Hedge fund TCI will vote against Safran's revised offer for Zodiac Aerospace, even after a fierce battle against the deal which got the French company to lower its offer and make changes to its corporate governance. After Zodiac said this week it would revise down its offer, TCI declared its governance concerns about the deal had been addressed. This included the structure of the shareholder vote on the deal, alleged preferential treatment of Zodiac's biggest shareholders, and a lack of independent board directors. However, TCI still believes the deal is poor and will vote against it in June. It wants Safran's management to restructure the way they will be paid, if the deal succeeds, to better align their incentives with the integration of Zodiac being a long-term success. "We would look more favorably on the deal if a new management compensation plan is established that explicitly ties a large part of management's bonus to the achievement of Safran's own target for the deal," the hedge fund said. TCI added that the headline 15% reduction in Safran's offer for Zodiac's equity was in effect a 26% reduction, due to a change in the exchange ratio used to calculate how many shares in Safran each Zodiac investor would receive in the deal. TCI's act of defiance comes as the jump in Safran's value in recent months has awarded the $14 billion hedge fund a 19.4% gain net of fees this year, making it one of the best performing large funds in 2017.
Arconic Inc. (ARNC) shareholders elected three of Elliott Management Corp.'s nominees to its board of directors, according to a preliminary vote count after the company's annual meeting on Thursday. Elliott reached a deal with Arconic on Monday, ending an extended battle for control of the board. The New York hedge fund, which launched its public campaign in January, argued that the specialty metals producer needs new leadership and that its performance had missed targets and straggled peers. Elliott's elected nominees are Christopher Ayers, former CEO of specialty steel wire ropes maker WireCo WorldGroup Inc.; Carlyle Group LP Operating Executive Elmer Doty; and Patrice Merrin, who currently serves on the board of commodities trading group Glencore Plc. Arconic's nominees—David Hess, Arconic's interim CEO; and Ulrich Schmidt, former CFO of aircraft parts maker Spirit AeroSystems—were also elected, Arconic confirmed. In addition, former Boeing Commercial Airplanes chief Jim Albaugh was appointed to fill a vacant director seat.
FrontFour Capital Group and its partner, Sandpiper Group, will nominate three directors to the board of Granite Real Estate Investment Trust after talks for change stalled earlier this month. "Over the past five-year period, the current board has overseen and approved what we believe to be a culture of entitlement," FrontFour co-founder Zachary George and Sandpiper Group CEO Samir Manji wrote in a letter to unitholders filed with regulators on Friday morning. "We have received significant unsolicited support from unitholders who are frustrated with Granite's failure to meet its own strategic objectives, the egregious board compensation, and the bloated cost structure." Connecticut-based FrontFour and Vancouver-based Sandpiper collectively own 6.2% of Granite, Canada's largest industrial real estate landlord. The investors said they would nominate Manji plus real estate veterans Al Mawani, former CEO of Calloway Real Estate Investment Trust, and Peter Aghar, former president of real estate private equity firm KingSett Capital, to Granite's board at its annual general meeting on June 15. Their slate will compete against one put forth by Granite's board last week that includes two new members to fill vacancies. FrontFour and Sandpiper also have proposed a plan that includes slashing the company's expenses by C$10 million by the end of 2017 and boosting its leverage to about 40% from 17% to help it pursue acquisitions. They also want to improve the company's disclosure.
Daniel Loeb's Third Point revealed a new presentation on Wednesday that calls for Dow Chemical (DOW) and DuPont (DD)—the chemicals behemoths that are planning a $143 billion consolidation—to consider splitting into as many as six publicly traded companies. The hedge fund argues that management's current plan, which would break the combined entity into three, fails to maximize shareholder value. Dow and DuPont agreed to merge in late 2015 and announced a plan to split into three businesses: plastics and related materials, agricultural chemicals and seeds, and specialized chemicals. Earlier this month, however, the companies' independent directors said they will review those plans once the merger is completed and that both boards had agreed to "conduct a comprehensive review of the business composition of each division." Third Point claims that changing the structure of the spin-offs could secure as much as $20 billion in additional value. Under its proposal, the specialty products company would have four separate business divisions that could each become public companies or be sold off. "We believe this portfolio reshuffling will lead to a more appropriate fit between assets and will unlock significant value for shareholders," Third Point said. The hedge fund also addressed issues of pay and stock buybacks, noting management teams need compensation that is not linked to the performance of the other businesses. Additionally, it said the board should return roughly $40 billion of "excess capital" to shareholders within two years of closing the deal by further cutting costs.
