Glass & Lewis Recommends Starboard Nominee to AOL Board
Starboard Value LP, the investor pushing for changes at AOL Inc., said Glass Lewis & Co. recommended shareholders vote for one of its three nominees to the Internet company’s board.
Glass Lewis, a proxy voting advisory firm, advised New York-based AOL investors to elect Jeffrey C. Smith as director, Starboard said today in a statement.
Starboard -- the fifth-largest investor in AOL with 5.3 percent, according to data compiled by Bloomberg -- is gaining partial support from proxy-voting companies. Institutional Shareholder Services Inc. earlier recommended to vote in favor of Smith, a co-founder of Starboard, and Dennis Miller, another nominee.
Starboard said in April that a sale of AOL patents to Microsoft Corp. wasn’t enough, urging AOL to find new ways to extract value from its advertising business. The investor has also asked AOL to return more cash to shareholders.
Glass Lewis’s recommendation is “flawed” because Smith, chief executive officer of Starboard since February 2011, has no new-media experience, AOL said in a statement.
The Internet company said Starboard’s short-sightedness is evidenced by the investor’s call to shut down Patch, a local- news division, even after AOL said it is committed to bring the business to profitability.
“Starboard’s distracting and misleading proxy campaign, led by Mr. Smith, furthers our belief that Mr. Smith’s interests are not aligned with the interests of all stockholders,” AOL said in the statement.
Smith was previously a partner managing director of Ramius LLC, a subsidiary of investment bank Cowen Group Inc., according to Starboard’s May 29 proxy filing with the U.S. Securities and Exchange Commission. He is on the board of Regis Corp. (RGS), operator of the Supercuts salons, and SurModics Inc. (SRDX), a provider of drug- delivery and technologies to the health-care industry.
AOL fell 0.7 percent $27.19 in New York. The stock has gained 80 percent this year.
Miller is an adviser to film company Lions Gate Entertainment Corp. (LGF), and focuses on investing in media and technology, according to Starboard’s filing.
A third Starboard nominee is James Warner, the principal of advisory firm Third Floor Enterprises, a company specializing in digital marketing and media.
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