Ladies and Gentlemen,
Hawksbill Holdings, LLLP is a significant, long-term shareholder of Innodata (NASDAQ: INOD).
This year's Annual Meeting was very disappointing. Based on management's presentations, it is clear that no credible plan exists to meaningfully grow Innodata's businesses and enhance shareholder value. Perhaps most revealing in this regard was the implication that the turnaround at the company's DDS segment is dependent upon the productization of its internal AI/ML tools; the Team Lead at Innodata Labs said, "We hope we'll find a great niche market for these tools." Hope is not a convincing strategy to enhance shareholder value.
The Annual Meeting discourse also made clear that any improvement in corporate governance that appeared to begin with the recent reconstitution of the Board ended with that action. The Board refuses to name an independent Chair, the Board refuses to require any meaningful director stock ownership and the Board refuses to implement best practices such as a majority voting standard. Shareholders voiced their dissatisfaction with the Board by withholding 43% of the votes cast in the latest election from Innodata's Lead Independent Director.
Innodata's directors owe the corporation and its shareholders the unyielding fiduciary duties of care and loyalty. These responsibilities, coupled with Innodata's long history of shareholder value destruction and an intangible forward business plan, obligate the Board to explore all strategic alternatives immediately, including a sale of the entirety of the company. Hawksbill estimates a sale of the company to a strategic buyer would generate shareholder returns in excess of 200%. The immediacy and surety of this result is a sharp contrast to the management team's uncertain and vague path to enhance shareholder value.
During its 2017 year-end conference call on March 5, 2018, Innodata disclosed that it retained turnaround consultant Al Angrisani to "validate the course of this charting toward creating improved shareholder value and to evaluate each segment's strategy." Hawksbill calls on the Board to disclose to shareholders the findings of Mr. Angrisani's engagement. Additionally, Hawksbill calls on the Board to disclose any unsolicited, inbound offers or inquiries to acquire all or portions of the business. This transparency will enable Innodata's shareholders to fully assess the Board's actions and the management team's decision making.
I look forward to our continuing dialogue on these matters and improved outcomes for Innodata shareholders.
Manager and President
SOURCE: Hawksbill Holdings, LLLP
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