ISS Supports Cray Group Nominee For MGP Ingredients Board

          ISS Supports Cray Group Nominee For MGP Ingredients Board

ISS recommends that stockholders vote on the GOLD proxy card for the Cray
Group nominees, John Bridendall and Cloud L. "Bud" Cray, and against
Say-On-Pay proposal

PR Newswire

ATCHISON, Kan., Aug. 19, 2013

ATCHISON, Kan., Aug. 19, 2013 /PRNewswire/ -- The Cray Group today announced
that Institutional Shareholder Services ("ISS"), a leading proxy advisory
firm, issued its analysis of the proxy contest for the 2013 Annual Meeting of
Stockholders of MGP Ingredients, Inc. ("MGP" or the "Company"), and any
adjournments, postponements, continuations or rescheduling thereof (the "2013
Annual Meeting"). The members of the Cray Group include Bud Cray, Karen
Seaberg, Laidacker M. Seaberg, Cray Family Management LLC and Cray MGP
Holdings LP.

ISS Recommends Replacing John Speirs with Cray Group Nominee, John Bridendall

ISS recommended that the Company's stockholders vote in favor of the Cray
Group nominees, John P. Bridendall and Bud Cray. In support of its conclusion
that the Cray Group "had made a compelling case for change," ISS stated the
following:

"Over the 3-year period – the period in which management indicates its
transformation began – MGPI lost 19.8% of value, compare to gains of 67.5% and
59.6% for the peer group and Russell 2000 index respectively. Over the 5-year
period – the period that captures the Chairman's (2004) and CEO (2008) entire
tenures – MGPI lost 37.9% of value, as compared to gains of 13.9% and 45.5%
for the peer group and index, respectively. The sustained poor performance [of
MGP] clearly gives merit to the [Cray Group's] claims, namely, that the CEO
and board have failed to improve shareholder value over an adequate time
period." (emphasis added)

"Given the persistent poor performance and the long tenure of the Chairman
(servicing since 2004), who, by his own account, has played a key role in
designing and implementing the [C]ompany's strategic plan, the change on the
board the [Cray Group] is seeking appears justified."

"It is notable that the overwhelming majority of the Cray Family's economic
interest is tied to its common stock holdings and not linked to its preferred
stock ownership. Therefore, in this respect, the family appears aligned with
the interest of other common shareholders. Moreover, the [Cray Group's] key
critique – that failed board stewardship since 2008 has resulted in a lack of
accountability to shareholders and that the board and CEO have failed on their
mandate to implement and execute on a strategy to increase shareholder return
and improve operating results in a timely manner – appears to have merit.
Balancing these countervailing issues, we conclude the dissident has made a
compelling case for change." (emphasis added)

"The [Cray Group] has made a compelling case that there is need for additional
board oversight at MGP Ingredients. Given that the [Cray Group] and
management are in general agreement about [MGP's] strategy, the central focus
at [MGP] is, rather, on the slowness and apparent inability of the board and
management team to execute and increase shareholder value since 2008, the date
that the board appointed a new CEO and changed the company's strategic
direction." (emphasis added)

"Against this backdrop, and given the persistent poor performance and actions
that have yet to resonate with shareholders, the board could benefit from the
skills and experience of John Bridendall and the continuing presence and
knowledge of Cloud Cray Jr. who, we note is supported by both the dissident
and management." (emphasis added)

"Bridendall brings extensive industry experience, particularly in his
knowledge of the distilled spirits industry, and has expertise in strategic
planning, branding strategy, managing organic growth and external growth
through his experience in mergers and acquisitions. Bridendall also brings his
training and experience in finance and accounting. The addition of Bridendall
to the board is likely to add a fresh perspective to board deliberations and
its decision-making." (emphasis added)

