WASHINGTON, D.C. 20549
-------------
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
Under the Securities Exchange Act of 1934
(Amendment No. 5)*
Griffon Corporation
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(Name of Issuer)
Common Stock, par value $0.25 per share
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(Title of Class of Securities)
398433102
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(CUSIP Number)
Marc Weingarten, Esq.
Schulte Roth & Zabel LLP
919 Third Avenue
New York, New York 10022
(212) 756-2000
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
June 28, 2007
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(Date of Event which Requires
Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following
box. [ ]
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7 for other parties
to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 10 Pages)
- --------------------------
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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CUSIP NO. 398433102 SCHEDULE 13D PAGE 2 OF 10 PAGES
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- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
CLINTON GROUP, INC.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
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7 SOLE VOTING POWER
-0-
----------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 2,669,740
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON WITH -0-
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
2,669,740
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
2,669,740
- --------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.0%
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14 TYPE OF REPORTING PERSON*
IA; CO
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* SEE INSTRUCTIONS
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CUSIP NO. 398433102 SCHEDULE 13D PAGE 3 OF 10 PAGES
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- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
CLINTON MULTISTRATEGY MASTER FUND, LTD.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
CAYMAN ISLANDS
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7 SOLE VOTING POWER
-0-
----------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 2,386,260
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON WITH -0-
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
2,386,260
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
2,386,260
- --------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
[ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.0%
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14 TYPE OF REPORTING PERSON*
CO
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* SEE INSTRUCTIONS
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CUSIP NO. 398433102 SCHEDULE 13D PAGE 4 OF 10 PAGES
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- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
CLINTON SPECIAL OPPORTUNITIES MASTER FUND, LTD.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
CAYMAN ISLANDS
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
-0-
----------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 283,480
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON WITH -0-
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
283,480
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
283,480
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
[ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.0%
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14 TYPE OF REPORTING PERSON*
CO
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* SEE INSTRUCTIONS
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CUSIP NO. 398433102 SCHEDULE 13D PAGE 5 OF 10 PAGES
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1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
GEORGE E. HALL
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
AF
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
-0-
----------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 2,669,740
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON WITH -0-
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
2,669,740
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
2,669,740
- --------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.0%
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14 TYPE OF REPORTING PERSON*
IN
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* SEE INSTRUCTIONS
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CUSIP NO. 398433102 SCHEDULE 13D PAGE 6 OF 10 PAGES
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1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
CONRAD BRINGSJORD
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
AF
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
-0-
----------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 2,669,740
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON WITH -0-
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
2,669,740
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
2,669,740
- --------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.0%
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14 TYPE OF REPORTING PERSON*
IN
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* SEE INSTRUCTIONS
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CUSIP NO. 398433102 SCHEDULE 13D PAGE 7 OF 10 PAGES
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The Schedule 13D filed on December 20, 2006 by Clinton Group, Inc., a Delaware
corporation ("CGI"), Clinton Multistrategy Master Fund, Ltd., a Cayman Islands
company ("CMSF"), Clinton Special Opportunities Master Fund, Ltd., a Cayman
Islands company ("CSO"), George E. Hall and Conrad Bringsjord (collectively, the
"Reporting Persons"), with respect to the shares of Common Stock, par value
$0.25 per share (the "Shares"), of Griffon Corporation, a Delaware corporation
(the "Issuer"), as previously amended by Amendment No. 1 dated February 7, 2007,
Amendment No. 2 dated March 15, 2007, Amendment No. 3 dated May 9, 2007 and
Amendment No. 4 dated May 31, 2007 is hereby amended as set forth herein by this
Amendment No. 5.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Item 3 of the Schedule 13D is hereby amended and restated as follows:
Funds for the purchase of the Shares reported herein were derived from
available capital of CMSF and CSO. A total of approximately $63.4 million was
paid to acquire such Shares.
ITEM 4. PURPOSE OF TRANSACTION.
Item 4 of the Schedule 13D is hereby amended by the addition of the following:
On June 28, 2007, CGI sent a letter to the Issuer's Board of Directors
expressing disappointment with the response CGI had received from the Issuer's
Chairman with respect to CGI's proposal for a public recapitalization of the
Issuer, and detailing the response's mischaracterizations of the CGI proposal.
