Proxy advisory firms weigh in on Zarlink vote

By Lisa Kerner

Charlotte, N.C., July 15 - Three proxy advisory firms have made recommendations in the election of directors to Zarlink Semiconductor Inc.'s board on July 23.

Glass, Lewis & Co. and Proxy Governance, Inc. are recommending shareholders vote for the company's slate of directors, according to a Zarlink news release.

All of Zarlink's eight directors are standing for re-election.

Zarlink said that Proxy Governance recommended shareholders reject the five individuals nominated by the Concerned Shareholders of Zarlink group.

Members of the Concerned Shareholders include Scott Leckie, who manages funds owning the second-largest holding in the company, as well as David Banks and Daniel Owen. Together, they own or control more than 5.9% of Zarlink's shares, it was previously reported.

The group said if its candidates were elected, the new board would move immediately to replace Zarlink president and chief executive officer Kirk Mandy.

Proxy Governance questioned the group's plan to halt Zarlink's actions, noting that the group's plans are "far less compelling" than its frustration with the company.

Glass Lewis noted that while the Concerned Shareholders plan to replace Mandy, they have failed to identify a permanent candidate for the position.

In addition, Zarlink said the Glass Lewis report found the group's plan for the company is not significantly different that Zarlink's own stated strategic plan.

According to the dissident group, RiskMetrics Group/ISS recommends that shareholders do not vote for three of the management nominees, all members of the compensation committee: Adam Chowaniec, Jules Meunier and Dennis Roberson.

The Concerned Shareholders said shareholder value has been damaged by the $390,000 in bonuses paid to management and Mandy, as well as the $137 million acquisition of Legerity Holdings Inc. in 2007.

Leckie's group previously asked Zarlink shareholders to use the blue proxy to vote for Banks, Owen, Neil Carragher, Kalai Kalaichelvan and Luke Smith, as well as for management nominees Chowaniec, Hubert T. Lacroix and J. Spencer Lanthier.

Zarlink maintains that Chowaniec, Lacroix and Spencer Lanthier did not consent to serve with the five individuals nominated by the dissident shareholder group and are committed to standing for election as management nominees. The company has asked shareholders to vote using the yellow form of proxy.

Located in Ottawa, Zarlink designs, manufactures and distributes semiconductors in Europe, Asia Pacific, the United States and Canada.

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