ISS backs three dissident director candidates in proxy fight at US Foods
2022.05.09 15:37
FILE PHOTO: Scott Ferguson, Managing Partner and Portfolio Manager for Sachem Head Capital Management LP, presents during the 2018 Sohn Investment Conference in New York City, U.S., April 23, 2018. REUTERS/Brendan McDermid
By Svea Herbst-Bayliss
NEW YORK (Reuters) -Proxy adviser Institutional Shareholder Services (ISS) on Monday said US Foods Holdings shareholders should vote for three of Sachem Head Capital Management’s five nominees, arguing the company would benefit from “closer board oversight”.
“The dissident has made a case for change, and the issues identified warrant the addition of three dissident nominees who can add supply chain and executive experience, directly represent shareholders, and bring robust public board and relevant industry experience.” ISS wrote in its report.
ISS backed Scott Ferguson, Sachem Head’s founder, as well as James Barber and Jeri Finard to be elected to the company’s board which will have 11 members.
Sachem Head is US Foods’ largest shareholder with an 8.7% stake and has been invested in the company since 2018.
Ferguson began pushing for changes last year and has said he believes the company is lagging peers and has not improved operations as promised.
The hedge fund initially sought to take control of the board by nominating seven directors but scaled back its slate after the company took steps that included adding two independent directors to persuade investors it was pursuing the right strategy.
The company had offered to settle the fight and proposed giving two board seats to Sachem Head. ISS wrote two board seats “may not have been sufficient to create change” and added “with three there is a path for the ideas of the dissident directors to seek support from a majority of their colleagues.”
Representatives for US Foods and Sachem Head did not immediately respond to requests for comment.
The company’s annual meeting is scheduled for May 18.
