ISS proxy advisory firm supports Denny’s investors fighting to elect board candidates

Proxy advisory firm backs Denny’s investors

CHICAGO — One day after a shareholder advisory firm supported Denny’s Corp.’s efforts to fend off a proxy battle with a group of shareholders, another advisory firm lent its partial support to the investors fighting to gain seats on the restaurant company’s board.

A group that calls itself the Committee to Enhance Denny’s said RiskMetrics ISS, an influential shareholder advisory firm, backed at one of its three board nominees. ISS did not support the group’s two other candidates.

That committee wants to unseat CEO Nelson Marchioli, board Chairwoman Debra Smithart-Oglesby and former Chairman and current board member Robert Marks.

Denny’s has asked shareholders to reject the investors’ three nominees — Patrick H. Arbor, Jonathan Dash and David Makula — and vote for its eight board nominees.

On Thursday, Denny’s said proxy advisory firm Glass, Lewis & Co. supported its slate, claiming the election of dissident nominees would be “unwarranted at this time.” Denny’s board said it was also supported by another firm, Proxy Governance Inc.

But ISS weighed in on Friday, saying that the group led by investment firms Oak Street Capital Management and Dash Acquisitions, could help Denny’s rebuild its business.

“Given the long-term underperformance issues, we believe dissidents have made a reasonable case for change at the board,” ISS officials said in a statement, supporting Dash’s election.

The investors said their trio would cut costs by $15 million, adjust management’s bonus system and work to reverse trends keeping diners away from the chain’s 1,500 locations.

The investors said Denny’s serves roughly 725,000 customers every day, a nearly 20 percent decline from five years ago.

But the restaurant chain contends the investors are waging a proxy fight for personal gain and don’t have the company’s interests in mind.

It’s a point they repeated Friday.

“We believe its goal is to ultimately obtain control of the company without paying a premium to other shareholders,” Denny’s said in a statement.

Denny’s has 1,318 franchised and licensed locations and 233 company-owned restaurants, with operations in the U.S., Canada, Costa Rica, Guam, Mexico, New Zealand and Puerto Rico.

Denny’s shareholders are scheduled to meet May 19 to elect members of the board.

Its shares fell 2 cents to $3.23 in trading Friday.