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The proposal by Digital Lightwave's Bryan Zwan would remove takeover protections. The company insists that it is not for sale.
By JEFF HARRINGTON, Times Staff Writer
© St. Petersburg Times, published April 13, 2002
CLEARWATER -- Less than three months after returning to the helm of Digital Lightwave, founder and majority owner Bryan Zwan is consolidating his power.
Digital plans to eliminate its anti-takeover provisions, according to the company's annual proxy filed this week with the Securities and Exchange Commission. That would give Zwan free rein to negotiate a sale, merger or other major structural changes at the Clearwater maker of optical testing equipment.
The proposal will be voted on at Digital's annual meeting May 20, but that's merely a formality. It requires a simple majority to pass, and Zwan wields a 60 percent stake.
Under Digital's current bylaws, holders of at least 70 percent of the shares not controlled by Zwan have to approve any changes that dramatically alter the company. Digital's proxy said the proposal gives its top shareholder greater flexibility to enter into business deals without "the expense and delay of receiving stockholder approval."
Zwan was not available for comment Friday. But Digital chief financial officer Mark Scott insisted this is not a precursor to Zwan selling his majority stake on his own terms. "The company is not for sale," he said. Rather, Scott said, Digital will be the one searching for buyout opportunities in today's fast-changing market.
There are plenty of those opportunities in a fiber-optics industry decimated by a drop in orders. Once one of the hottest stocks in the bay area, with a trading price above $100 a share, Digital has struggled as well. Its stock has languished in the single digits after closing 2001 with a fourth-quarter loss of $12.8-million and an 84 percent drop in sales.
Digital shares closed Friday at $5.30 a share, up 20 cents but off 90 percent from its 52-week high of $57.56.
Zwan left Digital during a probe by the Securities and Exchange Commission into accounting irregularities at the company in mid-1997. An SEC suit against Zwan was settled last fall. He returned to the roles of chief executive and board chairman in January upon the resignation of Gerry Chastelet.
According to the proxy filed this week, Chastelet received a salary of $302,849 and no bonus in his last year at the company. In 2000, he received a salary of $293,574 and a $50,000 bonus.
Under Chastelet's severance package, he received a one-time payout of about $450,000 plus insurance coverage for a year and pending options, the proxy disclosed. He also made $6.6-million last year cashing out stock options.
Two other members of Chastelet's management team who have recently left the company, chief financial officer Steve Grant and executive vice president George Matz, made $3-million and $4.4-million, respectively, by cashing out options last year.
-- Jeff Harrington can be reached at harrington@sptimes.com or (813) 226-3407.