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An influential proxy advisory firm is urging shareholders of Crescent Point Energy Corp. to back an activist investor’s nominees to the company’s board even though the dissident firm has a tiny percentage of the stock.

Institutional Shareholder Services Inc. concurred with Cation Capital Inc.’s assertions about poor investor returns. Cation seeks four board seats as a precursor to launching a sweeping review of costs, operations and executive compensation at Saskatchewan’s largest oil producer.

ISS also said Crescent Point chief executive officer Scott Saxberg’s pay packet is out of step with corporate performance, a key criticism of Cation, a new firm led by former investment banker Sandy Edmonstone. Mr. Edmonstone has not called for Mr. Saxberg to be replaced as CEO as part of his clamorous proxy campaign.

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In a split decision, ISS recommended shareholders vote for Cation nominees Herb Pinder, a director at ARC Resources Ltd.; and Dallas Howe, the former chairman of Potash Corp. of Saskatchewan. It did not support installing Mr. Edmonstone and another prominent ex-banker, Tom Budd, on the board.

Even so, it is unusual that an activist with a small stake in the company – Cation has 0.3 per cent – would get support for two board seats in a proxy fight. Shareholders are slated to vote at the annual meeting on May 4.

“The dissident has made a reasonably compelling case for some change to the incumbent board to facilitate improvements to capital allocation decisions, to enhance profitability and to ensure appropriate alignment of executive compensation,” ISS said in its report.

Despite rising oil prices, Crescent Point’s shares have lagged most of its large-cap energy peers. It has been sharply criticized by investors in recent years for launching equity issues in a declining market and for rich executive pay despite the poor shareholder returns.

In efforts to improve its lot, Crescent Point has set a five-year plan to operate within cash flow, sell non-core assets and concentrate on developing its existing properties. It points out it has reconstituted much of its 10-member board in recent years.

“The company fundamentally disagrees that a slate of directors, which does not have a plan nor add any incremental value, can be nominated at the last minute onto an independent board of directors,” Crescent Point said in a statement to express its disappointment with the ISS recommendations.

Among them, ISS said Mr. Pinder and Mr. Howe should replace Crescent Point nominees Rene Amirault and Mike Jackson.

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“Crescent Point reiterates its concern that both Mr. Pinder and Mr. Howe have significant conflicts of interest, are near the board’s retirement age threshold and do not represent the refreshed board sought as part its ongoing renewal process,” it said.

Mr. Pinder sits on the boards of several other companies, including those of competitors, and Mr. Howe does not have oil and gas experience, Crescent Point said.

Mr. Edmonstone said the proxy firm’s assessment backs his assertion that a “failure of leadership” has caused the company’s poor performance. “ISS clearly agrees that change is needed, and further that Cation board nominees bring the experience, independence and ideas to unlock shareholder value,” he said.

ISS recommended shareholders vote against the company on a non-binding vote on executive compensation. It noted that pay for Mr. Saxberg remained flat at $4.4-million in 2017 despite the company’s subpar returns.

“Although a number of positive developments were undertaken by the company during the last year they seemed to be overshadowed by significant underperformance that was not reflected in the CEO’s total compensation,” ISS said.

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