UPDATE 1-Proxy firms favor Steel Partners' Adaptec plan
NEW YORK, Oct 22 (Reuters) - Hedge fund Steel Partners, engaged in a proxy battle with Adaptec Inc (ADPT.O), gained two influential allies as RiskMetrics and Proxy Governance Inc recommended investors vote to remove Adaptec's chief executive and another director from the technology company's board.
As Adaptec's Nov. 10 annual shareholder approaches, the digital data storage firm and activist investor Warren Lichtenstein have sparred over who will control a board of directors that will soon be reduced by two seats from nine.
The recommendations from proxy advisory firms RiskMetrics, formerly Institutional Shareholder Services, and Proxy Governance, could help Steel win the votes it needs to oust two directors -- CEO Sundi Sundaresh and Robert Loarie.
Steel wants Adaptec to sell its assets and main business operations, leaving more than $300 million of cash that currently fetches no value in the market place. The plan, as prepared by an investment bank hired by Adaptec earlier this year, would also preserve valuable tax losses.
"Given the history of poor financial and share price performance, coupled with recent questionable governance actions, the dissidents have made a valid case for greater management and board oversight," RiskMetrics wrote in its report, issued late Wednesday.
Two weeks ago, proxy advisory Glass Lewis & Co recommended shareholders support Adaptec management and vote against Steel's proposal.
Glass argued the current market is not right for a sale of assets and observed several Steel officials have been on Adaptec's board for two years, bearing some responsibility for the company's poor performance. (Reporting by Joseph A. Giannone, editing by Gerald E. McCormick)
