Dissident shareholders of Computer Network Corp. intend to launch a proxy fight to replace current management at the company's annual meeting later this summer, according to documents filed late Tuesday with the Securities and Exchange Commission.
John Spohler, a New York stockbroker who is leading the management challenge, said he plans to spend between $100,000 to $200,000 to solicit proxies for a new management team at Comnet.
Spohler is joined by five other major Comnet stockholders, each of whom said they would contribute no more than $500 to the fight. Together, the dissidents control nearly a quarter of Comnet's outstanding stock.
For the past year, Spohler has battled with Comnet Chairman Lee Johnson over a series of management actions that Spohler charges are designed to enhance Comnet's officers at the expense of the company's shareholders.
One of the chief items of contention is a deferred compensation scheme that would automatically grant five years of salary and benefits to the company's top four officers if the company is taken over by new management.
Spohler contends that this "golden parachute" amounts to a giveaway of 30 percent to 50 percent of the company's assets--without any of the stockholders being allowed to vote on the plan.
Additionally, Spohler has fought the company's stock-option scheme that automatically accelerates, upon announcement of a proxy fight, the vesting and redemption of stock options granted earlier to top officers.
But because these options would be granted automatically, once he launched a proxy fight, Spohler has always viewed a proxy fight as his last resort, trying instead to get these and other actions overturned by the court and the SEC. Up to now, neither has taken any of the actions Spohler has requested.
Johnson was not available for comment yesterday. In the past, he has justified these actions, saying they were necessary to protect the company from an unacceptable takeover. In particular, Johnson has charged Spohler with trying to take over the company at an unjustifiably low stock price, and then stripping the company of its large cash holdings and its stock in two other promising computer-equipment companies.
Spohler has denied the charge.