On May 24, Institutional Shareholder Services (ISS) recommended that shareholders of Buffalo Wild Wings (BWLD) vote for board directors nominated by Marcato Capital Management at the company's June 2 annual meeting. The proxy adviser said in its research report, "The dissident has presented a compelling case that additional board change is warranted." The company's shares rose over 6% to $155.71 on news of the report. ISS is supporting Marcato nominees Mick McGuire, the hedge fund's founder, and Scott Bergren, former CEO of the Yum Brands' (YUM) restaurant chain Pizza Hut. However, ISS did not recommend that shareholders support Marcato nominee Lee Sanders, former chief development officer at TGI Fridays. It also supports board nominee Sam Rovit, CEO of CTI Foods and a former executive at Kraft Foods, who was originally nominated by Marcato, then later nominated by the company as well, and is running for a board seat uncontested.
The online lender OnDeck (ONDK) is facing pressure from investors as it seeks to cut costs in an effort to turn a profit by the end of the year. Since its initial public offering in December 2014, the New York-based company has made money in only two of 10 quarters, taking a hit from rising funding costs and bigger provisions for bad loans. Earlier this month, OnDeck said it would shift its focus from growth to profitability, reducing its staff by about a quarter, tightening underwriting standards, and holding more of its loans on its own balance sheet. Mario Cibelli, managing partner at Marathon Partners Equity Management, said, "Clearly the additional cuts are a step in the right direction ... but my instinct is that this is not enough. As we've pointed out, the level of overhead still seems unhinged from reality." Meanwhile, EJF Capital, which has built a 9% stake in the company, has said it may seek talks with management. OnDeck's stock has fallen 27% this year, and Cibelli, whose firm is its eight-largest shareholder with 2%, said he may add to his stake if the stock keeps falling. "I'd full well acknowledge it is a risky situation," Cibelli said. "I'm more interested in the company it could potentially become than the company it is."
PPG Industries (PPG) head Michael McGarry said on Tuesday the U.S. company remains interested in working out a "consensual" deal with Akzo Nobel, even as the Dutch paintmaker resists its €26.3 billion ($29.5 billion) takeover offer. McGarry, in the Netherlands for a shareholder lawsuit against Akzo on Monday, said he had never before witnessed such hostility between a company and its shareholders. However, "PPG remains very interested in pursuing a privately negotiated, substantive deal with Akzo Nobel," he said. On Monday, several top Akzo shareholders led by Elliott Advisors filed suit against the company over Akzo management's refusal to engage in talks. PPG is in discussions with Dutch market regulator AFM about extending a June 1 deadline to submit a formal bid for Akzo while it awaits the court's decision, most likely on May 29. Shares in Akzo traded 1% higher at €76.47 early Tuesday, far below PPG's €96.75-per-share bid proposal extended on April 20—indicating shareholders are doubtful a PPG offer will ultimately succeed. Akzo's complaints about a PPG takeover include that it would be bad for employees, that it would face antitrust risks, and that Akzo should stay Dutch in the country's national interest.
HSS Hire announced on May 22 that Steve Ashmore would become its new CEO in June. He will succeed John Gill, who will formally step down on May 23 after holding the position for 19 months. Ashmore will become the London-listed tool hire group's second CEO in two years. Losses in the company's core businesses have pushed shares down by 75% since its 2015 listing and nearly 50% in the past 12 months. In April, HSS Chairman Alan Peterson said Gill had led the company "through a period of significant change as we implemented our new operating model," but a new CEO was needed as HSS shifts focus to expanding sales. HSS has significantly underperformed its rival Speedy Hire in the past 12 months. The two firms abandoned talks of a merger in late 2015, but some analysts hope the discussion is revived. "A gigantic gulf has opened between the two since Speedy's new chief executive joined" in mid-2015, said Beaufort Securities analyst Barry Gibb. "Speedy always said to us that the timing wasn't right [for a deal with HSS]. We have some hope they are still considering taking another pop at HSS." Toscafund, which holds a nearly 20% stake in Speedy, objected to the company's decision not to pursue a merger with HSS. At the time of the merger discussions, the investor held a 4% stake in HSS, which has grown to 26% since January 2016, making it HSS's largest shareholder other than former private equity owners Exponent.
