Proxy advisory firm Institutional Shareholder Services is recommending investors withhold votes for four AMC Entertainment (NYSE:AMC) directors, including Chairman and CEO, Adam Aron, ahead of the June 16th annual meeting.
Institutional Shareholder Services said the compensation committee demonstrated poor responsiveness following last year's low support for the say-on-pay proposal. Further, AMC has not disclosed a plan or intention to reverse the board reclassification nor submitted a proposal to declassify the board at this annual meeting. This represents "a material governance failure," the advisory firm added.
AMC stock, which became symbolic of the meme-stock craze last year, is down 51% year-to-date.
The firm said given that compensation committee members are absent on the ballot, withhold votes are warranted for incumbent director nominees Adam Aron, Howard (Hawk) Koch Jr., Kathleen Pawlus, and Anthony Saich "for demonstrating poor responsiveness following last year's low say-on-pay vote result".
This is further warranted "for incumbent governance committee nominee Anthony Saich for not disclosing any intention to reinstate the declassification of the board, which represents a material governance failure," it was added.
"The 2021 say-on-pay vote received the support of only 65.7 percent of votes cast. As such, ISS has evaluated the compensation committee's responsiveness to shareholders' concerns as evidenced by the low vote result," the firm continued. "In this case, although shareholder engagement efforts were disclosed, the disclosure is vague, and the committee did not disclose any feedback received or meaningful changes to the compensation program. As such, the compensation committee demonstrated poor responsiveness to shareholder concerns underlying the low vote result. Accordingly, support is not warranted for the incumbent compensation committee members as well as the say-on-pay proposal. However, due to the classified board structure, no compensation committee members are standing for election at this year's annual meeting. As such, support is not warranted for incumbent director nominees Adam Aron, Howard (Hawk) Koch Jr., Kathleen Pawlus, and Anthony Saich."
Institutional Shareholder Services further recommended that AMC shareholders vote "FOR" the ratification of" auditors Ernst & Young LLP but vote "AGAINST" an advisory vote to ratify named executive officers' compensation.