Huntsman Gears up for Proxy Fight with Starboard

21.03.2022 - Gearing up for a potential proxy fight at its Mar. 25 annual meeting, Huntsman has written to its shareholders urging them to vote for the company’s nominated directors as it hopes to head off activist investor Starboard Value.

In late January, Starboard, which owns an 8.6% stake in Huntsman, nominated four directors to the chemical company’s board. These include Starboard founder and CEO Jeffrey Smith, former LyondellBasell CEO James Gallogly and Sandra Beach Lin, former CEO of Calisola, a former executive vice president of Celanese and CEO of its then-plastics subsidiary Ticona.

Institutional Shareholder Services, a proxy voting advisory firm, has recommended that shareholders vote for Smith and Gallogly, stating that Starboard has “made a compelling case for further change”, and adding that the two nominees “should be sufficient to ensure independent oversight of management and ensure that the interests of shareholders are prioritized."

But another proxy advisory firm Glass Lewis has recommended a vote for Huntsman’s candidates. In a report quoted by Huntsman, Glass Lewis said: “Although Starboard seeks to replace directors who it believes lack true independence or qualifications for the board, not only do we find insufficient cause to remove current directors, we also aren't convinced that Starboard's nominees have particularly relevant, timely or incremental experience to add to the board at this time.”

It added that Starboard’s campaign “appears to be backwards-looking in several respects” and “lacks new ideas or a detailed plan to improve Huntsman’s performance going forward.”

In his letter of Mar. 16, Huntsman chairman Peter Huntsman wrote: “Over the past few years, the Board has taken meaningful actions to oversee our 'value over volume' strategy, transform our balance sheet, and enhance our governance through an extensive refreshment plan. As a result of all these actions, 2021 was the very best year in our history with the strongest profit and margin performance we've ever achieved with our current portfolio.”

Huntsman also pointed out that the company’s stock is trading near its all-time high and is beating its next-best peer by double digits.

Last November, Huntsman announced the start of a strategic review of its Textile Effects division and a $1 billion share repurchase program, as well as implementing a multi-year incentive program for officers and vice presidents. It also appointed three replacement board members.

Author: Elaine Burridge, Freelance Journalist