Glass Lewis & Co., an independent financial research firm that makes recommendations on how institutional investors should vote their shares, has come out in favor of the Barnes & Noble-backed board nominees in the retailer’s proxy battle with Ron Burkle. The firm didn't give the B&N slate a ringing endorsement, observing that the Burkle group "has identified certain areas of concern" including that B&N's share price has underperformed. Still, the firm said, incumbent management "with access to more and better information regarding the company, should be given the benefit of the doubt regarding its strategic business decisions."
Glass Lewis did express the same concern as the B&N board did about the ties between Burkle's Yucaipa firm and that of Aletheia Research and Management, noting that if the second and third largest shareholders in B&N united, they could take over the company "without providing shareholders a control premium." The firm rejected Burkle's argument that he and his nominees need to be elected in order to ensure that the strategic review committee overseeing the possible sale of B&N moves as quickly as possible. "We find little value in applying an arbitrary time frame in which such a review should, or is likely, to be completed. To the contrary, we believe value maximization for B&N's shareholders should take considerable precedence over an unnecessarily expedited review," Glass Lewis wrote.
The firm also noted that Burkle has provided little reason to support his slate of nominees other than highlighting the "shaky performance" of the company. Glass Lewis said Burkle has manufactured old issues as new evidence "for the tacit purpose of installing the Dissident nominees."
The company closed with a party shot at the current board, in particular, the compensation committee, noting that committee has not done a good job in linking pay for top executives with the company's performance. While ordinarily Glass Lewis would recommend against withholding votes for committee members under such circumstances, "given the contested nature of the 2010 annual meeting" the firm said instead it will continue to monitor the issue.
