ISS and Ownership Matters have advised its clients to vote against the election of Bill Wavish to the Endeavour board

Two more proxy advisory firms have advised clients to not vote for rebel candidate Bill Wavish, with one also recommending voting against the re-election of Bruce Mathieson Jr.

The rebel bid by Bill Wavish for the Endeavour board being backed pubs billionaire Bruce Mathieson Senior was dealt a double blow on Tuesday when two proxy advisory firms told their shareholder clients to vote against Mr Wavish’s election, with one going an extra step to also recommend against the re-election to the board of Bruce Mathieson Junior.

Proxy advisory firm Ownership Matters joined two other proxy advisers to recommend voting against the election of Mr Wavish to the Endeavour board of Endeavour, but has also advised for a vote against Bruce Mathieson Jr because of his father’s campaign against the board and the risks of destabilising the board and giving the Mathieson family too much board influence.

In a report on Tuesday Ownership Matters said shareholders should vote against the election of Bruce Mathieson Jnr. The Mathieson family own 15 per cent of Endeavour and is the liquor chain and pubs giant’s biggest shareholder.

The recommendation against Mr Mathieson Jnr’s election has been made taking account of the risks to shareholders of a divided board, Ownership Matters said.

“Bruce Mathieson Snr has been publicly critical of the board of Endeavour and has provided funding (and public support) to Bill Wavish’s campaign to seek election to the Endeavour board

“Bruce Mathieson Jnr has also endorsed the election of Wavish to the board and was recently quoted as saying he disagreed with the Endeavour board‘s response to his father’s criticisms of the company and had been excluded from an “unlawfully convened” board meeting held to discuss the company’s response to those criticisms.”

“In these circumstances and given the risk of a destabilised board allowing a major shareholder to gain disproportionate influence through directors either directly associated with them or supported by them, there does not appear to be a compelling benefit to non-Mathieson shareholders of Endeavour for Bruce Mathieson Jnr to remain on the board.”

Ownership Matters is also recommending a vote against Mr Wavish.

A second proxy advisory report also came out in support of the Endeavour board as it faces a shareholder uprising and the rebel candidacy of Mr Wavish to become a director of the owner of Dan Murphy’s, BWS and 354 pubs, tilting the playing field slightly more in favour of its chairman Peter Hearl.

Proxy advisory firm ISS has advised its institutional clients to vote against the election of Mr Wavish to the board at the upcoming Endeavour annual shareholder meeting, arguing many investors believe that it was “generally counter-productive” to support the election of a director who is not endorsed by the company’s board, unless there are compelling grounds to do so.

It is the second blow to Mr Wavish’s election campaign and his main backer, Endeavour major shareholder and pubs billionaire Bruce Mathieson Senior, and could encourage many of Endeavour’s institutional and superannuation shareholders to vote against Mr Wavish’s bid for the board.

Last week, proxy firm CGI Glass Lewis became the first advisory firm to enter the Endeavour civil war to advise its clients to vote against the election of Mr Wavish.

The combined power and influence of both proxy reports now siding with the Endeavour board, and against Mr Wavish and his backer Mr Mathieson Sr, could help direct the votes of Endeavour’s second-largest shareholder, supermarkets giant Woolworths which owns 9.1 per cent of the company, and AustralianSuper which has 7.5 per cent of Endeavour.

In its report, ISS noted Endeavour had disclosed that a formal director search process was ongoing, as it seeks to fill a number of board vacancies, and Mr Wavish had determined not to participate in this.

“The board also states that there has not been sufficient time to complete the usual processes it undertakes in selecting and appointing directors, including associated probity assessments,” the ISS report said.

“Given the importance of a functioning and cohesive board to shareholders, a board is generally best placed to determine who should and should not be a director (subject always to shareholders’ ability to remove directors and nominate candidates should the board’s discharge of its duties be unsatisfactory). Ultimately, it is generally counter-productive to support the election of a director who is not endorsed by the company’s board, unless there are compelling grounds to do so.”

However, ISS said some shareholders might prefer to support the nomination of Mr Wavish having regard to the endorsement of an incumbent member of the board (Bruce Mathieson Junior) and substantial shareholder (the Mathieson family). It also pointed to Mr Wavish’s retail and financial experience as former finance director and supermarkets director of Woolworths, where he led the acquisition of Endeavour’s pubs arm and its integration into Woolworths, and as former boss and executive chair of Myer.

The Endeavour AGM is slated for October 31.