OTTAWA, Aug. 12 /CNW/ - The Concerned Shareholders of Zarlink
Semiconductor Inc. today issued an open letter to their fellow shareholders
thanking them for their consideration and significant support at the Company's
annual meeting on July 23, 2008. The Concerned Shareholders also note that
they intend to hold the Zarlink Board of Directors accountable for claims made
during the proxy contest and responsible for its promises of improvement at
The text of the letter follows:
Dear Fellow Shareholder of Zarlink Semiconductor Inc.
With the Zarlink Annual and Special Meeting behind us, we are writing to
thank all of you who became engaged in the recent proxy contest,
especially those who submitted the Blue proxy for change. We appreciate
the willingness of all you to listen to our proposal and we believe that
- whether you supported us or not - the increased scrutiny of Zarlink can
only help the Company's performance.
In the end, we lost the vote, although we were gratified to have secured
the support of more than 40% of the votes cast at the meeting, given the
short time we had to mount our campaign and the hostility of the
incumbent board in its continuing efforts to entrench itself. I am
tempted to say "we appear to have lost" the vote because analysis of the
voting indicates that we received a majority of 54% of the votes cast by
Canadian shareholders, but only 5% of the US vote. This is an unusual and
suspicious voting pattern. We are left to wonder if our slate of
directors may have actually won the proxy contest but for some
irregularity in communication with US shareholders. Since the vote, we
have been investigating this unusual voting pattern in the US but as of
yet cannot find a satisfactory explanation.
Whatever the final outcome, despite the strong support from many
shareholders, the day before the meeting, the Board rejected our proposal
for a negotiated settlement to place two of our nominees on the Zarlink
Board. We also agreed to drop our demands for the immediate removal of
Kirk Mandy and Henry Simon. The flat rejection was consistent with the
Board's established pattern of ignoring or rejecting the concerns of its
We were told they would never have any of the Concerned Shareholder
Nominees on "their" Board. They claimed they were personally offended by
our challenge. This was despite our specifically noting in our Proxy
Circular: "Individually, there are very good directors on the current
Board of Zarlink. They are people of integrity, insight and experience."
That is what we believed on July 4, even with the prima facie case
against the Board based on the loss of shareholder value. That's what we
still believe, although our belief was badly shaken by the tactics they
employed leading up to the annual meeting and by the Board's
unwillingness to put aside our differences and work together to make
Zarlink a more valuable enterprise.
We believe the Board's rejection of our proposal was inappropriate as
well as revealing of an entrenched and self-serving attitude. The Zarlink
Board talked about "their" Board. But it's not "their" Board; it is the
shareholders' Board. The directors' duty is to protect the best interests
of the company and its shareholders, not itself and certainly not to
ignore the 40% of shareholders who voted for a new Board.
While Chairman of the Board Henry Simon said we "wasted" the Board's time
in our efforts to engage shareholders in understanding the abysmal
performance of their Company, we do not believe involving owners in the
affairs of their company can ever be considered a "waste". It is clear
from the vote that a substantial number of Zarlink shareholders wanted to
replace the Board. Even more clear is that every Zarlink shareholder
wants change, whether implemented by a new Board or the current
directors. No rational person would want Zarlink to continue to perform
as it has over the past decade. There must be change.
At the annual meeting, Mr. Simon once again promised improvement in the
future, using almost exactly the same words he has since he first took
that job 14 years ago. As he has for several years, CEO Kirk Mandy once
again said that Zarlink was at a turning point.
As significant shareholders of Zarlink, we hope this time they are right.
Even their supportive shareholders have given this Board only a year to
prove it. We will monitor the leadership's performance, and expect them
to meet their commitments for immediate, significant improvements in
The Concerned Shareholders will continue to work on behalf of all
shareholders to find the best path to value realization for their Zarlink
holdings. Despite their abysmal record of value realization, the current
leadership is intent on continuing to implement the most recent three-
year plan without considering alternate strategies to maximize value for
stakeholders. We have learned that shareholders cannot rely on the
current leadership to consider wider alternatives, as it is not part of
We sincerely hope the Board now understands that the owners of Zarlink
want results and are not going to wait forever.
We are not going away. We will hold this Board accountable until either
the results improve or the current Board is changed.
In the meantime, we extend our deeply felt thanks for your consideration
and for your support.
The Concerned Shareholders of Zarlink Semiconductor Inc.
For further information:
For further information: The Concerned Shareholders of Zarlink
Semiconductor Inc., Scott Leckie, (416) 363-3399