ISS Recommends Against Say-On-Pay Proposal

ISS recommended that shareholders vote AGAINST the advisory vote on
compensation of executive officers ("Say-On-Pay"). ISS warned that the recent
actions of management to implement golden parachute benefits for executives,
which are not linked to performance, and are designed to be triggered by a
change in board composition "raise concerns about [MGP's] compensation
program." ISS underscored that such self-serving changes "were implemented in
the midst of the current proxy contest and following a sustained period of
underperformance by [MGP]." (emphasis added) ISS also noted that:

Changes to the bonus and stock incentive programs also increase the
possibility of "pay for failure" scenarios, while potentially raising the cost
to shareholders of implementing management change that may be deemed needed.
In light of these actions, support for this proposal is not warranted.
(emphasis added)

ISS Recommends For Cray Group Governance Proposal to Repeal Interim Bylaws

ISS also recommended voting FOR the Cray Group's governance proposal to repeal
all bylaw changes adopted by MGP since the original record date for the 2013
Annual Meeting of April 3, 2013. ISS noted that this proposal is a common
precautionary device in proxy contest "which would allow the [Cray Group]
nominees sufficient latitude to act on their mandate if elected."

Other Cray Group Governance Proposals

The Cray Group expressed its disappointment that the other governance reforms
it proposed did not receive ISS support, namely:

  oA precatory proposal to amend the articles of incorporation to declassify
    the MGP board of directors ("Board");
  oA proposal to amend the bylaws to allow one or more stockholders holding
    of record, in the aggregate, 10% or more of the outstanding common stock
    or preferred stock to call a special meeting of stockholders, subject to
    certain exceptions designed to prevent duplicative and unnecessary
    meetings;
  oA proposal to amend the bylaws to require that any vacancies on the Board
    be filled only by the stockholders and not by the Board;
  oA proposal to amend the bylaws to provide for confidential voting at the
    2013 Annual Meeting and future annual meetings of stockholders.

The Cray Group respectfully disagrees with ISS's analysis on these governance
proposals and believes that ISS's rationale is logically inconsistent. ISS
acknowledges that these proposals reflect best practices in corporate
governance, avoid the potential to entrench management, promote accountability
to shareholders and generally enhance the rights of shareholders. Moreover,
as described more fully above, ISS concluded that the Cray Group claims that
the CEO and board have failed to improve shareholder value over an adequate
time period. ISS also noted that the "overwhelming majority of the Cray
Family's economic interest is tied to its [ownership of 27.5% interest in the
common stock of MGP] and, in this respect, the family appears aligned with the
interest of other common stockholders."

Despite these findings and its conclusion that the Cray Group has "made a
compelling case for change at the Company helm," ISS concludes that these
governance proposals could "accelerate the [Cray Group's] ability to gain
majority control over the Board" and that "shareholders may benefit from a
wealth of perspectives provided by the [C]ompany's independent directors."
ISS's views appear to be unduly influenced by the MGP's dual class structure
which permits the Preferred Stock to elect five of the nine directors
constituting the Board. This perspective, however, overlooks the fact that
holders of Common Stock elect four of the nine directors and our governance
proposals would make the directors elected by them more accountable to the
Common Stockholders. In addition, the directors elected by Preferred
Stockholders, as well as the directors elected by Common Stockholders, have a
fiduciary obligation to represent the interest of all stockholders and not
just the class of stockholders that elected them. Since the current
independent directors are the same group that have failed to provide effective
oversight and stewardship, which allowed the destruction of shareholder value
over a five-year time period, we see no value in either allowing them to
continue to remain entrenched or to continue to provide a perspective that has
led to such value destruction. Restoring accountability to benefit all
shareholders and bringing in new highly qualified and independent directors
that will oversee the needed turnaround in corporate and share performance
should be embraced by all shareholders, rather than having governance barriers
remain in place that prevent timely and positive change.

