Activist investors AB Value Management Bradley Radoff have garnered support from proxy voting adviser Institutional Shareholder Services (ISS) for their board nominee at Rocky Mountain Chocolate Factory.
ISS told Rocky Mountain shareholders that they should vote for the nominee put forward by AB Value and Radoff at the upcoming August 18 annual meeting, according to a Monday statement from the two activists. ISS raised concerns about the way the U.S. candy store chain’s board has handled settlement negotiations, among other issues.
Rocky Mountain has been negotiating a way out of the proxy contest with AB Value and Radoff for months. However, in a surprise move last week, the company rejected a dissident nominee despite a previous offer to give the activists a board seat as part of a settlement deal.
“In proposing a settlement with customary conditions, and then weaponizing those conditions to retract its own proposal, the chairman and those board members that voted with him have chosen to risk reputational damage for the possibility of retaining control of the company,” said ISS about Rocky Mountain’s recent U-turn.
After Rocky Mountain dismissed their nominee, AB Value and Radoff proposed a new one – Jill Sutton, a board member at sandwich shop Potbelly who led the legal department of United Natural Foods for more than three years until last December.
ISS suggested Sutton has the expertise and experience to help Rocky Mountain. The company has said it would only add directors with “significant demonstrated experience and a deep understanding of franchise systems and the core needs of franchise owner/operators, as well as prior corporate governance experience.”
In a Friday recent email between lawyers, the activists said they were expecting a response from Rocky Mountain regarding Sutton’s appointment to the board under a settlement the company previously said was acceptable.