Peter J. Solomon

Aug 11, 2021

BOSTON (Businesshala) – Two powerful proxy advisory firms back an active investor’s proposal to overhaul the financial structure at auto services company Monroe Inc, according to reports seen by Businesshala, hot-buttoning issues for all shareholders Let me tell you one thing. A person now has veto power. Institutional Shareholder Services and Glass Lewis have urged shareholders in the US$1.9 billion car service and tire centers company to vote on a non-binding shareholder proposal made by hedge fund Ides Capital Management when voting at next week’s annual meeting. approve. There have been two publicly traded Monero stock classes since 1991. Its Class C preferred structure is based on a board member, 82-year-old investment banker Peter J. Solomon to nullify the votes of all other stockholders, including BlackRock, Vanguard Group and T. Rowe Price. Solomon owns 100% of Monroe’s outstanding Class C preferred shares, which is 0.06% of the total shares. ISS and Glass Lewis wrote in reports seen by Businesshala that shareholders’ voting rights should match their economic interests, giving all Monero owners a say in deciding who will sit on the board. Getting rid of the dual-class structure would result in “an equal playing field for all shareholders, as well as a board that would be more accountable to all shareholders”, wrote Glass Lewis. Ides said Monroe’s “undemocratic and unequal voting rights” hurt the company’s share price. It has been pressuring Monero for months to improve returns and change operations. Monroe’s stock price has risen 7.41% since January and closed Wednesday at $57.25. Still, it lagged the benchmark Russell 2000 Index by 44.5% over the past year and 95.6% over the past 10 years, Ides said in a regulatory filing. A representative for Monero did not immediately respond to a request for comment. “Monero is a textbook example of what can go wrong for corporate stakeholders when a board fails to uphold that principle,” said Diane McKeever, IDE’s chief investment officer. “We filed a recapitalization motion to provide Monero’s long-suffering shareholders an opportunity to speak for themselves on the company’s regressive governance structure.” If the resolution is passed, she said she would expect the board to take “immediate action to uphold the will of the majority of Monero’s true economic owners – its common shareholders.” Dual share class structures often give founders more power and have long raised eyebrows among governance experts, especially as they are becoming a bit more popular with many new technology companies joining the public. Often there is a provision for the structure to be dismantled after several years, which has not happened at Monroe. “Many institutional investors favor a sunset of seven years or less because academic research has found that the price premium when some dual-class companies go public is six to nine percent of IPOs,” said Amy Boras, executive director of Amy Boras. Years later, it gets discounted.” Council of Institutional Investors. Reporting by Svea Herbst-Bellis; Editing by David Gregorio .