By Phil Wahba

NEW YORK (Reuters) - Shareholder advisory firm
Glass Lewis & Co on Wednesday urged Barnes & Noble Inc
shareholders to side with the company in its proxy battle with
billionaire investor Ron Burkle.

Glass Lewis recommended that shareholders support the
bookseller's slate of three directors -- Leonard Riggio, Barnes
& Noble's chairman, founder and top shareholder, and two
outside directors -- at the company's annual meeting on Sept.
28.

It also said shareholders should reject Burkle's plan to
change the company's anti-takeover poison pill at the annual
meeting.

Burkle has nominated himself and two others for election to
the board for three-year terms.

"We believe that incumbent management, with access to more
and better information regarding the company, should be given
the benefit of the doubt regarding its strategic business
decisions," Glass Lewis wrote in its recommendation.

Burkle, whose Yucaipa Companies owns 18.8 percent of the
retailer's shares and is its second-largest shareholder, last
month launched a proxy war against Riggio and the company,
charging Riggio has mismanaged Barnes & Noble for his own
benefit. Riggio owns 28.2 percent of shares.

In a statement, Yucaipa said that Glass Lewis made errors
of fact in its analysis and said it hoped the firm would
reconsider its recommendation.

"Leonard Riggio and his family have enriched themselves
disproportionately at the expense of other stockholders with
the blessing of Mr. Riggio's hand-picked board," Yucaipa's
statement said.

Glass Lewis found in its analysis that Barnes & Noble
overpays its executives and has underperformed its peers,
echoing criticisms Burkle has made.

But Glass Lewis said Burkle's plans to turn around Barnes &
Noble, which has contended with a long-term decline in sales of
physical books and a 40 percent drop in the value of its shares
in the past year, were "light on detail and redundant to the
board's own efforts."

In a statement, Barnes & Noble said Glass Lewis' analysis
"concludes that Mr. Burkle and his nominees have not offered a
compelling plan or strategy."

Separately, Bank of America Merrill Lynch analyst Alan
Rifkin earlier on Wednesday downgraded Barnes & Noble shares to
"underperform" from "neutral," citing ongoing softness in
retail sales and a "deteriorating" balance sheet.

Burkle is asking shareholders to vote to raise the
threshold at which the largest U.S bookstore chain's poison
pill is triggered to 30 percent of shares from 20 percent.

Barnes & Noble put the pill in place in November after
Burkle nearly doubled his stake in a matter of days.

Glass Lewis agreed with Barnes & Noble that the lower
threshold would prevent Burkle from teaming up with
institutional investor Aletheia Research & Management, which
owns 15.1 percent of shares, to take over the retailer without
paying shareholders a premium.

Yucaipa has repeatedly denied Barnes & Noble's contention
that Burkle is seeking to take control and is in cahoots with
Aletheia.

Barnes & Noble put itself up for sale last month and Riggio
said at the time he would consider making a bid to take the
company private as part of a larger investor group.

(For a timeline of key events in the fight between Barnes &
Noble and Burkle, please click on )

A representative for Yucaipa did not return requests for
comments about the Glass Lewis recommendations.

Barnes & Noble shares were 0.4 percent at $15.93 in
afternoon trading.
(Reporting by Phil Wahba; additional reporting by Jonathan
Stempel; Editing by Dave Zimmerman, Bernard Orr and Steve
Orlofsky)