Ashland Inc., the U.S. chemical maker that’s soared 21 percent since activist Jana Partners LLC disclosed a stake, said its board voted in favor of ending staggered three-year terms for directors.
The switch to electing directors annually will require the support of at least 80 percent of shareholders at the 2014 annual general meeting to be held on Jan. 30, Covington, Kentucky-based Ashland said today in a regulatory filing.
The phasing out of three-year terms will begin in 2015, with all directors elected annually from 2017, Ashland said. The proposed switch comes after Jana disclosed a 7.4 stake in the company in April and said it held talks with management about boosting shareholder value. It also follows Ashland’s decision in July to consider divesting units with $2 billion of sales.
“They are signaling that they are open to input from all their shareholders, including Jana,” James Sheehan, an Atlanta-based analyst at Suntrust Robinson Humphrey, who rates Ashland a buy, said by phone today. “It’s definitely more shareholder friendly.”
Ashland’s director nominees are unlikely to face a challenge because management strategy seems to be aligned with that of Jana, Sheehan said. In particular, Ashland’s plans to divest the elastomers unit and consider the sale of the water treatment business were accelerated by Jana’s investment in the company, he said.
The plan to eliminate the classified board structure stems from approval of a shareholder resolution in January, Gary L. Rhodes, an Ashland spokesman, said today in an e-mail.
Ashland fell 0.4 percent to $93 at the close in New York, after earlier touching a record intraday high of $94.