Starboard Wins Support in Fight Over Chemcial Maker GCP's Board

(Bloomberg) -- Activist investor Starboard Value’s efforts to revamp the board of GCP Applied Technologies Inc. was given a boost Friday with a prominent shareholder advisory firm urging investors to support six of its board nominees.

The New York-based hedge fund, which owns a 9% stake in GCP, has nominated eight directors, arguing dramatic change is needed at the chemical maker to improve its performance.

Institutional Shareholders Services Inc. urged investors to support six of Starboard’s nominees, saying the company’s board has overseen disappointing shareholder returns, market share losses, sales declines and falling profitability since it went public four years ago. While the company has said it has embarked on its own turnaround plan, its financial results have been “mixed at best” and there’s little evidence of the business stabilizing, ISS said.

“The company is in need of a comprehensive turnaround plan that can be effectively executed by management and overseen by the board,” ISS said in its report. “The dissident’s detailed plan, designed with the benefit of experience of executives that have developed and overseen turnaround plans, appears to offer a viable alternative given lack of conclusive evidence of success on the incumbent board’s part.”

A representative for Cambridge, Massachusetts-based GCP wasn’t immediatly available for comment.

Starboard’s efforts have already won the support of GCP’s largest shareholders, David Winter and David Millstone, who own 24.4% of the company through their firm Standard Industries Inc. and private investment platform 40 North Management. The duo said in a letter to the company’s board last month that, while they have patiently stood by management since the company was spun off of W.R. Grace & Co. in 2016, they agree changes are needed now.

ISS recommended shareholders elect Kevin Brown, Marran Ogilvie, Clay Kiefabet, Linda Welty and Rob Yanker alongside Starboard’s managing member, Peter Feld, to the board from the dissident’s slate.

“In light of the board’s apparent resistance to outside perspective, providing the dissident with a majority of seats appears to be the only way to ensure that its nominees will be able to assess potential missteps by the incumbent board and properly oversee a revised turnaround plan,” ISS said.

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