Activist Icahn Wins Some Support From Proxy Firm in Southwest Gas Board Push

(Bloomberg) -- Activist investor Carl Icahn's efforts to revamp the board of Southwest Gas Holdings Inc. won partial support from two prominent shareholder advisory firms.

The billionaire investor has been seeking to replace 10 directors on the board of the Las Vegas company after years of what he calls missteps and underperformance. Proxy advisory firm Institutional Shareholder Services Inc. on Friday recommended investors support four of Icahn's 10 nominees, while Glass Lewis & Co. urged them to support two of his nominees.

“We believe Icahn has ultimately presented investors with an opportunity to implement relatively low risk change centered around injecting fresh, independent perspectives,” Glass Lewis said in its report.

Southwest Gas didn't immediately return a request for comment.

Icahn, who owns about 4% of Southwest Gas, has been locked in a months-long proxy battle with the company and has also offered to buy the shares he doesn't already own for $82.50 apiece. The matter is slated to go before a shareholder vote on May 12. The utility owner has rebuffed Icahn's efforts.

Southwest Gas said earlier this month that it received an indication of interest from a potential buyer that's “well in excess” of Icahn's proposal. The undisclosed interest prompted Southwest Gas' board to initiate a strategic review that could include selling all or part of the company.

Icahn has cast doubt on the validity of the process, arguing that the company's board and Chief Executive Officer John Hester can't be trusted after Southwest Gas issued $400 million in equity at a lower price than what Icahn offered. The activist investor has said that if his nominees were elected, they would continue to pursue strategic alternatives. But, unlike the current board, it would run an “open and transparent process.”

ISS said in its report that “support is warranted for only a subset” of Icahn's nominees. “It appears that this would be the most effective means of confirming the thoroughness of the ongoing strategic review, without potentially delaying the process, while concurrently strengthening the board in the event that a deal does not materialize.”

The activist has been feuding with Southwest Gas since the company defied his objections and moved forward with plans to buy Questar Pipelines from Dominion Energy Inc. for about $2 billion.

In its report, Glass Lewis expressed concerns about the Questar deal, but said a number of Icahn's critiques have “struggled to find purchase.”

Glass Lewis recommended that investors support two Icahn nominees: Marcie Edwards, a former general manager of the Los Angeles Department of Water and Power, and Henry Linginfelter, a recently retired executive with Southern Company Gas.

ISS recommended Nora Mead Brownell, a former chair of PG&E Corp.; Andrew Evans, a former chief financial officer of Southern Co.; Walter Higgins, former CEO of Ascendant Group Ltd; and Andrew Teno, a portfolio manager at Icahn Capital.