Project management company Hill International announced on Thursday the creation of two new board positions as it attempted to fend off pressure from the activist investor Bulldog Investors.
The US-based business, which earns most of its revenue from the Middle East, announced on Thursday that its board had “determined that it is necessary” to postpone the annual general assembly just hours before it was due to take place, then revealed that Irvin Richter, who founded the business in 1976, was to step down as chairman and taken on the title of “chairman emeritus”.
Irvin Richter’s son, David, who took over from Mr Richter as president and chief executive of the company two years ago, has taken on the role of chairman, but relinquished his position as president.
The company also increased the size of its board from nine to 11 members, electing Raouf Ghali, its chief operating officer, and Adam Eiseman to its board. Mr Eiseman is the founder of Lloyd Group, an IT managed services company. Mr Ghaouli, who has become president, has worked for Hill International for more than 20 years.
Two senior vice presidents, chief financial officer John Fanelli III and general counsel William Dengler Jr, have also been promoted to executive vice-president.
The company had faced a challenge to proposals to re-elect three members of its board (including Irvin Richter) from activist shareholder Bulldog Investors, which had raised concerns about excessive executive pay and corporate governance practices.
In particular, Bulldog Investors’ managing partner Philip Goldstein had written to David Richter criticising Hill for awarding Irvin Richter what Mr Goldstein described as “a five-year ‘no show’ contract” as chairman, for which he was paid $1.2m per year, with no requirement that he perform any specific duties. It had also criticised Hill’s financial performance and its rejection of two offers from private equity fund DC Capital Partners – one valuing Hill at US$5.50 per share in May last year and a second at $4.75 per share in December. Its shares closed on Friday at $4.10 per share – up by almost 6 per cent since the start of this year.
DC Capital Partners’ plan had involved merging the company with another building consultancy and reducing its exposure to the Middle East.
Last year, Hill International earned 48 per cent of its $631m worth of consulting fee revenue from the Middle East. It has project management roles on a number of high-profile projects, including the Riyadh and Doha metro schemes, the Lusail Light Rail project in Qatar and the Dubai Parks and Resorts project.
Earlier this month, David Richter said that he expected the company’s Middle East operations to return to growth next year, although a lack of new work in Oman meant it was looking to reduce the resources it is dedicating to the sultanate.
Following the postponement of its assembly, the company said its board will shortly announce a new date, time and location for the meeting after it has been agreed.
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