The Rochester Business Journal reports that the top shareholder of Detection Systems Inc. (DSI), Ultrak Inc., has filed a competing proxy statement that could pave the way for DSI to be sold to a German conglomerate. Ultrak, which owns 21 percent of DSI, submitted the proxy to the Securities and Exchange Commission (SEC) asking shareholders to approve its slate of candidates, giving it control of the board. Ultrak also wants the company to cancel retirement and severance agreements with Karl Kostusiak, president and CEO, and David Lederer, vice president, that total more than $8.3 million. The proxy states the “golden parachute” for Kostusiak and Lederer would amount to more than 13 percent of the company’s market value and approximately 240 percent of DSI’s net income for 2000. DSI, which will hold its annual meeting in August, is offering minimal comment about the situation.
“We are working on appropriate SEC filings in response to the Ultrak initiative,” says Kostusiak. “Until these filings are completed, the rules tell us it’s not appropriate to comment.” Ultrak initially proposed replacing the entire five-person DSI board, but the proxy reduces its proposed slate to three members. That would still give the Ultrak-backed slate effective control of the firm. Ultrak plans to ask shareholders to elect Ronald Harnisch, Robert Frome and William Breedlove.