Elliott Management Corp. petitioned a Dutch court on Monday to clear the way for a shareholder vote to remove Akzo Nobel NV Chairman Antony Burgmans. The fund alleges that Burgmans failed shareholders by refusing talks and rejecting three takeover offers by rival PPG Industries Inc. (PPG), the latest worth about $29.5 billion. The court case comes 10 days before PPG's offensive could take a hostile turn, with the U.S. company facing a June 1 deadline to submit an offer document to the Dutch market regulator. If it is approved, PPG head Michael McGarry would have about a week to take the offer directly to shareholders or walk away for six months. The hearing also follows weeks of campaigning by Elliott to push Akzo Nobel to enter talks with PPG, a move the Dutch company has rejected. Elliott invested €1 billion ($1.1 billion) in Akzo Nobel, according to company attorney Jan Willem de Groot, who said there is a "crisis of confidence" among shareholders in the Dutch firm. The lawyer is asking the court to reverse Akzo Nobel's rejection of a request by a group of shareholders for an extraordinary meeting to vote on ousting Burgmans. At the end of Monday's hearing, the judge is expected to give a date for a ruling, which will likely be within days. In a separate petition, Elliott asked the court to investigate Akzo Nobel's management policies. Any probe could take more than six months and if the court found evidence of mismanagement, executives could be removed.
Richmond Brothers Inc., an investment advisor and wealth management firm that is the largest beneficial owner of Rockwell Medical Inc. (RMTI), along with Mark H. Ravich, has laid out the case for electing Ravich to the board at the annual meeting of shareholders next month. The letter to Rockwell shareholders cites shortcomings at the company, including "the failure to monetize two approved and promising drugs, abysmal corporate governance practices, egregious executive compensation practices, a complete lack of regard for shareholder concerns, disinterest in communicating with shareholders and the market, and perhaps most importantly, a lack of independent oversight." The letter insists that Ravich "has relevant investment and board experience, and is personally invested in the Company. We believe his qualifications blow away those of David Domzalski, who in our view would be nothing more than another crony of Rockwell Chairman and CEO Rob Chioini." Ravich and Richmond Brothers, together with their affiliates, own 11.8% of Rockwell's outstanding common stock.
Jia Yueting, founder of Chinese technology and entertainment company LeEco Holdings, is exiting his role as CEO of the listed video business following shareholder demand for stronger corporate governance. The billionaire will remain chairman of Leshi Internet Information & Technology Corp., according to a Shenzhen Stock Exchange filing. The move comes after China Bridge Capital, which was Leshi's second-biggest investor last year, urged Jia to decelerate LeEco's expansion and let new management bring focus back to the company. The investment firm sold more than 60 million shares in Leshi during the first quarter of this year, according to the company's latest earnings report. LeEco has been dealing with a decline in funds and a share-trade halt that has forced it to reexamine its business. The company started out as a video-streaming site and rapidly expanded in multiple directions. LeEco last summer announced a deal to purchase U.S. company Vizio Inc. for $2 billion, but it pulled out of the deal in April. Former Lenovo executive Liang Jun, who is currently president of Leshi, will step in as CEO. Meanwhile, Jia will focus on corporate governance, strategic planning, and core production innovation, according to the filing, although it was unclear if there was any change in his position at LeEco.
