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(Reuters) – Two proxy advisory firms on Friday weighed in on one of the year’s most bitter proxy battles with one backing UGG boot maker Deckers’ management and the other giving partial support to activist hedge fund Marcato Capital Management.
Shareholders will decide on December 14 who should sit on the $2.4 billion company’s board with Deckers asking them to reelect all directors and Marcato, which owns an 8.4 percent stake, seeking to throw out all 9 incumbent board members.
On Friday, advisory firm Glass Lewis recommended shareholders back management nominees. Institutional Shareholder Services, another such firm, recommended withholding votes for three Deckers directors to make room for three dissident candidates to join the board.
Marcato has been pushing hard for change at Deckers, forecasting that its shares could more than double by 2020 if it sells off pieces of its footwear business, buys back shares and overhauls executive compensation.
The company this week said it would appoint at least two independent directors by September 2018, a promise Marcato called “too little, too late.”
Glass Lewis said Marcato deserved some credit for spurring recent changes at the company but ultimately found the current board had the right experience and skills to guide the company.
“The current Deckers board has a firm handle and deeply engaged understanding of the opportunities and challenges facing the business and how to address them in a timely and sustainable manner,” the Glass Lewis report said.
ISS sounded a more critical note, writing that the “long-term trajectory of the company’s relative underperformance” argues for some level of boardroom shakeup.
Shareholders should withhold votes from Deckers’ three longest serving directors: John Perenchio, John Gibbons, and Karyn Barsa to make room for three Marcato candidates; Marcato partner Matthew Hepler, former L.L. Bean executive Steve Fuller and former Michael Kors executive Anne Waterman, ISS wrote.
This would allow newcomers to join the board without turning it over completely, something ISS said was not warranted.
Marcato has already won a proxy contest at Buffalo Wild Wings this year and boasts strong returns, but analysts noted its strategy of trying to replace the entire board was risky. Institutional investors often want to give management more time to fix problems.While the proxy advisory firms have long been influential, in the most recent contests, including a vote at Automatic Data Processing, their recommendations appear to have carried less weight.
Reporting by Svea Herbst-Bayliss in Boston and Gayathree Ganesan in Bengaluru; Editing by Anil D’Silva and Andrew Hay