Stockholders of Orthofix International NV fought back a proxy challenge by a New York-based hedge fund.
The McKinney, Texas-based orthopedic device manufacturer said its shareholders beat back an attempt by Ramius LLC to oust four current board members and install their own people.
Orthofix also runs offices in Boston and a production facility in Springfield.
Company officials had strong words about the Ramius action in a March 2 letter to stockholders:
“Ramius is an opportunistic, activist hedge fund that has engaged in numerous proxy contests over the past several years. Ramius owns just over 5 percent of Orthofix common shares outstanding, yet Ramius is seeking to gain control of nearly half of the Company’s Board seats (4 out of 10 seats) with a proposed slate of inexperienced and problematic directors. It is difficult for your Board to take instruction from a hedge fund that appears to be unable to manage its own affairs.”
Ramius had nominated Michael Egan, Peter Feld, Steven Lee and Charles Orsatti as board candidates. Orthofix singled out Peter Feld and Steven Lee as being particularly “problematic.”
Feld has “no experience in the health care industry and a strikingly thin (and disconcerting) record of service on just two public company boards,” according to the letter.
Furthermore, the letter warned, Lee’s presence on the board could harm Orthofix’s reputation because of his involvement with a company that was investigated for Medicare fraud after he left.
“Frankly, the Board is deeply troubled by the respective backgrounds of both Mr. Lee and Mr. Feld, as well as Ramius’ efforts to impose these two people on our team, our culture and our organization,” the letter said.
Officials at Ramius were equally pointed in their criticism of the Orthofix board, saying it has “overseen a period of massive shareholder value destruction highlighted by lofty expectations followed by terrible execution,” according to a federal filing.
They accused Orthofix of losing “almost a half billion dollars in market capitalization in the last three years,” taking on too much debt and missing earnings targets in 2007 and 2008.
The Ramius fund is owned by Ramius Capital Group LLC of New York. That firm was founded in 1994 by Peter Cohen, a former chairman of Shearson Lehman Brothers, which once managed over $7 billion in assets, according to BusinessWeek.