| CORRECTION: The original post misquoted Shapiro and erred in saying Mace never disclosed that it did not buy back stock. Our apologies. PhillyInc |
Mace Security International Inc. (NASDAQ: MACE) Chief Executive Louis D. Paolino Jr., who trumpeted his company's plans to buyback $2 million in shares earlier this week, was blasted by his company's largest shareholder Andrew Shapiro and others over its stock buyback plans and its disclosure that it never actually bought any shares back under a $3 million repurchase plan announced in 2004.
Paolino discussed the stock-buyback-that-never-happened during his company's quarterly earnings conference call yesterday. And it led him to trade barbs with Shapiro, the head of Lawndale Capital Management LLC., who has been railing about Paolino and his management of Mace for many months.
During the call today, Shapiro said: "I've been astounded by what I have been hearing in the call." He said the 2004 buyback had been mentioned in filings since 2004, including one issued a few weeks ago, as fully authorized and ongoing.
Paolino snapped back that Mace was advised by its legal counsel that it needed a new board authorization for the new buyback, even though it never purchased any shares from its old plan. He said to Shapiro on the phone, for all to hear: "Hey, what is your issue with this. The rules are the rules."
When Shapiro asked Paolino why this year's buyback is smaller than the one (promised) in 2004, Paolino replied that there was a different "decision-making process." That's probably code for the stock is much cheaper. In 2004, it hit more than $7 and today trades under $2.
In an interview after the call, Shapiro said he wished Paolino had bought Mace stock instead of investing in other companies that turned out to be money-losers. This time, Shapiro said he hopes Paolino really does buy shares, but he said he isn't optimistic."After three years of a much larger buyback and the stock price collapsing providing innumerable downtick purchasing opportunities and with the company not acquiring a single solitary share, I see no reason to date that any shares under the current buyback will be acquired either."
Both Paolino and Shapiro agree that Mace's stock is cheap. Shares of the Mount Laurel company are down about 24 percent this year and are trading under the company's book value (total assets minus liabilities). Said Paolino: "Where the stock is right now – we're very excited to be buying it back. In fact, they're (the board) very open to discussing bigger buybacks."
