Atmel shareholder vote shows overwhelming support for current board; rejection of Perlegos' plan

By Lisa Kerner

Charlotte, N.C., May 18 - Atmel Corp. said shareholders overwhelmingly support the company's current directors and reject George Perlegos' attempt to oust five directors who terminated him for cause, based on estimated votes cast at a special meeting held on Friday.

"On behalf of Atmel's board and new management team, I would like to thank our shareholders for their continued support and our employees for remaining focused on our business goals," Atmel president and chief executive officer Steven Laub said in a company news release.

"Now that shareholders have spoken, we are hopeful that Mr. Perlegos will choose to forgo a further expensive proxy campaign for the July annual meeting, and allow Atmel's board and new management team to execute on its plan without further distraction," Laub added.

The company said it is committed to several goals in 2007, including refocusing the company on its microcontroller and microcontroller-related businesses as well as consolidating manufacturing operations and redesigning products for lower cost.

Commenting on the vote, the independent nominees to the board said they "appreciate the feedback on our plan for Atmel from shareholders and have been encouraged by the supportive comments from those with whom we spoke over the last two months."

"In the final weeks before the vote, Atmel began to make vague promises regarding a new strategic direction for the company," a statement from the nominees read. "It is interesting that it took the onset of our special meeting for the incumbent directors to admit that there were serious unaddressed strategic and operating issues at the company. We have doubts that the incumbents will follow through on their plan. We also continue to question whether they are capable of delivering the value that Atmel shareholders deserve, and believe that, without drastic action, Atmel's financial results will continue to deteriorate."

The independent nominees said over the next several weeks they will consider their options and update Atmel shareholders accordingly.

In August 2006, Perlegos and his brother, Gust Perlegos, were terminated after an eight-month investigation into the misuse of corporate travel funds, including $235,000 worth of company airline tickets used for personal travel by senior management and their family members.

On March 23, Atmel filed a lawsuit against George Perlegos and Gust Perlegos claiming the pair were using false and misleading proxy materials in their proxy campaign to replace Atmel's CEO and its independent directors at the May 18 meeting.

In addition to the definitive proxy materials, Atmel mailed a letter to its stockholders urging them to vote against the Perlegos proposal.

The letter, signed by current president and chief executive officer Steven Laub, also outlined Perlegos' attempts to be reinstated through the court system. According to the letter, Perlegos' 20-year legacy at Atmel led to total losses of more than $1.2 billion in the last five years. Under Perlegos, Atmel failed to file a 10-Q report due to a stock option investigation and the company failed to fully execute an authorized share repurchase, according to a previous company news release.

The board and Atmel's new management team said they have taken actions, including a 16% workforce reduction, to save between $70 million and $80 million this year alone, and some $80 million to $95 million annual savings are expected beginning in 2008.

Atmel, based in San Jose, Calif., designs and manufactures microcontrollers, advanced logic, mixed-signal, nonvolatile memory and radio frequency components.

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