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Fujifilm Set to Sue Xerox Soon for Scrapping Takeover Deal
" Reuters (05/18/18) Yamazaki, Makiko"

A senior Fujifilm Holdings Corp. executive said on May 18 that the company plans to sue Xerox Corp. (XRX), claiming that it has no legal right to scrap their $6.1 billion merger. "We are currently in talks with lawyers on the schedule for filing the lawsuit and plan to go to court as soon as possible," said COO Kenji Sukeno at an earnings briefing. The deal would merge Xerox into the company's 56-year-old Asia joint venture Fuji Xerox and give Fujifilm control. Xerox backed out of the deal in a settlement with investors Carl Icahn and Darwin Deason. The settlement also included the resignations of Xerox CEO Jeff Jacobson and five other directors.

Blackwells Issues Open Letter to Supervalu Board of Directors in Response to Continued Value Destruction and Entrenchment
" Business Wire (05/17/18)"

Blackwells Capital LLC, which has an approximate 5.2% ownership interest in Supervalu Inc. (SVU), has issued an open letter to the company's board in response to its continued refusals to engage in good faith over proposals to "reverse the continued destruction of shareholder value." The letter states, "In order to unlock value for all shareholders, as we have previously expressed, the Company must change fundamentally, beginning at the Board level. In March, we privately notified you that we intend to nominate six exceptionally talented, independent candidates, who each bring desperately needed experience in retail and wholesale grocery, logistics, sustainability, and corporate turnarounds, as well as fresh perspectives for your boardroom. Rather than enter into a constructive discussion, however, this Board preemptively publicized (only part of) our nomination notice, mischaracterizing our intentions and our rights as a shareholder." Blackwells adds that the company "has yet to give shareholders notice or set a record date for the Supervalu annual meeting, which typically occurs in mid-July." The letter continues, "Enter into constructive discussions about ways to strengthen this Board. Take the time to meet with each of our extraordinary board nominees. Fulfill your fundamental duties by scheduling an annual meeting. Procrastination, delay tactics, and defensive half measures are elements that got us to where we are, not to where we should be. Stop the value destruction for the benefit of all shareholders."

WPP Investor Backs Chairman Over Unpublished Martin Sorrell Report
" The Guardian (05/18/18) Sweney, Mark"

Glass Lewis is advising WPP's (WPP) shareholders to vote against the reappointment of Chairman Roberto Quarta at the annual shareholder meeting in London on June 13. The proxy advisor said it had "severe reservations" about a number of issues, including WPP's failure to publish the outcome of an investigation into allegations of personal misconduct that prompted founder Sir Martin Sorrell to resign. However, WPP's largest shareholder has backed Quarta's decision not to reveal the outcome of the investigation. Harris Associates, which owns an 8% stake in WPP worth more than £1.3 billion, said publication of the report was not important for the future of the business. "We do not agree with Glass Lewis," David Herro, a partner at Harris Associates, said. "In our view the release of the conduct report is not a critical issue." Harris Associates said it was more focused on WPP's hunt for a new chief executive in order to keep the embattled advertising giant on track. "We are more concerned with an orderly succession process and the selection of an excellent and capable chief executive," Herro said. It is understood that WPP has received legal advice that it cannot disclose the details of the allegations against Sorrell under data protection law.

Icahn Contests Bid to Take AmTrust Private, Sending Shares Surging
" MarketWatch (05/18/18) Rapoport, Michael"

Carl Icahn is contesting an attempt by the primary owners of AmTrust Financial Services Inc. (AFSI) to take the company private, arguing the company hasn't treated its public shareholders fairly. Icahn sent a letter to AmTrust Thursday that accused the Karfunkel and Zyskind families, which control the New York-based insurer, of "blatantly taking advantage" of the company's minority shareholders. Icahn owns a 9.38% interest in AmTrust. He has urged the company's board of directors to postpone a shareholder vote on its $2.7 billion going-private deal, currently set for June 4. Icahn went on to accuse AmTrust of "stealthily" setting an April 5 record date for voting on the transaction but neglecting to tell shareholders or the market about it. He said he is reviewing his legal options "to correct the manifest injustice that will occur if the board fails to change the record and special meeting dates."

Appaloosa Gets Permission for Activist Stance With Allergan Stake
" Reuters (05/17/18) Erman, Michael"

David Tepper's Appaloosa Management and two of his funds received Hart-Scott-Rodino anti-trust clearances from the Federal Trade Commission on Wednesday, which could clear the way for the billionaire to become an activist investor in drugmaker Allergan Plc (AGN).  Wells Fargo analyst David Maris said in a research note that Allergan "indicated this clearance provides flexibility to the filer as to whether they want take an activist approach to the investment or not."  Appaloosa LP upped its stake in Allergan to 3.7 million shares from around 3.5 million shares over the last quarter, the firm said in a filing with the Securities and Exchange Commission on Tuesday.  "Allergan welcomes all investments in our company," said spokeswoman Amy Rose, when asked about the clearances.  Allergan launched a strategic review of its business earlier this year.  CEO Brent Saunders said in March the waning stock price required the company to consider all options "with a sense of urgency."  Still, Saunders indicated on the company's earnings conference call last month that he did not feel a fundamental change to the company's strategy was necessary.

Fleetwood Board Under Pressure From Investor
" West Australian (05/17/18) Harvey, Ben"

Fleetwood issued a statement Wednesday advising shareholders that it believed a call for an extraordinary meeting was imminent, and speculation is mounting that Sandon Capital is the major shareholder behind that push. Gabriel Radzyminski-led Sandon, which owns a 5% stake in Fleetwood, has previously called for the company to ditch loss-making arms. Meanwhile, Fleetwood managing director Brad Denison and chairman Phillip Campbell defended their actions in the face of pressure from the dissident shareholder. “The company advises that it has recently received a request for a copy of Fleetwood’s register of members from a substantial shareholder, with the stated intention of using the register to call a shareholder-initiated general meeting of the company,” they wrote in a note to shareholders. “The same shareholder has also previously nominated an individual to be considered for appointment to Fleetwood’s board of directors.” Denison and Campbell said they were searching for new directors and had invited the aggrieved shareholder to be part of that process but had been rebuffed.

DavidsTea Co-Founder's Proxy Battle Goes Cyber With Launch of Website
" Canadian Press (05/17/18)"

DavidsTea's (DTEA) founder has launched a website, called savedtea.com, that summarizes its turnaround plan as part of its proxy fight to gain control of the Montreal-based beverage retailer. Rainy Day Investments Ltd., the holding company of co-founder Herschel Segal, had previously considered taking DavidsTea private, but said in March it will not proceed with plans for a privatization transaction and had no plans to sell its shares. The firm, which owns about 46% of the company's outstanding shares, has proposed a slate of seven nominees to the board. The fight will come to a head at DavidsTea's annual meeting June 14. Segal said in a news release that the current board, from which he resigned in March, is wasting time, resources, and shareholder money exploring strategic alternatives to sell all or part of the company. "Urgent action is needed now to put DavidsTea back on the path to growth and long-term success for the benefit of all shareholders," he said. The company contends Segal wants to take control of the board without paying shareholders a premium for that.

Truston Throws Weight Behind Hyundai Plan
" Korea JoongAng Daily (05/18/18)"

Korean investment firm Truston Asset Management on May 18 voted to support Hyundai Motor Group's corporate restructuring plan, noting that the plan is expected to enhance shareholder value and resolve the controversial cross-shareholding structure. "We recently concluded in our internal meeting that Hyundai Motor's plan to restructure corporate governance is advantageous to us as a shareholder and an investment company," Truston Asset said in a statement. Truston is infamous in Korea for frequently taking opposition positions. According to industry data, 10.2% of Truston's votes between 2012 and 2017 were negative, the highest among domestic investment firms. "There is no evidence that the planned spinoff and merger deteriorates shareholder value," said the investment firm. "The spinoff conforms to domestic law and the merger righteously reflects the company's value," it added. Truston Asset Management holds 0.19% of shares in Hyundai Mobis and 0.09% of shares in Hyundai Glovis. Glass Lewis & Co. and Institutional Shareholder Services recently joined hedge fund Elliott in opposition of Hyundai Motor's plan to spin off Hyundai Mobis' after-sales service and module businesses to Hyundai Glovis. The battle between the automaker and the U.S. investors is likely to continue until May 29, when a final vote is scheduled to occur.

Barclays Investor Urges Trading Shutdown at Investment Bank
" Reuters (05/17/18) Cruise, Sinead; Martin, Ben; White, Lawrence"

Sources say Sherborne Investors' Edward Bramson wants Barclays (BCS) to end most trading activities at its investment bank in an effort to cut costs and increase returns. Bramson, who took a surprise 5% stake in the British lender in February, reportedly is taking aim at investment banking activities that do not directly serve corporate clients. This means Barclays would retain its M&A advisory business and equity and debt capital markets teams but eliminate its cash equities, currency, and fixed income trading desks, the sources say. According to one source, "The trading businesses lack scale, absorb too much risk capital, and deliver too small a return. There is a route back to success and respectability for this bank, and this is to focus on the retail bank, Barclaycard, and the good bits of the corporate and investment bank. Management just have to seize it."

Telecom Italia Boss Says Has Board Support, Elliott Plans Not Discussed
" Reuters (05/16/18) Flak, Agnieszka"

Telecom Italia (TI) CEO Amos Genish said on May 17 that he believes he has the full support of the board to proceed with his three-year strategy plan. He also noted that proposals from Elliott—the fund which recently wrested board control from top shareholder Vivendi—are not being discussed. In addition to the governance overhaul, Elliott has proposed a spin-off and partial sale of a soon-to-be-created network company, a conversion of savings shares, a return to dividends, and asset sales. Genish, whose staying on as CEO is conditional on being able to execute the three-year plan, said, "It's clear (the board support) is there and I feel very comfortable in moving forward with what needs to be done. I'm here for the long run."

KIC May Cancel $50 Million Contract With Elliott Over U.S. Fund's Disputes With Korean Government
" Korean Investors (05/17/18) Jae Yoo, Chang"

The head of Korea Investment Corporation (KIC) said Thursday it is investigating whether Elliott Management's recent move against the South Korean government represents a conflict of interest with the sovereign fund, and may cancel its $50 million entrustment contract with Elliott despite its strong performance. KIC is also closely following South Korean prosecutors' probe into allegations that Elliott violated disclosure rules during its purchase of Samsung C&T shares in 2015. Elliott is seeking compensation from the South Korean government, arguing that it suffered investment losses because of the government's intervention in the 2015 merger of two Samsung units. Elliott opposed the merger, but narrowly failed to block it. "If [Elliott] is involved in an issue which causes a conflict of interest of the South Korean government, or found to have violated a law, we will consider cancelling our contract," KIC's chief executive Heenam Choi said Thursday. KIC allocated $50 million to Elliott in 2010 when the sovereign wealth fund made its first investment in a hedge fund. It is among the world's top-performing hedge funds over the past eight years, said Shinwoo Kang, KIC's chief investment officer. Under the entrustment contract, KIC can terminate the agreement and Elliott must return the committed capital to KIC if the U.S. fund invests 5% or above of its fund's AUM in South Korean assets, it is involved in a conflict of interest with KIC, or it breaks a law.

Elliott Urges Israel's Bezeq to Appoint New CEO, Buy Back Shares
" Reuters (05/17/18) Scheer, Steven"

Elliott Advisors sent a letter to Bezeq Israel Telecom on Thursday calling for a new CEO and a potential share buyback program.  Elliott, which owns a 4.8% stake in Bezeq, has been agitating for change at Israel's largest telecoms group following a securities probe into the company's management and owners.  Bezeq shareholders last month voted to install a new board, removing the controlling shareholder's majority.  In Thursday's letter to new chairman Shlomo Rodav, Elliott said that with the long overdue changes in governance achieved, it recommended the company immediately appoint a new CEO, develop a coherent new business strategy, and seek authorization to buy back shares and consider implementing a buy-back program.  "Shares could be acquired from the market or, if feasible, from the (controlling shareholder) Eurocom Group," Elliott wrote.  The investor said Bezeq should seek authorization to acquire up to 10% of its shares, which it said were trading below analysts' expectations.  Elliott said it would be beneficial for Bezeq to repurchase its own shares and could be funded by a 500 million shekel ($140 million) real estate sale and modest loans.  "We continue to believe that Bezeq is fundamentally a well-positioned and resilient business, where—following a sustained period of poor governance and management—a new leadership team can drive performance improvements and rebuild shareholder value," Elliott said.

