ISS backs investor's board nominees against Stock Spirits' wishes

May 11 (Reuters) - A leading investor advisory firm has urged Stock Spirits Group shareholders to back two directors nominated by the vodka maker's top investor against the wishes of the company's management.

The endorsement by Institutional Shareholder Services (ISS (LSE: 0QRS.L - news) ) is a blow to Stock Spirits (Other OTC: SPPGF - news) , which has asked investors to vote against resolutions by Western Gate Private Investments, saying the additions to the board would require significant extra spending.

Western Gate, which owns a 9.7 percent stake in Stock Spirits, nominated two European drinks industry veterans in April to stand as independent directors at the company's annual meeting on May 23.

It (Other OTC: ITGL - news) was one of a number of measures called for by Western Gate, which said management had run out of ideas about how to stem a loss of market share in Poland, which accounts for more than half its sales.

ISS urged shareholders to support both Western Gate nominees, agreeing that the company could use new perspectives in turning itself round.

Taking into account issues including what it called Stock Spirits' failed marketing strategy and management turmoil, "we recommend shareholder support for both nominees," ISS said.

A Stock Spirits spokesman repeated that the company does not view the nominees as independent since they were nominated by Western Gate, and that they don't add significantly to the board's knowledge or expertise.

Even (Taiwan OTC: 6436.TWO - news) though they have significant experience in the drinks industry, neither has worked in Poland or for a listed British company, Stock Spirits said.

Bowing to pressure, the company has already carried out the main change sought by Western Gate, announcing the early retirement of chief executive Chris Heath.

Western Gate is the private family office of Portuguese businessman Luis Amaral, who is also CEO of Eurocash (LSE: 0LTM.L - news) , Stock Spirits' biggest customer in Poland.

ISS recommended shareholders vote against Western Gate's other proposal calling for a board-level review of the company's M&A strategy, noting that a reconstituted board would be able to address this issue itself.

In March, Stock Spirits reported a 22 percent drop in operating profit to 41.7 million euros ($47.5 million) in 2015.

Stock Spirits, which operates mostly in Poland, the Czech Republic and Italy, had cut its full-year profit forecast in November, citing falling demand for flavoured vodka and devaluation of the Polish currency.

Last month, Stock Spirits said it had returned to profit in the first quarter in Poland and reported a 29 percent jump in quarterly revenue.

Stock Spirits' shares were down 0.9 percent in London. ($1 = 0.8773 euros) (Reporting by Esha Vaish in Bengaluru and Martinne Geller in London; editing by Adrian Croft)