Activist Nominates Members to GCP’S Board
Activist investor Starboard Value has nominated nine directors to the board of GCP Applied Technologies, launching a potential proxy battle. The nominations comprise seven new directors, including former executives at LyondellBasell, Dow, Rockwood, H.B. Fuller and McKinsey, as well as two returning directors.
Starboard is one of GCP’s largest shareholders and owns around 8% of the construction products group. The investor, which has been a GCP shareholder for more than a year, has strongly criticized the company’s financial and operating performance.
In a letter to GCP’s chairman, Elizabeth Mora, Starboard managing member Peter Feld said GCP has “suffered from a prolonged period of disappointing operating and financial results, poor corporate governance and excessive executive compensation”, while also noting that the two previous director appointments “had not created enough change to address these very serious issues”.
Starboard said its research indicates that GCP’s specialty construction chemicals and specialty building materials businesses are market leaders with significant untapped potential and room for improvement.
“We believe that GCP needs a new plan with improved execution and greatly enhanced board oversight,” Feld wrote.
In response, GCP said it will evaluate Starboard’s nominees pursuant to its regular process and make a recommendation with respect to the election of directors in due course.
Credit ratings agency Moody’s Investors Services said GCP’s earnings performance has been lackluster over the last few years and lagged the market as well as its own expectations. Jiming Lou, vice president and senior analyst at Moody’s, said GCP “should be able to benefit from secular growth in the construction chemicals sector and catch up with the performance of its peers if it makes the right investments, streamlines its product offerings, and optimizes its cost base.”
GCP is the former construction products business of W.R. Grace spun off in 2016. The company started a strategic review of the business last February, although this did not prompt any major moves. It did, however, adopt a stockholder rights plan – or poison pill – in March 2019 to prevent activist hedge fund 40 North from taking a controlling stake.
