Icahn Backs Dissident Group’s Cyberonics Nominees

Billionaire investor Carl Icahn said Monday that he will back three nominees by Metropolitan Capital Advisors to the board of Houston, TX-based Cyberonics, an implantable device manufacturer under investigation for its stock options dating practices, according to Reuters News Service.

Icahn holds a 9.77% stake in Cyberonics, which will have its annual stockholders meeting on Feb. 1, according to a filing with the U.S. Securities and Exchange Commission.

Cyberonics manufactures an implantable device to treat epileptic seizures and chronic depression.

The SEC filing detailed the Cyberonics shares purchased by Icahn’s investment vehicles since Jan. 10 at prices ranging from $19.47 to $20.64 per share. Icahn paid a total of $46.9 million to buy 2.51 million shares, it said.

Company management is trying to get shareholders to re-elect its slate of board nominees and reject a plan by dissident shareholders. The board members up for reelection are chairman Tony Coelho, a former congressman, and directors Stanley Appel and Kevin Moore.

Metropolitan Capital wants to replace the three with Alfred Novak, Arthur Rosenthal and Jeffrey Schwarz. Novak and Rosenthal have experience working at medical technology companies, and Schwarz is the chief executive of Metropolitan Capital.

Metropolitan has voiced concerns about Cyberonics’ corporate governance and its charge of $18 million for stock options dating practices. The fund also criticized an estimated $5 million severance package for Cyberonics’ former chief executive officer.

Last week, shares of Cyberonics fell after the company’s auditor expressed doubt about its ability to continue as a going concern.