Its stock plan facing defeat, Keynote adjourns meeting to drum up more votes

keynote-logoKeynote Systems counted the votes on its proposal seeking shareholder approval to extend its 1999 stock incentive plan at its annual meeting today, and decided it needed more time to, presumably,  solicit additional support for the measure, according to a regulatory filing.

“As of February 27, approximately 12 million of the approximately 14.1 million outstanding shares have been voted, with approximately 48.3% of votes cast in favor of extending the Plan and approximately 51.7% against.”

The apparent rejection of the measure came despite a special appeal by the company’s chairman and chief executive, Umang Gupta, and Jennifer Bolt, chair of the board’s compensation committee.

In a letter sent to shareholders after it became clear that the shareholder advisory firm RiskMetrics would recommend a “no” vote on the measure — largely because Keynote has “a relatively large number of outstanding stock options” —  the company encouraged stockholders to “look a bit deeper at Keynote’s truly unique situation.”

The letter pointed out that Keynote has never sought to increase the number of shares it could issue under the plan and had even removed an “evergreen” clause that had allowed automatic increases. It also pointed out that while the company has has options to purchase 5.8 million shares currently outstanding, “over 90% of these shares are out of the money.”

The company decided to adjourn the meeting for a week, “to provide Keynote with additional time to solicit proxies from its stockholders.” We assume they aren’t particularly interested in more no votes. In fact, the company pointed out that stockholders “may also change their vote” on the proposal “by executing a new proxy” in the meantime.

The company is asking shareholders to extend by two years the 1999 Equity Incentive Plan, which is set to expire in June. The plan has 562,590 shares remaining in it.

The board of directors, all of whom were re-elected, urged shareholders to vote for the plan, saying it believes is necessary to assist in the retention of current employees and hiring of new employees, and to continue to provide our employees with an incentive to contribute to our future success by providing an opportunity to acquire shares of our common stock.”

A separate proposal to extend the company’s employee stock purchase plan by another 10 years was approved.


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