ISS Recommends Two Starboard Nominees for Huntsman’s Board

(Bloomberg) -- Starboard Value’s efforts to revamp Huntsman Corp.’s board have won partial support from a prominent shareholder advisory firm, which is urging the chemical company’s investors to support two of the activist investor’s four nominees. 

Institutional Shareholder Services Inc. recommended in a report Monday that investors elect to the Huntsman board Starboard managing member Jeff Smith and James Gallogly, the former chief executive officer of LyondellBasell Industries NV. 

“The dissident has made a compelling case for change,” ISS said. “The addition of two dissident nominees is warranted to address concerns with management accountability and ensure that the interests of shareholders are prioritized.”

Huntsman rose 2.6% in trading Monday to $30.18 at 9:43 a.m. in New York, giving the company a market value of $8.4 billion. 

Starboard, which owns an 8.4% stake in Huntsman, has argued that the chemical maker needs additional oversight after years of underperformance, missteps and broken promises to investors.

ISS’s recommendation comes a day after another proxy advisory firm, Glass Lewis & Co., published its own report that urged Huntsman investors to reject Starboard’s entire slate of nominees. 

The firm said Starboard’s arguments might have resonated two years ago. But the company has since made several changes, including several bolt-on acquisitions and the sale of its commodities businesses, to help boost the stock and its financial performance.

‘Right Track’

Glass Lewis said Huntsman has more work to do to improve its governance. While it has a “favorable view” of the six new directors the company has added since 2019, Glass Lewis said Starboard’s four nominees were “inferior” to the directors it was seeking to replace. 

“The company has given investors reason to believe it is on the right track, as demonstrated by Huntsman’s recent results and management’s detailed margin enhancement plan,” Glass Lewis said. 

Huntsman has been locked in a months-long battle with Starboard and has urged investors to support its own nominees at a meeting slated for March 25. 

Starboard’s efforts risk stalling the company’s momentum and its nominees won’t add valuable experience to the board, Huntsman said in a statement Sunday in response to the Glass Lewis report. 

“The recommendation from Glass Lewis to support all of Huntsman’s highly qualified nominees reaffirms that Huntsman’s refreshed board is best equipped to continue driving the company’s transformed product portfolio strategy, with the expertise necessary to drive enhanced value for shareholders,” the company said.

A representative for Starboard did not return requests for comment. 

Total shareholder returns at Huntsman, which is based in The Woodlands, Texas, have been roughly 40% since Starboard first disclosed its stake in the company on Sept. 27.

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