ConMed Gets Mixed Messages on Proxy Fight From Advisory Firms

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NEW YORK ( The Deal ) -- Two proxy advisory firms sent a split message to surgical device maker ConMed shareholders about whether they should back a three-person dissident slate of candidates activist fund Voce Capital Management LLC has put up for the company's eight-person board.

Proxy advisory firm Glass Lewis recommended that ConMed shareholders support two of three nominees put forward by the dissident, Voce said in a statement Friday.

However, Institutional Shareholder Services, the other major proxy advisory firm, told investors to support all of the surgical device maker's incumbent slate. It noted in a report obtained by The Deal that the company's board "has already made significant changes in the past year both to its own composition and to the senior executive ranks and the dissidents have not made a compelling case that additional change at the board level is necessary."

Nevertheless, it seems unlikely that a settlement will be reached prior to ConMed's scheduled annual meeting set for Sept. 10. ConMed already had pushed back the meeting from May 22.

The two Voce nominees Glass Lewis supported are James Green, president and CEO of Analogic Corp. and Joshua Levine, CEO of Accuray Inc. Both come from companies that have medical technology businesses. The proxy advisory firm didn't support Voce Capital's founder and managing partner Daniel Plants, the third dissident nominee for the board.

ISS in its report argued that Voce didn't make any substantive argument that the incumbent nominees are responsible for any history of poor operating performance. It added that Voce also did not make a good case that the targeted incumbent directors themselves performed poorly as "steward of public shareholders."

A key change came in July, when ConMed restructured its leadership, which included CEO Joseph Corasanti stepping down. Corasanti is the son of founder Eugene Corasanti, who started up ConMed in the 1970s and previously served as chairman - he retired from that position in February.

In its recommendation, ISS noted that in an "unusual twist" the board has substantially remade itself since the last annual meeting by eliminating the founder and his son and replacing five other incumbents with new directors.

Plants, in February, launched a proxy contest to install five directors on the company's board. However, recognizing that the company has made substantial changes since he launched his campaign, the hedge fund manager subsequently dropped his slate to three candidates, saying that the company has made some positive moves, including personnel adjustments, leading him to think it no longer needed a change of control.

ConMed also announced in July that it had concluded a review of its strategic alternatives, including a sale and that "various strategic alternatives available" at the time did not "adequately reflect the intrinsic value of the company or its future growth prospects." The stock price dropped following that announcement and has never really recovered since, closing Thursday at $38.14 a share.