BOSTON (Reuters) - Influential proxy-advisory firm Glass Lewis & Co recommended that Natus Medical Incorporated shareholders remove two company nominated directors and replace them with hedge fund Voce Capital Management’s nominees.
Glass Lewis’ recommendation, released to clients late on Tuesday and seen by Reuters on Wednesday, echoes last week’s report from Institutional Shareholder Services (ISS), which also suggests that shareholders oust the medical equipment and supplies company’s two directors who are up for election this year.
Both Glass Lewis and ISS wrote that the company’s financial performance has been weak and lagged its peers, making it appropriate to elect dissident directors Lisa Wipperman Heine and Joshua Levine. Natus’ annual meeting is scheduled for June 22.
The company said in a statement that it believes Glass Lewis should have backed its directors, Doris Engibous and Robert Weiss. In a letter to shareholders, the company wrote “Voce’s nominees are not qualified to serve on your Board.”
Voce, run by Daniel Plants, owns 2.2 percent of Natus and tensions have been rising ever since Plants in March asked for a meeting with the company’s board chairman and independent directors.
The company’s chief executive officer, James Hawkins, met with a Voce employee at an industry conference but neither Plants nor board Chairman Robert Gunst attended that meeting.
Voce also asked for shareholders to vote out Gunst and appoint a third nominee, Mark Gilreath, to the company’s six-member board. Both Glass Lewis and ISS stopped short of recommending for Gunst to be removed.
“We believe electing two dissident nominees to the six-member board would provide an appropriate level of new perspective and oversight on the board without being overly disruptive to the company,” the Glass Lewis report said.
Glass Lewis also wrote that it was especially concerned that the current board had not looked into a lawsuit filed in federal court in Oakland, California alleging that CEO Hawkins made “false and misleading statements to shareholders about the company’s business in Venezuela.”
Voce last year returned 19 percent and gained 10.36 percent in the first five months of 2018, making it one of the hedge fund industry’s best performers. The average activist hedge fund, which pushes for management change, has gained roughly half a percent in 2018 after gaining 5.45 percent in 2017.
Reporting by Svea Herbst-Bayliss; Editing by Cynthia Osterman and Richard Chang