Adviser ISS boosts investor bid to shake-up Firstgroup boardroom
AN INFLUENTIAL shareholder adviser has handed Firstgroup’s biggest investor a boost as it seeks to force through an overhaul of the rail and bus operator’s board.
ISS, whose opinions influence the voting decisions of some of the world’s biggest institutional investors, has supported a motion put forward by Coast Capital Management to remove one of Firstgroup’s long-term directors.
It backs the election of ex-arriva chief executive David Martin in the place of James Winestock.
The decision will come as a partial victory for the Wall Street activist in- vestor, which wants to remove six of Firstgroup’s directors and replace them with seven others. Included in those Coast wants to oust are chairman Wolfhart Hauser and chief executive Matthew Gregory.
A war of words has erupted between Firstgroup and Coast in recent weeks. The US investment firm has lost patience with the company’s plans to overhaul its strategy. Alongside the director shake-up, Coast also wants the company to slice itself in two, so that it can focus on more profitable operations in North America. It also wants Firstgroup to exit UK rail.
The company is recommending that shareholders vote against all of Coast’s boardroom changes at an extraordinary meeting on June 25.
Mr Gregory has attacked Coast’s proposals as an attempt “to take over a board of a UK listed plc without paying a premium for it”. He claims Coast’s plans are “riddled with errors” and “rooted in the past”. The company has, however, put its Greyhound coach arm and UK bus division up for sale.
While Coast’s “critique falls well short of demonstrating the need for a change in control at the board level, it has raised fair questions regarding the company’s newly proposed strategy and capital allocation”, ISS wrote.
In conclusion the adviser recommended the election of “one dissident candidate”, adding: “The removal of one incumbent director will provide room for the appointment of dissident nominee [Mr] Martin, who appears to be well qualified to contribute to the strategic review of the UK bus operations and the operational improvements in the company’s rail business.”
A Firstgroup spokesman said: “The proxy adviser’s report states that Coast’s rationale falls well short of demonstrating the need for such a change in control and we agree with that. We have a diverse, independent board in place with the correct mix of skills and backgrounds to address the future needs of transport.”