PhillyInc: Kensey Nash proxy holds one controversial item

December could be considered the off-season for shareholder meetings.

Spring is when mailboxes bulge with thick proxy statements outlining the elections of directors and complex new incentive-pay plans. Last May, 65 local companies held their annual meetings. They were bracketed by 31 in April and 33 in June.

In contrast, December jingles with just four gatherings: Kensey Nash Corp. (Dec. 1), Cohen & Co. Inc. (Dec. 10), and WPCS International Inc. and Discovery Laboratories Inc. (both Dec. 21).

Medical-device-maker Kensey Nash has a short agenda for the meeting at its headquarters in Exton. One resolution seeks the reelection of a board member. Another seeks to ratify Deloitte & Touche L.L.P. as its independent auditor. But the third proposal may prove interesting because it involves amending an incentive-compensation plan that has been around since 1995.

Kensey Nash's board wants to add 300,000 shares to the plan, which has issued 3.4 million shares to key employees over 15 years. That's a significant amount, given that the regenerative-medicine company had 8.5 million shares outstanding as of Oct. 22.

Two years ago, shareholders approved a similar amendment - increasing the shares available by 700,000 - with more than eight million shares cast in favor. However, 2.5 million shares were voted against the plan.

After issuing its latest proxy statement Nov. 1, the company said it was contacted by a corporate-governance firm, ISS Proxy Advisory Services, which indicated that it would recommend that shareholders vote against the amendment to the incentive-pay plan.

According to a filing with the Securities and Exchange Commission, Kensey Nash's board made changes Nov. 18 to the proposal to address ISS's concerns. We'll see if shareholders are persuaded.

Shares of Kensey Nash are up 7.3 percent in 2010. But that gain lags the 74-member Standard & Poor's 600 SmallCap Health-Care Index, which is up 14 percent this year. With a market value of $232 million, Kensey Nash is a member of that index.

Still, the company is profitable, with net income of $19.5 million, or $1.78 a share, on total revenue of $80.6 million for its fiscal year ended June 30. Those results were a little lower than the $20.1 million, or $1.69 a share, on revenue of $82.8 million for the year ended June 30, 2009.

Fedspeak