Proxy Advisory Firm RiskMetrics/ISS Recommends That Zarlink Shareholders Reject the Dissident Nominees
July 15 2008 - 3:28PM
Marketwired
OTTAWA, CANADA (TSX: ZL) today issued the following statement in
response to a report by RiskMetrics Group/ISS Governance Services
("RiskMetrics") regarding the election of directors at the
Company's 2008 Annual and Special Meeting of Shareholders on July
23, 2008 ("the Meeting"). As previously issued, independent proxy
advisory firms Glass, Lewis and Co. and PROXY Governance, Inc. have
recommended that shareholders of Zarlink vote FOR the reelection of
Zarlink's slate of nominees for the Board of Directors.
We are pleased that RiskMetrics urges shareholders of Zarlink to
vote FOR Management's YELLOW proxy and reject the proxy sent by
Scott Leckie, Daniel Owen and David Banks ("the Leckie Group" or
"the dissidents"). The press release issued by the dissidents today
failed to note that their slate of five nominees was rejected by
RiskMetrics. RiskMetrics is the third and latest advisory firm to
recommend to its clients the rejection of the dissident slate.
The RiskMetrics report summarizes the views of Zarlink
management and the dissidents, and concludes that shareholders
should not vote for the dissident nominees for the following
reasons(i):
- "For shareholders, waiting to see if this momentum can be
sustained is a better choice than replacing the board and
management to freeze the company for 100 days in order to renew the
company strategy."
- "There are signs in the most recent two quarters indicating
that a turnaround of ZL is happening. What it needs now is to let
the current strategy run for a couple of more quarters to rebuild
credibility and regain shareholder confidence as Mandy did three
years ago."
- "Dissidents have (been) unable to dismiss the latest
improvement of ZL's financial performance and the strong stock
rebound in a generally bearish market. The simple fact is that,
after being hit badly in Q3/FY08, ZL shares have significantly
outperformed its peer group (by approximately 50%)."
- "Therefore, it is extremely difficult to justify any
significant change at this moment, especially a proxy contest
without a thorough understanding of the company, which might bring
a disruptive effect when the company is at a turning point."
- "We also note that Chairman of ZL did not receive any per diem
amount for attendance to company business, at his request, for the
second half of FY08 ended March 28, 2008...The per diem portion of
the Chairman's compensation has been suspended indefinitely at the
Chairman's request until the company returns to an acceptable level
of profitability."
- "We have further reviewed the corporate governance practice of
ZL. The company generally has a sound record of adopting best
practices."
RiskMetrics concluded: "As the company is implementing a
strategy that works seemingly well at this moment, and the strategy
contains the key elements of the plan proposed by the dissidents, a
wholesale change is NOT NEEDED..." The Company and its Board are
appreciative that RiskMetrics has chosen to recommend the rejection
of the dissident nominees.
In its report, RiskMetrics recommended that shareholders of
Zarlink should vote to elect Company board nominees Oleg Khaykin,
Hubert T. Lacroix, J. Spencer Lanthier, Kirk Mandy and Henry Simon,
noting that a change at this time might bring a disruptive effect
when the Company is at a turning point. RiskMetrics also
recommended that shareholders withhold their vote from the current
members of the Company's compensation committee, being Adam
Chowaniec, Jules Meunier and Dennis Roberson. The Company disagrees
strongly with the need for such recommendation and urges
shareholders to support these individuals. The Company and the
Board acknowledge the concerns expressed by RiskMetrics in making
this recommendation and will take into account its recommendations
with respect to reviewing and determining executive compensation
but do not believe the appropriate response is to withhold voting
for these individuals at the Meeting.
(i) Permission to quote from RiskMetrics was neither sought nor
obtained.
Important shareholder voting instructions
The Zarlink proxy to vote is YELLOW. Your vote is important,
regardless of how many shares you own. Voting is a very quick and
easy process. To be effective completed YELLOW proxies must be
received by 10:30 a.m. on July 21, 2008. Due to the limited time
available we recommend voting by Internet, telephone or facsimile
today or at least 24 hours in advance of the proxy cut-off. If you
have already voted using the dissident proxy you have every right
to change your vote as it is the later dated proxy that will be
counted.
We urge you to carefully consider the ramifications of your vote
and to submit your YELLOW proxy today FOR the election of the slate
of director nominees set out in the Zarlink Management Proxy
Circular. Please discard any proxy or related materials you may
receive from the Dissidents and vote using only the YELLOW form of
proxy. For ease of voting, Zarlink shareholders are encouraged to
vote using the Internet and entering their YELLOW control number.
Please visit www.zarlink.com for additional information.
Shareholders with questions or needing assistance in voting
their YELLOW proxy are encouraged to call Zarlink's proxy
solicitation agent, Georgeson (North American toll-free,
1-866-717-8088).
About Zarlink Semiconductor
For over 30 years, Zarlink Semiconductor has delivered
semiconductor solutions that drive the capabilities of voice,
enterprise, broadband and wireless communications. The Company's
success is built on its technology strengths including voice and
data networks, optoelectronics and ultra low-power communications.
For more information, visit www.zarlink.com.
Shareholders and other individuals wishing to receive, free of
charge, copies of the reports filed with the U.S. Securities and
Exchange Commission and Regulatory Authorities, should visit the
Company's web site at www.zarlink.com or contact Investor
Relations.
Certain statements in this press release constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties, and
other factors which may cause the actual results, performance or
achievements of the Company to be materially different from any
future results, performance, or achievements expressed or implied
by such forward-looking statements. Such risks, uncertainties and
assumptions include, among others, the following: our dependence on
the successful development and market introduction of new products;
our dependence on revenue generation from our legacy products in
order to fund development of our new products; our ability to
successfully integrate Legerity and any businesses acquired in the
future; any potential undisclosed liabilities associated with the
Legerity acquisition; our ability to operate profitably and
generate positive cash flows in the future; our dependence on our
foundry suppliers and third-party subcontractors; order
cancellations and deferrals by our customers; and other factors
referenced in our Annual Report on Form 20-F. Investors are
encouraged to consider the risks detailed in this filing.
Contacts: Zarlink Semiconductor Inc. Ed Goffin 613-270-7112
edward.goffin@zarlink.com
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