OTTAWA -- The management of Zarlink Semiconductor Inc. won a bitter battle over the future direction of the troubled company Wednesday with 60 percent of proxy votes supporting the current board of directors.
The meeting almost didn't get started as a group of dissident investors complained that proxies had not been properly delivered before the meeting, to the disadvantage of those seeking to replace much of the company's board of directors and management.
Dissident leader Scott Leckie vowed to battle on, although he was not specific about what he could do.
"I'm not going away," Leckie, who manages funds owning 5.2 per cent of the company, said after the vote.
"This management group has been dismissive of shareholders, they don't know how to make money and as a group they are dysfunctional."
Speaking for the dissidents at the start of the meeting, counsel Debbie Einstein called for the gathering to be adjourned to late afternoon to ensure that all who wanted to vote had their proxies counted.
Weinstein's move to adjourn was voted down by 59 to 41 per cent, and she said later that one option for the dissidents now is to seek a court order to adjourn the meeting.
She said proxy voting on the management choices for the eight-member board showed 55 percent of those voting in Canada supported the dissidents but only five percent in the United States did so.
"This is a huge discrepancy," she said. "It's not like U.S. shareholders aren't familiar with the dissident issues."
Weinstein also challenged chairman Henry Simon's impartiality in chairing the annual meeting when he is one of the directors the dissident group wants removed.
Overall, the dissident board nominees won about 40 percent of the 84 million votes. Ballots cast at the general meeting were still to be counted but were not expected to significantly alter the result.
Three hours before the meeting, Zarlink reported earnings of US$1.1 million, nil per share, in the April-June quarter as revenue nearly doubled from a year earlier to US$60.5 million.
That was up from a year-earlier loss of $5 million or five cents per share for the Ottawa-based company, which reports in U.S. dollars. Year-ago revenue was $30.6 million.
Zarlink lost $19.1 million on revenue of $54.8 million in the January-March quarter, but the latest result "provides a much clearer view of the company that management, the board of directors and employees have been working to build over the past three years," CEO Kirk Mandy stated in releasing the results.
"Quarterly revenue is growing, driven by increasing customer demand for new products across our communications, optoelectronics and medical businesses."
Management expects second-quarter revenue of between $61 million and $63 million, with a gross margin of 47 to 49 per cent and earnings of one cent to three cents per share.
On Tuesday, Zarlink disclosed that its stock will be suspended from the New York Stock Exchange next week because it has traded below the exchange's minimum price of $1 for more than 30 trading days.
The stock will be delisted in the United States but will remain on the Toronto Stock Exchange, which accounts for more than three-quarters of its trading volume. Mandy said "the technology advances in equities trading mitigates the requirement for Zarlink to continue to be listed on multiple exchanges."
The Leckie group sought to remove CEO Mandy, chairman Simon and directors Jules Meunier, Dennis Roberson and Oleg Khaykin.
The dissidents complained about the performance of Zarlink shares, which peaked at $48.25 in March 2000 but have been below $4 since 2004.
Zarlink traded at 84 cents near midday on the TSX, off two cents on the session with a 52-week high and low of $1.77 and 55 cents.
In an attempt to settle the dispute ahead of the meeting, the company said Tuesday it met the Leckie group, which demanded three board seats and $600,000 to cover its costs.
Zarlink said it proposed to add two new independent directors but this was rejected.
On Wednesday, the company announced that Adam Chowaniec has been appointed vice-chairman effective immediately, "responsible for monitoring and refining Zarlink's strategic plan."
Chowaniec, who is chairman of Tundra Semiconductor Corp. and previously was president of Newbridge Networks, has been a Zarlink director since February 2007.
