Maybe First Financial Northwest won't need to dump the Junior Mints in favor of hard candy after all.

Proxy advisory firm Institutional Shareholder Services recommended Monday that its shareholders vote in favor of the Renton, Wash., company's board nominees — and reject the nominee offered by activist investor Joseph Stilwell.

Stilwell's nominee, Spencer Schneider, quit First Financial's board after the other directors refused to implement a series of austerity measures, including serving only hard candy at the annual meeting as a symbol of its

determination to cut expenses. Last month, Stilwell argued that First Financial's executives are overpaid and that the $1.1 billion-asset company should sell itself.

First Financial's management has "responded to the dissident's criticisms with what appears a reasonable openness to change, and the scale of compensation the board has approved does not appear to be out of line with general market practice," ISS said in its report. The excerpt was included in a press release issued Monday by First Financial.

ISS also recommended that shareholders approve the compensation packages of First Financial management team as part of a nonbinding say-on-pay vote.

The proxy battle between Stilwell, who owns 8.5% of First Financial's common stock, and the banking company has become nasty at times. In one letter to shareholders, Stilwell called the company's leaders "idiots" who are "deficient in judgment or lacking in character."

First Financial Northwest (FFNW) holds its annual meeting on May 24 in Renton.

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