The letter noted that CGI had met with the Issuer's advisers to discuss the
proposal, all aspects of which were negotiable, but that the Issuer had clearly
determined to reject the proposal out of hand and the meeting had been
unproductive. CGI again expressed its willingness to engage in serious
negotiations of its recap proposal. The letter further noted that the Issuer's
conduct of a review of its strategic alternatives should not preclude it from
making immediate changes to improve its corporate governance and reign in its
excessive management compensation, and that if the Issuer did not make such
changes then CGI intended to commence a solicitation to call a special meeting
of shareholders to address such issues. A copy of this letter is attached hereto
as Exhibit F and is incorporated herein by reference.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Paragraphs (a), (b) and (c) of Item 5 of the Schedule 13D are hereby amended and
restated as follows:
(a) As of the close of business on June 27, 2007, the Reporting Persons
beneficially owned an aggregate of 2,669,740 Shares, constituting approximately
9.0% of the Shares outstanding.
The aggregate percentage of Shares beneficially owned by the Reporting
Persons is based upon 29,824,276 Shares outstanding, which is the total number
of Shares outstanding as of April 30, 2007 as reported in the Issuer's Quarterly
Report on Form 10-Q for the period ended March 31, 2007.
(b) By virtue of investment management agreements with each of CMSF and
CSO, CGI has the power to vote or direct the voting, and to dispose or direct
the disposition, of all of the 2,386,260 Shares held by CMSF and the 283,480
Shares held by CSO. By virtue of his direct and indirect control of CGI, George
E. Hall is deemed to have shared voting power and shared dispositive power with
respect to all Shares as to which CGI has voting power or dispositive power. By
virtue of his position as managing director and senior portfolio manager of CGI,
Conrad Bringsjord is also deemed to have shared voting power and shared
dispositive power with respect to all Shares as to which CGI has voting power or
dispositive power. Accordingly, CGI, George E. Hall and Conrad Bringsjord are
deemed to have shared voting and shared dispositive power with respect to an
aggregate of 2,669,740 Shares.
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CUSIP NO. 398433102 SCHEDULE 13D PAGE 8 OF 10 PAGES
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(c) Information concerning transactions in the Shares effected by the
Reporting Persons since the most recent filing on Schedule 13D is set forth in
Schedule B hereto and is incorporated herein by reference. Unless otherwise
indicated, all of such transactions were effected in the open market.
Item 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Item 6 of the Schedule 13D is hereby amended and restated as follows:
The Reporting Persons may, from time to time, enter into and dispose of
cash-settled equity swap or other similar derivative transactions with one or
more counterparties that are based upon the value of Shares, which transactions
may be significant in amount. The profit, loss and/or return on such contracts
may be wholly or partially dependent on the market value of the Shares, the
relative value of Shares in comparison to one or more other financial
instruments, indexes or securities, a basket or group of securities in which
Shares may be included, or a combination of any of the foregoing. In addition to
the Shares that they beneficially own without reference to these contracts, the
Reporting Persons currently have long economic exposure to 234,200 Shares
through such contracts. These contracts do not give the Reporting Persons direct
or indirect voting, investment or dispositive control over any securities of the
Issuer and do not require the counterparties thereto to acquire, hold, vote or
dispose of any securities of the Issuer. Accordingly, the Reporting Persons
disclaim any beneficial ownership in any securities that may be referenced in
such contracts or that may be held from time to time by any counterparties to
such contracts.
Except as otherwise set forth herein, the Reporting Persons do not have
any contract, arrangement, understanding or relationship with any person with
respect to the securities of the Issuer.
Item 7. MATERIAL TO BE FILED AS EXHIBITS
Item 7 of the Schedule 13D is hereby amended and restated as follows:
Exhibit A - Joint Filing Agreement dated December 20, 2006 (previously filed)
Exhibit B - Letter to Issuer dated December 20, 2006 (previously filed)
Exhibit C - Letter to Issuer dated March 15, 2007 (previously filed)
Exhibit D - Letter to Issuer dated May 8, 2007 (previously filed)
Exhibit E - Letter to Issuer dated May 30, 2007 (previously filed)
Exhibit F - Letter to Issuer dated June 28, 2007
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CUSIP NO. 398433102 SCHEDULE 13D PAGE 9 OF 10 PAGES
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SIGNATURES
After reasonable inquiry and to the best of his or its knowledge and
belief, each of the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Dated: June 28, 2007
CLINTON GROUP, INC.
By: /s/ Francis Ruchalski
---------------------------
Name: Francis Ruchalski
Title: Comptroller
CLINTON MULTISTRATEGY MASTER FUND, LTD.
By: Clinton Group, Inc. its investment
manager
By: /s/ Francis Ruchalski
---------------------------
Name: Francis Ruchalski
Title: Comptroller
CLINTON SPECIAL OPPORTUNITIES MASTER FUND, LTD.
