Wynnefield Sends Another Letter to OME

November 17, 2015


Mr. Gary R. Goodwin, Chairman of the Board

Each of the Members of the Board of Directors

Omega Protein Corporation

2105 City West Blvd.

Suite 500

Houston, Texas 77042


Wynnefield Capital Management, LLC and its affiliates (“Wynnefield”) are longtime and significant shareholders of Omega Protein Corporation (the “Company”). This letter is a follow up to our several earlier communications in which we expressed serious concerns with the demonstrably unsuccessful effort of the Company to enter the human nutrition field, as well as our doubts concerning the credibility of the Company’s purported strategic review process.

The Board of Directors’ (the “Board”) unilateral adoption on November 5, 2015, of amended and restated Bylaws (the “Bylaws”) without obtaining shareholder approval, creates both new hurdles and burdens on shareholder suffrage, once again demonstrating the Board’s disregard for the interests of the Company’s shareholders.

Wynnefield, as well as Institutional Shareholder Services, Inc. (“ISS”), strongly disfavor the unilateral adoption, without shareholder approval, of bylaws and charter amendments that materially diminish shareholder rights. We believe that the newly adopted Bylaws are nothing more than a thinly veiled attempt to entrench the Company’s Board and management, diminish their accountability to shareholders, and were purposefully adopted by the Board with the intention of unduly restricting the right and ablility of Wynnefield and other shareholders, to nominate directors and/or submit shareholder proposals for consideration at the Company’s annual meeting of shareholders.

Specifically, the newly adopted Bylaws, among other things:

Remove the previous requirement that the annual meeting of shareholders be held no later than the 210 days after the close of the Company’s fiscal year. The amended Bylaws now allow the Chairman and the Board to schedule, cancel, postpone or reschedule shareholder meetings at any time for any reason. This is clearly an artifice to give the Company the ability to change potential outcomes of elections.


Ø In addition to creating uncertainty for shareholders as to when the annual meeting will be held from year to year, the Board has now given itself and management the ability to broadly manipulate the shareholder voting process by scheduling, adjourning, cancelling and/or delaying the holding of a shareholders’ meeting in response to proposals and/or director nominations submitted by the Company’s shareholders – particularly if the Board believes the shareholder’s nominee or proposal has garnered sufficient votes to prevail.


Significantly pushes back the advanced notice requirements for shareholders to submit a proposal or director nominations from 90 and 60 days, respectively, in advance of the annual meeting, to a date which is no later than 120 days prior to the anniversary of the previous years’ annual meeting.


Ø Such extreme advanced notice requirements are unreasonably long and restrict shareholder rights because they significantly limit the flexibility of shareholders in determining whether to submit a proposal and director nominations. Furthermore, any purported claim by the Company that such advance notice requirements facilitates the dissemination of information prior to the annual meeting is specious and inequitable, given that the Company typically disseminates its proxy statement only 30 days prior to the annual meeting.



In addition to significantly increasing the information required to be provided by shareholders seeking to submit proposals and director nominations (such as requiring disclosure of ownership of derivative securities by shareholders even though disclosure of such information is not required by federal law), the amended Bylaws now require director nominees to provide the Company with: (i) a questionnaire identifying his or her experience, and (ii) a certification that the nominee (a) is not and will not become party to a voting commitment that purportedly interferes with the nominees fiduciary duties to the Company, (a legal analysis most nominees are not qualified to make); and (b) if elected, will comply with all applicable publicly disclosed corporate governance policies and other guidelines of the Company – without a requirement that such policies have been vetted and approved by the Board.


Ø We believe the Company’s motivation for requiring such additional information, as well as the required questionnaire and certification, is to seek to inequitably burden shareholders and their director nominees and/or to provide the Company with a colorable avenue to disqualify proposals or nominees that purportedly fail to meet these new onerous requirements. Additionally, while the Bylaws provide that all nominees for election as a director must complete a questionnaire, the Bylaws are silent as to whether the questionnaire required to be provided by shareholder director nominees is the same information required to be provided by the Board’s nominees, even if such nominees are currently serving as directors. We also believe it problematic and unfair that potential nominees must open-endedly commit in advance to complying with all corporate governance policies and other guidelines of the Company that have been promulgated by the incumbent Board or management, even though such nominee believe such policies or guidelines are inappropriate or possibly illegal, and intends to seek to alter or repeal them if elected. Furthermore, this neuters the ability of a nominee to the Board to advocate for changes to Company policies and guidelines with which he disagrees and is contrary to the concept of director “independence”.

As noted above, ISS strongly disfavors the unilateral adoption, without obtaining shareholder approval, of bylaw amendments. Under ISS’ Governance Failures Policy, it will recommend that its clients oppose directors, who adopt, without shareholder approval, bylaw amendments, such as the ones adopted by the Company’s current directors, that materially diminish shareholders rights.

The Board should be aware, that Wynnefield will not allow the transparent and orchestrated attempt by the Board to restrict shareholder democracy and potentially deprive Wynnefield and the Company’s other shareholders of their rights to submit shareholder proposals and director nominees for election to the Board at the next annual meeting shareholders.

Wynnefield Capital Management, LLC

By: /s/ Nelson Obus

Nelson Obus, Co-Managing Member


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