Land & Buildings Investment Management LLC announced that it has issued an open letter to shareholders of Taubman Centers Inc. (TCO) addressing what it calls misleading excuses made by CEO and Chairman Bobby Taubman for the company's poor performance. According to the letter, "We urge shareholders not to be misled and to help put the Company back on track towards profitability by electing Land and Buildings' highly-qualified nominees at the upcoming annual meeting." The letter specifically cited undisciplined capital allocation; poor operations; inferior total returns; abysmal corporate governance; and a staggered, clubby, and long-tenured board. "Taubman wants investors to believe that it has a longstanding commitment to enhancing corporate governance, yet under the supervision of Lead Director Myron Ullman the Company maintains a dual-class share structure, a staggered, long-tenured (16 years), interconnected Board and has repeatedly ignored shareholder concerns. Taubman has earned the worst corporate governance score in the REIT industry, according to leading independent real estate research firm Green Street Advisors, a true feat given the pervasive poor corporate governance in the REIT sector relative to the rest of Corporate America," said the letter. "Land and Buildings' nominees Charles Elson and Jonathan Litt have proven track records of bringing accountability to boardrooms in numerous situations resulting in strong shareholder returns. ... With a modernized governance structure, a focus on implementing best in class operating strategies and a rigorous capital allocation policy – along with a culture of accountability in all aspects of the Company – Taubman should be able to close the substantial gap to underlying asset value, which we estimate at $106 per share, meaning a 70% upside from current levels."
Bill Ackman said on Thursday he is ready for a comeback after a disastrous investment forced his hedge fund firm to return to basics. "I'm incredibly focused. I've got something to prove," he told hedge fund managers and investors at the annual SkyBridge Capital industry conference, known as SALT, in Las Vegas. Ackman's bet on Valeant Pharmaceuticals International Inc. (VRX), which he divested from in March, played a significant role in two years of double-digit portfolio losses for his Pershing Square Capital Management. Ackman's portfolio is posting gains this year, and he said he probably will add at least two new market bets that are similar to the firm's early winners. "The next investment you will hear from us isn't going to be some successful company trading near its highs," he vowed. "It's going to be a huge opportunity for efficiency, better deployment of capital, a change in strategy, some management changes needed, but the business quality is going to be extremely high." Ackman was open about the lessons learned from Valeant, which he bought into in early 2015 before walking away with a multibillion-dollar loss 18 months later. He admitted that he had not expected Valeant's business to be so unstable and that he relied too much on management, but he said the mistake has enabled Pershing to return to a real focus on its core.
Liquor Stores N.A. Ltd., North America's largest publicly traded liquor retailer, has responded to the analysis and strategy of PointNorth Capital, emphasizing what it says are a number of serious flaws. PointNorth recently acquired a 9.7% stake in the company and has launched a proxy battle for control of the board. This comes just weeks after the investor rejected an offer from Liquor Stores for two board seats. According to Liquor Stores Chairman Jim Dinning, "Over the past six months, we repeatedly asked PointNorth to share its advice and constructive criticisms so we could either use its insights to improve our operations or help it to better understand our business. PointNorth consistently declined to share its thinking. Now we know why: PointNorth's analysis is riddled with flaws. The biggest flaw is its assumption that what might have worked in government-controlled provincial monopolies, that by definition have no competitors, would work in our six highly competitive markets. Government monopolies control both wholesale and retail operations, set prices, and adjust margins at will without having to compete with discounters—or anyone, for that matter." The company argues that applying a monopoly business strategy would erode gross margin. Dinning added, "Shareholders only have to look at the track records of PointNorth's principals to see the value destruction that occurs from a defective strategy. We urge Liquor Stores shareholders to bear that in mind as they evaluate PointNorth's faulty analysis, misleading claims, and wishful thinking. ... The question is whether PointNorth truly doesn't understand our business, or is trying to mislead shareholders into giving up control by electing their majority slate."
The Council of Institutional Investors (CII) sent a letter to every member of the House of Representatives on Wednesday urging them to oppose the Financial Choice Act, arguing it will harm shareholder rights. The letter was signed by 53 pensions, unions, and other institutional investors that collectively hold more than $4 trillion in assets. "The Choice Act threatens fundamental investor protections that keep U.S. markets safe, fair, and vibrant," said Amy Borus, deputy director at CII. The bill, which passed a House committee vote May 4, aims to roll back provisions of the 2002 Sarbanes-Oxley corporate governance law and 2010 Dodd-Frank financial overhaul law that some GOP lawmakers say hinder economic growth. CII's letter outlines five ways the bill would do damage, such as by hiking the cost of shareholder proposals. "This raises the bar for entry to ordinary investors and would make shareholder proposals a billionaire investor's privilege, when it should be a right for all investors," said Anne Simpson of Calpers, the biggest U.S. public pension fund. "Many issues raised by small investors have become mainstream good practice," she said. "If this channel is closed off, investors will have to exercise their votes in other ways." The letter claims the bill also would reduce limits on inappropriate executive pay practices, constrain shareholder rights in board elections, and inflate the cost of proxy advisers. It would also hinder the Securities and Exchange Commission's oversight of financial markets by requiring "excessive" cost-benefit analysis, the letter added.
