The latest twist in the Motient Corp. proxy battle is the imminent exit of five of the company’s 10 directors.
Officials at the company, which provides two-way wireless communications, announced that the five board members will not stand for re-election at this year’s annual meeting. The meeting hasn’t been scheduled yet.
The directors stepping down are Gerald Kittner, chairman of Motient’s nominating committee, as well as Gerald Goldsmith, Steven Singer, Jonelle St. John, and Barry Williamson. On February 28, Motient appointed two independent directors to its board.
“For the past several months, we have been working to identify a new team of highly competent and committed individuals who…are prepared to take Motient into its next phase,” said Kittner, in a statement. “We feel confident we have done so, and we wish them well.”
The decision came after the company’s lengthy, testy struggle with Dallas-based Highland Capital Management L.P., Motient’s largest stockholder. Highland, which owns roughly 14 percent of the company’s common stock, has accused Motient of poor operating performance, significant financial reporting deficiencies, questionable execution and management, and extensive board self-dealing and conflicts of interest.
The institutional investor also questioned the company’s compensation arrangements with several key executives, including Christopher Downie, executive vice president, chief operating officer and treasurer, and Myrna Newman, vice president, controller, and chief accounting officer.
Earlier this year, Highland announced its own slate of Motient directors. In April, the investor filed a complaint in the Delaware Court of Chancery after Motient refused to comply with Highland’s request to produce records and data on a variety of topics, including Motient’s financial performance.
Under Delaware law, Motient was required to respond and make arrangements to produce the requested materials by April 19, according to Highland. On April 20, Motient notified Highland that it was refusing to provide any of the requested information, the investor said in a press release.
Motient, which emerged from bankruptcy in 2002, now has a $1.3 billion market capitalization. The company trades on the Pink Sheets, an over-the-counter listing. Typically, companies that trade on the listing aren’t liquid enough to trade on the major exchanges.