UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 [X]
Filed by a Party other than the Registrant [ ]
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[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
THE YACKTMAN FUNDS, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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computed purs han ct 0- set th amount on ( which the filing
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Explanatory Note: This press release does not constitute a solicitation of
proxies for any meeting of the Funds' stockholders. Any such solicitation will
be made only pursuant to proxy materials complying with the requirements of
Section 14(a) of the Securities Exchange Act of 1934, as amended, and the rules
and regulations thereunder.
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THE COMMITTEE OF THE
INDEPENDENT DIRECTORS
OF THE YACKTMAN FUNDS, INC.
LEAD DIRECTOR
STANISLAW MALISZEWSKI
312-444-1919
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Chicago, Illinois, September 25, 1998. On September 25, 1998, the Committee of
the Independent Directors, who are the outside unaffiliated directors of The
Yacktman Funds, Inc., sent the attached letter to Arthur Levitt, Chairman of the
Securities and Exchange Commission. The Independent Directors of The Yacktman
Funds, Inc. take their responsibilities under the Investment Company Act of 1940
very seriously.
For further information, contact the Lead Director, Stanislaw Maliszewski at
312-444-1919.
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September 25, 1998
The Honorable Arthur Levitt
Chairman
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549-1004
Dear Chairman Levitt:
We are writing to you in our capacity as the Independent Directors of
The Yacktman Funds, Inc. (the "Funds"), with regard to the preliminary proxy
statement filed with the Commission by Yacktman Asset Management, Inc. (the
"Adviser"), on September 18, 1998.
Over the last year, the Directors of the Funds who are not interested
persons (Messrs. Hanson, Maliszewski, and Upton), along with a Director who was
formerly an employee of the Adviser (Mr. Carlson) (collectively, the
"Independent Directors"), have raised serious questions with the Adviser
regarding the management of the Funds and the capabilities of the Adviser. These
questions raised issues such as an apparent deviation in investment technique,
the appropriate use of derivatives, violations by certain employees of the
Adviser of the Funds' Code of Ethics, the management of the Funds' portfolios by
individuals other than those named in the prospectus, and the depth and
experience of investment management personnel employed by the Adviser.
Unfortunately, the atmosphere in which these issues were raised and discussed
has deteriorated into one of adversity and distrust. In June, the Adviser
terminated the employment of Mr. Carlson and had him escorted from its premises
by the Chicago Police. Mr. Carlson thereafter resigned from his positions as
Vice President and Secretary of the Funds, although he continued to serve as a
Director of the Funds.
On September 15, 1998, the Adviser delivered a letter to the
Independent Directors (a copy of which is enclosed herewith), in which the
Directors were given a choice of resigning or facing a proxy solicitation to
replace them as Directors with a slate of individuals proposed by the Adviser.
In the letter, the Adviser made the following statement:
Yacktman Asset Management Co. has already spent a lot of money
in preparing this proxy solicitation and is prepared to spend
whatever
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Mr. Arthur Levitt
September 25, 1998
Page 2
it takes to make the solicitation successful. Any attempt by
you to use Fund resources to perpetuate yourselves in office,
whether by engaging in a counter-solicitation or taking any
other action to contest our solicitation, would not only be a
breach of your fiduciary duties but also a violation of Rule
17d-1 under the Investment Company Act. We are prepared to
immediately pursue all legal remedies at our disposal. You
should be aware that any resulting litigation would not be
covered by the Funds' D&O insurance.
The Independent Directors refused to resign, and the Adviser filed the
preliminary proxy statement with the Commission, a document which we believe
contains a number of material misstatements and omissions and is false and
misleading.
On September 22, 1998, the Committee of the Independent Directors
called a meeting of the Board at which the officers of the Funds were removed.
In their place, Mr. Carlson was elected as President, Secretary, and Treasurer
of the Funds. The Board also dismissed the firm of Foley & Lardner and retained
the firm of Vedder, Price, Kaufman & Kammholz to act as counsel to the Funds.
Gardner, Carton & Douglas was retained as counsel to the Committee of
Independent Directors. Finally, the Board resolved that the call for a meeting
of shareholders which accompanied the September 15 letter from the Adviser was
invalid or, if not invalid, was revoked.
Throughout the course of these events, we, the Independent Directors,
have attempted to fulfill our responsibilities as "watchdogs for the
shareholders" by expressing our concerns about matters which Congress and the
Commission have told us we must oversee. We believe that the thinly-veiled
threats made by the Adviser, first, to resign or face a proxy solicitation, and
second, to permit the proxy solicitation to proceed uncontested or face personal
financial ruin, constitutes an attempt by the Adviser to control the
non-interested directors of the Funds. As such, we further believe that these
actions constitute a breach of the Adviser's fiduciary duty to the Funds in
violation of Section 36(a) of the Investment Company Act of 1940. Therefore, we
respectfully request that the Commission take whatever action, including making
a request for an injunction estopping the
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Mr. Arthur Levitt
September 25, 1998
Page 3
solicitation of proxies by the Adviser, as the Commission may find necessary to
ameliorate this breach of fiduciary duty by the Adviser and to prevent this
tactic from exerting an undue chilling effect over not only the Independent
Directors, but non-interested directors to investment companies throughout the
industry.
