Starboard pushes forward with proxy fight at GCP Applied Technologies

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BOSTON (Reuters) – Activist investor Starboard Value is pushing ahead with a proxy contest at GCP Applied Technologies (N:GCP), arguing that its director nominees would steer the chemical company through the current economic crisis more successfully than the current board.

The New York-based hedge fund owns roughly 9% of the Cambridge, Massachusetts-headquartered company and nominated eight directors, including Starboard partner Peter Feld, according to a regulatory filing made on Thursday.

The nominees have experience in finance, operations, strategy as well as construction products and are “uniquely capable to help govern the Company through and after this crisis and position it for future success,” the filing said.

GCP’s stock price climbed more than 5% to trade at $16.68 in afternoon trading. Over the last 52 weeks the stock price has dropped 46.8% and is off 26.4% since the start of 2020. Starboard has criticized the company, which is worth roughly $1.14 billion, for having missed its own financial expectations and that its stock price lagged behind its peers.

This marks the second time in two years that Starboard has become involved with GCP. Last year the company handed the hedge fund two board seats.

Since then the company has run a strategic process to consider options, changed its chief executive officer and cut costs.

This year the company has tried to work collaboratively with Starboard to avoid a proxy fight, a spokesman said.

But the hedge fund is pushing ahead with a “self-serving proxy fight that is out of touch with the realities of the current operating environment and global crisis,” a company spokesman said. “It is designed to undermine a Board and management team – that have been delivering positive financial and operating results and prudently managing the balance sheet – with directors who have limited experience in the sector and have yet to provide any plan.”

Starboard said in its filing “we recognize the COVID-19 crisis has created a difficult environment for many companies and their respective employees, customers, and partners. GCP is no different and needs strong leadership and oversight during these challenging times.”

This marks the second time this year that Starboard has asked for additional board seats at a company where it won board seats in 2019.

In March Starboard nominated four directors, including Feld, to the board of eBay (NASDAQ:EBAY) where it was able to help name a director in 2019.

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