By: Clinton Group, Inc. its investment
manager
By: /s/ Francis Ruchalski
---------------------------
Name: Francis Ruchalski
Title: Comptroller
/s/ George E. Hall
------------------------------
George E. Hall
/s/ Conrad Bringsjord
------------------------------
Conrad Bringsjord
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CUSIP NO. 398433102 SCHEDULE 13D PAGE 10 OF 10 PAGES
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SCHEDULE B
TRANSACTIONS IN THE SHARES BY THE REPORTING PERSONS SINCE THE MOST RECENT FILING
ON SCHEDULE 13D
Clinton Multistrategy Master Fund, Ltd.
Trade Date Shares Purchased (Sold) Price Per Share ($)
---------- ----------------------- -------------------
06/06/2007 1,000 22.74
06/07/2007 6,000 22.65
06/08/2007 3,000 22.61
06/11/2007 4,000 22.50
06/12/2007 4,000 22.19
06/19/2007 2,000 22.52
06/19/2007 1,000 22.45
06/20/2007 12,500 22.36
06/21/2007 1,000 22.23
06/21/2007 1,600 22.28
06/22/2007 25,400 22.06
06/25/2007 5,000 22.04
06/25/2007 25,000 22.05
06/26/2007 20,000 21.97
06/27/2007 23,200 21.55
Exhibit F
LETTER TO THE ISSUER'S BOARD OF DIRECTORS
June 28, 2007
Board of Directors
Griffon Corporation
100 Jericho Quadrangle
Jericho, New York 11753
To Griffon Board Members:
We were deeply disappointed with Mr. Blau's response to our last
letter to the Board, dated May 30, 2007, proposing a public recapitalization of
the Company. Our letter reflected a good faith proposal to unlock shareholder
value, while the response contained a significant number of clear
mischaracterizations of our proposal and our intentions, including the
following:
o Our public recapitalization proposal is not "indefinite". Its
terms were set forth with specificity, and when we later discussed it with your
investment bankers; they seemed to understand it quite clearly.
o We are not attempting to "take control" of the Company with only a
$65 million investment. In reality, we are attempting to RETURN control of the
Company to the stockholders and, to achieve this, our proposal reflects an
ADDITIONAL investment of $65 million that, when added to our existing position
as the second largest stockholder, and combined with the proposed 50% reduction
in shares as a result of the tender offer, would result in our owning close to
20% of the Company. To be clear, we want a majority of current directors removed
but our firm would be satisfied to obtain directorships consistent with our pro
forma ownership with the remainder of the new directors being comprised of
independent board members that will put the interests of the stockholders first.
o It is wholly inaccurate to portray our intentions as a short-term
profit motive at the expense of other stockholders. Our proposal gives other
stockholders not only an immediate premium to the current stock price to the
extent they participate in the tender offer but also permits each stockholder to
participate, with us as the largest stockholder on a continuing basis, in the
upside of the Company on the non-tendered portion of their holdings.
o Your filing also stated that our proposal reflected a valuation
for the Company that was lower than our initial valuation. The stockholders will
be afforded the opportunity to decide for themselves whether the valuation
reflected in the tender offer is appropriate in deciding whether or not to
tender their shares. Moreover, in our opinion your poor management execution has
made the Company worth less than it could be under the right plan;
June 28, 2007
Page 2
that you would essentially highlight your failures in the process of ignoring
our proposals strikes us as ironic.
Fundamentally, Mr. Blau's letter makes clear that you prejudged that
our proposal was not in the best interest of the stockholders based on some sort
of "initial review". Nevertheless, in good faith, we did as Mr. Blau requested
and met with the Company's advisers in the hopes of discussing our proposal and
negotiating the terms of our public recapitalization plan. As the attached
presentation that we provided at the meeting with the Company's financial
advisers clearly states, we were open to modify any and all terms of our public
recapitalization proposal including, but not limited to:
o Tender price;
o Tender percentage;
o Financing structure;
o Composition of the board of directors;
o Modifications to Griffon's corporate governance and executive
compensation;
o The restructuring firm we feel is required to dramatically reduce
the Company's cost structure (as opposed to a part-time CEO focused
on Aeroflex issues); and,
o The size of our equity commitment.
We also note the positive response to two recent sizeable
recapitalizations. Expedia is repurchasing 42% of its outstanding shares in a
Dutch Tender and Home Depot has increased its repurchase to over $40 billion. In
fact, the initial reaction to our plan was quite positively received by the
market only to be squashed by the Company's lack of consideration and continued
entrenchment as reflected in the 8K filing. Further, we note that our analysis
and actions seem to be supported by Rochdale Securities June 22, 2007 report on
the Company. Their one objection related to board control and hopefully our
position on this issue as stated to your advisers and in this letter has
addressed this concern.