Hyundai Motor Chief Pleads for Investor Support in Proxy Fight
" Financial Times (05/17/18) Jung-a, Song"

Hyundai Motor's executives are seeking shareholder support for a restructuring after two proxy advisory firms came out against the plan, aligning with Elliott Management.  Lee Won-hee, CEO of Hyundai Motor, on Thursday asked for shareholder support for the $8.8 billion deal between two of the group's units.  Lim Young-deuk, the president of parts-making unit Hyundai Mobis, made a similar plea to shareholders Wednesday.  But many investors are not buying Hyundai's claim, saying the deal would benefit the controlling family at the expense of Hyundai Mobis shareholders.  Elliott has said it will reject Hyundai's restructuring plan at Hyundai Mobis's general meeting on May 29, and Institutional Shareholder Service and Glass Lewis & Co. have also urged Mobis shareholders to reject the deal.  Foreign investors, which own 49% of Hyundai Mobis, could block the deal if they were united, as it would require a two-thirds majority to pass.  Hyundai's Chung family and the group's affiliates own roughly 30% of Hyundai Mobis.  Analysts said the state-run National Pension Service (NPS), with a 10% stake in Hyundai Mobis, had the deciding vote.  "Foreign shareholders are unlikely to go against the advice of proxy advisers," said Ryu Young-jae, head of Sustinvest, a local investment consultancy, predicting that up to 35% of foreign shareholders would reject the deal.  "In that case, the NPS vote will probably decide the outcome of the proxy fight. The pension fund will probably vote against the deal, given its shareholdings in various Hyundai units."

NACD Releases Guidance on Board-Shareholder Engagement in the New Investor Environment
" Globe Newswire (05/16/18)"

The National Association of Corporate Directors (NACD) has released the 2018 edition of its Governance Challenges series. Titled "Board-Shareholder Engagement in the New Investor Environment," the report aims to help board members chart an effective course toward long-term value creation and sustainable corporate success. According to the 2017–2018 NACD Public Company Governance Survey, a majority of respondents (51%) had a board representative meet with institutional investors in the prior year for the first time since 2014. Furthermore, two-thirds reported taking action to prepare for a potential activist challenge. NACD President and CEO Peter Gleason comments, "Our Governance Challenges 2018 report summarizes the latest thinking from our partners and provides practical guidance for boards, as well as for corporate secretaries and general counsel, during proxy season and beyond."

Elliott Exits Cognizant With Big Gains
" Economic Times (India) (05/17/18)"

Elliott Management has sold its shares in Cognizant (CTSH) after successfully pressuring the IT services company to shake up its business and return billions of dollars to shareholders. The stock has risen almost 50% since Elliott disclosed a 4% stake in Cognizant in November 2016. At that time, its ADRs were trading at about $51 a share on Nasdaq; on Tuesday, the stock closed at $75.46 on Nasdaq. At their highest point in the last year, the shares traded at $85.10. In February 2017, the company agreed to Elliott's demands, including committing $3.4 billion in share repurchases and dividends over two years, installing new board members designated by the hedge fund, and pledging to return 75% of its U.S. free cashflow to shareholders either through share buyback or dividends by 2019. The hedge fund's moves at Cognizant triggered changes throughout the rest of the sector, with its peers following suit with multi-billion dollar share buybacks. A Cognizant executive said the company's strategy would not change following Elliott's exit. In its investment thesis, Elliott had said if Cognizant followed its instructions, its share price could rise to $80-$90+ per share by the end of 2017. "They made their money and left and they helped all IT shareholders as well by boosting returns. All the large companies followed Cognizant and announced major buybacks. But there is a concern that they exited because they thought they would not see further upside," said an analyst with a Mumbai-based brokerage.

Elliott Management Hunts Shale Bargains
" Australian Financial Review (05/16/18) Ker, Peter"

On May 16, Paul Singer's Elliott Management confirmed that it is the third-biggest shareholder in Vantage Energy Acquisition Corp. (VEAC), which has more than half a billion dollars to spend on oil and gas acquisitions in North America. Incorporated in early 2017, Vantage raised US$565 million through an initial public offering and the sale of warrants. It recently told the U.S. Securities and Exchange Commission (SEC) that it was "formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses." SEC documents indicate that Elliott holds two classes of stock in the acquisition vehicle, and Bloomberg data suggests that the hedge fund owns a 7.25% stake. This comes after Elliott publicly urged BHP (BBL) to demerge or divest its U.S. oil and gas assets in April 2017; Elliott is the third-largest holder of BHP's London stock. The hedge fund also has stakes in ExxonMobil (XOM), Energen Corp. (EGN), EQT Corp. (EQT), and Hess Corp. (HES).

Whitbread Investors Debate Premier Inn's Future as M&A Odds Rise
" Bloomberg (05/16/18) Pham, Lisa"

Whitbread Plc indicates that setting a course for the Premier Inn budget hotel chain will be its main priority after Costa Coffee is spun off. Shareholder Whale Blue Capital believes the business should embrace a franchise model similar to InterContinental Hotels Group plc. Meanwhile, Bernstein analysts believe Premier Inn's business should be expanded in Germany, and others believe the division might be bought. According to Old Mutual Global Investors fund manager Ed Meier, "I'm not sure we'll be talking about Costa much longer. It's widely expected that it will get bid for before a demerger process is complete, at which point Premier Inn gets bid for as well." Whitbread's share price has jumped about 6% since it was disclosed that Elliott Advisors has taken a stake.

Hedge Fund Tiger Sends Letter to GameStop Urging Retailer to Adopt a Turnaround Plan
" CNBC (05/16/18) Picker, Leslie"

Tiger Management has penned a letter to GameStop's (GME) board urging the video game retailer to conduct a strategic review amid a recent management shakeup. "We view the recent management departures and crisis of confidence as an unprecedented opportunity for the Board to launch a strategic review and revive shareholder confidence in the sustainability of the GameStop business model," the letter stated. Tiger Management noted that it plans to remain a passive shareholder. "To the extent that you fail to implement a turnaround plan, we merely intend to sell our shares and redeploy capital toward more attractive investment opportunities," Tiger Management said. GameStop shares have fallen roughly 45% over the last year, and the company recently announced that CEO Michael Mauler resigned abruptly just only three months on the job. In the letter, Tiger Management urged management to reiterate its commitment to pause acquisitions, which the investor says have historically "resulted in a significant destruction of shareholder capital." Tiger Management added that GameStop should analyze cost-cutting measures, especially surrounding administrative expenses. It also said GameStop should consider divestitures of secondary businesses, specifically Technology Brands, ThinkGeek.com and International segments. In addition, Tiger Management urged GameStop to communicate a capital allocation plan that restores investor confidence in the company.

Athenahealth Takeover Bid: Elliott Management Says It Might Offer Substantially More Than $6.5 Billion
" Healthcare IT News (05/16/18) Monegain, Bernie"

Elliott Associates has blasted athenahealth (ATHN) management for not responding to its $6.5 billion offer to acquire the company a week ago. Responding to a request for comment, athenahealth stated: "Right now, the board is reviewing the offer from Elliott and in due course will make a decision with the best interest of the company in mind." The investor, which acquired 9% of athenahealth's stock in August 2017, penned a letter to athenahealth's board earlier this week. "We find this lack of communication concerning because, unfortunately, this is the same pattern of behavior we experienced when we tried to get the company to engage in November," wrote Jesse Cohn, partner and senior portfolio manager at Elliott Management. "We have received no direct communication despite our emails and messages to athenahealth offering to discuss next steps or to answer any questions regarding our proposal. None of the Company's advisors has contacted us." Elliott also characterized athenahealth's response as cursory and similar to a boilerplate press release. Cohn noted that Elliott has "a full team ready to engage in confirmatory diligence with the objective of reaching a definitive deal."

Two More Funds Build Stakes in ADP
" Wall Street Journal (05/15/18) Lombardo, Cara; Benoit, David"

D.E. Shaw Group and Sachem Head Capital Management have acquired small stakes in Automatic Data Processing Inc. (ADP) and reportedly have not decided whether to push for changes at the company.  The two hedge funds have met separately with ADP's management and are closely tracking its performance, according to sources.  Both firms disclosed in filings Tuesday they owned about 0.4% stakes as of the end of March, worth around $250 million, not including derivatives.  The investors, which are not working together, built their ADP stakes ahead of a key meeting for the company next month.  The company plans to hold an analyst day in mid-June, where it is expected to detail its plans for new growth.  Meanwhile, ADP earlier this month increased its revenue forecast for its fiscal year, which ends June 30, and its shares are up about 8% so far this year.  D.E. Shaw and Sachem Head join William Ackman as ADP shareholders.  Last year, Ackman's Pershing Square Capital Management LP—which owns about 7.2% of ADP, including derivatives—lost a proxy fight for three ADP board seats.  Ackman had argued the company fell behind technology-focused startups and needed to boost its margins, which ADP insisted it was already doing.  Other hedge funds also have looked at ADP recently, as some believe Pershing Square had the right ideas but slipped up in the proxy fight, sources said, but those funds so far have not gotten involved.

Elliott Management Exits Stake in Taubman Centers
" Wall Street Journal (05/15/18) Fung, Esther"

Elliott Management Corp. has exited its stake in shopping mall owner Taubman Centers Inc. (TCO), curbing expectations for deal activity anytime soon for the slumping real estate investment trust.  Elliott has a reputation for often buying stakes in companies and pushing for changes, but "it is tough to effect change for mall REITs when the competitive set is limited," comments Alexander Goldfarb, managing director at Sandler + O'Neill Partners.  "We doubt they would have exited so quickly if they saw long-term potential."  Taubman Centers is presently embroiled in a proxy fight with Land & Buildings Investment Management LLC, another investor calling for change, which is nominating its founder Jonathan Litt for a board seat.

Pershing Square's Funds Are Up, Ackman Talks United Tech
" Reuters (05/15/18) Herbst-Bayliss, Svea"

Bill Ackman said on a call with investors on Tuesday that all his funds are now in the black for the year to date, buoyed by investments in Chipotle Mexican Grill Inc. (CMG) and Automatic Data Processing (ADP).  That marks a welcome turnaround after three straight years of losses at Ackman's Pershing Square Capital Management.  All funds are in "slightly positive territory" as of Friday, Ackman said.  He added that his team was working on establishing a new position that will be substantial, but declined to name the company.  The hedge fund manager and his partners also discussed United Technologies Corp. (UTX), a relatively new position that Ackman said he was trading at a discount.  A regulatory filing Tuesday shows that Pershing Square owned 1.9 million shares at the end of the first quarter.  Like fund manager Daniel Loeb, whose Third Point is also invested in United Technologies, Ackman said the conglomerate would do better by splitting into three separate businesses: aerospace, elevators, and climate-control units.  "We think each business would trade at a very attractive valuation, and more importantly operate more effectively as independent companies," Ackman said.  He also said he would not try to raise big amounts of new cash.  "If we can run our business effectively and compound at a high rate over time, our capital base will grow at a very nice rate and that has worked well for us," he said.

Proxy Advisors, Top Investor Oppose Elliott Motion at Uniper AGM
" Reuters (05/16/18) Steitz, Christoph; Kaeckenhoff, Tom"

Proxy advisors and a top-10 shareholder in Uniper are lining up against an Elliott-backed request to investigate whether the energy group's management worked against the planned sale of E.ON's remaining stake to Fortum. Institutional Shareholder Services, Glass Lewis, and Odey Asset Management—which owns a 1.56% stake in Uniper--all urged investors to vote against the motion, filed by Cornwall Luxembourg S.a.r.l., which has the support of Elliott.

Ackman Makes Pitch to Break United Technologies Into Three Parts
" Bloomberg (05/15/18) Deveau, Scott; Clough, Rick"

Bill Ackman said during a conference call on May 15 that United Technologies Corp. (UTX) is trading at a hefty discount and its aerospace, elevators, and climate control businesses would thrive as three standalone companies. Echoing recent arguments from Third Point, Ackman said separating the company's businesses makes sense because they collectively trade at a discount to their peers in each segment. "This is one of the last remaining conglomerates. Other than Berkshire Hathaway (BRK.A), conglomerates have not had a great track record," he said. "The management here has put together three outstanding businesses and built them to significant scale. We think each business would trade at a very attractive valuation, and more importantly operate more effectively as independent companies." Ackman did not disclose the size of Pershing Square Capital Management's stake in United Technologies and said he was building a new position in another, unidentified company.

