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Activist hedge fund manager Andrew Shapiro on Tuesday cancelled plans for a proxy contest at Mace Security International Inc. after the electronic surveillance security devices maker agreed to a series of changes including the addition of several new independent board members.
Activist hedge fund manager Andrew Shapiro on Tuesday cancelled plans for a proxy contest at Mace Security International Inc. after the electronic surveillance security devices maker agreed to a series of changes including the addition of several new independent board members. According to a Securities and Exchange Commission filing by Shapiro's Lawndale Capital Management LLC on Tuesday, the Mt. Laurel, N.J.-based company agreed to propose a six-person board to be elected at Mace’s upcoming annual meeting, expected in December. Mace has agreed to propose five independent directors, three of whom will be new to the company’s board. Two of the new directors, according to the filing, were proposed by Mill Valley, Calif.-based Lawndale. One of Lawndale’s nominees, Dennis Raefield, a security products industry executive, will be added to Mace’s board by the end of October, prior to the company's annual meeting expected in December. As part of the settlement, Mace also agreed to change its bylaws to require that at least two-thirds of the board will be independent with no family or financial ties to management. The settlement comes after Shapiro launched a proxy contest last month to elect four nominees to the company’s board. Lawndale has a 9.6% Mace stake. The settlement is the latest stage in a public campaign launched by Shapiro last year intended to prod Mace into improving its governance by bringing on more independent directors and installing stringent ties between executive performance and compensation. Prior to launching the proxy contest, Lawndale offered a compromise plan Aug. 31 that was rebuffed. In the compromise, Shapiro wrote Mace officials asking them to replace director Matthew Paolino, the brother of Mace’s CEO, with an expanded board that included three of Shapiro's four nominees. Matthew Paolino and Burton Segal will not stand for re-election at Mace’s upcoming annual meeting, according to the agreement. They will be replaced by the other two of the three new independent directors as part of this settlement.
Also in September, Mace’s second-largest holder, Ancora Capital
Inc., reported owning an 8.6% stake, and according to an SEC filing, portfolio
managers there have come out in support of Lawndale. Mace Security has a $36
million stock market capitalization. — Ron Orol Ron Orol is a Washington-based reporter for The Deal and author of Extreme Value Hedging: How Activist Hedge Fund Managers Are Taking on the World. Categories Deal Video
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