On May 17, Jonathan Litt's Land & Buildings Investment Management LLC filed suit against Taubman Centers Inc. (TCO) in U.S. District Court for the Eastern District of Ann Arbor, challenging the Taubman family's control of the board. The suit is part of an ongoing proxy fight at the mall operator and marks the latest attempt by Land & Buildings to shake up Taubman's board. The investor alleges that the family's ownership of the company's preferred shares, or voting shares, violates the ownership guidelines set in the company's charter and that the company's proxy materials contain materially false and misleading statements about the ownership and voting power of the Taubmans. According to the suit, the family owns 29.3% of voting shares, while the charter restricts ownership to 8.23%. The suit seeks to limit the Taubman family's role in the company, blaming its "poor performance" on the family's dominance of the board. Litt started a proxy battle in April to oust Chairman, CEO, and President Robert Taubman and Myron Ullman III from the board. Both are up for re-election during the June 1 annual shareholder meeting. Litt seeks board seats for himself and Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware.
UNITE HERE reports that Hospitality Properties Trust (HPT) abruptly changed its decision to begin annual directors elections for its entire board, reverting back to multi-year, staggered terms. The move is a blow to shareholders who voted for five years in support of annual director elections, then voted for three years to protect this right from a Maryland state law loophole. Investors have shown overwhelming support for annual director elections at HPT: large majorities of voting shareholders (75-91% of votes cast) backed a CalPERS proposal to declassify HPT's board every year between 2009 and 2013. HPT's board did not initiate declassification of its board until 2014. UNITE HERE then submitted a shareholder proposal recommending the board opt out of Maryland's Unsolicited Takeovers Act (MUTA), which allows a board to reclassify without shareholder approval, among other takeover defenses. HPT shareholders also supported these proposals with large majorities (77%-97% of votes cast) every year between 2014 and 2016. Shareholders are set to vote on the same proposal in 2017. UNITE HERE also points out that no incumbent HPT director nominee over the past two years has won the support of a voting majority of shareholders, but all were reappointed. UNITE HERE urges shareholders to support its proposal to opt out of MUTA, to back its proposal to adopt proxy access, and to vote against all director nominees who just removed shareholders' right to elect directors annually.
Private-equity firms rarely engage in hostile takeovers and other acts of aggression, but lately they have been taking notes from shareholder activists. Late Monday, buyout giant TPG turned heads by announcing a 4.3% stake in Etsy Inc. (ETSY) and said it had contacted the struggling company "to offer to engage in discussions regarding strategic alternatives"—language reminiscent of activist investors, which typically purchase small stakes in public companies and push for changes. Similarly, KKR & Co. approached EMC Corp. in late 2015 and revealed it had bought $250 million of the data-storage company's stock and offered ideas on how to improve the business. EMC agreed to sell itself to Dell Inc. shortly after. The year before, private-equity firm Golden Gate Capital acquired a 9.5% stake in Ann Inc. and said it would seek talks with management about ideas to boost the stock. The following year, Ann was sold to Ascena Retail Group Inc. Such moves fall short of the full takeovers traditionally associated with private-equity firms, which have shunned hostile bids to avoid estranging corporate executives they would rather have as partners. But with attractively priced buyouts more elusive, firms are being forced to get more creative–and in some cases more aggressive–in seeking out deals. TPG and its partner Dragoneer Investment Group's emergence at Etsy followed a management shakeup earlier this month, just hours after Black-and-White Capital LP, which owns about 2% of Etsy, released a letter criticizing the company.
