ISS backs two activist candidates on Kohl's proxy fight

Institutional Shareholder Services is advising Kohl's shareholders to vote for two activist investor director candidates at the retailer's annual shareholder meeting on May 11.

Why it matters: ISS' recommendations hold heavy sway over investors, and while the final shareholder vote can go either direction, the proxy adviser's recommendation may increase the chances of an activist joining Kohl's board.

Details: Activist shareholder Macellum Acvisors nominated a majority slate of 10 directors to the company's board, according to its definitive proxy statement, and is urging shareholders to vote the "white" proxy card.

• Kohl's is nominating a slate of 13 directors and is urging shareholders to vote the "blue" proxy card, according to its definitive proxy statement.

Of note: While ISS does not back the full Macellum slate, its support of two directors is a blow to Kohl's, whose case to shareholders is that its board candidates are the right ones to lead the company's strategy.

What they're saying:

• ISS says in the recommendation note: "...the dissident has made a sufficient case that additional voices with industry expertise could assuage investors’ skepticism regarding the ongoing review of strategic alternatives and be additive to the execution of the standalone plan, should the sale process not bear fruit."