As expected, shareholders of struggling Palm Inc. (PALM) approved Wednesday the partial sale of the company to a private equity firm and a change in the board's makeup.
The proposed changes, designed to infuse new leadership and help the maker of Treo smart phones regain its reputation for innovative products, were announced in June.
Under the capital restructuring, Elevation Partners will pay $325 million in cash for a 25 percent stake in the company, and Palm will pay a special distribution of $9 per share, or about $940 million in cash, to shareholders for their reduction in ownership.
Palm will also get a new executive board chair — Jonathan Rubinstein, the former head of Apple Inc.'s iPod division — after the transaction closes.
Elevation partners Fred Anderson, Apple's former chief financial officer, and Roger McNamee, a veteran Silicon Valley investor, will also join the board, replacing outgoing directors Eric Benhamou and Bruce Dunlevie.
D. Scott Mercer, who previously announced his resignation, will remain on the board.
Rubinstein, who ran the iPod division at Apple (AAPL) from 2004 to 2006 and led creation of Apple's iMac computer before that, was part of the executive team that joined Apple after Steve Jobs returned to run the company.
Ed Colligan, Palm's president and CEO, said getting Rubinstein to join Palm was a critical part of the restructuring plan.
"There are a lot of moving parts here, but the goal is to bring in a transformation and change the dynamics of the company," Colligan said in an interview Wednesday.
Palm says it is looking to Rubinstein to help recruit and retain the talent it needs to create innovative products and to bring them to market quickly.
Palm was considered a pioneer — first in personal digital assistants and then in smartphones — but has lost its luster the past year as competitors introduced sleeker handsets.
The Treo, many users complain, now seems stale. The mounting competition stung Palm in the last quarter, when the Sunnyvale-based company's profits plunged by 43 percent while rivals such as Research in Motion Ltd. (RIMM), maker of the BlackBerry, saw its earnings grow 73 percent.
Last week, Palm pulled back the Foleo, a laptop-like companion to smart phones that was widely panned by analysts and reviewers. The product was slated to hit the market soon but Palm officials said they needed to do more work on it first.
Shares of Palm were fell 8 cents to $14.92 Wednesday.