ValueAct Capital Management LP's Jeffrey Ubben is turning over his $16 billion portfolio to the firm's president, Mason Morfit. Ubben has tapped Morfit to serve as ValueAct's chief investment officer, giving him the final say on what and when the fund buys and sells. Ubben will remain CEO. The transition marks a significant rite of passage, because few activist investors have structured their firms to allow a new generation of leaders to take control. Young partners frequently leave large, established firms to start their own funds. However, Ubben, age 55, is stepping back well before many of his peers; for instance, Carl Icahn is 81, and Stephen Schwarzman, founder of Blackstone Group LP, recently turned 70. Ubben indicated in an interview that he did not want ValueAct to suffer the fate of his father's investment firm, which collapsed when its founders left. "This is not something you can do at the end of your term. This is something you have to do well in advance," he said. "When I'm sitting on a talent like Mason, I'm just not going to let him go, and Mason is going to want to evolve." Furthermore, Ubben said he wants activism to mature into an asset class, like private equity, providing long-term value to companies rather than a quick profit for activists.
On May 16, Elliott Management increased pressure on BHP Billiton (BBL) to enact strategic changes, calling for an independent review of the mining giant's petroleum business. Elliott, which has a 4.1% stake in the company's London-listed arm, said in a letter to management, "There is extremely broad and deep-rooted support for pro-active steps to be taken by management to achieve an optimal value outcome for BHP's petroleum business following a formal open review." Elliott has been pushing for BHP to collapse its dual-listed structure, spin off its U.S. oil and gas assets, and boost returns to shareholders—moves which BHP has rejected. Speaking at a Bank of America Merrill Lynch mining conference in Barcelona, BHP CEO Andrew Mackenzie would not say whether shale oil and gas would stay in the portfolio. "If there is a natural owner out there who believes more upside can be achieved within this shale business than we do, then we will be more than happy to talk to them," he said. However, BHP is divesting non-core parts of its U.S. shale assets. Meanwhile, Elliott backtracked on its proposal for BHP to have its main listing in London, saying it could remain incorporated in Australia and stay an Australian tax resident, retaining full listings on the Australian and London bourses. BHP has said the costs of scrapping its dual-listed structure significantly outweigh the benefits.
Jeff Ubben is stepping down from daily oversight of ValueAct's portfolio and passing on leadership to his long-time partner Mason Morfit. Ubben will stay CEO but specialize in finding new investments and serving on boards, according to a letter to investors on Monday. Morfit, who has been a partner since he was 27 and is now president of the firm, will become chief investment officer in July. Ubben told the Financial Times he handpicked Morfit as his replacement years ago. "Why is it happening now? It's because 10 years ago I told Mason, you're going to be the portfolio manager, and when the clock struck midnight, he looked at me and pointed to his watch," Ubben said. "If you keep a jump ball in place on succession, it's not a very fun environment. It was better for investment performance because you don't have politics." As the hedge fund industry ages, many founders are struggling with who will succeed them, a transition that has only been handled smoothly by a handful of funds. ValueAct, which was founded in 2000, tends to avoid public battles in preference of securing board representation and advocating internally for a turnaround, as it has at current holdings including Microsoft and Rolls-Royce. Morfit served on his first corporate board for ValueAct at age 29 and is on the board of Microsoft, where ValueAct's pressure led to the removal of Steve Ballmer as CEO.
The board of Liquor Stores N.A. Ltd. is gearing up for a showdown with PointNorth Capital Inc. in a battle that is expected to determine control of North America's largest publicly traded liquor retailer. A recent letter to shareholders from Edmonton-based Liquor Stores warned that the fund founded by Toronto-based entrepreneur John Bitove plans to launch a proxy battle for control of the company. The public campaign comes after seven months of private negotiations failed to produce an agreement on leadership and strategy at the 252-store chain. The board asked shareholders to support its slate of eight directors at the company's June 20 annual meeting. PointNorth has been successful in past campaigns for changes in leadership and improved financial performance, last year resulting in a board restructuring at Extendicare Inc. When PointNorth disclosed a 10% stake in Liquor Stores last November, the fund said it planned to discuss "operational performance and corporate strategy with the board of directors and management." In a recent regulatory filing, Liquor Stores said it offered two seats on its eight member board to PointNorth nominees "in an effort to avoid a costly and distracting proxy fight." However, in the shareholder letter, the company said, "PointNorth has told us it wants control, but not why change is warranted, or what it would do with that control. Ultimately, PointNorth wants control of your company without offering to pay shareholders a premium."
