Hedge fund Dolphin has stepped up its battle with database compiling company infoUSA by urging shareholders to vote out the founder of the company at the annual meeting of stockholders due later this month.
The Connecticut-based hedge fund, which holds shares constituting 3.6 per cent of infoUSA, said that company founder and CEO Vinod Gupta should be voted off the board amid concerns over his rights plan, which prevents anyone but himself from owning more than 15 per cent of the company.
In a letter to investors, Dolphin urged them to vote in new directors to replace Mr Gupta.
"InfoUSA shareholders need to elect the three new highly qualified and independent directors nominated by Dolphin, as these nominees have no ties to Dolphin or to infoUSA or its management," the letter said.
Mr Gupta responded robustly to the hedge fund's actions, telling shareholders: "Don't be misled by Dolphin and its principle Donald T Netter – the best way to preserve and enhance the value of your infoUSA investment is to support our three highly qualified nominees [to the board] – Vinod Gupta, Dr George Haddix and Dr Vasant Raval."
How the shareholders vote at the end of May could prove an interesting case study of the influence that hedge funds now hold over other shareholders, and over the management decisions that companies make.