TORONTO (Reuters) - Two prominent proxy advisory firms have opposing advice for Magna International Inc (MG.TO) shareholders who will decide on whether to re-elect its controversial founder Frank Stronach as director at the auto-parts maker’s annual meeting on May 10.
Glass Lewis & Co is recommending shareholders withhold their vote for Stronach, citing 2011 real estate deals in which Magna sold properties at a loss to companies affiliated with Stronach and former Magna co-Chief Executive Officer Siegfried Wolf.
Glass Lewis also pointed out that Stronach failed to attend 75 percent of board meetings, “a fundamental failure to fulfill his role as director.”
In contrast, ISS Proxy Advisory Services recommends that shareholders vote for Stronach, who it says had a valid reasons for being absent. The ISS report does not refer to the real estate deals.
Magna declined to comment on Glass Lewis report, saying that its disclosure is complete in its proxy circular and first-quarter interim financial filing.
The company said in its circular that it had sold non-core property for $43 million last year and took a $9 million impairment charge for the deals.
Magna said it got two appraisals for each of the five properties and that sales prices fell within the mid-point of those values.
Magna’s corporate governance and compensation committee reviewed and recommended the transactions.
The committee included Chairman Mike Harris and two directors, all of whom backed a 2010 plan that paid Stronach nearly $900 million to relinquish control of Magna. Harris is stepping down along with the two directors, Donald Resnick and Louis Lataif.
“We are somewhat surprised and concerned to see that the board would sell properties to former executives at a loss to shareholders,” the Glass Lewis report said.
“While these properties may indeed have been ‘non-core,’ the board should disclose why it was deemed necessary to sell them at a loss, particularly since the company does not appear to have an immediate need for cash.”
Shareholders are also urged to withhold their vote for board incumbent nominee Barbara Judge. She serves on at least seven public company boards and may have inadequate time for Magna, the report said.
Glass Lewis also recommends that shareholders do not approve the advisory vote executive compensation, citing a significant disconnect between pay and performance.
Shares of Magna were 41 Canadian cents higher at C$44.30 on the Toronto Stock Exchange on Wednesday afternoon.
Reporting By Susan Taylor; Editing by Frank McGurty