components.

Peterman stated: "The One Comtech strategy was built on the strong strategic and operational foundation Fred and Mike laid over decades. Their visionary leadership spurred Comtech's growth through acquisitions and operational excellence, allowing these entities to operate independently. When I became CEO, Comtech was positioned for growth, and its operations were solid. When I departed, the One Comtech strategy was well on its way to driving long-term shareholder value. Unfortunately, the current Board's collective actions have disrupted this progress, driving away talented executives, impacting customer relations, and impeding stockholder value."

Peterman continued, "I have serious concerns about many decisions made by the current Board. For instance, the June 2024 financing deal may be one of the worst in recent memory. With a blended interest rate of 14.0%, augmented by the issuance of warrants to lenders, the effective interest rate appears to exceed 18.0%, which is similar to a credit card. The Board's lack of critical domain expertise in Comtech's core satellite and NG 911 markets, has and will jeopardize Comtech's future. Comtech, its employees, and its stockholders deserve better."

Peterman, Kornberg, and Porcelain Praised by Current Board Members for Their Operational and Strategic Expertise and Commitment to Shareholder Value

Mr. Peterman stated, "In July 2022, when I assumed the role of Chairman of the Board, I was asked to help guide Comtech through its ongoing transformation. At that time, I publicly expressed my excitement about Comtech's immense potential.  Additionally, I was eager to collaborate with Mr. Porcelain to build upon the strong foundation in place. Together, we had extensive operational and strategic experience and the Board fully recognized and valued the leadership of Mike and Fred:

Mike Porcelain — In October 2021, three current Board members—Judy Chambers, Larry Waldman, and Yacov Shamash—acknowledged Mike's instrumental role in executing Comtech's business strategies. They specifically noted his leadership in expanding the Next-Generation 911 and satellite earth station product lines and overseeing acquisitions such as Solacom Technologies Inc. and UHP Networks. The Board publicly stated that Mike was instrumental in developing and executing business strategies, driving substantial shareholder value across all facets of the Company, and that he was highly valued for his exceptional management skills, technical acumen, and understanding of the business. In January 2022, current Board member Wendi Carpenter and current Chairman of the Board Mark Quinlan joined Ms. Chambers, Mr. Waldman and Mr. Shamas in reaffirming that Mike Porcelain had positioned Comtech for a bright future.

Fred Kornberg — When Fred decided to retire, the Board acknowledged that his nearly five-decade tenure as CEO earned him respect for establishing Comtech as a market leader in satellite communications and 911 public safety products. The Board noted: "When Fred took on the role of CEO, Comtech had less than $20 million in revenue and approximately $1 million in net income. Today, Comtech is a global leader with over 2,000 employees around the world."

Mr. Peterman further added, "When I took on the role as Chairman of the Board, I told Fred that he was an amazing leader with a highly successful tenure that commanded my deepest respect and admiration. I was genuinely awed by how he navigated the many challenges posed by a multi-dimensional environment, continually changing market dynamics, competitive landscapes, and technology disruptions."

Shareholder Status

Mr. Peterman stated: "As a large stockholder, I hope my endorsement highlights the growing recognition that Comtech's future must be shaped by a Board of Directors with deep operational expertise and a proven track record of delivering long-term stockholder value. Both Fred and Mike have consistently demonstrated operational and strategic excellence, and with my endorsement, the case for electing Mr. Porcelain's full slate of nominees is even stronger."

Mr. Peterman concluded: "My endorsement is independent, is unrelated to my departure, and based solely on my personal assessment of what I believe is in the best interest of Comtech's stockholders, customers, and its talented employees."

About Ken Peterman

Ken Peterman is the Founder and CEO of the TheSpyGlass Group, a respected thought leader in emerging defense and aerospace market trends. Since 2012, The SpyGlass Group has worked with industry and government leaders to recognize and exploit market convergences and technology inflections to create advantage as well as with businesses to formulate effective strategies. Ken became a director of the Board of Directors of Comtech in May 2022, was elected to its Chairman in July 2022 and assumed the role of President and CEO in August 2022. Prior to that, Ken served as President of Viasat Government Systems from 2013 to 2021.

Contact:
Ken Peterman
Ken@theSpyGlassGroup.com
Telephone: (260) 215-7272

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SOURCE Ken Peterman

FAQ

Who is Ken Peterman and why is his endorsement significant for Comtech (CMTL)?

Ken Peterman is the former CEO and Chairman of Comtech Telecommunications Corp. His endorsement is significant because he is the third former CEO calling for a complete Board overhaul to restore stockholder value, adding weight to the push for change in the company's leadership.

What is the One Comtech initiative mentioned in relation to CMTL?

The One Comtech initiative was a strategic transformation designed to accelerate Comtech's long-term growth by unifying existing businesses into an integrated enterprise. It aimed to cut operating costs, drive efficiencies, and create greater customer value through systems and services.

What concerns did Ken Peterman express about Comtech's (CMTL) current Board?

Peterman expressed serious concerns about the current Board's decisions, including a June 2024 financing deal with an effective interest rate exceeding 18.0%. He also criticized the Board's lack of critical domain expertise in Comtech's core satellite and NG 911 markets, which he believes jeopardizes the company's future.

Why is Ken Peterman endorsing Michael Porcelain's slate of director nominees for Comtech (CMTL)?

Peterman is endorsing Porcelain's slate because he believes Comtech's future must be shaped by a Board with deep operational expertise and a proven track record of delivering long-term stockholder value. He praised Porcelain and Kornberg for their operational and strategic excellence in growing the company.