While the Company's financial advisers were polite in our meeting, it
was clear that neither they nor the Board has any current intention to negotiate
the terms of our proposal, and instead of providing guidance as to what
modifications would be necessary for the Company to proceed with such a
proposal, we were informed that our proposal would merely be incorporated into
the broader strategic review process and reviewed only upon completion of such
process. When we asked about the timing of this process, the response was
ambiguous and your advisers suggested that we be patient.
In any case, we fail to understand how executive compensation
reduction and improvement of the Company's governance is in any way precluded by
a "global" review of strategic options. We urge the Board to implement these
changes IMMEDIATELY. For example,
June 28, 2007
Page 3
Griffon scores a paltry 15.1% Corporate Governance Quotient according to
Institutional Investor Services while your competitor, EDO Corporation, scores a
93.7%. Perhaps coincidently but no less comforting to Griffon shareholders,
EDO's stock has appreciated approximately 40% this year.
If the Company does not implement at least these changes immediately,
we intend to commence a solicitation to call a special meeting of shareholders
(your management-entrenching 66% threshold notwithstanding). At the special
meeting, we would ask stockholders to vote on matters relating to improving
corporate governance and stockholder value. We would urge the trustees of the
ESOP to vote in a manner consistent with other stockholders.
We also strongly urge the Board not to attempt to add a poison pill,
as this would only serve to further entrench management at the expense of
stockholders.
As we stated to your advisers, we ARE long-term stockholders. However
we cannot stand idly by to support the continuation of a decline in stock price
of over 15% since January 1, 2005 through June 18, 2007, while the S&P Index has
risen over 26% during the same time period. The outsized compensation received
by management and approved by the Board while the stock has languished is in our
opinion contrary to all reasonable business judgment. We are frankly surprised
the Board would condone such action.
While we are not slowing our efforts to make this Company responsive
to stockholders and to maximize its potential value, again we are open to REAL
negotiations and would be willing to again meet with your advisers prior to
receiving the required consents to call a special meeting. We would also welcome
the opportunity to directly address you on these opportunities.
THE CLINTON GROUP
/s/ Conrad Bringsjord
- -----------------------
Conrad Bringsjord
Managing Director
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GRIFFON CORPORATION
DISCUSSION MATERIALS
June 19, 2007
[LOGO OMITTED]
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SENIOR MANAGEMENT COMPENSATION
- --------------------------------------------------------------------------------
> Griffon management compensation far exceeds that of its peers...
Comparison of Management Compensation (1)
Market Total Restricted Shares /
Company Cap (2) Position Name Base Bonus Cash Comp. Options *
- ------------------------------------------------------------------------------------------------------------------------------------
Griffon Corp. $ 675 CEO Harvey Blau $ 921,000 $4,089,000 $5,010,000 1,818,000
Griffon Corp. $ 675 CFO Eric Edelstein $ 500,000 $ 350,000 $ 850,000 125,000
Griffon Corp. $ 675 Treasurer Patrick Alesia $ 380,000 $ 260,000 $ 640,000 126,500
COMPARABLE COMPANIES: DEFENSE
EDO Corp. $ 724 CEO James Smith $ 650,000 $ - $ 650,000
EDO Corp. $ 724 CFO / Treas. Frederic Bassett $ 320,049 $ - $ 320,049
Argon ST, Inc. $ 464 CEO Terry Collins $ 360,244 $ 60,000 $ 420,244
Argon ST, Inc. $ 464 CFO / Treas. Victor Sellier $ 334,680 $ 100,000 $ 434,680
Herley Industries $ 254 CEO Myron Levy $ 685,755 $ 477,377 $1,163,132
Herley Industries $ 254 CFO Kevin Purcell $ 220,000 $ - $ 220,000
Herley Industries $ 254 Treasurer NA (4) NA NA NA
COMPARABLE COMPANIES: PLASTICS
Tredegar $ 862 CEO John D. Gottwald (3) $ 245,833 $ - $ 245,833
Tredegar $ 862 CFO / Treas. D. Andrew Edwards $ 262,276 $ - $ 262,276
COMPARABLE COMPANIES: BUILDING PRODUCTS
American Standard $ 12,111 CEO Frederic Poses $1,000,000 $ - $1,000,000
American Standard $ 12,111 CFO G. Peter D'Aloia $ 600,000 $ - $ 600,000
American Standard $ 12,111 Treasurer NA (4) NA (4) NA NA
Universal Forest Products $ 886 CEO Michael Glenn $ 413,234 $ 29,098 $ 442,332
Universal Forest Products $ 886 CFO Michael Cole $ 209,268 $ 26,510 $ 235,778
Universal Forest Products $ 886 Treasurer NA (4) $ NA $ NA $ NA
American Woodmark $ 552 CEO James Gosa $ 607,954 $ 231,129 $ 839,083
American Woodmark $ 552 CFO Jonathan Wolk $ 255,192 $ 109,901 $ 365,093
American Woodmark $ 552 Treasurer NA (4) NA NA NA
(1) All compensation figures reflect amounts awarded in the prior fiscal year, and are as of the most recent 14-A filing.