Why Elliott's Taubman Exit Could Hurt Land & Building's Cause
" Benzinga (05/14/18) Schwarzbaum, Ezra"

Elliott Management reportedly has liquidated or is liquidating its stake in Taubman Centers Inc. (TCO), which observers say could be a "major blow" to Jonathan Litt's Land & Buildings Investment Management and its proxy fight against Taubman. Litt has long criticized the company's poor performance and dual-class voting structure and recently put himself forward for election to the board. It is unclear why Elliott has decided to exit its 3.8% stake in the company.

With New Faces on Board, Norwalk Energy Firm to Cut Costs
" Stamford Advocate (05/15/18) Soule, Alexander"

Crius Energy is ramping up cost cuts and making other changes after JCP Investment Management won a seat on the company's board. Crius secured an agreement with JCP in April, after the investor criticized the company's capital allocation and debt accumulation. Crius has been reducing its use of independent agents who rely on telemarketing, while experimenting in the past year with door-to-door sales. Despite a net loss of 21,000 accounts in the first quarter of 2018 that brought its base below 1.4 million, Crius' revenue rose 29% from the preceding three months to $322 million. Profits totaled $4.3 million compared to $36 million in the fourth quarter of 2017. Crius said Tuesday it plans to find at least $20 million in cost savings this year, double its earlier indications, without expecting any impact on jobs. As part of the agreement with JCP, Crius Chairman David Kerr is stepping down.

Elliott Wins More Allies in Blocking Hyundai Motor's Revamp Plan
" Bloomberg (05/14/18) Deveau, Scott; Kim, Sohee"

Elliott Management Corp. has won vital backing from two proxy advisory firms in its opposition to an $8.8 billion deal between two Hyundai Motor Group units. Glass Lewis & Co. called the company's restructuring plan "profoundly unattractive" in a report on Monday, arguing the deal undervalues the assets being sold, lacks business logic, and seems designed to benefit Hyundai's founding family. Institutional Shareholder Services Inc. (ISS) said in its own report Tuesday that although the transactions are compliant with South Korean laws, the deal appears to be unfavorable for Hyundai Mobis Co. shareholders. Both advisers urged investors in the parts maker to vote against the plan. "The board has failed to articulate a clear business rationale for the transaction and has not provided any details in support of the purported synergies," ISS said. The advisors' recommendations may be crucial to the outcome of the Hyundai deal, as neither the founding Chung family nor Elliott have the votes to determine the outcome. Foreign investors' holdings in Hyundai Mobis surpassed 45%—more than enough to block the deal—as of April, according to data compiled by Bloomberg. The deal requires a two-third majority to pass in a vote slated for May 29. If it is blocked, it would mark a landmark victory for foreign investors in a country where all such campaigns have failed.

Xerox Investor Darwin Deason Wants Auction ASAP, Talking to PE Firms
" Bloomberg (05/14/18) Hammond, Ed; Chatterley, Julia; Fu, Scarlet"

Xerox Corp. (XRX) shareholders Darwin Deason and Carl Icahn want to launch an auction for the company and have already held discussions with several private equity firms about a possible deal.  In an interview on Bloomberg TV, Deason said that new Xerox CEO John Visentin is immediately starting the auction for Xerox "to make sure anyone who has any interest in buying this company has the opportunity to look at it and has a fair opportunity to look at it—including Fuji."  Deason, who together with Icahn owns about 13% of Xerox, added that a new deal with Fujifilm Holdings Corp. could be "the very best thing to do."  The investors had waged a campaign against Xerox's deal to sell to Fujifilm for $6.1 billion, and won Sunday when the U.S. office equipment supplier said it would cancel the deal and replace its CEO, Jeff Jacobson.  Deason had sued Xerox in February to block the proposal, accusing Jacobson of acting without authorization on a deal that saved his job at shareholders' expense.  The lawsuit also alleged that the company's board breached its fiduciary duties.  Deason said a U.S. court decision to prevent the takeover with an injunction was a "landmark" for shareholder rights.  "It's going to help shareholders, I think, all over the country," he said.

Amazon Adopts New Policy to Promote Board Diversity
" Reuters (05/14/18) Vengattil, Munsif; Nagarkatti, Karan"

Amazon.com Inc. (AMZN) announced Monday it is adopting a new policy to promote diversity on its board of directors, and that women and minorities will be among the company's board nominees. Amazon's board has 10 members, all of whom are white, including three women. "We reached this decision after listening to your feedback as well as that from Amazon employees, shareholders, and other stakeholders about the Board diversity proposal," Amazon's vice president of public policy, Brian Huseman, wrote in a letter to the Congressional Black Caucus. The new policy follows a shareholder proposal submitted by the Master Trust of the Service Employees International Union and CtW Investment Group, which argued that Amazon's board has failed to commit to practical action on diversity. "Shareholders have long believed that embracing diversity will benefit companies by providing greater access to talent, harnessing existing talent more effectively, and improving decision making by reducing groupthink and similar psychological biases," stated the April 27 proposal.

Debate Over Poison Pill Brews in Korea Amid Growing Hostile Moves by Foreign Forces
" Pulse - Maeil Business News Korea (05/15/2018) Joon-hyung, Park; Hyo-jin, Kim"

A South Korean lawmaker has proposed legislation to bolster companies' defense mechanisms in the face of hostile takeovers amid an ongoing battle between Elliott Management and Hyundai Motor Group. The proposal calls for the introduction of differential voting rights, which would attach more voting rights to special classes of shares to give more control to certain shareholders. The proposal also suggests introducing a shareholder rights plan, or "poison pill," which gives existing shareholders the right to purchase additional shares at a discount, diluting the hostile bidder's interest and significantly raising the cost of the bid. The two policies have not been adopted in Korea because they breach the one-share-one-vote principle and face the risk of abuse of power in the hands of major shareholders. But a string of battles between domestic companies and foreign investors have triggered support for such defensive measures. Most recently, Elliott has threatened to vote against Hyundai Motor Group's restructuring scheme and urged fellow shareholders to do the same ahead of the general meeting on May 29. SK Group faced a similar contest in 2003 when Sovereign Asset Management pushed for a corporate governance reform. In 2006, KT&G fended off a hostile takeover bid from Carl Icahn, a move that had sparked intense debate in Korea as it was the first attempt of its kind in the country.

Elliott Management Releases Letter to the Board of Athenahealth
" Business Wire (05/14/18)"

In a letter to the board of directors of athenahealth Inc. (ATHN), Elliott Management Corp.—which has proposed acquiring the company for $160 per share in cash—outlined its concerns with the company's refusal to engage with any of the parties that have expressed interest in an acquisition of athenahealth. "We find this lack of communication concerning because, unfortunately, this is the same pattern of behavior we experienced when we tried to get the company to engage in November," Elliott wrote. "It is our view that immediate engagement with Elliott to explore a take-private transaction is the right course forward for all athenahealth stakeholders."

Investors Smell Possible Victory in Hyundai Showdown
" Financial Times (05/13/18) Jung-a, Song"

Elliott Management intends to vote against Hyundai's restructuring plan at a unit's general meeting later this month. The plan to spin off the after-sales business of Hyundai Mobis and merge it into the logistics unit, Hyundai Glovis, is not fair to investors, according to Elliott, which has a 1.5% stake in Hyundai Mobis. The South Korean group says selling down the controlling family's 29.9% stake in Hyundai Glovis to buy more shares of Hyundai Mobis would end its circular shareholdings and boosts its competitiveness, but many investors view the move as an attempt to strengthen the family's control over key units. Elliott wants Hyundai to focus on improving the value of the automotive units by appointing more independent board members and raising dividends. Analysts say Elliott faces an uphill battle due to its small stake in Hyundai Mobis, but add the proxy vote could be close if other foreign shareholders side with the investment management firm. Some analysts predict that Seoul's National Pension Service, which holds a 10% stake in Hyundai Mobis, might vote against the restructuring, considering the public criticism it has faced for choosing to support a contentious merger of Samsung units in 2015.

Xerox Drops Fujifilm Merger Plan, Strikes a Deal With Icahn and Deason
" Wall Street Journal (05/14/18) Lombardo, Cara"

Xerox Corp. (XRX) confirms it will exit its merger deal with Fujifilm Holdings Corp., because it reached a new settlement with shareholders Carl Icahn and Darwin Deason.  The printer and copier company has agreed to replace its CEO and overhaul its board of directors.  This is Xerox's second settlement with Icahn and Deason.  It had struck an earlier deal with the two to oust CEO Jeff Jacobson and flip the board.  However, that accord abruptly expired earlier this month prior to receiving court approval.  The new settlement marks a win for Icahn and Deason, who agreed to table their proxy fight after several months of conflict.  They opposed the plan to combine with the joint venture Fuji Xerox, arguing it undervalued Xerox, and had planned to nominate their own slate of directors for Xerox's board.  Xerox appointed five new board members, and five existing directors resigned—in addition to Jacobson.  Icahn Enterprises CEO Keith Cozza, one of the new members, is expected to serve as chairman. The new Xerox board, the majority of which comprises directors supported by Icahn and Deason, will now start examining strategic alternatives.

ValueAct Environmental Push Adds Textiles-From-Bottles Maker
" Bloomberg (05/13/18) Deveau, Scott"

Jeff Ubben's ValueAct Capital Management has acquired a 5% stake in Unifi Inc. (UFI), a company that makes polyester and nylon textiles out of recycled plastic bottles, as part of its push into environmentally focused investing. "Unifi has a long history as a trusted partner to global brands," Ubben said. "Being a key part of the soft goods supply chain, the company has committed to making long-term investments toward satisfying increased consumer demand for recycled products and reducing environmental impact." Plastics recycling in the U.S. has dropped and Unifi's textiles offer a solution through its Repreve fiber products, Ubben said. Unifi CEO Kevin Hall said the company with its partners has already recycled 10 billion plastic bottles and intends to reach 30 billion by 2020. "We welcome ValueAct on this very important journey," he said. The investment is the latest for a new ValueAct fund focused on social and environmental investments. The hedge fund had originally sought to raise $100 million for the Spring fund, launched in January, but has more than doubled that goal. "We believe the opportunity could be enormous if we can prove out the valuation creation to this adapted form of active governance investing," Ubben wrote in a January letter to investors.

Convergys Is in Talks With Several Potential Buyers
" Wall Street Journal (05/11/18) Cimilluca, Dana; Lombardo, Cara"

Convergys Corp. (CVG) is in deep discussions with a number of parties interested in the call-center operator, according to sources. The company is seeking a buyer to help it bulk up at a time of rapid change in the industry. Convergys initiated a sales process after CEO Andrea Ayers decided to resign after nearly three decades at the company, including more than five as CEO. The suitors include both industry rivals and private-equity firms, the sources said. A deal is not guaranteed and Convergys could instead choose to continue as an independent company and replace Ayers, one of the sources warned. Elliott Management Corp., which sometimes pressures companies to sell themselves, earlier this year disclosed a roughly 4.9% stake in Convergys. It has not publicly revealed anything about its intentions.

Investor Group Comments on ISS Recommendation at Destination Maternity
" Business Wire (05/11/18)"

Nathan G. Miller and Peter O'Malley, collective holders of approximately 9% of the outstanding common stock of Destination Maternity Corp. (DEST), have released a statement in regard to a recent report from Institutional Shareholder Services (ISS). "We are pleased that ISS agreed with our argument that the chronic underperformance at Destination Maternity is emblematic of a company not living up to its potential, and that change at the board level is warranted. However, we find it counterintuitive that while agreeing with these fundamental points, ISS refrained from recommending for our majority female slate, citing a lack of public board experience among our nominees as the primary justification. The reality is that Destination Maternity is a company where the absence of female board representation and leadership is in direct misalignment with the strategic goals, end customers, and product selection that will ultimately determine whether DEST becomes a successful turnaround story, or yet another cautionary tale of mismanagement and missed opportunity. Notably, before launching this proxy contest we proposed to the Company that they add to the Board two of our highly-qualified female nominees. They responded by adding two men. The share of women on S&P 500 company boards rose merely 1 percentage point last year to 22%. If the argument—a chauvinist trope—continues to be that qualified women executives should not be added to boards because they have not previously served on boards, this embarrassing problem will not get solved. Board diversity cannot remain a 'chicken or the egg' situation. As such, we believe that our highly-qualified nominees Holly N. Alden, Christopher B. Morgan, Marla A. Ryan, and Anne-Charlotte Windal should be added to the Board of Directors of the Company in order to bring about the level of change needed to reverse the years of mismanagement and underperformance the Company has suffered."

