Shareholders of the struggling Imation Corp. have voted to oust three board members, including the board's chairman and the company's CEO.
At the data storage company's annual meeting Wednesday in Lake Elmo, shareholders elected a slate of three board nominees put up by the Clinton Group, an activist investor in New York.
The outcome, which still must be certified, ends a prickly proxy battle that resulted in missives lobbed by both sides via letters to shareholders and filings to the Securities and Exchange Commission.
Clinton officials accused executives of the Oakdale-based Imation of mismanagement, excessive pay and years of dismal results. In return, Imation officials characterized Clinton executives as Johnny-come-lately shareholders who were motivated only by personal gain.
In the end, shareholders decided they wanted some fresh eyes that might improve shareholder value and stop the financial hemorrhaging. New board members are Joseph De Perio, Clinton's senior portfolio manager; data storage executive Robert Fernander; and Barry Kasoff, president of Realization Services Inc.
After the vote, Imation's stock rose 4 cents to close at $4.59.
"We are pleased that shareholders spoke loudly for their voice" in this company, De Perio said after the annual meeting.
The vote ousted Mark Lucas from the board, but it did not take away his role as Imation's CEO.
After the meeting, he told the Star Tribune that the vote was "constructive." Also ousted from the board were Chairman L. White Matthews and two-year board member David B. Stevens.
"We don't anticipate anything to change," under the newly composed board, Lucas said. "We will work very constructively with the Clinton Group to enhance shareholder value."
Clinton Group officials said they expect to meet with Lucas and rest of the board as soon as next week, hoping to begin talks on how to improve Imation's bottom line.
Lucas has long maintained that the company's core legacy products such as CDs, DVDs and magnetic data storage tapes have been declining for years and are currently down about 25 percent from last year. As a result, he told shareholders at the meeting Wednesday that Imation has made critical acquisitions that focused on data security products. It also introduced new hard drives and other products that are portable and secure for both consumers and businesses.
At the same time, Imation cut "legacy costs" by $100 million, Lucas said. The company also sold $300 million worth of unprofitable businesses and invested in new and higher margin products.
That update didn't mollify everyone.
Shareholders noted recent results, including a May 6 posting of a $14 million net loss for the first quarter on revenue that fell 13 percent. It was yet another quarter of dismal results.
During the meeting, longtime shareholder Roger Rasmussen of Maplewood yelled at Lucas and demanded to know why the company's revenue and stock price are a fraction of what they were in 2010. He said he voted in favor of electing the outside board members and then bought 1,000 additional shares of Imation stock Wednesday morning.
"My hope is this new group of board members can effect change," Rasmussen told the Star Tribune.
De Perio said he was reserving further comments about his win for later.
De Perio told shareholders at the meeting that Imation's stock price has risen about 35 percent just since the Clinton Group raised its concerns and took them public in the form of a proxy battle. By getting more involved, "hopefully, we can reverse the fortunes of [stock] declines" that have crippled shareholder value in recent years.