According to former chair and current board member Adam Adamou, IDC's growth since the last general meeting in July 2011 has slowed due to poor management from the board at large.
He is squaring off against the rest of the members concerning the election of new directors at the meeting. Nominations listed in papers to shareholders are for Georges Ata, Frederick Godard, Delbert Lippert, Graham McBride and Francesco Ruffolo.
In the last quarterly results, IDC showed a net loss of $207,203, down 59 per cent from a loss of $510,512 the year before. Revenue increased 16 per cent to $9.7 million in the same time period.
The company's board chair, James Hall, stepped down in early June along with David Little. On June 25, the board appointed two new directors, Mr. Lippert and Mr. Ata.
In a letter circulated in a package describing the annual meeting activities, Mr. Adamou said the board as it currently stands does not represent the interests of shareholders.
"Our strategy is now at best incoherent, and our vision unclear. Your board is dysfunctional," he wrote.
"It has proven incapable of defining or committing to any consistent value creating strategies or actions for the business. The current board of directors and governance structure at IDC is broken."
Mr. Adamou claimed he did not meet with the new directors prior to their appointments and they were not brought in "through the appropriate process."
But in particular, Mr. Adamou's concern centres on Mr. Ruffolo, who according to IDC documents is the sole person to control more than 10 per cent of the outstanding shares of the company.
Mr. Ruffolo is president of J.A. Wilson Display Ltd., a metal manufacturer, and according to company documents has been a director and executive of software developer Softquad, broadcast equipment maker Lortech, merchant bank Pega Capital Corp. and software development company Carolian Systems. With the exception of Lortech and J.A. Wilson, all of these companies were publicly traded.
"Mr. Ruffolo has been a net seller of IDC shares over the last twelve months. In my discussions with him I have found him to be unduly preoccupied with determining the most effective method to orchestrate a sale of his shares in the company," Mr. Adamou wrote.
Media reports state that Mr. Ruffolo said he sold 96,000 shares out of 6.7 million shares that he held.
"I believe that Mr. Ruffolo’s desire to liquidate his share position, coupled with what I believe to be his high degree of aversion to business and industry risks common to our sector, his lack of experience with technology companies, and his lack of experience on public company corporate governance matters compel me to oppose Mr. Ruffolo’s nomination or election to the board of directors."'
Mr. Adamou also criticized Mr. McBride for his close professional relationship with Mr. Ruffolo as well as "his relative lack of experience with TSX-listed companies and with technology-related businesses in general."
In a joint statement among three board members - Mr. McBride, Mr. Godard and Mr. Ruffolo - the directors said they would not respond to specific allegations in Mr. Adamou's statement.
"Mr. Adamou's statement reflects his attitude and approach toward his fellow board members. Although his statement contains numerous criticisms, complaints and baseless allegations, it does not include any constructive plans or suggestions for IDC or for the board," the statement read.
The members stated that in 2010, Mr. Adamou and the board were given the mandate to grow the business through acquisition of businesses "not necessarily complementary to the core business of IDC," but as of now no such business targets have fit into that strategy.
As of January 2012, the members stated, IDC has chosen instead to "focus its attention on its existing business units. This decision followed previous discussions at the board, with a majority of the board at the time feeling that it would be difficult for IDC to execute on a business acquisitions strategy given its resources at the time."
The directors added that Mr. Adamou still wants to pursue a strategy of growth through acquisitions, which is "ill-advised" due to "the concurrent need to transform the core business of IDC, the fragile state of the economy, plus the limited human resources available to execute on that strategy."
IDC describes itself as a digital content distributor for broadcasters in mediums including radio, television, data and digital cinema. It has 100 local employees, according to Ottawa Technology magazine.
The meeting will be held July 31 at the Holiday Inn & Suites in Kanata.
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