Plenum Wins Order Barring Severance Pay : Proxy battle: Publisher says the ruling will prevent Gradco from exercising ‘golden parachute’ agreements and from dissipating funds.
SANTA ANA — A Superior Court commissioner on Monday issued a temporary order sought by Plenum Publishing Corp. that bars Gradco Systems Inc. from making severance payments to its top executives or from interfering with the right of a bloc of pro-Plenum shareholders to vote in an election for Gradco’s board of directors.
Bernard Bressler, Plenum’s corporate secretary, said the New York publisher sought the restraining order against the maker of copier and printer products because of “concern that funds of the company will be dissipated before certification†of the board election results.
Newton H. Lee, corporate secretary for Irvine-based Gradco, said the election was overseen by a neutral third party, and he disputed Bressler’s reasons for the restraining order.
“That’s the most ridiculous and libelous thing I’ve heard forever,†Lee said. “We’ve been restrained from doing things that we had no intention of doing in the first place.â€
The voting dispute stemmed from Gradco’s acrimonious annual meeting on Friday, where the two sides hurled insults and accusations at each other. Plenum maintains that it has enough votes to be immediately declared the winner of the proxy battle, but Lee disputes that claim.
Plenum Chairman Martin E. Tash is leading an effort to oust Gradco Chairman Keith B. Stewart and his board of directors from the company and elect a slate of directors hand-picked by Plenum. Shareholders cast their votes at Gradco’s annual meeting.
Bressler said he interpreted the order to mean that Gradco and its elections overseer, Corporation Trust Co. in Delaware, must count 310,000 pro-Plenum votes in the board election. But Lee said Corporation Trust will determine which votes are eligible for counting.
At the meeting Friday, the two sides disagreed about how long the polls would remain open. Gradco allowed 15 minutes after the meeting ended, but the Plenum group could not cast its ballot in time. A shoving match broke out between a Plenum board nominee and Jeffrey Tindell, an attorney for Gradco, who were arguing over the vote counting.
Superior Court Commissioner Julian Cimbaluk’s order extends until Oct. 25, when another hearing has been scheduled in Santa Ana Superior Court.
Bressler said the order prevents Stewart and other Gradco officers from exercising so-called “golden parachute†agreements, or severance packages that award top executives lucrative benefits in the event they lose their jobs when the company is taken over by another firm. Bressler said Stewart’s severance contract entitles him to three times his salary, or $1.05 million, upon his departure.
Bressler also said the order prevents Gradco from changing employment contracts, issuing payments to employees in excess of one week’s salary or making advanced payments to individuals until the board election is completed.
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