Amazon Shareholders Are Getting Opposite Advice on Whether Diversity Should Be Mandated for the Company's Board
" Recode (05/12/18) Del Rey, Jason"

Institutional Shareholder Services (ISS) and Glass Lewis are split on a hotly debated Amazon (AMZN) shareholder proposal designed to push the company to consider more females and minorities for director seats.  This past week, ISS announced its support of the proposal, which would require the online retail giant to include women and people of color among candidates each time a new board seat comes open. Currently, all 10 Amazon board members are white, with seven male and three female.  Glass Lewis has recommended shareholders vote against the proposal—a stance the Amazon board has also taken, angering some employees. Glass Lewis pointed out that Amazon's board already has three female directors, and that the company has said it already considers race and gender in the selection process.

Compromise Rejected as Icahn Adds Nominees for SandRidge Board
" Bloomberg (05/11/18) Nussbaum, Alex"

In a May 11 regulatory filing, Carl Icahn announced two more nominees for the board of SandRidge Energy Inc. (SD), increasing his slate of candidates to seven and saying it was in the "best interests" of shareholders to elect all of them. The move comes after the Oklahoma City-based oil and gas explorer announced earlier this week that it was expanding the five-member board in an effort to make room for two Icahn representatives. The filing indicates that Icahn's new nominees are Jonathan Christodoro, a private investor and former managing director for Icahn Capital LP, and Nancy Dunlap, who runs the private family office of former New Jersey Gov. Jon S. Corzine.

U.S. Fund Elliott to Vote Against Hyundai Restructuring Plan
" Reuters (05/10/18) Lee, Joyce; Yang, Heekyong"

Elliott Management is urging fellow shareholders to join it in voting against Hyundai Motor Group's restructuring plan. Elliott said late Thursday that the restructuring plan was "based on flawed assumptions," and that the conglomerate's "token measures" to buy back and cancel shares were insufficient to achieve fair value for investors. "More significant measures are needed to address the long-unresolved issues at the group that have led to significant valuation discounts and underperformance at Hyundai Mobis, Hyundai Motor, and Kia," Elliott said. A Hyundai Motor Group executive responded that the proposed arrangements to simplify the automaker's complex ownership structure would not change and pledged higher returns for shareholders. He said measures to improve investor returns would be presented after a May 29 meeting where shareholders will vote on the restructuring. Elliott says it owns more than 1.5% of common shares in auto-parts maker Hyundai Mobis. Hyundai Motor Group Chairman Chung Mong-koo and the group's affiliates own a total 30% stake in Mobis, which will put the spin-off plan to a shareholder vote. The state-run National Pension Service owns almost 10% of Hyundai Mobis.

Third Point Seeks to Launch 'Blank-Check' Company - Sources
" Reuters (05/10/18) Franklin, Joshua; Herbst-Bayliss, Svea"

Daniel Loeb's Third Point LLC is in talks with investment banks about launching a "blank check" company that would raise money in an initial public offering (IPO) to pursue an acquisition, according to sources. The new investment vehicle, called a special purpose acquisition company (SPAC), would be the first of its kind to be raised by a hedge fund such as Third Point. A SPAC uses proceeds from its IPO, together with borrowed funds, to acquire companies that are typically privately held. Investors in the IPO do not know ahead of time which company a SPAC will buy, although many indicate what sectors they want to be active in. Third Point is in discussions with investment banks about arranging the SPAC's IPO later this year, which could raise hundreds of millions of dollars, the sources said. The SPAC is an effort by Third Point to diversify its revenue stream, as returns from its flagship hedge fund have slumped this year amid jitters in the stock market. SPACs usually let investors redeem their common stock at the IPO price if they disagree with a proposed acquisition. This has traditionally turned off long-term institutional investors but made them popular with hedge funds, willing to gamble on what a SPAC's deal could be. To address this, some SPACs now seek to launch with the backing of cornerstone investors who have pledged not to redeem their money if they disapprove of a proposed acquisition.

Bramson Met With Old Mutual Global Investors Last Month as He Plots to Shake Up Barclays
" City A.M. (05/10/18) Booth, James"

Edward Bramson met with Old Mutual Global Investors last month to gather support for his plans to shake up Barclays (DTYS).  Bramson reportedly met the investment manager's CEO Richard Buxton and discussed his plans to drive changes at Barclays investment bank, which could include a spin-off.  The two were said to disagree on the health and viability of the investment bank, and Old Mutual Global Investors regarded a spin-off of the unit as too simplistic.  Bramson owns a 5.41% stake in the bank via his investment vehicle Sherbourne, while Old Mutual Global Investors holds a 0.31% stake.  Bramson has reportedly met other major shareholders of the bank in recent months in a bid to get support for his plans.  He has not made any public comment since the news broke that he had acquired a more than 5% stake in Barclays, worth more than £2 billion.  In turn, Barclays has drawn up contingency plans with its corporate brokers to prepare for Bramson's next move.

Visa Glass Ceiling Subject of CEO Meeting With Female Managers: Report
" Fox Business (05/10/18) De Lea, Brittany"

Visa (V) CEO Alfred Kelly is set to meet with female managers over complaints that it is more difficult for women to advance within the company than men. After reviewing an employee survey that found that females were less satisfied working for the credit card giant than males, Kelly called the meeting. In addition, the bank has set up a women's advisory group. In a statement to media, Visa pledged to increase "female leader representation" and work on creating an environment where all staffers feel comfortable.

Sebi Asks Listed Companies to Set up Governance Panel to Monitor Unlisted Subsidiaries
" Moneycontrol.com (05/10/18)"

The Securities and Exchange Board of India (Sebi) is requesting that companies with a large number of unlisted subsidiaries track their governance through a dedicated committee. The decision to establish such a committee would lie with the board of directors of the listed entity, Sebi said in a circular. "The listed entity may monitor their governance through a dedicated group governance unit or governance committee comprising the members of its board of directors," Sebi noted. The notification followed Sebi's board meeting in March accepting 40 of the 80 recommendations of the Uday Kotak panel on corporate governance. The panel had submitted its report to Sebi in October 2107. With regard to the disclosure of the medium as well as long-term strategy of the entity, Sebi has asked listed firms to disclose, under the management discussion and analysis section of the annual report, such strategies based on a time frame as determined by its board of directors. The listed entity may articulate a clear set of long-term metrics specific to the company's long-term strategy to allow for appropriate measurement of progress. As part of its disclosures on board evaluation, listed firms must carry out observations of board evaluation carried out for the year, the previous year's observations and actions taken, and proposed actions based on current year observations.

Gullane Capital Partners Announces Support for Shareholders' Position of Destination Maternity
" Citizen Tribune (05/10/18)"

Gullane Capital Partners, which owns more than 3% of Destination Maternity Corp. (DEST), said it supports the GOLD proxy card issued by shareholders Nathan Miller and Peter O' Malley calling on stockholders to vote in favor of their four director nominees at the company's May 23 annual meeting. "Destination Maternity's existing board has been given ample time to fix DEST while watching the stock price fall over 80% in the past three years," said Trip Miller, managing partner of Gullane Capital Partners. "We believe the four new proposed directors are highly qualified to restore long term value to DEST and encourage other shareholders to take action."

ValueAct Takes Stake in Wood Pellet Manufacturer Enviva
" Bloomberg (05/10/18) Chediak, Mark; Deveau, Scott"

ValueAct Capital Management has acquired a $20 million stake in wood pellet manufacturer Enviva Partners LP (EVA), making the investment through its new $250 million environmentally and socially focused fund.  "With Enviva, I think we've found a jewel because it's still early days in using wood pellets to reduce coal plant emissions," ValueAct's Jeff Ubben said in an interview.  Enviva produces wood pellets that can be burned in power plants as an alternative to coal.  The company makes an attractive investment, Ubben said, because it has refined its technology to raise the burning temperature of pellets, enabling them to produce more energy.  The company has also slashed costs by building facilities close to logging sites where it can collect scraps that sawmills cannot use.  "We think the growth here is double digit on the dividend even though we're getting 9% today," Ubben said.  These products remain controversial among environmentalists because they still emit carbon dioxide when burned, but Enviva requires its wood suppliers to commit to replanting trees and managing forests sustainably to offset emissions.  "Biomass, looks to us, as a big opportunity as long as you're incentivizing the tree farmers to grow their trees," Ubben said.  The ValueAct Spring Fund now has three public stakes, including in international power producer AES Corp. (AES) and education company Strayer Education Inc. (STRA).  The fund has also made three undisclosed investments, Ubben said.

All Shareholders Aren't Equal, a Japan Inc. Elder Statesman Says
" Bloomberg (05/10/18) Redmond, Tom; Taniguchi, Takako"

Yoshihiko Miyauchi, the senior chairman of the $23.5 billion financial and leasing group Orix Corp. (IX), wants Japan to allow so-called class shares in order to keep voting rights away from investors who "buy today and sell tomorrow."  Miyauchi—who has previously suggested taking voting rights from stockholders who have not owned shares for a certain period of time—says Japan should follow the example of the United States and Hong Kong by letting companies list different classes of shares.  That way, control over a firm could be concentrated among people focused on its longer-term growth.  Miyauchi's views contrast with those of many corporate governance experts, who say Japan needs to reduce its web of cozy stock ownership known as cross-shareholdings.  Miyauchi is also critical of activist shareholders, who he says tend to be short-termist.  Some shareholders active in the region strongly oppose Miyauchi's comments.  They are "extraordinarily dramatic statements," says Seth Fischer, chief investment officer of Oasis Management Co., the Hong Kong-based hedge fund that has pressed for changes at companies including Nintendo Co. and Alpine Electronics Inc.  "And I disagree with all those statements."  Fischer says there are different types of activists operating in Japan today.  He says almost none of Oasis' campaigns in Japan have been about calling for dividend payments, and that Oasis has companies' long-term interests at heart.  "In all of our cases, we're talking about how to create a better company," Fischer says.

Shareholders Throw Out Pay Proposals at AMP
" Financial Times (05/10/18) Smyth, Jamie"

AMP has lost a shareholder vote on its remuneration report amid an investor backlash over a scandal that has wiped about AU$4.5 billion off the financial services company's market cap and forced the resignation of its chairman and chief executive. More than 60% of the company's shareholders voted against AMP's remuneration report, which represented a "first strike" under Australia's corporate governance rules. The 169-year-old Australian group recently said it faced two class-action lawsuits from disgruntled shareholders linked to revelations aired at a public inquiry that AMP knew it was charging fees to clients without providing any services.

Xerox Board Seeks Better Terms From Fujifilm, Will Resume Talks
" Reuters (05/09/18) Rai, Sonam; Panchadar, Arjun"

Xerox Corp.'s (XRX) board announced Wednesday it planned to continue merger talks with Fujifilm Holdings, seeking a sweetened deal to terms reached in January that have spurred a proxy battle. Carl Icahn and Darwin Deason—who own 15% of Xerox—have been seeking to thwart the deal and unlock more value from the company. Arguing the Fujifilm deal values Xerox at just $28 per share, the investors said this week they would consider an all-cash bid of at least $40 per share. Analysts say the extended battle for Xerox could ultimately push higher any offer price from Fujifilm or other interested parties. Fujifilm said Thursday it has not yet received a new proposal from Xerox and believes the current deal provides the best value for all shareholders. Although some Tokyo-based analysts believe Fujifilm would be better off investing in its non-copier and printer businesses, others argue that the Japanese firm, which depends on the joint venture for nearly half of its revenue, should bow to the shareholders' demands. Xerox had at one point reopened the deal talks with Fujifilm, but those discussions were suspended after Deason won a temporary court order blocking the deal. However, the judge said that Xerox was not restricted from exploring other transactions with Fujifilm. Xerox said Wednesday that it will pursue an appeal of the lower court's ruling in the Deason lawsuit. Fujifilm is also pursuing an appeal.

