Hedge Fund Manager Shapiro Takes On Mace Security

Activist hedge fund manager Andrew Shapiro on Friday took his insurgency campaign at Mace Security International Inc. up a notch by launching a proxy contest to elect four nominees to the electronic surveillance security devices maker’s five-member board.
Shapiro, who manages Lawndale Capital Management LLC, a Mill Valley, Calif.-based activist fund, owns a 9.6% stake in Mace. His proxy contest is the latest stage in a public campaign he launched last year intended to prod the Mt. Laurel, N.J.-based company into improving its governance by bringing on more independent directors and installing stringent ties between executive performance and compensation.
"Lawndale believes that adding new, independent directors who have no ties to the current management of the company and have not been selected by the management of the company will improve the functioning of the board," Shapiro wrote to Mace Security secretary Robert Kramer.
Lawndale’s proxy contest follows up on a compromise measure offered by Shapiro to Mace officials on Sept. 10 that was rebuffed. In it, Shapiro wrote Mace officials asking them to replace director Matthew Paolino, the brother of Mace's CEO, with an expanded board that included three of Shapiro's four nominees. Shapiro said he would consider modifying his proposal if the company only wants to have a five-person board, but it would need to be significantly restructured.
One day after Shapiro made that offer, Mace’s second largest holder, Ancora Capital Inc., reported owning an 8.6% stake, and according to a Securities and Exchange Commission filing, portfolio managers there have come out in support of Lawndale. Mace Security has a $36 million stock market capitalization. — Ron Orol
Ron Orol is a reporter for The Deal and author of Extreme Value Hedging: How Activist Hedge Fund Managers Are Taking on the World.
Tags: deals, m&a, mergers, hedge funds