August 11, 2014
A pair of proxy advising firms gave Bob Evans Farms shareholders a lot to chew on this past weekend.
ISS and Glass Lewis recommended shareholders cede four to six spots on the company’s board of directors to candidates put forward by activist investor Sandell Asset Management.
The recommendations cheered Sandell, who has parried with Bob Evans management for much of the past year in a bid to spark change at the New-Albany based restaurateur. Though neither recommendation would give control of the board to Sandell, they would give more seats to Sandell-backed candidates than Bob Evans did during negotiations.
“As we continue to speak with shareholders, we grow increasingly confident that change is coming to Bob Evans – and it will be to the benefit of all the company’s shareholders,” said Tom Sandell, CEO of Sandell Asset Management.
“The support of ISS and now Glass Lewis ... underscores what we have said all along: Bob Evans needs fresh, truly independent and highly-qualified board members who are able to bring new perspectives and ideas to the company – and our slate of nominees is the best choice to deliver it.
ISS recommended four of Sandell’s eight nominees be elected to the board. Glass Lewis recommended six of the eight. Bob Evans board consists of 12 directors, and the company nominated 10, effectively giving Sandell a minimum of two seats this year.
Bob Evans offered Sandell three seats this summer, but was rebuffed as Sandell demanded four seats and for Bob Evans to cover the costs of the proxy fight – up to $2 million.
In its statement regarding the proxy recommendations, Bob Evans highlighted that neither firm chose to cede control of its board to Sandell.
“We are pleased that a third advisory service has concurred in not recommending that Sandell Asset Management nominees take control of the board," said Michael Gasser, the lead independent Bob Evans board member. "We are nevertheless concerned that splitting the board down the middle, as suggested by Glass Lewis, would create the potential for a sharply divided board that would be challenged to agree on the best strategy and direction for the company.”
The third company weighing in on the proxy fight was Egan Jones, which recommended voting for all of Bob Evans nominees, which would give Sandell two seats on the board.