Spring Bored

To those who are tiring of this spring’s back-and-forth between Mentor Graphics and its two largest shareholders, take note: It should only last about three more weeks.

On May 12, the EDA company will hold its annual meeting, at which time shareholders either will affirm their  faith in management by re-electing the current directors, or will try to grab gold via a different channel by voting in favor of dissident shareholder Carl Icahn’s alternate slate.

Icahn and some other investors have claimed, in no uncertain terms, that they feel Mentor spends too much money on itself and not enough flows back to the shareholders. They believe the design software company would be better off run by a group with a greater stake in the outcome — no current Mentor director holds more than a 0.5% share, while Icahn controls nearly 15%. “Over the past 19 years under current management, Mentor’s share price is down 18%, with zero return for shareholders,” Casablanca Capital, another dissident shareholder, wrote in a letter today. “How can we support a board that is responsible for this underperformance?”

For its part, Mentor today responded with its strongest rebuttal yet, saying that Icahn has no plan, short of selling the company, a move it says would jeopardize customer stability; overrates his own nominees’ qualifications; and distorts Mentor’s track record. Mentor further argues that its stock has beaten that of its main rivals over the past five years.

While the battle has been mostly confined to the boardroom — Mentor’s stock price hasn’t yo-yo’d much since Icahn made a $17 per share offer for the company in February — it’s hard to believe that the potential of new management hasn’t been an ongoing distraction to the company’s thousands of employees. They, too, are likely eager for some relief.

It also should be noted that the two investors that are calling for the board’s heads — Icahn and Casablana — own a little more than 20% of the company. The other 79%+ of voting stockholders have been quiet throughout this tennis match. They are the ones who will decide Mentor’s fate, however. At this point, the company is in their hands.

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About Mike

Mike Buetow is president of the Printed Circuit Engineering Association (pcea.net). He previously was editor-in-chief of Circuits Assembly magazine, the leading publication for electronics manufacturing, and PCD&F, the leading publication for printed circuit design and fabrication. He spent 21 years as vice president and editorial director of UP Media Group, for which he oversaw all editorial and production aspects. He has more than 30 years' experience in the electronics industry, including six years at IPC, an electronics trade association, at which he was a technical projects manager and communications director. He has also held editorial positions at SMT Magazine, community newspapers and in book publishing. He is a graduate of the University of Illinois. Follow Mike on Twitter: @mikebuetow