Tuesday, December 8, 2009

USA Technologies

USA Technologies Inc., a company based in Malvern, PA that provides "networked credit-card and other non-cash systems in the vending, commercial laundry, hospitality, and digital imaging industries," has a shareholders meeting scheduled for Tuesday, December 15.

The board elections are being contested by a shareholders group calling itself Shareholder Advocates for Value Enhancement (SAVE).

Glass Lewis & Co. is supporting SAVE. It believes "that the Board's recent amendments to the Company's bylaws call into question whether the Board is truly acting in shareholders' best interests." Apparently, these recent amendments eliminate the ability of shareholders to call special meetings and stagger the Board into three classes -- taking the pro-entrenchment side of two of the classic contentious issues of corporate governance.

On its own behalf USA Technologies has characterized the situation thus: "At precisely the moment in the Company's history when we achieved market leadership and have developed a roadmap to achieve profitability, we believe the dissidents are opportunistically seeking to take control of your Company to serve their own agenda. The dissidents are attempting to distort and discount our achievements by cherry-picking stock price data that paints our Company management team and Board in the worst possible light."

I don't see a specific defense of the recent bylaw amendments in these materials. But I suppose management if they believe the above assertions would also say, "This sort of dissident is exactly the reason we need to be able to entrench ourselves."

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