(Adds details from report, background on contest)
By Svea Herbst-Bayliss
BOSTON, Dec 6 (Reuters) - Proxy advisory firm Institutional Shareholder Services on Wednesday suggested shareholders back hedge fund Marcato’s choice of directors at Deckers Outdoor Corp , switching its recommendation after the U.S. fund made changes.
In one of the season’s most hotly contested proxy contests, activist investor Marcato Capital Management has proposed its own slate of directors to influence strategy at the maker of UGG boots.
But after having spent months campaigning to replace all nine members of the board, Marcato on Monday slimmed its proposal to three directors, who are all independent of it.
On Wednesday, ISS, a proxy advisory firm that issues voting recommendations for shareholders, wholly threw its weight behind Marcato, saying that the Deckers board has been too slow in addressing problems at the company and that it was time for a shake-up.
“Shareholders are therefore advised to directly support dissident nominees Fuller, Waterman, and Feldman by voting FOR their election on the dissident (GOLD) card,” ISS wrote.
Steve Fuller was previously marketing chief of apparel brand L.L. Bean, while Anne Waterman was a former Michael Kors executive. Kirsten Feldman is a former Morgan Stanley executive.
The new ISS report praised the candidates’ retail expertise.
Last week, ISS essentially signaled its supported for Marcato, but stopped short of urging investors to vote outright for the dissidents, for fear of toppling the entire board, a move it considered too harsh.
However, Deckers got some good news on Wednesday when rival proxy advisory firm Egan-Jones recommended that shareholders vote for all of Deckers’ incumbent directors.
Last week, Glass Lewis, another proxy advisory firm, also threw its weight fully behind the company directors.
Deckers said in a statement on Wednesday that it was pleased that Egan-Jones and Glass Lewis “recognize that Deckers has the right board and the right strategy.” It did not mention the ISS recommendation and did not immediately respond to a request seeking comment about the new ISS report.
Marcato, which owns an 8.5 percent stake in Deckers, comes into the Dec. 14 Deckers annual meeting with strong credentials, having already won one proxy contest at Buffalo Wild Wings this year and posting some of the hedge fund industry’s strongest returns. Its flagship fund up was 24 percent through November.
Reporting by Svea Herbst-Bayliss, Editing by Sandra Maler and Rosalba O'Brien