Brian Duperreault, who became CEO of American International Group Inc. (AIG) on Monday, said he is not planning to break up the company as some investors have called for. "I didn't come here to break the company up. I came here to grow it," he said at AIG's consumer-insurance investor day, adding that the company's multiline structure is beneficial. "Capital will also be deployed to expand and grow our businesses with the goal of building long-term shareholder value." AIG named Duperreault its seventh CEO since 2005 as it struggles with higher-than-expected claims costs. Duperreault, who spent more than two decades at AIG earlier in his career, succeeds Peter Hancock, who announced in March he was leaving due to a lack of support from investors including Carl Icahn. Icahn acquired a stake in AIG in 2015, urging the company to split into three firms: one offering property-casualty coverage, another selling life insurance, and a third guaranteeing mortgages. AIG eventually sold its mortgage-insurance company, United Guaranty Corp. Icahn congratulated AIG in a Twitter post Monday for making some "much-needed" changes. "It is extremely gratifying that the activist strategy continues to create value for all shareholders," he said.
Greenlight Capital Inc. and its affiliates, which own 3.6% of the common stock of General Motors Co. (GM), is mailing a letter today to GM shareholders highlighting the gap between GM's stagnant share price and its intrinsic value. Notably, GM completed its IPO at $33 per share in 2010, and today its shares trade at about $34. Meanwhile, the S&P 500 has more than doubled during that time. Greenlight urges all GM shareholders to vote the green proxy card in favor of its plan to split GM's common stock into two classes of common equity, potentially unlocking billions of dollars in shareholder value, and to support Greenlight's three director nominees, Leo Hindery Jr., Vinit Sethi, and William N. Thorndike Jr.
Johnston Press has responded to shareholder anger by scrapping planned increases to the maximum possible payouts this year to CEO Ashley Highfield and CFO David King. Under a new three-year remuneration policy, Highfield's bonus will remain capped at 120% of his £430,000 salary; the publisher had planned to boost the top payout to 180%, or £774,000. Meanwhile, King's maximum bonus will stay at 100%, rather than the proposed 165%. They did not receive bonuses last year after Johnston Press missed all its performance targets, and the company intended to pay any bonuses this year entirely in cash, arguing that its depressed share price means shareholders would be significantly diluted. However, investors spoke out against the plan after the company's cash reserves were eroded from more than £40 million to £16 million last year. Other than in unspecified "exceptional circumstances," it now plans to pay a third of any bonuses awarded to senior executives in shares, deferred for three years. Johnston Press Chairman Camilla Rhodes said the remuneration committee had "engaged with leading shareholders over the last few months" and received "helpful comments and feedback," and she said the amended policy was "fair" and "necessary for retaining the right talent in order to achieve successful outcomes to the challenges facing the business."
Carl Icahn reportedly backs Brian Duperreault as the next CEO of American International Group (AIG). Sources said Icahn has had Duperreault in mind for more than a year and proposed him as a replacement for outgoing CEO Peter Hancock to members of the board. AIG has had a rough six months as it struggles to match earnings projections, demonstrated by its lackluster fourth-quarter results. In response to the board's dissatisfaction with the company's performance, Hancock was forced to resign after three years at the helm. Icahn, who owns a 4% stake in the company, was known to oppose Hancock as CEO. His support of Duperreault also comes as some analysts say the board brought him in to take an aggressive stance against activist investors. Duperreault is the expected choice to lead the firm, after several decades working at AIG and a stint as CEO at Marsh & McLennan, where he resolved shareholder frustration with the firm's performance and calls for it to be broken up by slashing costs, strengthening the management team, and acquiring smaller firms to improve growth, among other strategies. If Duperreault gets the job at AIG, he will face an uphill battle, as the insurer's profit margins have notably underperformed peers since its near-collapse during the financial crisis.