In an amended 13D filing on Cyberonics Inc. (NASDAQ:CYBX), major stockholder Metropolitan Capital Advisors and The Committee for Concerned Cyberonics Inc. Shareholders disclosed a letter sent to the company on September 28, 2006 to "set the record straight" on what they say was a number of misleading statements made in a press release issued by the Company last evening.
The firm said, contrary to statements by the company, they do not desire a, "costly and disruptive proxy contest," but wish to replace a minority of its insular board with their nominees, who they say will provide shareholders with the independent voice in the boardroom that this Company so desperately needs.
The group also said on September 22, 2006, Bedford delivered a letter to the Company requesting its stockholder list in connection with the the groups planned solicitation of proxies. The group also said on September 27, 2006, they, together with Mssrs. Nestler and Rosenthal, filed with the SEC their preliminary proxy materials in connection with the solicitation of proxies with respect to the election of Mssrs. Schwarz, Nestler and Rosenthal to the Board of Directors of the Company at its 2006 annual meeting. They said Cyberonics has not yet announced the date of its 2006 annual meeting.
A Copy of the Letter:
September 28, 2006
The Board of Directors
100 Cyberonics Boulevard
Houston, Texas 77058
In the interest of setting the record straight, we want to respond to a number of the misleading statements made in the press release issued by the Company last evening. We are addressing our letter to the Board as a whole because we are unable to determine from the press release the source of the quote contained in the release.
The press release said that the Company met with representatives of Metropolitan Capital on June 9, “in an effort to reach a cooperative solution.” In fact Cyberonics’ representatives, Ms. Westbrook and Ms. Frank but not Mr. Cummins, met with us and many other investors, separately, in a series of meetings organized by Piper Jaffray, in an effort to support your flagging share price. The only portion of our meeting that might be construed as “an effort to reach a cooperative solution” with us took place when the Company’s PR consultant asked us what we wanted. We responded that we wanted the Company to replace a minority of the existing Cyberonics board members with our nominees and to commit to implement long overdue corporate governance reform. It is highly misleading to imply that a special meeting took place to discuss our concerns and suggestions.
The remainder of the June 9 meeting involved the Company’s CFO, Pam Westbrook, walking us through the Company’s investor presentation (We notice that the Company’s investor presentations have been removed from the investor relations portion of the Company’s website. Does this mean that investors should no longer rely on the information in those presentations or is it simply the Company’s strategy to make it more difficult for investors to see the many examples of the Company over-promising and under-delivering?).
The Company press release says that shortly after the June 9 meeting “the Cyberonics Board invited Metropolitan Capital to submit the credentials for their director nominees to the Board’s outside search firm…. Rather than proceeding in a cooperative fashion to the benefit of the company and its shareholders, however, Metropolitan Capital has decided to pursue a potentially costly and disruptive proxy contest.” The depiction of the facts in this instance is also highly misleading because we had already provided all the information with respect to our nominees required by the Company’s advance notice provisions in the by-laws. After the June 9 meeting, we did not hear from the Company again until receiving a letter from the Company’s general counsel on July 25 (nearly two months after we provided notice to the Company of our nominations, along with the required information about our three nominees) that asked for further information about our director nominees. We responded with the requested additional information the very next day. In contrast, over the course of the last month our calls to Mr. Cummins and Ms. Westbrook have not been returned.
To be sure, we do not desire a “costly and disruptive proxy contest.” What we want is for the Company to replace a minority of its insular board with our nominees, who will provide shareholders with the independent voice in the boardroom that this Company so desperately needs, and for the Company to commit to implement necessary corporate governance reform.
As the Company professes a commitment to the highest standards of shareholder democracy, and as today is the one year anniversary of the last annual meeting of the Company’s shareholders, we reiterate the request we made earlier this month—inform the shareholders of the date of the 2006 annual meeting.
A true commitment to shareholder democracy must begin by providing shareholders with their most fundamental right—the right to choose directors that will represent their interests.
Karen L. Finerman President
Jeffrey E. Schwarz Chief Executive Officer
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