One of First Niagara Financial Group's directors has stepped down from the board's audit committee after a pair of independent proxy advisory firms questioned his independence from management and recommended that shareholders vote against him.
The decision by the bank and director Carl A. Florio -- who remains a board member -- shows the power and influence of the advisory firms, whose recommendations about corporate elections and resolutions are often followed by institutional shareholders, such as pensions and other funds. And it shows the importance given to the audit committee, which is seen as the board's internal watchdog over management.
In a filing with the Securities and Exchange Commission, First Niagara said Institutional Shareholder Services and Glass, Lewis & Co. had both recommended that shareholders withhold their votes to re-elect Florio.
The reason given, according to the bank, was that he was not considered an "independent director" by their standards and was not suitable to serve on the audit committee because he had served as the bank's Eastern New York market president until January 2008. For the advisory firms, that meant he was still "affiliated" with First Niagara, which in 2004 acquired the bank Florio had led in the Albany area.
Florio, who has been a director since January 2009, does still meet the independent director standards as set by Nasdaq, the bank noted, and the board still supports him.
The board's nominating committee will nominate another existing director, who meets the standards of the two proxy advisory firms, to replace Florio, who remains a candidate for re-election to the board.