NEWARK, NY -- Locked in a battle with its largest shareholder over control of its board of directors, the chairman of IEC Electronics today issued a letter to company stockholders calling the bid "fundamentally flawed" and a "serious conflict of interest." 

Vintage Capital Management, which owns 7% of the contract assembler's outstanding stock, is in a proxy battle to gain seven seats on IEC's board. The equity group has been critical of IEC's financial performance and executive decision-making. It proposes a new board including Jeff Schlarbaum, IEC’s former president, as well as veteran EMS executive Keith Butler.

In his letter today, chairman and CEO W. Barry Gilbert said Vintage is offering "shrill criticism but no real plan."  He said Vintage's proposed slate is fundamentally flawed and suffers serious conflicts of interest.  

Gilbert's letter also attempts to turn the tables on Vintage itself for its own track record. Vintage, which holds a 40% stake in API Technologies, has seen that EMS company's stock price decline by about two-thirds during its ownership tenure. "Given API's poor performance under Vintage's guidance, it is not clear how Vintage can help IEC," Gilbert wrote.

Gilbert also took direct aim at three of Vintage's nominees for "serious conflicts of interest that could prevent them from acting in [shareholders'] best interests." He disputed Vintage's statement that IEC's separation with its former president was due to succession plans. 

According to Gilbert, Schlarbaum lacked "the skills or the ability to contribute to IEC's future success," leading to the termination of his employment. He added that new customer relationships "were not being established" and the crash of order backlogs, issues that Gilbert asserts have been rectified since Schlarbaum's departure. 

He also noted that Brian Kahn, founder and managing partner of Vintage and chairman of API, presents a conflict of interest even though he is not one of Vintage's nominees. "I am skeptical that Vintage will be able to separate its interests in these two investments and prevent a flow of competitively sensitive information from IEC to individuals who either hold senior positions at API or otherwise are involved in advising API to the detriment of IEC."

Schlarbaum was IEC president from October 2010 to February 2013, and Butler is the founder of Veritek and former executive vice president of OnCore Manufacturing.

The IEC annual meeting takes place Jan. 28.

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