Hyundai Mobis CEO Opposes Elliott's Proposal on Holding Firm: Maeil
" Reuters (05/10/18) Park, Ju-min"

The CEO of auto parts maker Hyundai Mobis Co. Ltd. reportedly has spurned Elliott Management's calls for the Hyundai Motor Group to set up a holding company structure. Hyundai Motor Group in March announced reforms aimed at simplifying its complex ownership structure, but Elliott said they were insufficient to address Hyundai's share price discount to foreign automakers. Elliott said the Hyundai Motor Group should merge Hyundai Mobis with Hyundai Motor to create a holding company instead. However, Hyundai Mobis CEO Lim Young-deuk believes that businesses such as components and car making should be kept separate, South Korea's Maeil Business Newspaper reported Thursday. "A management structure reorganization plan claimed by Elliott can hurt competitiveness of the automotive group's businesses so it is difficult to adopt it," he said in an interview. Ahead of Hyundai's plan being put to a shareholder vote on May 29, Elliott urged the autos-to-steel group to set up a holding company structure, improve shareholder returns, and install more independent board members. The U.S. fund proposed Hyundai Mobis be merged with Hyundai Motor Co. to create a holding company that would also include financial subsidies such as Hyundai Capital and Hyundai Card Co. Ltd. Elliott says it owns more than 1.5% of common shares in Hyundai Mobis.

South Korea Regulators Step Up Pressure on Samsung Over Complex Ownership Structure
" Reuters (05/09/18) Yang, Heekyong; Park, Yuna"

South Korea's antitrust chief said Thursday that Samsung Group's complex ownership structure was "not sustainable," piling new regulatory pressure on the nation's top conglomerate. The remarks by Kim Sang-jo, chairman of the Korea Fair Trade Commission, come as Korea's powerful family-controlled conglomerates have faced growing calls for reform from the government and investors. Critics have said the web of circular shareholdings has enabled the family of Samsung heir Jay Y. Lee to retain control of the companies in the conglomerate, especially crown jewel Samsung Electronics, with minimum investments. Kim said Thursday that he is urging Samsung Group management to make a decision concerning the ownership structure, adding that Samsung Electronics management had told him it will be considered. Kim has often criticized such "chaebols" for their complicated cross-shareholding structures that he has said are aimed at cementing family control. He is even known as the "chaebol sniper" for his shareholder activist campaigns before joining the Commission. Earlier criticism of Samsung Group came most notably from Elliott Management, which proposed as a solution in 2016 that Samsung Electronics split itself into two. Samsung Electronics rebuffed that proposal but accepted part of the fund's proposals by announcing plans to cancel its existing treasury shares worth over $35 billion by 2018.

Ahold Delhaize Appeases Shareholders With Poison Pill Compromise
" Reuters (05/09/18) Meijer, Bart H."

Ahold Delhaize's takeover defense mechanism will remain in place, even though a group of shareholders led by hedge fund CIAM had demanded a vote on the matter. But the Dutch-Belgian supermarket company has agreed to give shareholders more rights if it ever activates the poison pill, which was set to expire in December. In place for at least 15 years, the mechanism enables an independent body to issue shares to thwart a takeover. Under the new agreement, Ahold Delhaize would call a shareholders' meeting to discuss the situation within six months of the option being exercised, and hold a vote on the cancellation of the issued shares within a year. The body holding the new shares will have no say in this vote. Ahold Delhaize had maintained that it did not need shareholders' consent to extend the mechanism. CIAM has dropped its request for an extraordinary shareholders' meeting to vote on the mechanism and its threat of legal action if the company ignored its demand.

Xerox Board of Directors Releases Letter to All Shareholders
" Digital Journal (05/09/18)"

In a letter to shareholders, Xerox's (XRX) board of directors acknowledged the uncertainty created in recent weeks by the adverse lower court ruling on April 27 and its ongoing disagreement with investors Carl Icahn and Darwin Deason. In an effort to set the record straight, the board said, "Consistent with our duties to all Xerox shareholders, we intend to: resume discussions with Fujifilm regarding a potential combination with Fuji Xerox on superior terms to the transaction announced on Jan. 31; continue to engage with all of our shareholders and ensure all shareholder voices are heard; and pursue our appeal of the lower court's ruling in the Deason litigation, which we believe was wrongly decided and will be reversed. We will take these steps while ensuring that Xerox continues to focus on driving operational and financial performance. As always, we will be guided by our commitment to ensure the success of Xerox and to maximize value for all shareholders." The board added that it will continue to "focus on business sustainability and operational excellence," "drive shareholder value," and "ensure shareholders' voices are heard and reflected."

Ironwood Pleas With Investors: Don't Give Us Alex Denner
" Endpoints News (05/09/18) Meiling, Brittany"

On May 9, Ironwood (IRWD) urged shareholders to reject a bid by Sarissa Capital's Alex Denner for a board seat. Sarissa took a stake in Ironwood late last year, and it was made known last month that the firm planned to nominate Denner to Ironwood's board. "Ironwood strongly believes that Sarissa has not made a compelling case for Ironwood to add Alex Denner to the board, given the skills, experience, and diversity of the existing directors who have acted to unlock value for Ironwood shareholders," the company said in a statement. Shareholders are being urged instead to vote for three independent directors who are up for re-election at the company's May 31 annual meeting.

Tesla Urged to 'Raise Its Game'
" Bloomberg (05/09/18) Hull, Dana"

CtW Investment Group is waging a campaign against the re-election of three board members at Tesla, claiming the electric-car maker has veered off the path to profit. The firm—which is working with union pension funds that are Tesla investors managing more than $250 billion—blasted the board members' ties to Chairman and CEO Elon Musk, their lack of industry experience, and their poor track records of independent board service. "Tesla has failed to hit critical production milestones and has consequently seen its past progress toward profitability sharply reverse," Dieter Waizenegger, CtW's executive director, wrote in a letter filed Wednesday with the Securities and Exchange Commission. "But instead of recognizing the need for independent and effective board leadership, Tesla has re-nominated three directors who exemplify the company's failure to evolve." The firm urges shareholders to vote against the three individuals at Tesla's June 5 annual meeting: Antonio Gracias, a private-equity investor and Tesla's lead independent director; Kimbal Musk, Elon's brother; and James Murdoch, CEO of Twenty-First Century Fox Inc. Waizenegger writes that the Tesla's prospects for continued success are "more tenuous than ever" and that the board needs to "raise its game." The letter raises concerns with matters including Musk's combative earnings call with analysts last week, safety issues at Tesla's California assembly plant, deadly crashes involving the driver-assistance system Autopilot, and litigation related to the company's controversial acquisition of SolarCity Corp.

FTSE Chairman Andrew Page Feeling the Pressure as Both Cote and Northgate Come Under Fire
" City A.M. (05/08/18) White, Lucy"

Crystal Amber penned a letter to fellow Northgate shareholders accusing Chairman Andrew Page of being a "hindrance," as the commercial vehicle hire company's share price has failed to recover after a string of profit warnings. Page has come under pressure from investors after three of the companies he currently presides over—including Carpetright, where he is senior independent director, and restaurant chain Cote, where he is chairman—have fallen into trouble. For example, Cote announced Tuesday it might have to shutter stores across its Limeyard and Jackson & Rye brands, while Carpetright last month closed 92 outlets in a desperate effort to stave off administration. In its letter, Crystal Amber accused Page of being "responsible for Northgate's self-defeating lack of transparency." The investor referred to incidents such as an event held exclusively for sell-side analysts such as investment bankers and stock brokers, which excluded shareholders and barred them from hearing management pronouncements and publicly raising questions. Crystal Amber also questioned why certain performance yardsticks, such as Northgate's average fleet age, had been dropped.

HK Fund Oasis, Objecting to Japan's Alps-Alpine Merger, Submits Proposals
" Reuters (05/09/18) Ando, Ritsuko"

Oasis Management has accelerated its moves against Japan's Alpine Electronics Inc.'s intentions to sell itself to larger affiliate Alps Electric Co., submitting proposals ahead of a June shareholder meeting. The Hong Kong-based hedge fund, which holds a 9.9% stake in Alpine, says the company's board was permitting Alps to take over the company at an unfairly low valuation. Seth Fischer, the fund's founder and chief investment officer, says that he had proposed that Alpine Electronics pay a special dividend of 325 yen ($2.97) per share to shareholders and appoint two independent directors to the board.

Senators Ask Billionaire Carl Icahn for Refinery Waiver Details
" Reuters (05/09/18)"

Six senators have asked Carl Icahn and Environmental Protection Agency (EPA) Administrator Scott Pruitt to explain how an Icahn-owned refinery won an EPA exemption from the U.S. biofuels law. Letters sent by the senators on May 8 bring pressure to the embattled EPA chief over his pro-business policies, as well as to Icahn, whose dual role last year as an investor and presidential adviser is being investigated by the Department of Justice. The EPA granted a small refinery hardship waiver from the nation's biofuel laws to an Oklahoma refinery operated by Icahn's CVR Energy (CVI), permitting it to avoid tens of millions of dollars worth of costs related to the U.S. Renewable Fuel Standard (RFS). "We ... are troubled that a company that is owned by a billionaire former 'special adviser' to the President who is currently under investigation by federal prosecutors ... has now received an 'economic hardship waiver,'" the senators wrote in the letters to Icahn and Pruitt. Neither Icahn nor his attorney have commented on the letters. The RFS mandates that refiners add biofuels such as corn-based ethanol to their gasoline and diesel, or to buy blending credits from competitors that do. The policy is geared toward helping farmers, cutting petroleum imports, and reducing air pollution. EPA has the authority to exempt small refineries of less than 75,000 barrels per day of capacity if they can prove they are facing financial difficulties because of the regulations.

Gold Miner Petropavlovsk Faces Shareholder Revolt as Splinter Group Aims to Oust All Directors and Reinstate Old Guard
" City A.M. (05/09/18) White, Lucy"

Two investors have proposed resolutions to remove all the board members at London-listed gold miner Petropavlovsk. Cabs Platform and Slevin—which own a combined 9.11% stake in the Russia-based business—instead want to reinstate former directors Pavel Maslovskiy, Roderic Lyne, and Robert Jenkins. The investors seem to be trying to reverse the decision of a group of shareholders who overhauled Petropavlovsk's top management last summer. That shakeup included the ouster of founder and mining magnate Peter Hambro—a move backed by shareholder advisory group Institutional Shareholder Services at the time, which had said there was a "compelling case" for board-level change. Without the backing of Petropavlovsk's major shareholders—which include some investors that instituted the earlier shakeup, as well as Russia's VTB Bank and US-based investment firm DE Shaw & Co.—Cabs Platform and Slevin are unlikely succeed with their resolution.

E.ON Undecided on Elliott Motion Regarding Uniper Stake Sale
" Reuters (05/09/18) Steitz, Christoph"

E.ON is undecided regarding an Elliott-backed shareholder request to investigate whether the management of former subsidiary Uniper actively worked against the planned sale of E.ON's remaining stake to Finnish peer Fortum.  Uniper had said on Tuesday that Cornwall Luxembourg S.a.r.l.—which it said was supported by Elliott—had issued a proposal to appoint a special auditor in order to identify potential breaches of duty by the board in relation to Fortum's bid.  Fortum, which is currently awaiting regulatory approval to purchase a 46.65% stake in Uniper from E.ON, said last month that Uniper had actively worked against the proposed transaction in Russia.  E.ON, which will likely still own the stake at Uniper's shareholder meeting on June 6, will hear all sides before deciding whether or not to support the motion, E.ON CEO Johannes Teyssen told shareholders on Wednesday.

Split Over Macquarie Infrastructure Corp Board
" Australian Financial Review (05/08/18) Kehoe, John; Moullakis, Joyce"

Two leading proxy advisory firms have given shareholders of Macquarie Infrastructure Corp. (MIC) conflicting advice on whether or not to vote for directors facing re-election at the company's May 16 annual meeting. Glass Lewis recommends that investors support the six MIC directors seeking reappointment, but Institutional Shareholder Services recommends terminating three directors, including former CEO James Hooke, who is now employed by Macquarie Group in Sydney. Meanwhile, Moab Capital Partners is lobbying other institutional shareholders to revolt against the MIC board. The controversy stems from the allegedly belated February disclosure of a shock earnings downgrade at MIC's Louisiana oil storage facility and a significant cut to the company's dividend, which triggered a 41% share price crash and wiped out more than US$2 billion in MIC's market value on a single trading day. Observers say index-tracking funds and U.S. mutual funds will heavily influence the vote, with Vanguard Group and BlackRock (BLK) owning about 13% of MIC and Macquarie owning about 6.5%.

