SiliconBeat

Shareholders of Credence Systems, the Milpitas maker of semiconductor design-and-testing gear, and its competitor LTX of Norwood, Mass., are set to vote Thursday on the proposed merger of the two companies.

On Monday, holders of Credence’s 3.5% Convertible Senior Subordinated Notes due 2010 threw the company a curveball after they sent Credence a letter saying that the proposed merger would “constitute a change of control” requiring Credence to “offer to repurchase all of the outstanding Notes (due in 2010) at 100% of the principal amount thereof plus accrued and unpaid interest,” according to an SEC filing Tuesday.

Credence and LTX are now “reviewing and considering the positions taken in the letter” but assured investors that the $156 million it holds in cash and cash equivalents, combined with $71.5 million held by LTX would be sufficient to meet its obligation, if the merger is found to be a change of control.

Little more than two weeks before it announced its agreement to merge with a Massachusetts
competitor, Credence Systems awarded its chief executive, Lavi Lev, 700,000 shares of restricted stock that were to vest after four years, or sooner depending on “the occurrence of certain events in connection with a change in control.”

Credence announced Sunday its intention to merge with Read the rest of this entry »

In its proxy announcing its upcoming shareholders meeting, Credence Systems said a vote would be held on a shareholder proposal regarding the establishment of a “pay for superior performance” proposal that, according to its proponent, would “incorporate the principle” that bonuses, cash incentives, and stock-based compensation would only be paid if the company’s performance exceeded that of a pre-established peer group.

What’s more, the proposal called for enough disclosure about the criteria measuring that
performance “to allow shareholders to determine and monitor the pay and performance”
correlation themselves.

But despite the fact that it thinks the proposal would place “undue constraint” on its compensation committee, restrict its choices and perhaps inhibit its ability to react to “market forces”, and that it could put the company “at a competitive disadvantage,” the board recommended that shareholders vote FOR it, not AGAINST.

Read the rest of this entry »

Less than seven months after being hired as chief financial officer at Credence Systems, for which she received a $120,000 signing bonus, Joy Leo is calling it quits.
In an 8-K filed with the SEC Wednesday, the Milpitas maker of semiconductor design-and-testing gear reported that Leo ”notified” the company on Halloween that she would be resigning her position ”effective upon the filing of the Company’s annual report on Form 10-K for the fiscal year ended November 3, 2007”. Based on the company’s past practice, that would probably be sometime in January.
In her brief time at Credence Leo has so far certified the financial filings for only one quarter. Her appointment, announced April 16, was to be made ”effective upon the filing of the company’s quarterly report on Form 10-Q, anticipated on or about June 8, 2007.” Those results were certified by her successor, John Batty, who served as CFO since 2004.
The news hit Credence shares hard, which dropped Wednesday by 55 cents, or 18.1 percent, to $2.49. Last week, Credence held a special shareholders meeting to seek approval of an option exchange program in an effort to get more of its employees options back into the money. It also asked to increase the number of shares in its stock incentive plan.
In her offer letter in April, Leo was awarded a $325,000 salary. In addition to the signing bonus, she was to be eligible for a target bonus equal to sixty percent of her salary, as well as a ‘’special bonus” equal to some ”remuneration as Ms. Leo and the Company shall mutually agree,” based on the company’s performance.
Leo is also entitled to receive ”certain separation benefits in the event of a termination without cause (unrelated to a change in control), including a payment equal to twelve months of her base pay, acceleration of the vesting of her stock option and restricted stock for a period of twelve months, and the continuation of benefits for a period of twelve months.”
No word yet whether those terms will apply here, but we’ll be watching.