ISS acknowledges that confidential voting ensures that "all votes are based on
the merits of proposals" and that the "major advantage of confidential voting
is the elimination of pressure on investors to vote with management in cases
when management may determine how they voted." Yet, ISS does not favor our
confidential voting proposal because it does not include an exception for
contested elections and, in its view, places the Company at a disadvantage in
the event of a proxy contest. Again, this view appears to be logically
inconsistent with the underlying rationale for confidential voting in that
contested elections are precisely the time when pressure from management on
how to vote to preserve employment or business relationships will be most
pronounced. In view of the need to protect the anonymity of shareholder
voting decisions in proxy contests and prevent retaliation, our proposal
includes narrowly crafted exceptions, which we believe are customary in this
context, to permit inspectors of election to certify the results of the vote
and to resolve any disputes or challenges to voting or if necessary to meet
applicable legal requirements. Moreover, our goal for confidential voting is
solely to enable voting on the merits without fear of reprisal or retaliation
and not to gain any informational advantage over management.

The Cray Group needs your help in bringing about positive change at MGP. We
ask you to vote only the GOLD Proxy card.

3 EASY WAYS TO VOTE

1.Vote by Telephone. Call the toll-free number listed on your proxy card or
    voting instruction form. Have your control number listed on the form
    ready and follow the simple instructions.
2.Vote by Internet. Go to the website listed on your proxy card or voting
    instruction form. Have your control number listed on the form ready and
    follow the simple instructions.
3.Vote by Mail. Mark, sign, date and return your proxy or voting
    instruction form in the postage-paid return envelope provided.

PLEASE ACT TODAY

YOUR VOTE IS IMPORTANT

All you have to do is vote the GOLD proxy card or voting instruction form that
was included with this letter. It will supersede any original proxy that you
submitted. Do NOT return the white proxy from MGP Ingredients.

If you submit a proxy to us by signing and returning the enclosed GOLD proxy
card, do not sign or return any white proxy card or follow any voting
instructions provided by MGPI management unless you intend to change your
vote, because only your latest-dated proxy will be counted. If you have
already sent a proxy card to MGPI, you may revoke it and vote on the GOLD card
simply by signing, dating and returning the enclosed GOLD proxy card. Please
do not return any white proxy card; it will revoke any GOLD card you have
previously signed.

STREET NAME SHAREHOLDERS: IF YOUR SHARES ARE HELD IN THE NAME OF A BROKERAGE
FIRM, BANK NOMINEE OR OTHER INSTITUTION, ONLY THEY CAN VOTE YOUR SHARES AND
ONLY UPON RECEIPT OF YOUR SPECIFIC INSTRUCTIONS.

If you have any questions or require any assistance in executing your GOLD
proxy card, please call or e-mail:

D.F. King & Co., Inc.
Toll-free: (800) 859-8509
E-MAIL: MGPI@DFKING.COM

NOTICE TO INVESTORS

ON JULY 10, 2013, THE PARTICIPANTS FILED A DEFINITIVE PROXY STATEMENT WITH THE
SECURITIES AND EXCHANGE COMMISSION (THE "SEC"). SECURITY HOLDERS ARE ADVISED
TO READ THE DEFINITIVE PROXY STATEMENT AND OTHER DOCUMENTS RELATED TO THE
SOLICITATION OF PROXIES BY THE PARTICIPANTS FROM THE STOCKHOLDERS OF THE
COMPANY FOR USE AT THE 2013 ANNUAL MEETING BECAUSE THEY CONTAIN IMPORTANT
INFORMATION RELATING TO THE PARTICIPANTS. THE DEFINITIVE PROXY STATEMENT IS
AVAILABLE AT NO CHARGE AT THE SEC'S WEBSITE AT HTTP://WWW.SEC.GOV. THE
PARTICIPANTS' DEFINITIVE PROXY STATEMENT AND A FORM OF PROXY WERE FIRST SENT
TO COMMON AND PREFERRED STOCKHOLDERS ON OR ABOUT JULY 12, 2013.

SOURCE The Cray Group

Contact: Thomas D. Long, tlong@dfking.com, 212-269-5550