NEW YORK, Feb. 22, 2018 /PRNewswire/ -- Neuberger Berman has been a long-term holder of Nuance Communications, Inc., owning shares on behalf of our clients for over five years, and has engaged with the Board of Directors to help drive changes that Portfolio Managers believe could lead to long-term value creation.
We note that today, 14 months after CEO Paul Ricci announced his retirement and only a few weeks before he is about to retire, shareholders have not received any meaningful update about the CEO succession, and a new CEO has not been announced. We remain concerned as to the Nuance Board's ability to execute the announced CEO succession plan, and the departing CEO's influence on the process.
We believe that the shareholders' right to call a special meeting – a proposal that appears on the ballot for the upcoming annual meeting of shareholders – will allow shareholders to act in case the Board fails to execute on the succession plan and prevent a delay of the decision for another year.
Moreover, we strongly believe that it is a fundamental shareholder right to call a special meeting, a belief we have publicly codified in our Governance and Proxy Voting Guidelines where we state our general support for shareholder or management proposals granting these rights. Our view is supported by organizations like the Council of Institutional Investors, representing over $25 trillion in assets under management.  This corporate governance best practice has been adopted by a majority of Russell 1000 companies.
The proposal is especially important for Nuance shareholders, given the absence of a right to act by written consent or a majority vote, a history of poison pill adoption, and several years of poor support for Board proposals at shareholder meetings. We note that the Board has chosen not to issue a recommendation on this shareholder proposal, which we see as a positive step in improving the Company's overall governance profile.
Both Glass Lewis and ISS have voiced support for the proposal, which ISS noted would "help to increase accountability of the board and management" and quoted our above-referenced letter as an indication of concern. We agree with the proxy advisors' assessment and are hopeful about the potential for positive change.
For all of those reasons, Neuberger Berman intends to vote FOR the shareholder proposal.
We hope and expect the proposal will receive significant support from shareholders, and that the Board will follow the proponent's statement and promptly adopt the right unilaterally. We appreciate the changes Nuance has already implemented, and look forward to a continuing dialogue with the Board of Directors.
For context and information on past Neuberger Berman actions regarding Nuance, please click here.
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