Institutional Shareholder Services (ISS) has cautioned against allowing Simpson Oil to take control of Parkland Corporation’s board, despite acknowledging the need for change at the Calgary-based fuel retailer and refiner.

ISS, a leading proxy advisory firm, recommended that shareholders vote for a mixed slate: Six director nominees from Simpson Oil and seven from Parkland management. Simpson, which owns just under 20% of Parkland’s shares, has been pushing to appoint nine of its nominees to the board at the upcoming May 6 shareholder meeting.

“There is a clear case for substantial change,” ISS stated. “However, the bar for a control slate is high, and the dissident [Simpson] has not cleared it outright. At this stage, the board needs to be reconfigured to ensure that the CEO search and the strategic review are carried out in accordance with the best interests of shareholders.”

The year-long standoff between Parkland and the Cayman Islands-based investor has intensified in recent months. Under mounting shareholder pressure, Parkland announced a strategic review in March, including a potential sale of the company. CEO Bob Espey also revealed plans to step down before year-end.

Parkland intends to reduce its board to 11 members from 13 members by the end of 2026. Simpson could still gain control of the board through the reduction, but ISS suggested the risk pf that scenario is justified.

“The risk of this outcome is outweighed by the need for substantial change,” the advisory firm wrote. “Moreover, the downside if the dissident secures control is limited, as the dissident’s plan appears to be well-reasoned, despite lacking the depth that shareholders generally require in order to be comfortable supporting a control slate.”

A second advisory firm, Glass Lewis, similarly argued against a full board takeover but flipped the proposed balance, recommending seven seats for Simpson nominees and six for Parkland’s.

The battle over Parkland’s direction and governance continues to unfold ahead of the crucial shareholder vote.

Simpson previously called for the entire board to be replaced. However, Glass Lewis dismissed that idea in its report, contending that Parkland management had nominated experience dismissed and qualified individuals.

Glass Lewis that Parkland’s board has been refreshed in recent weeks.

Parkland operates about 4,000 gas stations and electric-vehicle charging sites across Canada, the U.S., and the Caribbean. The company also owns the On the Run convenience-store chain and M&M Food Market, along with a refinery in Burnaby, B.C.

Pictured: On the Run convenience store.

Photo: Parkland

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