The board of directors of Orbotech Ltd. (Nasdaq: ORBK) has rejected the demands for changes in its composition and procedures presented last week by Ion Asset Management, managed by Stephen Levey and Jonathan Half.
Ion owns 6.17% of automated optical inspection equipment company Orbotech. It seeks to install younger directors more closely connected to the electronics industry on Orbotech's board, the average age of which is 67. It also wants directors to stand for re-election annually, and a semi-annual review of the company's capital structure and dividend or share buyback policy.
In its response, signed by chairman Yochai Richter, the Orbotech board says that Ion's requests and proposals are not in the company's best interests, and are even unlawful.
"The Orbotech board is always open to addressing shareholder concerns and is committed to creating value for all shareholders and takes its fiduciary duties and responsibilities very seriously. The Orbotech board has given careful consideration to your proposals and requests and has determined to decline them," Richter's letter to Ion states.
"Your requests are not in accordance with applicable law," it continues, "Compliance with them would require the Company to delay its currently scheduled 2014 Annual General Meeting and it will not do so. Also, the proxy statement for our 2013 Annual General Meeting (filed with the SEC on August 6, 2013) stated that all shareholder proposals to be presented at the 2014 Annual General Meeting must have been received by Orbotech no later than April 8, 2014. "
The letter also states that Ion had failed to respond to requests to that it should nominate candidates for directorships: "At multiple meetings held starting in April between yourselves and a member of the Orbotech board and senior management, we requested your input about potential nominees to the Orbotech board. On each occasion, you declined to provide any names to us."
On the demands for annual re-election of directors and periodic reviews of the company's capital structure the letter says, "Although the Company will not be delaying its 2014 Annual General Meeting, the Orbotech board views the declassification of the board as an appropriate topic for shareholder consideration. Accordingly, the Orbotech board has authorized calling an Extraordinary General Meeting in the near term to allow shareholders to vote on this matter. We anticipate making the specific details of such Extraordinary General Meeting public shortly.
"We do not believe that your proposal to amend the Articles of Association of Orbotech to address the capital structure of Orbotech is appropriate for consideration at a general meeting of shareholders or for inclusion in the Articles of Association, and therefore will not submit this proposal at either the 2014 Annual General Meeting or the Extraordinary General Meeting. The Orbotech board regularly reviews the capital structure of the Company, and to require public reporting on those reviews would disadvantage the Company from a strategic and competitive perspective."
Ion claims that Orbotech's share price has declined by 36% since it first invested in the company in 2006.
Published by Globes [online], Israel business news - www.globes-online.com - on June 16, 2014
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