Proxy advisory firm Glass Lewis & Co. LLC is urging shareholders to reject two directors who are up for re-election at auto parts maker Martinrea International Inc., but a group seeking to unseat the entire board received no support from Glass Lewis or another proxy firm.
Glass Lewis supports the election of five members of the seven-director slate put forward by Martinrea management while Institutional Shareholder Services Inc. (ISS) recommends shareholders elect the entire slate amid a proxy fight for control of the company’s board of directors.
The proxy fight is set to come to a head at Martinrea’s annual meeting next week, where shareholders will face a choice between a new board recommended by a dissident group led by the company’s former vice-chairman Nat Rea and management’s slate, which includes the existing board plus new nominee Sandra Pupatello, former Ontario economic development minister.
Mr. Rea’s nominees include former Magna International Inc. chief executive officer Fred Gingl, who would also be nominated as CEO of Martinrea. Martinrea was created when former Magna executives who were running a company called Royal Laser Tech Corp., took over Rea International Inc. in 2002.
But the partnership between those executives and Mr. Rea deteriorated over a decade. He launched a lawsuit last fall against the company, some board members, chairman Rob Wildeboer, chief executive officer Nick Orlando and chief technology officer Fred Jaekel. Those three men were the Magna executives involved in the founding of the company.
The defendants have filed a counter claim.
Mr. Jaekel died last month and Mr. Orlando resigned as CEO earlier this year, although he is staying in the job until a replacement is found.
Both proxy advisory firms pointed out that the dissident group has not yet filed details of its proposals with securities regulators.
Glass Lewis recommended shareholders withhold their votes from incumbent directors Fred Olson and Scott Balfour.
They were members of the corporate governance and nominating committee and thus approved the adoption of a plurality approach to the election of directors instead of a majority vote policy. That means a director can be elected with a just a single yes vote, even if a majority of shareholders withhold votes.
“We believe such discontent should be viewed as irrefutable evidence that shareholders no longer believe the director is suited to serve on the board and that such director should be required to resign from the board,” the proxy firm said.