Shareholders Win Two Seats on Caravel's Board
" Stockhead (Australia) (05/08/18) East, Angela"

At a general meeting of Caravel Minerals on May 7, a dissident shareholder group won two seats on the board, with Alasdair Cooke and Alexander Sundich being elected to the board of the junior gold and copper explorer. Caravel received a notice in March demanding the shareholder meeting to vote on the removal of three of the company's four directors, but there was no mention in the company's corporate update that the three directors had been voted out. Caravel has been pursuing legal action against Cooke and two associated companies, including Hartree, which holds a 5.6% stake in Caravel and is a wholly owned subsidiary of Cooke. Caravel had submitted an application to the Australian government-controlled Takeovers Panel over the move to revamp the board, but the panel declined to hold a hearing on the matter and subsequently refused to review its decision.

U.S. Fund Apollo Walks Away From FirstGroup Offer
" Reuters (05/08/18) Denina, Clara; Martin, Ben; Keidan, Maiya"

Apollo Global Management has dropped plans to make a takeover bid for FirstGroup after two approaches for the British bus and rail operator were rejected. Apollo had until May 9 to make a decision under British takeover rules, and it did not reveal why it has abandoned its plan. According to a statement from FirstGroup, it has received in recent weeks "two preliminary and highly conditional indicative proposals from Apollo relating to a possible cash offer," but "having considered them in detail, the board of FirstGroup concluded that the proposals fundamentally undervalued the company." The value of the offers was not disclosed. West Face Capital—which holds about 2.5% of FirstGroup—also has engaged the company, believing it is undervalued by the stock market.

An Aggressive Hedge Fund Bucks Stock Rout by Pushing Japan Firms
" Bloomberg (05/07/18) Ujikane, Keiko; Ito, Komaki"

Japan's new champions of shareholder rights are described as friendly activists, but Tsuyoshi Maruki takes a more aggressive approach to Japanese companies. The founder of Strategic Capital has launched a campaign against cross-shareholdings that is aligned with the move by Prime Minister Shinzo Abe's government to get companies to cut down on the practice. Strategic Capital has already started proxy fights at three of its investments this year, calling on them to sell all stock held in listed peers held to cement relationships. Japan's smaller companies are often run by managers who don't really understand capitalism and need the proper advice to see a huge improvement in their stocks, according to Maruki. "Once they get more understanding of such things, their companies' valuations can change utterly," says Maruki. The global equity markets have been routed in the first three months of the year, but Strategic Capital is the one Japanese hedge fund that has posted a gain. Maruki's performance has been helped by companies that have accepted some of his recommendations. Maruki's long-only fund rose 0.2% in the first quarter, while Japan's benchmark Topix index tumbled 5.6% and the Eurekahedge Japan Hedge Fund Index slipped 1.6%.

Land & Buildings Sends Letter to Taubman Centers Shareholders
" Business Wire (05/08/18)"

Land & Buildings Investment Management LLC sent a letter to the shareholders of Taubman Centers Inc. (TCO) on Tuesday in relation to its nomination of Jonathan Litt for election to the board of directors at the annual shareholder meeting on May 31 and its request that the board eliminate the dual-class voting share structure. Land & Buildings notes that the company's performance has not materially improved since this time last year, and says this stagnancy comes down to four main issues: "severe operational missteps and lost opportunities; an appalling lack of true director experience, the refusal to evolve past the outdated dual-class share structure, and the chronic underperformance driven by the preceding factors." In the letter, Litt writes that if elected, he would introduce the following actions on his first day in the boardroom: "Motion to split the Chairman and CEO roles; motion to form a special committee of independent directors to evaluate the elimination of the dual-class voting share structure; motion to form a capital allocation committee to evaluate ways to improve performance at Taubman, including strategic alternatives, capital allocation, and operations; and motion to sell assets to take advantage of the arbitrage between private and public markets given the substantial discount the shares trade at to Net Asset Value." Land & Buildings has also released a supplemental investors presentation detailing the operational issues, underperformance, and case for change at Taubman.

ValueAct Sets Sights on Citigroup
" Wall Street Journal (05/07/18) Benoit, David; Lombardo, Cara; Demos, Telis"

ValueAct Capital Partners LP has built approximately a $1.2 billion stake in Citigroup Inc. (C) over the last four to five months, betting that the bank's strength as a service provider to corporations will enable it to thrive in the post-crisis era and make up ground its shares have lost in recent years. The ownership interest amounts to nearly 0.7% of Citigroup, which has a market value of $175 billion. The San Francisco investment fund's quarterly letter to its investors details a view of an evolving industry that has often led ValueAct to request a board seat. The letter does not call for any major strategic changes. However, it does suggest the bank could boost its plan to return cash to shareholders via buybacks and dividends from $40 billion to about $50 billion.

Icahn, Deason Want Bid of at Least $40 Per Share for Xerox
" Reuters (05/07/18) Chatterjee, Laharee; Yamazaki, Makiko"

Xerox Corp. (XRX) shareholders Carl Icahn and Darwin Deason—who oppose a $6.1 billion deal with Fujifilm Holdings—announced they would consider an all-cash bid of at least $40 per share. That represents a 43% premium to the Japanese firm's current offer, which values Xerox at about $28 per share. In an open letter to shareholders, Icahn and Deason said they are "confident other potential buyers are waiting in the wings," and they see the possibility of similar or better value in a standalone Xerox. They also lambasted Xerox's board for going back on an agreement to settle their dispute. In setting a minimum price on Xerox, the investors have thrown the ball back into Fujifilm's court while also gaining time to court other investors after Xerox failed on Monday to gain a quick appeal to a temporary court order blocking the deal. Although some analysts say Fujifilm would be better off putting its money into its non-copier and printer businesses, others argue that the Japanese firm—which relies its joint venture with Xerox for nearly half of its revenue—should bow to the investors' demands. "It's not cheap, for sure," said Masahiko Ishino, an analyst at Tokai Tokyo Research Center. "But for Fujifilm, it's still better than a complete collapse of the deal, which could mess up Xerox in a major way. Fujifilm shouldn't waste this opportunity." Icahn and Deason together own roughly 15% of Xerox.

Icahn Warns Danger of Bankruptcy in Fuji-Xerox Deal
" Nikkei Asian Review (Japan) (05/08/18) Nakayama, Shuji"

Carl Icahn is warning shareholders that a proposed takeover by Japan's Fujifilm could lead U.S. printer maker Xerox (XRX) into bankruptcy. In a written response to questions from Nikkei on Monday, Icahn said it was "absurd" for Xerox shareholders to accept the current offer to merge the U.S. company into existing joint venture Fuji Xerox. "Based on the ongoing accounting scandal that appears to grow in size and scope every quarter, combining Xerox with Fuji Xerox could possibly lead to bankruptcy," Icahn said, noting: "In that case, we run the serious risk that the only money we will ever see is the one-time $9.80 cash dividend." He also said that Fujifilm's proposal "dramatically undervalues Xerox and overvalues Fuji Xerox." He added that "no one from Fuji has ever even reached out to us. It's sort of laughable." The two sides have made little progress toward resolving their differences, raising the likelihood of a proxy battle. Icahn told Nikkei: "We've been through this countless times over the past four decades, and we believe there's very little chance we lose this proxy fight. Every shareholder we've spoken to has been extremely supportive of and grateful for our efforts. They want to see the proposed Fuji deal terminated, new leadership brought in at Xerox, and a real strategic alternatives process conducted." When asked if he would push for dissolving all financial ties with Fujifilm once the proxy fight was won, Icahn said, "Once our slate of directors is elected and the proposed Fuji deal is terminated, every option will be on the table."

Elliott Looks to Take Athenahealth Private
" Wall Street Journal (05/07/18) Lombardo, Cara; Prang, Allison"

Elliott Management Corp. is angling to take Athenahealth Inc. (ATHN) private, arguing the company is missing an opportunity to expand and providing insufficient returns to shareholders.  Elliott—which owns an 8.9% stake in Athenahealth—offered on Monday to buy the remainder of the health-care software company for $160 a share, a 27% premium to its Friday closing price.  The offer values the entire company at approximately $6.5 billion.  "It is clear to us and becoming clear to many others that Athenahealth's potential will never be realized without the kind of operational change that the company seems unable to deliver," Elliott wrote in a letter.  The investor believes that Athenahealth should be more actively selling its cloud-based software to hospitals and better competing with Cerner Corp. (CERN) and Epic Systems Corp., according to sources.  Elliott reportedly thinks that Athenahealth could eventually be bought by a strategic buyer such as Cerner.  The investor said it had approached Athenahealth in November about going private, but the company did not engage.  Elliott added that it "may also be able to substantially improve the proposed price with additional, private diligence."  One of its complaints in its letter was that the "leadership team has lacked stability," observing that the company has had five CFOs over the past four years and that its chief product officer just exited.

Telecom Italia Reappoints Genish as CEO After Elliott Coup
" Reuters (05/07/18) Flak, Agnieszka; Jewkes, Stephen"

Telecom Italia (TIM) announced Monday its board had unanimously backed Amos Genish's reappointment as CEO. The move comes after U.S. fund Elliott triumphed in a battle for board control at the phone group last week, winning a shareholder vote to appoint 10 independent directors—or two-thirds of the board—and thus loosening the grip of top shareholder Vivendi. Genish is close to Vivendi but is also respected by Elliott, the Italian government, and investors. The 58-year old had previously said he would only continue in his role if the new board backed his plan, which emphasizes a digital transformation of the company, fixing its finances, and getting back an investment grade credit rating. Vivendi said Monday it welcomed the appointment of Genish and reaffirmed its long-term commitment to TIM. The French media group said it would ensure the company's plan was "coherently implemented in its entirety" and that measures taken to improve profitability continued. Five of Vivendi's candidates, including Vivendi CEO Arnaud de Puyfontaine, will be on the board, so the two sides will have to find a way to work together to help the company reduce debt and become more competitive.

Comcast Lines Up Financing for Possible Hostile Bid for 21st Century Fox Assets
" Wall Street Journal (05/08/18) Sharma, Amol"

Comcast Corp. (CMCSA) is getting the pieces in place to make a hostile bid for 21st Century Fox's (FOXA) entertainment assets should it opt to do so.  Fox agreed late last year to sell the assets in question to Walt Disney Co. (DIS) for $52.4 billion in stock. Comcast is considering making a play to break up that deal, sources state. The cable giant has yet to decide whether to proceed with a hostile bid. One big factor is the outcome of the federal government's lawsuit to stop the pending merger of AT&T Inc. (T) and Time Warner Inc. (TWX). If those two corporations are successful and their deal survives, the sources say Comcast would be emboldened to pursue the Fox assets. Arguments in the antitrust case against the deal recently concluded, and the judge said he would announce his ruling on June 12.

Oaktree Proposes Two New Directors Be Appointed To Ranger Direct Board
" Alliance News (05/08/18) Laniyan, Dayo"

Oaktree Capital Management LP sent a letter to Ranger Direct Lending Fund PLC on Tuesday nominating two new directors to the company's board. Oaktree said it was "deeply disappointed" with the fund's board of directors, citing a series of poor decisions, a "flawed and biased" strategic review, and corporate governance that has led to the "destruction of shareholder value." Ranger Direct recently said that the Princeton Alternative Income Fund LP and Princeton Alternative Funding LLC filed voluntary petitions of bankruptcy, after arbitration proceedings following a provisional takeover of a loan portfolio. In April, Oaktree wrote to Ranger Direct stating that it would be in the best interest of shareholders for it to wind down the company and return its capital. "We strongly believe that the board's weaknesses can only be resolved by adding to the board and introducing a greater degree of oversight, a broader range of views and a much deeper base of relevant experience at this important strategic time for the company," Oaktree said in the letter. Oaktree owns a 19% stake in Ranger Direct.

Paul Singer's Elliott Makes All-Cash Offer for Athenahealth of $160 a Share
" CNBC (05/07/18) Moyer, Liz"

On May 7, Elliott Management made an all-cash deal worth $160 a share for athenahealth (ATHN). The hedge fund run by Paul Singer took a stake of 9.2% in the healthcare technology company about a year ago, but that stake now stands at 8.9%. In a letter to management, Elliott said it has had constructive discussions with management, "and we greatly appreciate how much time the management team, led by [CEO] Jonathan [Bush], and the Board have invested in evaluating our perspectives as well as the perspectives of our fellow shareholders." The letter went on to say, "Unfortunately, we are faced now with the stark reality that athenahealth as a public-company investment, despite all of its promise, has not worked for many years, is not working today, and will not work in the future. Given athenahealth's potential, this reality is deeply frustrating."

