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AOL Inc. (AOL), facing a fight with investor Starboard Value LP, said Institutional Shareholder Services Inc. was wrong in not recommending shareholders vote for two of its eight board nominees.
AOL, in a statement today, said it agrees with the shareholder advisory service’s recommendation that holders vote against Starboard’s nominees.
In April, Starboard Value said the sale of AOL patents to Microsoft Corp. doesn’t go far enough in solving the Internet company’s problems, urging it to find new ways to extract value from its advertising business. The investor also asked AOL to return more cash to shareholders and said it planned to nominate candidates to AOL’s board.
AOL said today that Starboard nominees Jeffrey Smith and Dennis Miller lack an understanding of the company’s business model, and don’t have a “viable plan for AOL other than to break up and liquidate the company.”
Telephone calls placed to Starboard Value by Bloomberg News outside of regular business hours today went unanswered, as was an e-mail seeking comment.
Smith, 40, is co-founder and chief executive officer of Starboard Value since February 2011, according to Starboard’s May 29 proxy filing with the U.S. Securities and Exchange Commission. Miller, 55, is an adviser to Lions Gate Entertainment Corp., and focuses on investing in media and technology, according to Starboard’s filing.
A third Starboard nominee is James Warner, 58, the principal of advisory firm Third Floor Enterprises, a company specializing in digital marketing and media.
AOL said Egan-Jones Proxy Services on May 29 supported the election of all of its nominees, and urged shareholders to follow the Egan-Jones recommendation and not that of ISS. Starboard Value owned (AOL) about 5.3 percent of AOL’s shares outstanding as of May 25.
AOL’s annual meeting is set for June 14.
Shares of New York-based AOL fell (AOL) 32 cents to $27.11 in New York Stock Exchange composite trading yesterday. The stock has gained 80 percent this year.
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