(2) Market capitalization as of June 15, 2007 (Source: Bloomberg).
(3) Mr. Gottwald's 2006 salary reflects $8,333 for January-February service as Chairman, and $237,500 thereafter for CEO
compensation.
(4) Treasurer position does not exist at company.
* ON AUGUST 3, 2006, MR. BLAU RECEIVED 50,000 SHARES OF RESTRICTED STOCK. AS OF FEBRUARY 2, 2007, MR BLAU HOLDS 1,768,000
SHARES OF COMMON STOCK ISSUABLE WITH RESPECT TO OPTIONS CURRENTLY EXERCISABLE. AS OF THE SAME DATE, MR. EDELSTEIN HOLDS 125,000
SHARES OF COMMON STOCK ISSUABLE WITH RESPECT TO OPTIONS CURRENTLY EXERCISABLE. ON AUGUST 3, 2006, MR. ALESIA RECEIVED 15,000
SHARES OF RESTRICTED STOCK AND HOLDS 111,500 SHARES OF COMMON STOCK ISSUABLE WITH RESPECT TO OPTIONS CURRENTLY EXERCISABLE AS OF
FEBRUARY 2, 2007.
- --------------------------------------------------------------------------------
2
SENIOR MANAGEMENT COMPENSATION
- --------------------------------------------------------------------------------
> Based on this analysis, if Griffon executive compensation was in-line with
that of its comparables, and if redundant CFO/Treasurer positions were
eliminated, the Company would save in excess of $5 million, or $0.11 per
share on an after-tax basis.
> At 15x, this savings would represent in excess of $1.65 in stock value per
share.
- --------------------------------------------------------------------------------
3
SENIOR MANAGEMENT COMPENSATION
- --------------------------------------------------------------------------------
> Excessive compensation has persisted while the stock price has been range-
bound for several years.
-- The price is down 15.8% from 1/1/05 to Monday's close while the S&P 500
has risen 26.4%.
[GRAPHIC OMITTED]
- --------------------------------------------------------------------------------
4
CLINTON GROUP PROPOSAL
- --------------------------------------------------------------------------------
> Governance Changes
-- Shareholder vote requirement to call a special meeting be amended to 20%
from 66.7%.
-- Staggered BOD be amended to a declassified BOD.
-- BOD member removal by shareholder vote, with or without cause.
-- Separate the roles of Chairman and CEO.
-- BOD oversight which will serve to limit executives' outside obligations.
-- Executive employment and pay packages to be voted on by shareholders.
-- Diversification, greater independence, and significant ownership added to
the BOD.
-- Simple majority vote versus supermajority vote for acquisition or merger
proposals.
- --------------------------------------------------------------------------------
5
CLINTON GROUP PROPOSAL
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> Levered Recapitalization
-- $25 per share public recapitalization entitling existing shareholders to
have 50% of their shares purchased.
-- Sources of funding include:
o $395 million in first lien bank financing.
o $130 million in second lien bank financing.
o Approximately $65 million from Clinton Group and its affiliates,
and/or co-investors
-- At ~5x, the leverage ratio is manageable given the current credit
environment.
-- Contingencies include:
o Clinton Group appointing the majority of the Directors to the Board.
o Adoption of our proposed governance modifications.
o Mr. Blau to be designated Non-Executive Chairman.
o Engagement of a restructuring firm to be chosen by Clinton Group.
o Completion of due diligence and funding.
o The creation of equity incentive plans for the management teams of the
subsidiaries.
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CLINTON GROUP PROPOSAL
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> Our proposal is negotiable with respect to:
-- Tender Price
-- Tender Percentage
-- Financing Structure
-- BOD Composition
-- Governance Modifications
-- Restructuring Firm
-- Equity Commitment
> We have received multiple proposals regarding transaction financing.
-- The composition of the financing itself is not relevant with respect to
agreeing to pursue a transaction.
-- The current financing market is more than capable of financing our
proposal.
> Nonetheless, we are more than happy to refine our financing proposal if the
Company agrees to pursue a transaction within certain parameters.
> Tell us what gets a transaction completed.
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