The battle for control of Atmel Corp is becoming increasingly bitter after the microcontroller vendor wrote to shareholders warning that the future of the company would be at stake if the former CEO were to replace the board of directors that fired him.
Atmel’s former CEO and founder, George Perlegos, was dismissed in August 2006, along with his brother executive vice president Gust Perlegos, and two other unnamed officers, following an independent investigation into allegations of misuse of corporate travel funds.
In a statement, Atmel said that within hours of being fired for cause as president and CEO, George Perlegos, utilizing his then position as chairman, requested a special stockholder meeting for the sole purpose of removing those directors who terminated him. It said Perlegos and his brother also turned to the courts in an attempt to regain their executive positions. In February, the Court of Chancery rejected the Perlegoses’ attempt to be reinstated.
On March 23, Atmel hit Perlegos with a lawsuit. But Perlegos responded with an answer and counterclaim. In his counterclaim, Perlegos said he was seeking to compel Atmel to issue corrective statements and to enjoin the company from making further misstatements so that Atmel’s shareholders have complete and accurate information prior to voting at the Special Meeting of Shareholders scheduled for May 18, 2007.
Perlegos plans to use the special meeting of shareholders to oust five directors of the company, including his replacement Steven Laub. To encourage shareholders support for his plan, he has proposed divesting what he regards as non-core assets to refocus on its core strength in microcontrollers. He also plans to hire an experienced new president and CEO and initiate a $500m to $1bn share-repurchase program.
Perlegos also said the information Atmel has released indicates a marked downturn in both revenue and cash. He claimed that the current plan to address Atmel’s deteriorating financial performance does not go nearly far enough and has significant flaws that could jeopardize the future value of the company.
Atmel responded to this and has written to shareholders, urging them to vote against Perlegos proposal.
We believe George Perlegos statements and counterclaim are without merit and nothing more than an attempt to confuse a clear record and deflect attention from the real issues – the fact that George Perlegos is seeking to retain control of the company after being fired for cause for misusing corporate funds for personal gain, the company said Thursday.
Atmel also went on to accuse Perlegos of presiding over ethical failures at the company, including the abuse of corporate funds. It also pointed out that Atmel suffered net losses in each of the last five full years under George Perlegos’s leadership that exceeded $1.2bn.
Atmel also commented on its suspended financial reporting. Less than two weeks before George and Gust Perlegos were terminated for cause, Atmel announced it was unable to file its quarterly report on Form 10-Q because Atmel had initiated an independent investigation regarding the timing of stock option grants made during George Perlegos’s tenure as chairman and CEO, it said.
Perlegos had led the company as CEO since its inception in 1984. He remains its largest individual shareholder, with 5.3% of its outstanding shares.
Shares in the company fell 0.59% to $5.03 on Nasdaq Thursday.