The Securities and Exchange Commission has dealt a setback to dissident shareholders of Computer Network Corp. and their efforts to challenge Comnet management.
In a letter made public yesterday by Comnet lawyers, the SEC staff ruled that the company did not have to include three dissident proposals in its proxy material to be mailed to shareholders this month.
The proposals, which seek to overturn recent management actions, may be viewed as "one of the many tactics designed to enforce a personal claim or redress a personal grievance against the company and its management," wrote Linda C. Quinn, associate director of the SEC's division of corporate finance.
The decision will make it harder for the dissidents, who together own about one-fourth of Comnet stock, to challenge its management.
Besides having to mail out their own solicitations for votes against management, the dissidents may put into effect one of the actions they are trying to block.
Among other things, the shareholders are trying to stop the implementation of a deferred compensation scheme enacted by Comnet's management last year. The "golden parachute" plan automatically would guarantee Comnet's top four officers five years of salary and benefits if there is an attempt to change the company management--even if the attempt is unsuccessful. Thus, any proxy fight challenging management would trigger the compensation plan, which the dissident shareholders estimate amounts to about 30 to 50 percent of the company's assets.