JDS Uniphase Activist Sandell Urges Vote Against CEO

Sandell Asset Management Corp., the activist shareholder that pushed JDS Uniphase Corp. to split into two businesses, is urging shareholders to vote against the company’s chief executive officer and its longest serving board member at a Dec. 5 annual meeting.

Sandell, in an open letter, asked JDS Uniphase investors to withhold support for returning CEO Thomas Waechter and Martin Kaplan, who chairs the company’s governance committee, as directors, citing their “intransigence” in failing to pursue the hedge fund’s suggestions and “blatant entrenchment” proxy maneuvers.

Sandell is pushing JDS to seek a buyer for its optical component and commercial-laser unit and has submitted a shareholder proposal formally asking the board to evaluate additional strategic options. That proposal wasn’t included in the proxy statement. The company called its annual meeting exactly 60 days ahead -- making it “effectively impossible” for shareholders to nominate alternative directors within the 60 to 90 days’ notice period, Sandell wrote in the letter.

The New York-based hedge fund, which has said it holds a “significant” stake in JDS Uniphase, also wants the Milpitas, California-based company to extract tax benefits from operating losses.

“The JDSU board believes that pursuing an auction process for the sale of any business segment, as Sandell proposes, would be harmful to the business and not serve to maximize shareholder value,” the company said today in a statement. “The board will continue to assess its strategy and consider opportunities for additional or greater shareholder value creation.”

‘Futile’ Talks

Last week Sandell escalated its campaign, hiring Okapi Partners LLC to reach out to other shareholders and solicit support after “futile” talks with Waechter.

JDS Uniphase said Sept. 10 it would split into two businesses -- one focusing on optical components and commercial lasers and the other selling network-testing equipment. Sandell had been pushing the company for months leading up to the split announcement, people with knowledge of the matter said in September.

Created in 1999 through the $7.05 billion merger of two companies, Uniphase Corp. and Canada’s JDS Fitel Inc., JDS Uniphase at the time became the biggest maker of components for the fiber-optic equipment used in telecommunications networks.

Sandell was founded by investor Thomas Sandell in 1998. Activist investors agitate management and directors of targeted companies to make changes they believe will boost returns for shareholders.

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