Carl Icahn Sells Stake in AIG: Sources
" Reuters (05/07/18) Barlyn, Suzanne; Herbst-Bayliss, Svea"

Carl Icahn has sold his stake in AIG, according to sources. He began accumulating AIG shares in 2015 and became its third-largest investor with a 4.76% stake at the end of last year. Icahn reportedly exited AIG when its stock price ranged from $60 to $65 a share. At $65 a share, his stake would have been worth $2.78 billion, according to calculations by Reuters.

Telecom Italia Seen Reappointing Genish as CEO After Elliott Win
" Reuters (05/07/18) Flak, Agnieszka"

In the wake of Elliott gaining board control from Vivendi, Telecom Italia (TI) is expected to reappoint Amos Genish as CEO as the company enters a new phase. On May 4, Elliott won a shareholder vote to appoint 10 independent directors, or two-thirds of seats, to the board at Telecom Italia. Sources say the first name on Elliott's slate, Fulvio Conti, a former manager at Telecom Italia, is seen as a front-runner to become chairman. Elliott, the Italian government, and investors respect Genish despite his closeness to top shareholder Vivendi. However, Genish has said he will continue only if the new board backs his plan, which focuses on a digital transformation of the company, fixing its finances, and getting back an investment grade credit rating. Elliott has a 9% stake in the company, while Vivendi owns 24%.

Barclays Ready to Fend Off Radical Proposals by Sherborne
" BT (British Telecom) (05/07/18)"

Barclays (BCS) CEO Jes Staley and finance director Tushar Morzaria are expected to sit down with Ed Bramson, whose fund Sherborne is the investment bank's fourth-largest shareholder with a stake of about 5.4%, to inform him that shareholders do not have the appetite for a major overhaul. Bramson has not yet made any specific demands, though some believe he will push for an overhaul at Barclays to deliver bigger returns for investors. Following a lengthy period of restructuring, one board member believes "shareholder support for the current strategy is there." However, the board member added that, "Generally as a board we're focused on the three- to five-year picture of where we can go, and frankly we'd all like to get there as fast as we could. If there are sensible things to do, then why not?" Meanwhile, observers do not believe Bramson will ask for a spot on the Barclays board, as it could generate backlash from regulators who would prefer stability over a shake-up at one of Britain's biggest lenders.

SandRidge Expands Board to Allow Two Icahn Nominees
" Reuters (05/04/18) Farhatha, Ahmed"

SandRidge Energy (SD) announced Friday it would let shareholders elect two of Carl Icahn's nominees to the board, expanding it from five to seven members. The investor last month nominated a five-person slate with the aim of overhauling the board, but SandRidge said in a filing Friday that adding more than two Icahn nominees could delay a strategic alternatives review. Icahn—who owns roughly 13.5% of the company—has successfully thwarted SandRidge's planned buyout of competitor Bonanza Creek Energy Inc. (BCEI) and forced the ouster of the company's CEO and CFO.

Xerox Appeals Ruling Blocking Fujifilm Deal
" Japan Times (Japan) (05/05/18)"

Xerox Corp. (XRX) has appealed a New York court ruling to prevent its deal with Fujifilm Holdings. The move came Friday just hours after the company announced that its ousted CEO and directors would remain in place as the agreement to oust them reached with dissenting shareholders Darwin Deason and Carl Icahn expired late Thursday. A Japan Times source said Xerox's board let the settlement expire because it came to believe it had flexibility to renegotiate a deal with Fujifilm. In addition, board members took into account that the company's stock had fallen more than 10% since it announced its settlement with Deason and Icahn.

Crescent Point Shareholders Reject Dissident Slate of Directors but Vote Against Say-on-Pay
" Canadian Press (05/04/18)"

The head of Crescent Point Energy Corp. (CPG) is pledging to work harder to address complaints after shareholders rejected four directors nominated by Cation Capital Inc. at its annual meeting on Friday. Scott Saxberg acknowledged that the company has faced questions for years from investors critical of its spending, debt levels, executive pay, and share performance, but insisted the company has already made changes and is willing to do more. All 10 of CPG's nominees were elected at the annual general meeting in Calgary. However, 61% of shareholders rejected a "say-on-pay" motion asking them to endorse the way Crescent Point pays its executives. The company also lost a similar motion at its 2016 annual meeting. Former investment banker Thomas Budd, one of the four defeated dissident nominees, said the action by Cation has drawn attention to the many problems at Crescent Point. "Basically, the board has let Scott do whatever he’s wanted for three years," he said after the meeting, adding the CEO's pay has not reflected the company's sagging share price. He also indicated that he owns more stock than the re-elected directors. Saxberg said he thinks the compensation rejection was more of a vote on its share price, which declined almost 40% in the 12 months before Cation launched its proxy contest in early April.

Cincinnati Bell Defeats GAMCO
" Cincinnati Business Courier (05/07/18)"

Cincinnati Bell (CBB) announced Friday that shareholders had rebuffed GAMCO Asset Management Inc.'s attempt to gain board representation. GAMCO leader Mario Gebelli had proposed James Chadwick, Matthew Goldfarb, and Justyn Putnam to join the board of the Cincinnati-based communication company, arguing that more oversight is needed on behalf of its shareholders. Cincinnati Bell said that the owners of 11.2 million shares voted in favor of Gabelli's nominees, while it received 25 million to 31 million share votes. GAMCO and its affiliates own roughly 11% of the company's total outstanding stock. Gabelli is also waging a proxy fight at Cincinnati-based company E.W. Scripps Co. (SSP), where he has nominated three directors to join the board ahead of the company's annual meeting on May 10.

M&C Hotels Directors Hit by Revolt by Minority Shareholders
" Reuters (05/04/18) Martin, Ben"

Millennium & Copthorne Hotels (M&C) faced an investor revolt last week over the re-election of some board directors. The hotelier, majority-owned by chairman and Singaporean billionaire Kwek Leng Beng, said minority investors cast a "significant number of votes" against the reappointment of its independent non-executive directors, including Shaukat Aziz and Susan Farr. The move came after Kwek failed in January to acquire the 34.8% of M&C he does not already own, with investors rejecting the bid despite support from the company's independent board directors. At the May 4 annual meeting, 33.7% of minority shareholders voted against the re-election of Aziz, and 32.5% opposed the reappointment of Farr. "The board takes the views of the company's shareholders seriously and will continue to engage with them to understand their concerns," the company said.

Third Point Calls for Otis Elevator Owner United Technologies to Split Into Three
" CNBC (05/04/18) Cheng, Evelyn"

Third Point's Dan Loeb said on May 4 that United Technologies (UTX) should split into three companies. The hedge fund, which took a "significant stake" in the company in the fourth quarter, wrote, "To reverse its years of underperformance and realize the full potential of its franchise assets, we believe UTC should split into three focused, standalone businesses: Otis [Elevator Company], [UTC Climate, Controls & Security], and an aerospace company ("Aerospace RemainCo") encompassing UTAS and Pratt & Whitney." The company responded with a statement reading, "While UTC disagrees with several of the assertions contained in the Third Point letter, the company is always open to the input of shareholders." According to Third Point, it has initiated conversations with United Technologies' board, and CEO Greg Hayes has indicated the board is reviewing the company's portfolio.

Destination Maternity in Proxy Battle
" Chain Store Age (05/04/18) Wilson, Marianne"

Destination Maternity (DEST), the nation's biggest maternity apparel retailer, faces a challenge from the Miller Group at its May 23 annual meeting. In a May 4 letter to stockholders, Destination Maternity said the Miller Group—which holds a 7.6% stake in the company, making it the second largest investor—wants to replace the company's entire board with a slate of "unproven and untested nominees" who lack "institutional knowledge" of the company. The company noted that "not one of the Miller Group's nominees appears to possess any experience as a director of a public company of Destination's size and complexity, and only two of the four have ever served in a senior/leadership role at a public company...Simply put, their collective experience and relevant expertise pale in comparison to the decades of corporate leadership and board experience in the retail and apparel industry represented on your board."

KKR to Ditch Partnership Structure and Become Corporation
" Wall Street Journal (05/03/18) Gottfried, Miriam; Rubin, Richard; Cumming, Chris"

KKR & Co. (KKR) on May 3 announced plans to convert on July 1 from a partnership to a corporation, a structural change that many publicly traded private-equity firms have been considering following changes in U.S. tax legislation.  The partnership structure, which features multiple share classes and special tax-reporting requirements, has long limited the pool of investors willing or able to own shares of private-equity firms. KKR officials are hopeful the change will make the stock more attractive to institutional investors, most of which do not invest in publicly traded partnerships—a lack of demand that has depressed KKR's stock price. Scott Nuttall, KKR's co-president and co-COO, states, "It became clear to us that we've been fishing in a small pond with a slow leak and wondering why we weren't catching anything." KKR will become the second among its peers to convert. Ares Management LP became a corporation on March 1. Blackstone Group LP, Apollo Global Management LLC, Carlyle Group LP and other peers have voiced caution, referencing the expected hit to their profits. "We're monitoring carefully all aspects of the issue. We're not in a hurry," said Blackstone CFO Michael Chae on a recent earnings call. "This is a race that does not necessarily go to the swift, and you have one shot at making a thoughtful decision." ValueAct Capital Management LP, which owns approximately 6% of KKR shares, has called for the structural change. "This conversion will help to further expose a great business to a broader universe of potential investors, and increase long-term value for all shareholders," stated Mason Morfit, chief investment officer of ValueAct, in an email.

Jana, ConAgra End Standstill as Pinnacle Foods Comes Under Pressure to Sell
" Reuters (05/04/18) Brumpton, Harry; Roumeliotis, Greg"

ConAgra Brands Inc (CAG) announced Friday it had terminated a standstill agreement with Jana Partners LLC, the hedge fund angling for a sale of Pinnacle Foods Inc (PF). The end of the deal, which began in 2015 when ConAgra and Jana agreed to appoint two new mutually agreed directors to ConAgra's board, enables Jana to more freely agitate both ConAgra and Pinnacle Foods to explore a combination. ConAgra held talks to acquire Pinnacle Foods last year, but could not close a deal due to price disagreements, sources said at the time. Last month, Jana revealed a 9.1% stake in Pinnacle Foods and said it would speak to the company about it participating in industry consolidation by exploring a sale. ConAgra said its standstill agreement with Jana ended by mutual agreement. Pinnacle Foods shares were up 4% at $63.16 on Friday, giving the company a market capitalization of $7.5 billion. ConAgra shares were up 2.7% at $36.80, giving it a market capitalization of $14.7 billion.

RELEVANT ARTICLES

Why Bill Ackman Will Salvage Pershing Square
" Forbes (05/18/18) Schiefelbein, Luke"

In a recent interview, Garrett Arms, a portfolio manager at Moon Capital Management, discussed his long call on Pershing Square, the resilience of Bill Ackman, and his value investing philosophy. When asked whether several high profile losses and nearly $2 billion in redemptions will cause permanent damage to Ackman's and Pershing Square's reputations, he said he highly doubts it. "It is certainly not something that a couple of strong years of returns wouldn't cure and Ackman has a pretty good long-term batting average. The brevity of investor memory will allow the recent performance to get papered over, unless the mistakes keep compounding. And judging by the extent to which he has been crucified lately, the recent period of Ackman dismissal will probably turn out to be a good contrarian indicator for the fund," he said. As for how Ackman will emerge from this losing streak, Arms said, "I struggle to see Pershing's investing strategy changing much. At the margin, maybe Ackman keeps a lower profile for a few years." He added, "When you maintain such a high profile and exude that much confidence and things go poorly, by default, you are going to attract proportionately larger criticism. I heard one activist refer to it as the 'downside of what was the upside of being Bill Ackman.'"

AMP, CBA Scandals Threaten 'Cosy' Boardroom Club
" Australian Financial Review (05/18/18) Evans, Simon; Durkin, Patrick"

Boardroom culture in Australia has come under heavy criticism following scandals at AMP and CBA. Angry investors and the public are questioning how directors could miss major problems like the fee for no service misconduct that was going on at AMP. Critics say vast structural changes taking place in most industries mean boards must have deep knowledge of their sector and the inner workings of their company. As a result, critics say a seat on a board can no longer be a retirement or part-time job. Australia has a unique problem because a large number of directors have seats on other boards. Regulators and investors have raised their expectations of boards in recent years, telling them that they are responsible for culture. The rise of proxy advisers is having an impact and investors have been more willing to step up pressure on "overloaded" directors. Suncorp and NBN Chairman Ziggy Switkowski relinquished his Oilsearch board position after facing pressure from investors last year.

