The board of bwin.party digital entertainment has urged its shareholders to vote against all of the resolutions proposed by activist investor SpringOwl, including its four nominees to the board, claiming that the appointments are not in the best interests of the company.

SpringOwl gained the right to nominate one individual to the bwin.party board after it acquired a 6.1 per cent stake in the business from PartyGaming founders Ruth Parasol and Russell DeLeon.

Earlier this month however, SpringOwl sought to nominate four individuals to the board, in addition to its one nomination, giving the operator five SpringOwl-appointed directors in total.

The nominees are internet entrepreneur and reputation management specialist Michael Fertik; lawyer Francis Grady of the law firm Grady & Riley LLP; venture capitalist Kalendu Patel, and Steve Rittvo of advisory and investment company the Innovation Group.

“On the limited information presented to date by SpringOwl on each of the proposed director nominees, and having consulted with many of its leading shareholders and depositary interest holders, the board is recommending that shareholders and depositary interest holders vote against the SpringOwl resolutions,” bwin.party said in a statement Friday.

The board’s nomination committee explained that it needed sufficient information and time to interview any candidate to assess their suitability and qualifications to serve as a director.

It said that it had been provided with very little information of each of SpringOwl’s four nominees, highlighting the fact that each person’s background is especially important as they may have to be licensed under the terms of online gaming regulations in the US.

Furthermore, the board said, the requisition documentation provided by SpringOwl did not include any justification as to why the appointment of the quartet was in the best interests of the company and shareholders. It did not detail their qualifications, or even state in which capacity the four were being nominated.

bwin.party also revealed that in March, SpringOwl had proposed four individuals to the board in private – three of whom were different from those proposed a month later. The original four were put forward at a time when the board was looking to recruit a chairman or senior independent director, and each person was evaluated with the aid of executive search and consultancy Spencer Stuart. None were found to be qualified to serve in either role.

It also highlighted more practical issues with the nominations. The board said that all four nominees were male, at a time when the company was looking to appoint a second woman to the board (after Sylvia Coleman) in line with UK and European corporate governance best practice.

In addition, it said that should all four nominees be appointed and SpringOwl exercised its right to a further nomination, the board would have 14 members in total - a number that the board and leading shareholders have previously viewed as too large following the company’s merger in 2011 (at which time it comprised of 14 members).

“SpringOwl's proposal to increase the size of the Board to 13 or 14 members would therefore result in a more unwieldy decision-making forum as well as add extra cost to the company,” the board explained.

The board also noted that SpringOwl was yet to exercise its right to nominate an individual to the board, saying this was the most appropriate way for the activist to have its views represented.

“The Board does not believe that it is in the best interests of the company and its shareholders and depositary interest holders for a minority shareholder, holding only 5.25 per cent of the company's voting share capital, to nominate up to five directors onto the Board,” it added.

bwin.party also said that it had maintained regular dialogue with SpringOwl since it finalised the acquisition of its 6.1 per cent stake, which has since been reduced to 5.2 per cent.

“The board has also encouraged SpringOwl to set out its views on the direction of the company,” the board explained. “SpringOwl's plan to add four, possibly five additional directors to the board has not been supported by any constructive views on the company's future, business strategy or how it intends to improve the group's prospects.”

However despite strongly stating its opposition to the four nominations, the board has said that it will evaluate each nominee as part of a performance review conducted in accordance with the UK Corporate Governance Code.

As part of the exercise, bwin.party will work alongside Spencer Stuart and has requested additional information from SpringOwl about each nominee. It will also invite the four to an interview.

This, it said, would help ascertain whether “whether they can be deemed independent and what additional experience and knowledge they might bring to the board that could benefit the board's deliberations and decision-making process.”

bwin.party’s response comes as SpringOwl, led by US gaming analyst Jason Ader, has stepped up its campaign to make high-level changes to the operator with the launch of the Savebwinparty.com site. It outlines where Ader feels the current management team has failed, and includes short biographies of each board nominee.

It is being represented by controversial public relations firm 5WPR, which has previously worked with a diverse range of clients including musician Snoop Dogg, book retailer Barnes & Noble, softcore pornography franchise Girls Gone Wild and Evangelical Christian groups including the Christian Coalition of America.

Shares in bwin.party digital entertainment plc (Co.Data) (LSE:BPTY) are currently trading down 0.62 per cent at 127.20 pence per share in London this morning, having gained 1.99 per cent in trading yesterday.

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