McNeely's tenure, proxy fight, and downsizing
Everitt A. Carter, the chairman of Oak for 21 years, abruptly resigned in late 1984.[26] His resignation culminated a year in which the company held its annual meeting near its Oak Materials plants in Hoosick Falls in upstate New York, with some shareholders suggesting the decision to do so was calculated to dissuade attendance.[27]
E. L. McNeely (1919–1991[28]), formerly of the Wickes Companies, was brought in as interim chairman in November 1984; his position was later made permanent. He continued a downsizing that had already begun in the last year of Carter's tenure.[29] McNeely saw the downsizing of Oak's Rancho Bernardo headquarters' staff from 250 to 50 within three years of his tenure. In 1985, he sold off Oak's subsidiaries in Mexico and South America as well as Adec; Oak had let these units stagnate, and by the early 1980s they had consistently failed to turn profits.[2] In 1986, he sold the company's esteemed materials division to AlliedSignal. The company paid off $195.5 million of its $230 million worth of outstanding debt, as of 1985, with the proceeds from this sale to AlliedSignal.[30] This effectively turned Oak's net worth from negative $69.9 million to positive $65 million; contemporary analysts credited McNeely with saving the company from bankruptcy. Oak's name was cleared by the SEC in 1987, and $33 million was paid to stockholders who had collectively filed a class action suit against the company in the years before that year.
Fueled by tax-loss carry-forwards obtained due to Oak's operating losses, between late 1986 and early 1987, the company made two disparate acquisitions: the Quartz Crystal Components Group from the Electronic Technologies Corporation of New York and the Railway Maintenance Equipment Company from the Rexnord Corporation. In May 1987, Oak acquired Nordco, another manufacturer of railroad maintenance equipment. The Quartz Crystal Components Group comprised three subsidiaries—Croven Crystals Ltd. of Whitby, Ontario, a maker of quartz components for precision applications; Ovenaire-Audio-Carpenter of Charlottesville, Virginia, a maker of crystal oscillators for the telecommunications and defense sectors; and Houston Electronics, a Kane, Pennsylvania-based manufacturer of airtight enclosures for quartz components. Oak sold off Croven Crystals by the middle of 1987. McNeely asserted that the remaining acquisitions were within industries resilient to another recession. Pending patent infringement suits against Zenith Electronics, General Instrument, M/A-COM Linkabit, and several other television equipment manufacturers also promised a trickle of profit in the meantime, according to McNeely.
These acquisitions were not without detractors within Oak, however. Roderick M. Hills, a former SEC chairman and friend of McNeely's who was brought onto Oak's board of directors in 1985, led a proxy fight for control of the board in April 1989. He found fault in McNeely's hiring of chief financial officer Alan Steel without first informing the board; the erratic nature of McNeely's acquisitions, failing to disclose such acquisitions to the board before signing them; and Oak's aggregate net loss of $227.7 million from 1983 to 1989. Hills had the backing of MIM Ltd., a British investment firm who had acquired a 25 percent stake in ownership in Oak from stocks bought from AlliedSignal twice-removed (AlliedSignal sold their stock in Oak to spinoff Henley Group, who sold it to Itel Corporation, who sold it to MIM).
During a heated two-hour debate in the company's annual meeting, MIM chairman David A. Stevens charged that Oak had treated him with "offhandedness and contempt", indicative of the company's overall treatment of its shareholders, while a smaller stakeholder felt that Oak's $14 fall in the stock market price from 1982 was indicative of the need "to shake things up a little bit". Although McNeely rebuked that he "snatched the company from the jaws of death" and pointed to Oak's improving bottom line and retirement of debt, McNeely was successfully ousted as chairman a week later, with Hills receiving 77 percent of the vote for control of the board. Although embittered, McNeely accepted a director position on Oak's board at Hills's request at the last minute.
Chief executive officer duties were then split between Hills and three other board members, faced with turning around a company that had earned a position on The Wall Street Journal annual list of the ten worst-run companies.[31] Within two weeks of control, Hills's team hired Rex W. Warden of Aerojet General as president pro tempore of Oak and shut down their TeleFinder division, which was staffed with 45 employees and ran an online classified advertising service.[32] William S. Antle III of the Wayland, Massachusetts–based consulting firm Hadleigh Group replaced Warden by the end of 1989.[33] After assuming control, Antle was faced with the imminent depletion of Oak's cash reserves and had eight weeks to correct the course. After touring all nine of Oak's operating divisions,[8] he commissioned Hadleigh Group to make liquidation plans for seven of them, in the event that the company was forced to divest any due to financial pressures,[2] while ordering the sale of Diamond-H Controls Ltd. (a maker of electric stove
In January 1991, Oak acquired Standard Grigsby for $7.6 million. Standard Grigsby, an Illinois-based switch manufacturer and an old competitor of Oak's, had moved from Arlington Heights to Aurora to Sugar Grove. Oak then rebranded its component manufacturing division to OakGrigsby and shuttered its former headquarters and switch manufacturing plant at Crystal Lake in July 1991,[38] with both of the firm's facilities in that city shuttered. The company's component division was then splintered between Sugar Grove and Standard Grigsby's factory in Ciudad Juárez, Mexico.
Oak finally returned to profitability in the early 1990s, earning $5.6 million in profit for 1991 and $10 million in earnings over $107 million for the first three-quarters of 1992. The company downsized from 2,203 employees total in 1989 to 1,620 in 1992; its divisions then consisted of Harper-Wyman—a maker of controls for gas kitchen appliances—as well as OakGrigsby, Nordco, and the Oak Frequency Control Group (comprising the company's quartz oscillator subsidiaries).[8]
