PARIS ISS Proxy Advisory Services is advising shareholders in Nexans to back a hedge fund resolution to dismiss its Chairman and Chief Executive Frederic Vincent from the board at the French cablemaking company's May 15 annual meeting.
Corporate governance adviser ISS, whose recommendations can influence the voting of institutional shareholders, said it agreed with some of 5.5 percent shareholder Amber Capital's complaints about the way the company is run.
Shareholders have the power to vote Vincent off the board and thereby end his reign as chairman. However, only the board itself has the power to remove him as CEO.
Nexans made a loss in 2013 and skipped its dividend for the year after being forced to raise new share capital in October, blaming a lack of growth in Europe and industry overcapacity.
Amber, the Paris-listed company's fourth-largest shareholder, has said it has little chance of success with the vote, but decided to submit the resolution in protest against what it sees as poor performance and failure to keep up with main competitor Prysmian since Vincent took the helm in 2009.
The resolution is based on an October 31 request from Amber to split the chairman and CEO functions, in line with U.S. and British corporate governance norms. That request was denied two weeks later. ISS said Nexans has also since recommended that shareholders reject the resolution.
"Removing Frederic Vincent as director appears to be the most direct and effective way for shareholders to obtain separation of the two functions of chairman and of CEO, which would be considered positive," said ISS in its written recommendation dated April 25.
"The dissident shareholder is not asking for board representation, to change the board to a two-tier structure, or to implement a new strategy," it said. There was therefore "little if any downside risk" to removing Vincent as director.
Nexans could not be immediately reached for comment but on April 15, after news of the planned resolution, a spokeswoman said: "These issues will be dealt with at the AGM and management has no comment to make at this stage".