By Svea Herbst-Bayliss
BOSTON (Reuters) – Monro Inc shareholders should vote against all five of the auto service company’s directors who are up for election after the board failed to follow investor wishes and restructure its share classes, shareholder advisory firm ISS said on Wednesday.
Institutional Shareholders Services, known as ISS, said the board “demonstrated insufficient responsiveness to last year’s majority-supported shareholder proposal” and that “withholding support from all director nominees is warranted.”
Shareholders will vote on Aug. 16. Many investors follow ISS recommendations on votes ranging from who will sit on the board to corporate matters like acquisitions.
Monro’s board has nine members. Five are up for election this year.
Hedge fund Ides Capital, which has been pushing the company for years to make changes, submitted last year’s shareholder proposal to recapitalize the share classes so that each share would have one vote in each voting situation.
Eighty-eight percent of common shareholders supported the proposal at the 2021 annual meeting. While the board “acknowledged the results … and engaged with shareholders on the issue,” ISS wrote that the board did not act because it felt it did not have the “right or power to unilaterally ‘recapitalize’ its equity capital structure to eliminate the Class C Preferred Stock.
All Class C shares are owned by investment banker Peter Solomon, who sits on the board and is one of the company’s top five shareholders after mutual fund companies BlackRock, T. Rowe Price, Vanguard and Wasatch Advisors.
Shares of Monro, which runs auto service and tire centers and has a market capitalization of $1.7 billion, have dropped by 15% in the last 52 weeks.
Monro did not immediately respond to a request for comment. Ides Capital could not be reached.
(Reporting by Svea Herbst-Bayliss in Rhode Island; Editing by Matthew Lewis)