Despite having its board nominees for Fisher Communications rejected by Institutional Shareholder Services (ISS), FrontFour Capital is finding some solace in certain parts of the ISS report. FrontFour continues to press for shareholders to elect its four candidates at the May 11th Fisher Communications annual shareholder meeting.
“While disappointed with ISS’s overall recommendation, FrontFour is pleased that ISS recognizes that the current Board and senior management have failed to enhance stockholder value and that ISS highlights in its report several of the same serious concerns that FrontFour has been expressing to stockholders during this election contest,” FrontFour said in a press release.
FrontFour pointed to a few specific points in the ISS analysis:
On the Company’s Poor Performance
“The company has clearly struggled to deliver shareholder return, down 49.2% between October 2005—when the board brought in the current CEO—and Dec. 31, 2010—the last day of trading before Huntingdon announced it had made an unsolicited offer.”
On the Company’s Lagging its Broadcast Television Peers
The Company’s performance between October 2005 and December 31, 2010 is “markedly worse than television peers, which were down 23.7%.”
On the Company’s Poor Corporate Governance Practices
“More concerning, in our view, are actions the board took in April 2007, apparently in response to GAMCO increasing its stake, to increase from 20% to 25% the threshold for shareholders to call a special meeting, and to raise to two-thirds the threshold for shareholders to amend the bylaws. It remains an open question whether such actions are really for the benefit of all shareholders or the incumbent board.”
“Similarly, in 2009 shareholders approved a FrontFour ballot proposal to declassify the board. In its December 2009 meeting, the board unanimously rejected declassification, and has since noted that the shareholder proposal was only approved by 0.1% of votes cast. Arguing that the margin of victory somehow throws the victory itself into doubt may be one of the least helpful things a board can do for its shareholders: from a governance perspective, the most salient fact would seem to be that a majority of shareholders did support the proposal.”
On the Company’s Failure to Successfully Market Fisher Plaza
“The company owns a 300,000 square foot office and data center complex in downtown Seattle, a clearly non-core asset which it marketed unsuccessfully in 2008.”
FrontFour then charged that Fisher CEO Colleen Brown and the current board might be planning to “embark on another acquisition spree with stockholder capital.” It also blasted Brown for not buying a single share of Fisher stock with her own money. “We question whether her interests are aligned with stockholders,” FrontFour stated.
According to FrontFour, “this election is about whether stockholders want a Board that will allow the CEO to make further acquisitions, despite past failures, or whether stockholders want new directors that will take the steps necessary to successfully maximize the value of the Company’s current assets.”
While ISS had criticized the FrontFour board nominees for having no broadcast experience, FrontFour insisted that they “are highly qualified and experienced and have a plan to enhance shareholder value at Fisher.” FrontFour again urged shareholders to return its GREEN proxy cards and support the dissident slate.