NEW YORK (The Deal) -- With the 2015 proxy season drawing to a close and a number of companies dealing with new faces in the boardroom because of activist campaigns, The Deal is already looking forward to 2016 to see which companies might be more vulnerable to shareholder pressure because of problematic governance.
The assessment was based on Institutional Shareholder Services' QuickScore reports, which The Deal obtained, as well as company performance and newsroom intelligence.
Titan International (TWI)
ISS QuickScore: 10
Titan International this month received a third consecutive bruising annual vote of no confidence from shareholders, a large segment of whom opposed the tire maker's executive pay packages and a director's re-election. About 30% of the voting shares were against the pay packages this year, an improvement from 2014's 52% opposed and 47% against in 2013 but still substantially negative.
Frustrated shareholders also overwhelmingly backed a California State Teachers' Retirement System proposal to de-classify Titan International's board even though the company had urged investors against doing so.
A Titan International spokesman said that, given the shareholder vote, the company does indeed plan to declassify the board.
Although that might help Titan International improve its governance profile with ISS, there are additional problems, according to the QuickScore report.
Titan, like Bed Bath & Beyond was also subject to an ISS "pay for performance misalignment" qualitative review.
In addition, the company recently disclosed a "material weakness" in its internal controls, a "key risk" according to ISS.
The company put Carl Icahn protégé Mark Rachesky of MHR Fund Management on its board last year after he started up an activist campaign, but that move hasn't helped its underperformance profile.
Its return on invested capital is -7.68%, compared with peers' 10.75%, while its total return over the past two years is -46.83, compared with peers' 11.97, according to data from Bloomberg.
The company's stock price also provides little reassurance to management and board members as it is down about one-third over the past year.
The company spokesman acknowledged that the company's Chairman and Chief Executive Maurice Taylor had suggested breaking up the company by selling or splitting off its mining tire business sometime in late 2013 or early last year. If that were to happen, investors would be likely to cheer it on.
Lately, though, Titan International appears more focused on making a small acquisition in Brazil. An activist however may have a different plan for Titan International's $191 million in cash on hand as of March 31.
The spokesman noted that in addition to Rachesky, the board has been refreshed with the addition of two other new directors over the past 18 months including Gary Gowger, a board member who had a long career at General Motors. - Ronald Orol