#United States #New York #Proxy Vote #Burford Capital #ISS Recommendations

Burford Capital's Call for Shareholder Backing

On April 28, 2025, Burford Capital Limited, a prominent global finance and asset management firm specializing in legal finance, urged its shareholders to support the re-election of two essential board members amid controversy over proxy voting recommendations from Institutional Shareholder Services (ISS). This recommendation arrived as a part of the procedures linked to Burford's definitive proxy statement, filed with the U.S. Securities and Exchange Commission (SEC) on April 3, 2025.

Context of the Controversy

The advice from ISS stated that shareholders should vote against the re-election of Vice Chair Christopher Halmy and Robert Gillespie. The primary concern raised was about what ISS characterized as ineffective internal control over financial reporting dating back to FY2021. They argued this issue revealed a lack of oversight by the audit committee, warranting a dismissal of both directors. Notably, ISS's opinion stemmed from a misunderstanding of the facts surrounding Burford's operations.

Glass Lewis, another advisory firm, disagreed with ISS, supporting the re-election of both directors. This divergence in recommendations highlights the complexities and nuances in the governance landscape, and Burford is asking its shareholders to disregard ISS's conclusions.

Clarifying the Misunderstanding

Burford described ISS's rationale as a misinterpretation of distinct issues. They asserted that any internal control challenges relate separately to their evolving valuation practices and the present assessment of financial controls. While ISS's claims touch on material weaknesses, Burford maintains there have been no misstatements in their consolidated financial reports. They emphasize that Mr. Halmy was not a board member in 2021 and contend there are no grounds for terminancies as ISS has suggested.

The company took the opportunity to detail the significant contributions both Mr. Halmy and Mr. Gillespie have made since taking positions on the board. Mr. Halmy has played a pivotal role in overseeing significant corporate transitions, including the company's lift from international to U.S. domestic reporting and facilitating SEC engagements that positively transformed their valuation methodologies. Meanwhile, Mr. Gillespie has contributed heavily to the firm's governance and finance strategies, particularly regarding the U.S. stock listing in 2020.

Strong Backgrounds of Directors

• - Christopher Halmy: An independent non-executive director, Halmy brings wealth through experiences in senior finance positions, including his tenure at Ally Financial and McKinsey. His understanding of financials executed during the listing on the NYSE sets a firm grounding for his oversight in company governance.
• - Robert Gillespie: With over 25 years in investment banking, Gillespie's background includes top roles at UBS, guiding the company through financial strategies that proved beneficial during intricate corporate maneuverings. His role at UK Export Finance highlights his day-to-day leadership and governance dynamics that serve to stabilize Burford’s operational framework.

Burford's management has expressed that these directors are integral, not only for their historical impact but also for their continued guidance through changing financial landscapes. Thus, they are appealing to shareholders to recognize this value in the face of proxy advice.

Addressing Executive Compensation

In conjunction with board re-elections, Burford invites votes in favor of their proposed executive compensation plan. ISS also recommended opposition to this compensation structure purely on the basis of carried interest allocations, a stance the firm argues is misaligned with industry standards. Burford believes that aligning management incentives with shareholder returns is crucial, and their structure reflects this strategy, enhancing cash performance and value generation.

Moving Forward

The upcoming votes are a crucial chapter for Burford Capital as they encounter this internal strife driven by external advisory recommendations. As they prepare for these votes, effective communication to their shareholders will be essential in reinforcing the value proposition that both Mr. Halmy and Mr. Gillespie represent, along with affirming the firm's commitment to sound financial governance.

For further insights on Burford’s initiatives and the progress of the proxy proposals, shareholders are encouraged to look for updates on their official page at Burford Capital.