In its report, ISS backed former Blue Buffalo CEO Kurt Schmidt and former Hostess Brands CEO William Toler as well as comScore Inc president Sarah Hofstetter and former Uber Technologies executive Bozoma Saint John. It also recommended support for Third Point partner Munib Islam.
Third Point has said its nominees can provide operational, marketing and branding as well as financial expertise to help turn around Campbell's lagging stock performance. The company has been hurt by falling soup sales plus its fast paced acquisitions spree. In August, it announced plans to sell its fresh foods and international units.
Campbell responded to the ISS report by urging shareholders to support its 12 board members and said again that it had offered to expand the board to include two Third Point nominees, Schmidt and Hofstetter. It again voiced its objection to having a Third Point employee on its board.
ISS said Campbell's underperforming total stock return and weak fundamentals are linked to its acquisition strategy and poor execution on mergers as well as a lack of focus on its core business.
"In light of these factors, the dissident has presented a compelling case that change at the board level is warranted," the report said.
Third Point owns roughly 7 percent of Campbell's stock and it has allied with George Strawbridge, a descendant of John Dorrance who invented condensed soup and ran the company about a century ago. Three Dorrance heirs currently serve on the Campbell board and they plus another family member control roughly 40 percent of the shares, making Loeb's proxy contest all the more difficult.
At the outset, Loeb was pushing for a sale of the company but later backed away from that and more recently recommended splitting the company to make it more attractive to potential buyers. It also warned the company against hastily hiring a new chief executive during the proxy contest.
The company had criticized the hedge fund for not having a concrete plan to turn around the company.
ISS said it may make more sense for the company to improve its operations instead of pursuing a sale right now. "The dissident's seemingly premature focus on a sale may have caused some investors to worry that a dissident-controlled board might not thoroughly explore all strategic options," the report said.