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A shareholder group at RCM Technologies Inc. (NASD: RCMT) announced today it filed a countersuit in response to a lawsuit filed earlier this month by RCM. Meanwhile, RCM’s board reported today the early termination of a shareholder rights plan (poison pill) and other changes.
The moves are part of a proxy battle at RCM leading up to the company’s annual meeting on Dec. 5. The two sides are fighting over several issues including opposing slates of directors up for election at the meeting.
In the announcement of its lawsuit, the shareholder group contends the company is advancing false and misleading statements. In its lawsuit, RCM had argued the shareholder group hadn’t provided complete and accurate information in filings it made with the U.S. Securities and Exchange Commission.
“RCM cannot continue to mislead stockholders by alleging our proxy materials are false and misleading merely because we responded to SEC comments in the ordinary course,” said Bradley Vizi, founder and managing director of Legion Partners, one of the members of the dissident shareholders group. Vizi is also one of the group’s nominees for election to the RCM board.
In addition to Legion Partners Asset Management LLC, the shareholder group includes IRS Partners No. 19 and others.
The group seeks to have its two nominees — Vizi and Roger Ballou — elected to RCM’s board. Ballou is the former CEO of CDI Corp. (NYSE: CDI) and he is presently a director of Fox Chase Bancorp Inc. and Alliance Data Systems Corp.
The group also seeks shareholder approval of a nonbinding advisory vote requiring the board chairman be an independent director.
RCM’s own nominees to its board include Kerr and Michael Frankel. Kerr has been a director since 1994, and he was founding partner of Everingham & Kerr Inc., an M&A consulting firm. Frankel is director of a firm called Onvia and CFO of Iconology Inc.
Separately, RCM announced today it was ending its stockholder rights plan — also known as a “poison pill” — early on Nov. 18. The plan was previously set to expire on Jan. 29.
RCM reported the board ended the plan early after supplemental disclosures were made last week by Legion Partners Asset Management and other members of the dissident stockholder group that the group had no intention of obtaining control of RCM. However, the company said it remained concerned about a disclaimer in the disclosure that the group reserved the right to change its intentions.
In addition, the company reported it retained an executive search firm to assist in finding independent members of the RCM board.
“When the RCM Board adopted the rights plan earlier this year following the Legion Group's announcement of its proxy contest against RCM, we were very clear that this was a limited-purpose, limited-duration rights plan,” said RCM Chairman and CEO Leon Kopyt. “In approving the early termination of the rights plan, as with our actions earlier this year in declassifying our board, adopting majority voting in the election of directors, adopting stock ownership guidelines and appointing a lead independent director, we continue to demonstrate our willingness to be receptive to stockholder input, particularly around corporate governance enhancements that have the potential to improve the functionality of our board and make it more accountable to stockholders.”