Institutional Shareholder Services said on September 24 it will recommend shareholders back two nominees put forward by ATG Capital Management LP at Empery Digital Inc.'s annual meeting on October 14, escalating pressure on the Miami-based company's board during an ongoing proxy fight.
ISS recommended voting for ATG Capital nominees Gabriel D. Gliksberg and Aaron T. Morris, while advising shareholders to withhold support from incumbent directors Orn Olason and Ian Read, who chairs the nominating and corporate governance committee. ISS also recommended a vote against the company's equity incentive plan.
ATG Capital holds 4.5 million shares of Empery Digital, representing more than 16% of the outstanding stock. The firm has nominated three additional directors—James C. Elbaor and Meredith S. Kirshenbaum—alongside Gliksberg, who is founder and managing member of ATG Capital.
In its report, ISS wrote that "the board's rejection of the dissident nominations appears to be an unjustified substitution of the board's judgment for that of shareholders" and added that "the board's functioning, details of which have come to light in trial, has been less than robust."
The Delaware Court of Chancery previously ruled that Empery Digital's board improperly invalidated ATG Capital's director nominations, a decision that cleared the path for ATG's slate to appear on the company's universal proxy card alongside management's nominees.
Gliksberg stated that the company "spent more than $20 million of stockholders' money fighting to keep our nominees off the ballot."
ISS also raised concerns about shareholder communications, citing contradictory statements made regarding a March 23 registered direct offering and the disclosure of related-party transactions.
