Lawndale Capital Management LLC and its affiliated activist funds, beneficial owners of nearly 1.6 million, or 2.6%, of Willbros Group Inc. (NYSE: WG) intend to vote "FOR" a shareholder proposal calling for Willbros' board members to be elected annually instead of its present practice of its board members serving staggered three-year terms. The shareholder proposal will be voted on by Willbros' shareholders at the company's Annual Meeting on June 9 in Houston.
On May 12, Lawndale sent a letter to Willbros' lead independent director, S. Miller Williams, for distribution to Willbros' independent directors, informing them of Lawndale's intent to vote " FOR" Proposal 5, often called a "de-classify" or "de-stagger" proposal. The letter also called for Willbros' board to implement additional reforms to its corporate governance practices and structure to address changes made necessary when formerly Independent Chairman John McNabb was appointed as the company's CEO.
Lawndale's letter called for the following additional steps regarding fixing Willbros' "broken" corporate governance:
- The independent directors need to serve the PRIMARY role in Willbros' director search and nomination process and not CEO McNabb.
- The board should replace Edward DiPaolo, a long-time friend and former business partner of CEO McNabb, from the Willbros' Nominating/Governance Committee that he presently chairs.
- Willbros' lead independent director, Williams, should "step up" to his role and ensure an appropriate non-management dialogue conduit with respect to shareholder concerns on topics that are properly deliberated and decided by independent board members and not CEO McNabb.
Lawndale President Andrew Shapiro stated, "Having directors stand for elections annually makes them more accountable to shareholders, and could thereby contribute to improved performance and increased firm value. The existence of staggered director terms at Willbros entrenches and immunizes ineffective directors from necessary accountability and potential replacement by the company's shareowners.
"Having a long-time friend and former business partner of your CEO as Nominating/Corporate Governance Committee Chairman raises serious conflict and governance concerns and is inappropriate," he added. "A truly independent board committee should direct and run the director search and nomination process."