Shares of Buffalo Wild Wings soared nearly 6 percent on Wednesday after proxy adviser Institutional Shareholder Services recommended that owners of the stock vote for three of four board directors nominated by activist hedge fund Marcato Capital Management.
"The dissident has presented a compelling case that additional board change is warranted," ISS said in its research report.
ISS, an influential adviser to investment funds seeking guidance on how to vote for proposals and director nominees at annual shareholder meetings, put its weight behind Marcato nominees Mick McGuire, the hedge fund's founder, and Scott Bergren, the former chief executive of Yum Brands' Pizza Hut.
"Increased shareholder oversight would be a powerful tool to ensure that the board increases its accountability and avoids any delays in the implementation of strategic projects," ISS said. "In that sense, it appears prudent to add McGuire, who represents the company's third largest shareholder, to the board."
The proxy adviser also recommended Bergren because of his industry knowledge and experience expanding Pizza Hut into international markets.
ISS did not recommend that shareholders support Marcato's third nominee, Lee Sanders, the former chief development officer at TGI Fridays.
"We don't perceive the move to a 90 percent franchisee model to be as critical as other strategic initiatives to the company's long-term growth and profitability," ISS said. "Therefore, the inclusion of dissident nominee Sanders appears less critical to the company at this point."
Buffalo Wild Wings has accused Sanders of having a conflict of interest within the company. In a report published last week, the chicken wing chain said that Sanders had been attempting to "scare" franchisees into selling their restaurants to him.
In a letter to shareholders, Marcato said there wasn't a conflict of interest with any of its director nominees, and added that Sanders would cease all consulting activities with Buffalo Wild Wings if elected to the board.
In addition, the proxy adviser said that it also supported nominee Sam Rovit, the CEO of CTI Foods and a former executive at Kraft Foods. Rovit was originally nominated by Marcato, but then later also put up by the company.
Buffalo Wild Wings will hold its annual meeting on June 2.
— Reuters contributed to this report.