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By Svea Herbst-Bayliss
BOSTON (Reuters) - Proxy advisory firm Institutional Shareholder Services on Monday backed cloud storage vendor Box Inc in its fight with activist investor Starboard Value by recommending that shareholders vote for the company's directors instead of the hedge fund's nominees.
In its report, ISS said shareholders should vote for Box directors Peter Leav and Aaron Levie, arguing that the current board has made sensible changes and should get more time to effect a turnaround.
Reuters saw a copy of the report, which was published before the company's annual meeting planned for Sept. 9.
ISS' recommendations are traditionally very powerful and this one deals a blow to Starboard, one of the busiest and most powerful activist investors in the industry.
Earlier this year, Starboard, which owns 8.4% of Box, nominated four directors to Box's 10-person board saying that the company failed to capitalize on the work-from-home trend during the COVID-19 pandemic, falling behind its cloud computing peers.
The hedge fund launched its proxy fight just one year after having reached a settlement with Box in March 2020 where three new directors, including one named by Starboard, joined the board.
"In light of the operational and governance improvements shown since the settlement, the current board appears to deserve some additional time to implement the turnaround," the ISS report said. "As such, direct support for the dissident nominees does not appear warranted at this time," the report added.
Box's share price gained 2.25% in early trading to $25.43 on Monday morning.
(Reporting by Svea Herbst-Bayliss; Editing by Chizu Nomiyama and Steve Orlofsky)