/s/ Jon D. Carlson /s/ Stanislaw Maliszewski
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Jon D. Carlson Stanislaw Maliszewski
/s/ Thomas R. Hanson /s/ Stephen E. Upton
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Thomas R. Hanson Stephen E. Upton
cc: David A. Sturms, Esq. (Vedder, Price, Kaufman & Kammholz)
Paul H. Dykstra, Esq. (Gardner, Carton & Douglas)
Mr. Barry P. Barbash (Securities and Exchange Commission)
Mr. Barry Miller (Securities and Exchange Commission)
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YACKTMAN
Asset Management
Suite 1925-303 West Madison Street-Chicago, Illinois 60606-(312)201-1200
David A. Yacktman
President
(312) 201-9478
September 15, 1998
Jon Carlson
Thomas Hanson
[X]Stanislaw Maliszewski
Stephen Upton
Gentlemen:
As President of The Yacktman Funds, Inc. and in accordance with its bylaws, I
have called a special meeting of the stockholders of The Yacktman Funds, Inc.
for the purpose, among other things, of removing you as directors of the Funds.
A copy of the formal action I took is attached.
Yacktman Asset Management Co. intends to solicit proxies in support of the
motion to remove you as directors. We have retained D.F. King & Co., Inc. as our
proxy solicitor. They expect that a number of their employees will be actively
calling stockholders in support of our solicitation.
We have also prepared a proxy statement which we intend to file with the
Securities and Exchange Commission. The proxy statement sets forth in detail why
we believe it is in the best interests of the stockholders of the Funds that
they vote to remove you as directors. The proxy statement is ready to be filed
now. Once it is filed, it will be available to the public, including the
national financial press. We've delayed filing the proxy statement to create an
opportunity for a private resolution of this matter, which we believe to be in
the best interests of the Funds. A copy of a letter of resignation that you can
sign and fax back to us at (312) 201-1216 is attached. If we don't receive your
resignations by noon on Friday, September 18, we will file the proxy statement
on Friday afternoon.
I want you to know that Yacktman Asset Management Co. has already spent a lot of
money in preparing this proxy solicitation and is prepared to spend whatever it
takes to make the solicitation successful. Any attempt by you to use Fund
resources to perpetuate yourselves in office, whether by engaging in a
counter-solicitation or taking any other action to contest our solicitation,
would not only be a breach of your fiduciary duties but also a violation of Rule
17d-1 under the Investment Company Act.
We are prepared to immediately pursue all legal remedies at our disposal. You
should be aware that any resulting litigation would not be covered by the Funds'
D&O insurance.
Sincerely,
/s/ Donald A. Yacktman
Donald A. Yacktman
cc: Ronald Ball
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September 16, 1998
TO: The Yacktman Funds, Inc.
I hereby resign as a director of The Yacktman Funds, Inc., effective as
of the close of business on September 16, 1998.
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Stanislaw Maliszewski
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The Yacktman Fund Suite 1925
303 West Madison Street
Chicago, IL 60606
September 14, 1998
VIA HAND DELIVERY
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The Yacktman Funds, Inc.
303 West Madison Street
Chicago, Illinois 60606-3308
Attention: Ronald W. Ball, Secretary
Dear Ron:
This letter hereby serves as notice to The Yacktman Funds, Inc. (the "Funds")
that, in my capacity as President of the Funds and pursuant to Article I of
Section 3 of the Bylaws of the Funds, I am hereby calling a special meeting of
the stockholders of the Funds to be held at the Goodman Room of the Allegro
Hotel, 171 West Randolph Street, Chicago, Illinois, on Tuesday, November 24,
1998, at 10:00 a.m. local time, for the following purposes:
1. To remove all current directors of the Funds other than Ronald
Ball and Donald Yacktman;
2. To amend the Funds' Bylaws to reduce the number of directors
of the Funds from six to five;
3. To elect three nominees as new directors of the Funds; and
4. To transact such other business as may properly come before
the special meeting or any adjournment thereof.
In my capacity as President of the Funds, I am hereby directing the Secretary of
the Funds to mail the enclosed Notice of Special Meeting of Stockholders to each
stockholder of the Funds in accordance with Section 2-504 of the Maryland
General Corporation Law.
In addition, in my capacity as President of the Funds, I am hereby directing
Sunstone Financial Group, Inc., the administrator for the Funds, to place a copy
of this letter into the corporate minute book for the Funds.
Sincerely,
/s/ Donald A. Yacktman
Donald A. Yacktman
Enclosure
cc: Firstar Trust Company
Sunstone Financial Group, Inc.
Shareholders Services Center, 615 East Michigan Street,
P.O. Box 701, Milwaukee, WI 53201-0701
Fund Information: For 24-hour fund information,
prices and literature 1-800-525-8258
Shareholder Services: For information about your
Yacktman Fund account 1-800-457-6033
<PAGE>
THE YACKTMAN FUNDS, INC.
303 West Madison Street
Chicago, Illinois 60606
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To be held on November 24, 1998
To the Stockholders of THE YACKTMAN FUNDS, INC.:
A Special Meeting of the Stockholders of The Yacktman Funds, Inc.
(the "Funds") will be held at the Goodman Room of the Allegro Hotel, 171 West
Randolph Street, Chicago, Illinois, on Tuesday, November 24, 1998, at 10:00 a.m.
local time, for the following purposes:
1. To remove all of the current directors of your Funds other
than Ronald Ball and Donald Yacktman;
2. To amend your Funds' bylaws to reduce the number of directors
of your Funds from six to five;
3. To elect three nominees as new directors of your Funds; and
4. To transact such other business as may properly come before
the special meeting or any adjournment thereof.
Only stockholders of record who owned outstanding shares of the
Funds at the close of business on October 25, 1998, the record date, are
entitled to receive notice of, and to vote at, the special meeting.
By Order of the President,
Ronald W. Ball
Secretary
Chicago, Illinois
September 14, 1998
