January 14, 2019 / 3:16 PM / a day ago

Proxy advisory firm ISS backs two dissident nominees in Luby's fight

NEW YORK (Reuters) - Proxy advisory firm Institutional Shareholder Services is recommending that shareholders elect two dissident nominees at Luby’s Inc after the current board oversaw “alarming underperformance” at the casual dining chain.

ISS recommended votes for Jeff Gramm, whose hedge fund Bandera Capital is running the proxy contest, and his father, Philip Gramm, a former U.S. senator from Texas, according to the report seen by Reuters. Bandera asked shareholders to elect four dissidents.

The report criticized Luby’s board for standing by as company’s stock price deteriorated at a time the broader industry thrived. “The incumbent board has overseen alarming underperformance over the past decade and deteriorating financials over the past five years,” the report said. The share price of Luby’s, which owns hamburger chain Fuddruckers, has dropped 37 percent in the last 52 weeks.

ISS also wrote that current board members are out of touch with shareholders’ concerns and that “further change is not only warranted, it is overdue.”

A spokesman for Luby’s said the company was pleased that ISS did not throw its weight behind Bandera’s other two nominees, Savneet Singh and Stacy Hock. “We strongly disagree with their recommendations to vote for Senator Philip Gramm and his son Jeff Gramm – a familial combination that ISS itself described as ‘suboptimal,’” a spokesman said.

The vote is on Jan. 25.

Reporting by Svea Herbst-Bayliss; Editing by Chizu Nomiyama and Steve Orlofsky

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