By Svea Herbst-Bayliss
BOSTON (Reuters) - Activist investment firm Starboard Value LP is arguing that Huntsman (NYSE:HUN) Corp investors should elect its director candidates to the board to ensure the chemical maker delivers on promises to shareholders.
Starboard, which owns an 8.6% stake in Huntsman, launched a proxy contest in January when it nominated four people to the company's board.
This week the hedge fund and the company presented their arguments to proxy advisory firm Institutional Shareholder Services which will make a recommendation to shareholders before the vote on March 25.
Starboard says the company has repeatedly failed to deliver on its promises to shareholders and that Huntsman will disappoint shareholders again unless the four new directors help bring independence and accountability to the board.
The company said the hedge fund has "ignored our record results in 2021 and stronger outlook for 2022 which are reflected in our all-time high share price. These results speak for themselves and confirm that this refreshed board is holding management accountable for the company’s performance."
Huntsman last year promised to improve margins, return $1 billion to shareholders through share repurchases, not to spend more than $500 million on a single acquisition and to run a sales process for the non-core Textile Effects unit.
Starboard believes the company can improve its margin by 600 basis points. While Starboard largely supports Huntsman's initiatives, the hedge fund worries some board incumbents won't press management to meet these goals.
Citing governance concerns, the hedge fund wants to replace Cynthia Egan, the lead independent director, and Jose Munoz, who joined the board this year in a Huntsman revamp.
The fund is also targeting Mary Beckerle and Daniele Ferrari (NYSE:RACE), two directors Starboard says are conflicted. It wants to replace them with chemical industry veterans including former LyondellBasell Industries (NYSE:LYB) CEO James Gallogly and Starboard's managing member, Jeffrey Smith.
Starboard also noted in its presentation that Huntsman has not made disclosures recommended by the Task Force on Climate-related Financial Disclosures even though investors requested them two years ago.