World Air Holdings, Inc. (OTC:WLDA) shares moved up $0.16, or 1.54%, to $10.56 today after the Clinton Group disclosed a 5.3% stake in the company and expressed its concerns regarding the company's poor shareholder communication and financial performance. The hedge fund said that rather than simply restating the steps they believe the company should take to maximize shareholder value, including pursuing a sale transaction, they again protest the utter lack of transparency in the company's dealings with shareholders, exemplified by the glaring lack of shareholder communication, an inability to timely provide SEC financials, and minimal guidance as to the evaluation of strategic alternatives by the company and its financial advisers, Legacy Partners.

The Clinton Group then recommended that the following steps at a minimum should be presented by the company for consideration by the shareholders at this year's annual meeting:

1. Stockholders are currently denied the right to call a special meeting. The by-laws should be amended to permit shareholders owning 15% of the outstanding shares to call a special meeting.
2. The charter and by-laws should be amended to eliminate the classified board and replace it with a single class of directors annually elected.
   
3. The by-laws should be amended to limit the board size to no more than 11 members.
   
4. The by-laws should be amended to permit shareholders to fill any vacancies on the board as a result of shareholder removal of directors whether with or without cause.

The majority of the provisions that the hedge fund is seeking to remove are "poison pills" aimed at protecting the company in the event of a hostile takeover. Classified boards enable companies to retain board control even if a hedge fund is successful by staggering election times. Meanwhile, companies also occasionally increase the size of the board to dilute any new hostile directors' influence over the company. And finally, by allowing shareholders to fill any vacancies on the board, it eliminates the need for an election by the company, which typically favor incumbent directors.

So, what does all of this mean? Well, the Clinton group has already said that it will be nominating three candidates to the company's board of directors at the company's next annual meeting. Their goal is to make sure that the most appropriate approach to maximize shareholder value is implemented - clearly, they will be pushing for a sale. If they are successful, it could mean significant upside for the company's shares, which have remained relatively stagnant during the past couple of years. Moreover, if the board implements the recommended changes, it would make it a lot easier for the hedge fund to launch a more direct campaign to take over the company's board of directors. Combined, these factors make WLDA a stock worth following!

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