California Micro Devices shareholder seeks support for three nominees

By Lisa Kerner

Charlotte, N.C., Aug. 4 - California Micro Devices Corp.'s second-largest stockholder, Dialectic Capital Management, LLC, wants its three director candidates elected to the company's board on Sept. 17.

Dialectic sent a letter to fellow stockholders on Tuesday asking them to vote for John Fichthorn, J. Michael Gullard and Kenneth Potashner using the gold proxy card.

Fichthorn is Dialectic's co-founder. Gullard is a general partner at Cornerstone Management, Inc. Potashner is chairman of the board of Newport Corp.

The nominees' primary objective is "to ensure that the company's capital is allocated in the most efficient manner possible in order to maximize returns to stockholders," Dialectic said.

Dialectic, with an 8.8% interest, also announced it has filed definitive proxy materials with the Securities and Exchange Commission in connection with California Micro Devices' 2009 annual meeting.

According to Dialectic, it began the election contest as "a last resort" after trying to work "cooperatively and constructively" with California Micro Devices to create a board that represents stockholders' best interests.

'A rudderless ship'

Dialectic said in its letter that California Micro Devices has been "a rudderless ship" under the current board, which has failed to hold management accountable for the company's "dismal results."

Since Robert Dickinson was named chief executive officer eight years ago, the company's enterprise value has fallen to less than $10 million from $82.7 million and its accumulated deficit has increased to $65.6 million from $31.3 million, the letter said.

The board and senior management collectively directly own only 88,200 shares, or 0.38% of California Micro Devices' outstanding shares, Dialectic said.

"While the board members have chosen not to invest alongside their employees and other stockholders, they have chosen to engage in a number of poor corporate governance practices that have served to entrench and isolate them from stockholders," Dialectic said in its letter.

Tactics include implementing a poison pill without stockholder approval and not enabling stockholders to call special meetings.

Dialectic also questioned the current board's decision to maintain the current base salaries of the company's executive officers for fiscal 2010 as well as modifications made to the bonus plan.

California Micro Devices is a Milpitas, Calif.-based maker of application-specific protection devices and display electronics devices for the mobile handset, digital consumer electronics and personal computer markets.

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