WILSONVILLE, OR -- Mentor Graphics next board meeting might be awkward as outsiders have supplanted three longstanding directors, as the EDA software company confirmed yesterday.
According to an SEC filing, Mentor shareholders have opted for three new directors, two by convincing margins.
Shareholders voted to retain five directors, including president Greg Hinckley and chief executive Wally Rhines. However, they also booted three company-backed directors from the board in favor of nominees from Mentor's largest shareholder, Carl Icahn.
The changes come despite a months-long PR campaign waged by Mentor against the Icahn slate, during which the printed circuit board and semiconductor software design company emphatically asserted that it had turned the corner after two years of losses.
Sent packing were James Fiebiger, Marsha Congdon and Fontaine Richardson. In their place, shareholders voted in José Maria Alapont, Gary Meyers and David Schechter. While Alapont and Meyers both received more than twice as many votes as the nearest ousted incumbent, however, Schechter won his seat by a mere 8,100 votes, out of more than 98,000 cast.
The installation of three new directors presents a dilemma of sorts for Mentor's returning directors. Mentor has been locked in a struggle with Icahn, who holds nearly 15% of the company's stock, over its direction and expenses. Icahn claims Mentor has inflated sales and marketing expenses versus its primary competitors, and that the company could unlock value for shareholders by exploring a sale. Icahn even offered a $1.9 billion stalking horse bid, which Mentor dismissed as too low.
Mentor asserts that a sale would not pass antitrust concerns and that its recent results are proof its current strategy is sound.
Since last week's vote, both sides have publicly indicated a willingness to work together. Given recent back-and-forths over matters ranging from the date of the shareholders meeting to Mentor's decision to issue $253 million in new bonds, coupled with clear disagreements over the company's direction, it is unclear how long the two sides can cling to their new best faces.