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Major shareholders will now be entitled to nominate potential board members and have those candidates included on the company's ballot.
Stephen Taub, CFO.com | US
April 25, 2007
Comverse Technology announced Wednesday that under a new by-law amendment, major shareholders will now be entitled to nominate potential board members and have those candidates included on the company's ballot.
The announcement of limited "proxy access" came one day after the Securities and Exchange Commission announced three roundtable discussions on shareholder rights and proxy rules. The first roundtable, on May 7, will include panels on the federal role in upholding shareholders' state-law rights, on the purpose and effect of the federal proxy rules, and on both binding and non-binding proposals.
Under the Comverse by-law amendment, a shareholder will be entitled to nominate directors provided he or she has owned at least 5 percent of the company's stock continuously for at least two years. Any shareholder whose nominee does not receive at least 25 percent of the votes cast at an annual meeting will be barred from the process for the next four years.
The Comverse board also adopted an amendment to its certificate of incorporation, pertaining to uncontested elections, which will be submitted for shareholder approval at the next annual meeting. Under the amendment, directors would need a majority of votes cast, not a mere plurality, to win or retain a board seat; a director who fails to do so would be required to submit a letter of resignation.
The company also agreed to separate the positions of chairman and chief executive officer and to form a shareholder advisory group to gather input from significant shareholders about board composition, director nominations, and other issues.
In addition, Comverse named Andre Dahan, former president and chief executive officer of AT&T Wireless' Mobile Multimedia Services, as president, chief executive officer, and a member of the board, effective April 30.
The sweeping governance changes come close on the heels of an announcement by Comverse investor Oliver Press Partners that it intends to seek support from fellow shareholders to call a special meeting to elect directors. Noting that the company has not held an annual meeting since June 2005, it added that it would nominate its own principals, Augustus K. Oliver and Clifford Press, to the Comverse board.
Last May, Comverse's finance chief and two other top executives resigned in the wake of an internal investigation into the timing of stock option grants.
In August, federal prosecutors charged former chairman and chief executive officer Kobi Alexander, former chief financial officer David Kreinberg, and another top executive with fraud in connection with alleged backdating. Alexander subsequently fled the country but was caught in Sri Lanka.
In January, the SEC settled civil fraud charges against former general counsel William Sorin, stemming from his role in the company's backdating scandal; Sorin agreed to pay more than $3 million in civil penalties, disgorgement, and prejudgment interest. That same month, Comverse was delisted from Nasdaq for failing to file its financials on time.