Institutional Shareholder Services (ISS) has recommended that shareholders of WEX Group support two director candidates put forward by activist investor Impactive Capital, aligning broadly with views expressed by other proxy advisers ahead of the company’s upcoming annual meeting, according to a report by Reuters.
In its advice, ISS backed the election of Impactive co-founder Lauren Taylor Wolfe and payments and technology executive Kurt Adams, while advising investors to vote against incumbent directors Nancy Altobello and Stephen Smith. The shareholder vote is scheduled for 5 May.
The recommendation places ISS alongside Glass Lewis, which has also supported Taylor Wolfe and Adams and gone further in urging investors to remove both Stephen Smith and WEX chief executive Melissa Smith from the board. Meanwhile, Egan-Jones, the smallest of the proxy advisory firms, has taken a more expansive stance, backing all three of Impactive’s nominees.
ISS highlighted the experience of the activist nominees, noting that Adams in particular brings relevant industry expertise in areas where WEX has faced operational and strategic challenges. It also dismissed concerns raised by the company about Taylor Wolfe’s independence, arguing that her long-standing investment in WEX would allow her to contribute as an informed and engaged board member.
Impactive Capital, which holds just under 5% of WEX’s shares, has been preparing its campaign for more than a year. The hedge fund is seeking to install three new directors on the company’s nine-member board, arguing that governance weaknesses and leadership decisions have contributed to weak share performance.
While Impactive has criticised chief executive Melissa Smith’s compensation and stewardship of the company, it has stopped short of calling for her removal as CEO.
ISS echoed some of the activist’s concerns, pointing to WEX’s relative underperformance versus its peers over much of Smith’s tenure. The proxy adviser said this gap was difficult to reconcile with the board’s presentation of overall results. However, it also concluded that conditions were not severe enough to justify immediate leadership change at the executive level.
WEX, which provides payment processing and related services, has seen its share price decline by roughly a third over the past five years, reducing its market capitalisation to around $5.2bn.
The company reportedly did not immediately respond to requests for comment. Impactive also declined to comment on the latest recommendations.
