A Medical Device Daily
Billionaire investor Carl Icahn said this week that he plans to back three nominees by Metropolitan Capital Advisors — a group of dissident shareholders — to the board of Cyberonics (Houston), under federal scrutiny for its stock options dating practices.
Icahn holds a 9.77% stake in Cyberonics, scheduled to have its annual stockholders meeting Feb. 1, according to a filing with the Securities and Exchange Commission.
The filing details the Cyberonics shares purchased by Icahn’s investment vehicles since Jan. 10 at prices ranging from $19.47 to $20.64 a share. Icahn paid a total of $46.9 million to buy 2.51 million shares, it said.
Because of errors in the company’s stock option practices, CEO Skip Cummins and CFO Pam Westbrook resigned in November (Medical Device Daily, Nov. 21, 2006). A review by the company’s audit committee discovered those flaws and the company must restate results for the fiscal years 2000 through 2005.
Metropolitan Capital is attempting to oust, with its own nominees, a group of board members backed by Cyberonics management.
In a related note, Cyberonics issued a statement Tuesday in response to the recommendation by Institutional Shareholder Services (ISS) regarding the election of directors at Cyberonics’ upcoming stockholder meeting in which it urged stockholders to vote for all the board’s nominees.
“We are pleased that ISS recommended that Cyberonics stockholders vote to re-elect Cyberonics’ Chairman, Tony Coelho, to the Cyberonics Board of Directors,” the company said.
“Cyberonics’ director nominees — Stanley Appel, MD, Tony Coelho, Guy Jackson, Kevin Moore, Alan Olsen, Michael Strauss, MD, MPH, and Reese Terry Jr. — have diligently served on Cyberonics’ board and are committed to enhancing long-term stockholder value. Hugh Morrison, the remaining Cyberonics nominee who joined the board in November 2006, brings important perspective on this complex industry.”
Further, it said: “We believe that ISS has reached the wrong conclusion in failing to recommend the election of Stanley Appel and Kevin Moore. Both are highly qualified and committed to serving the best interests of all Cyberonics stockholders.”