Dissident shareholders of Computer Network Corp. took control of the company's board yesterday after negotiating a truce with Comnet's chairman and president, Lee Johnson.
In a settlement announced in U.S. District Court here yesterday, Johnson agreed to let the dissidents replace six of the seven members of the current board. Johnson will remain as chairman, president and chief executive officer.
In return, the dissidents agreed to drop their proxy fight--which sought to name the exact same people to Comnet's board--and their year-old lawsuit against Comnet, which specializes in data-processing services. Its headquarters is on MacArthur Boulevard.
The lawsuit sought to overturn a series of management actions designed to prevent a takeover by any unfriendly company or group. The dissidents charged that these actions served only to enrich current management.
One of the actions automatically would have granted Comnet's top four officers five years of salary and benefits if the company were taken over. The dissidents, led by New York stockbroker John Spohler, claimed that this "golden parachute" plan amounted to giving away as much as 30 percent of the company's assets.
Under the agreement reached yesterday, Spohler and three other dissidents--who together own about a quarter of the company's stock--would be named to the board. Also assuming posts on the board would be Robert S. Bowen, an executive vice president of Firestone Tire & Rubber Co., and Leonard J. Smith, president of his own company, Training Services Inc. Both own Comnet stock.
The settlement did not specifically discuss the fate of the golden parachutes and other management actions that the dissidents had challenged. However, in an interview after the settlement was filed, Johnson noted that these agreements would not go into effect. Instead, Johnson and the three other officers will be offered new employment contracts.
Another antitakeover plan that automatically would have accelerated the vesting and redemption of stock options upon the announcement of a tender offer or proxy fight will be dropped, Johnson indicated. The options will be vested under the normal rate.
The settlement ends nearly two years of bitter struggle between Johnson and Spohler. Initially, Johnson filed suit against Spohler when he was buying substantial blocks of Comnet stock at a price substantially below the book value of the company, which then was flush with cash holdings.
At the time, Johnson accused Spohler of trying to grab Comnet's stock at an unjustifiably low price to control the company's large chunk of cash and stock in two promisng compmuter-equipment companies.
Spohler denied the charge and later filed a lawsuit against Johnson challenging the antitakeover provisions adopted shortly after Spohler began buying Comnet stock.
Johnson initiated the settlement Sunday night, just two days after Spohler's group announced the slate of people it intended to nominate for directors at the company's annual meeting later this summer.
"I felt that the process of the litigation and proxy fight was not going to be beneficial for the customer, the shareholders or the employes," Johnson said.
Johnson, who at Spohler's request also was speaking for his former adversary, said that, in spite of the change in management, "I expect to be running the company as it has been in the past. And I now expect to be getting a lot of help and assistance" from board members who only days ago were his adversaries.