BOSTON (Reuters) - Proxy adviser Institutional Shareholder Services Inc (ISS) said on Friday that Tegna Inc TGNA.N shareholders should elect one of hedge fund Standard General LP's four director nominees to the U.S. regional TV station operator's 12-member board.
ISS backed Standard General nominee Colleen Brown, saying that her “direct experience with local stations would appear to be additive to the board.” ISS recommended that shareholders not vote for three other dissident nominees, including Soohyung Kim, the hedge fund’s founder, who has been Tegna to sell itself.
“We are pleased that ISS supports change on the Tegna board, Kim said in a statement. “This recommendation reinforces our clear message that the status quo is no longer acceptable.”
Tegna said it “applauds ISS’s rejection of Soohyung Kim and two other Standard General nominees ...but disagrees with the recommendation to vote for one Standard General nominee.”
Reuters saw a copy of the ISS report on Friday.
Tegna and Standard General have been locked in an increasingly bitter proxy battle since the middle of January when the hedge fund nominated four candidates to the board. Tegna shareholders are scheduled to vote on the board’s composition on April 30.
Standard General has criticized Tegna’s board members for having little broadcasting industry operating experience and for having failed to respond quickly to a potential takeover proposal. The company criticized Kim’s prior business and board service.
ISS said it is backing Brown’s candidacy because she “seems well suited to provide such oversight and contribute her experience with local broadcasting.”
ISS expressed concerns about Kim’s candidacy, citing his role in “pursuing a suboptimal deal while on the board of Media General.” It also pointed to the increasingly personal nature of the attacks between the two sides and said there is no room for “heightened boardroom dysfunction” at a time the company needs to focus on navigating through the coronavirus pandemic.
“While Soo Kim’s industry experience and significant ownership of Tegna support the logic of his candidacy, Kim’s apparent focus on conducting a strategic review and selling the company, when taken in concert with the cautionary tale of Media General’s sale process, seems to outweigh the potential benefit of his personal involvement in this case,” ISS wrote.
Brown currently serves on three boards and has committed to step down from one of her existing board seats if elected.
Tegna, a spinoff of Gannett Co Inc's GCI.N broadcasting and digital arm, runs 62 TV stations in 51 U.S. markets, and reaches 39% of television households in the United States.
Reporting by Svea Herbst-Bayliss; Editing by Steve Orlofsky, Leslie Adler and Cynthia Osterman
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