Spate of Company Scandals Taints Singapore's Clean Image
" Wall Street Journal (05/18/18) Watts, Jake Maxwell; Chaturvedi, Saurabh"

The Singapore Exchange plans to step up efforts to improve corporate governance at publicly listed companies. In January, regulators called for a public consultation on proposed changes to the corporate governance code intended to streamline rules and better enforce the impartiality of independent directors by limiting their terms. The move comes at a time when companies in Singapore have been rocked by a spate of police investigations and allegations of accounting irregularities. Critics say corporate governance and market regulation in the city-state is weak, while some investors allege that an "old boy's club" of independent directors and weak shareholder activism has failed to check company executives. Investment firm Keshik Capital has called for the resignation of executives at Declout over weak corporate governance. But challenging suspicious accounting in Singapore can be tough because strict defamation laws limit what people can say publicly. "It is fundamentally risky business to call out bad conduct," says Alex Turnbull of Keshik Capital. "Singapore is losing the confidence of investors," according to Ravi Murarka, an individual investor who has clashed with several companies over governance issues in the past few years.

JPMorgan and eBay Under Fire Over Shareholder Meetings
" Financial Times (05/16/18) Gray, Alistair"

U.S. companies have begun pushing back on corporate governance efforts that seek to make it easier for shareholders to call special meetings. Shareholders are filing formal proposals to lower the required level of investor support needed to call special meetings, but companies are now putting forward their own motions, which enable them to omit the shareholder proposals. JPMorgan (JPM) recently won support for a motion to retain its 20% requirement during a contentious vote. Capital One (COF) put forward a proposal at its annual meeting earlier this month, and eBay (EBAY) is seeking ratification for its existing 25% threshold at its annual meeting on May 30. The companies are engaging in "gamesmanship," says Rosemary Lally of the Council of Institutional Investors. "It's not a very democratic process when you do it that way." Special meetings are a powerful tool for investors who want to force changes at companies outside of the regular schedule of annual meetings. Shareholders have filed formal proposals to make it easier to call special meetings at a record 61 U.S.-listed companies this year, according to ISS Corporate Solutions.

Elliott Needs Pensioners' Help to Fight Auto Dynasty
" Bloomberg (05/17/18) Kim, Heejin; Kim, Sohee; Einhorn, Bruce"

Elliott Management Corp.'s proxy fight at a South Korean company is once again coming down to the country's $580 billion National Pension Service (NPS). The hedge fund is challenging Hyundai Motor Group's $8.8 billion merger plan between two units, three years after it opposed a reorganization plan by Samsung. In that battle, the deciding vote in favor of the conglomerate was cast by the NPS. The state-controlled NPS is once again at the center of this fight because of its combined $2.7 billion in holdings in the two Hyundai units. "If I were the NPS, I would abstain from voting," said Chang Park, an economics professor at Chung-Ang University in Seoul. "If the fund votes against Hyundai, local media would criticize it by saying it hates the chaebol. If it votes for Hyundai, local media would also criticize it for driving away foreign capital." Hyundai's founding family can hardly afford to lose the NPS' backing. The deal requires support from at least two-thirds of shareholders voting at a scheduled meeting May 29, and foreign investors last month held nearly half of Hyundai Mobis, according to data from the Korea Exchange. Meanwhile, Elliott owns more than $1 billion in Hyundai units. Glass Lewis & Co. and Institutional Shareholder Services Inc. agreed with Elliott that the proposed deal was unfavorable to Hyundai Mobis shareholders. The highest-ranking official to weigh in on the proxy fight is Kim Sang-jo, head of the Fair Trade Commission that oversees conglomerates, who has opposed Elliott's proposal. Caught in the middle is the NPS, which will ask an outside committee to decide next week on whether it should vote for the deal or not.

Companies Find Value in Combining Compliance, Sustainability
" Wall Street Journal (05/15/18) DiPietro, Ben"

An emerging trend among some big corporations is the melding of their risk and compliance functions with their environmental, social, governance, and human-rights programs. Companies embracing these changes include Barrick Gold Corp. (ABX), which is bringing together its corruption, human rights, and compliance programs; Novartis AG (NVS), which is combining its risk management and compliance programs; and both Lockheed Martin Corp. (LMT) and AstraZeneca PLC (AZN), which are melding their compliance and sustainability functions. The change comes as part of a growing recognition among multinationals that protecting their organization's reputation and mitigating its risks requires a more coordinated and integrated response, said Alison Taylor, managing director at BSR, a global nonprofit sustainability organization. Part of this emerging shift is driven by the increased focus of activists using social media to name and shame companies that displease them, and among governments to hold companies to account for the impact their decisions have, she said.

Why Buy Volkswagen When You Can Get Porsche for Less?
" Wall Street Journal (05/15/18) Wilmot, Stephen"

A court case set to commence in June should eliminate a significant roadblock for the merger between Volkswagen and Porsche, which has not officially occurred despite a takeover battle a decade ago. The companies already have merged operationally, but Porsche remains a listed holding company that owns a slight majority of VW voting shares. The takeover saga involved Porsche borrowing heavily to accumulate VW stock prior to making an acquisition, catching hedge funds in a short squeeze when VW shares surged after the announcement was made, and VW ultimately bailing out Porsche in exchange for a stake in its car business when banks called in the loans that funded the takeover effort. Paul Singer's Elliott Management was among the investors that filed suit against Porsche for allegedly cornering the market in VW stock, prompting executives to call off the full merger. Porche's 52% share of VW voting stock is worth nearly all of its roughly 27 billion euros in assets. Investors have found an opportunity in a 6 billion-euro gap between Porche's assets and its 21 million-euro market capitalization. According to Barclays automotive analyst Kristina Church, the legal claims against the company currently total 6.3 billion euros, which far surpasses what Porsche likely will pay. Observers say the discount at which Porsche shares trade should narrow as the case moves ahead, and investors could boast significant returns even if the companies do not merge. Investors can bet on the discount closing by buying Porsche stock and selling VW's shares short, or they can buy Porsche as a doubly discounted way into VW.

What It Means When Shareholders Withhold Their Support for Company Directors
" National Post (Canada) (05/14/18) Critchley, Barry"

Variations in shareholder support for individual directors on boards may not necessarily be a reflection of the work done at the company holding the vote. For example, the results released by Onex Corp. at its May 10 annual meeting reveals that Arni Thornsteinson, a director since March 1987, received 94.91% support, which is up from 90.28% in 2017 but down from 97.58% in 2016. According to the circular, Thornsteinson's industry experience and expertise is real estate, finance, investment banking, corporate governance, and hospitality. Onex's shareholders may have not been too pleased with how some of Thornsteinson's other activities were working out. For example, in 2015, activists focused their attention on Temple Hotels, which resulted in Monguard Corp. winning managerial control. One shareholder said he would not "read too much" into the results, as support above 90% is "pretty healthy." It is rare for shareholders to gather enough support to oust the nominees put forward by companies. What is more common, but still rare, is for nominees to step down due to activist campaigns before an annual meeting. That has happened at DIRTT Environmental Solutions and AIMIA this proxy season.

Australian Directors 'Buzzing' as Gender War Looms for Boards
" Australian Financial Review (05/14/18) Durkin, Patrick; Patten, Sally"

A showdown is on the horizon between directors and shareholders in Australia over women on boards as both sides weigh in on the issue amid backlash over the AMP scandal and the ASX's newly proposed 30% gender targets. The resignation of AMP Chairman Catherine Brenner and subsequent departure of the three remaining female AMP directors last week has sparked a fierce gender debate. The chairman of the Australian Institute of Company Directors (AICD), Elizabeth Proust, said that the coverage of Brenner's resignation was "sexist" and reiterated that female directors need greater financial and line experience to boost their credentials to help fill board demand. But Peter Swan, professor of finance at the UNSW Business School, is a harsh critic of the update to the ASX's corporate governance principles, which builds on the target of 30% of ASX200 board seats—currently at 27%—set by the AICD and industry super funds led by the Australian Council of Superannuation Investors. "All the research shows that diversity has no discernible impact on performance," said Swan, who has previously argued that independent directors destroy shareholder value.

CEO Pay and Performance Often Don't Match Up
" Wall Street Journal (05/14/18) Fuhrmans, Vanessa"

Corporate boards have tried for years to tie CEO pay to the results they deliver.  In reality, though, CEO compensation and performance have often not matched up.  For instance, among S&P 500 CEOs who got raises in 2017, the 10% who received the biggest pay hikes scored—as a group—in the middle of the pack in terms of total shareholder return. That's according to a Wall Street Journal analysis of data from MyLogIQ LLC and Institutional Shareholder Services.  Similarly, the 10% of companies registering the best total returns to shareholders scored in the middle of the pack in terms of CEO compensation. One reason for the mismatch is that boards often establish CEO pay by benchmarking the average compensation for leaders at a peer group of companies and establishing performance targets accordingly. That works if CEO performance doesn't vary too much from the average.

Hedge Funds' Favorite Charity Is Funding Their Opponents
" Wall Street Journal (05/14/18) Copeland, Rob"

Daniel Loeb and other hedge-fund managers have inadvertently sent millions of dollars to groups participating in anti-hedge-fund activist campaigns, such as the Hedge Clippers and Strong Economy For All. They have done so through a series of transactions involving the Robin Hood Foundation, a nonprofit co-founded by investor Paul Tudor Jones that serves as the hedge-fund industry's unofficial charitable arm. The foundation collects money from virtually every big name hedge-fund manager, with Loeb donating about $1.2 million since 2010. The money supports "organizations helping New Yorkers in need," like community centers, healthcare providers, and mentorship programs, according to the nonprofit. Since 2010, more than $11 million in grants have been given to an arm of Service Employees International Union, Coalition for the Homeless, and Make The Road NY, which are among the more than 20 labor and advocacy groups that make up Strong Economy For All or the Hedge Clippers.

Activists Don Sustainability Cloak to Whip Up Support
" Financial Times (05/13/18) Mooney, Attracta"

Shareholders continue to use environmental, social, and governance (ESG) issues in their campaigns. Industry experts say shareholders are using ESG issues to win wider support from pension funds and traditional asset managers, but some note that more investors are concerned about these issues. The California State Teachers' Retirement System (Calstrs) and Jana Partners, two of Apple's (AAPL) biggest shareholders, recently called on the technology company to address the addictive nature of its iPhone. Cartica, which has pushed for responsible investments in emerging markets, has also pressed companies on governance changes. Mexican restaurant operator Alsea responded to pressure from the hedge fund by announcing in December that Google executive Adriana Norena would join its board. There is debate over whether ESG is associated with positive performance, but shareholders say paying attention to it can lead to higher returns. Research indicates that companies with better ESG credentials outperform their rivals. According to a study in January from index provider MSCI, companies with high ESG ratings "can generate abnormal returns," leading to higher profitability and dividend payments.

U.S. 'Vultures' Shine Spotlight on U.K. Boardrooms
" Telegraph.co.uk (05/12/18) Burton, Lucy"

Elliott Management, which wrestled control of Telecom Italia's board from French media group Vivendi earlier this month, is digging its teeth further into Europe. The investor is ramping up its focus on U.K. corporations after years of work behind the scenes. So far this year, Elliott has taken aim at shopping mall group Hammerson, Costa Coffee owner Whitbread, bookstore chain Waterstones, software firm Fidessa, technology company Micro Focus, artificial joint-maker Smith & Nephew, engineering firm GKN, broadcaster Sky, and Anglo-Australian miner BHP Billiton. Founder Paul Singer is one of the world's most feared investors, but the U.K. arm of Elliott is run by his eldest son, Gordon, who does not have a history of engaging in bloody battles and ruthless tactics. "Elliott has adapted its style to be constructive [in the U.K.] and establish a relationship with the company from the start rather than going for the jugular from the outset," says one shareholder. Elliott's success in forcing out boss Alliance Trust's Katherine Garrett-Cox is viewed as a watershed moment for the business in Europe. Some observers say Elliott has come to the realization that there is not a huge gap between investors and companies in the U.K. "Activists charging in and making a lot of noise actually got a stronger, more positive reception in the U.S., whereas here that gap never existed and therefore you don't need that level of confrontation," says a London-based shareholder who works closely with Elliott.

Half of U.K. Companies Ignore Shareholder Rebellions During Voting Season
" London Evening Standard (05/14/18) Bow, Michael"

Of 45 U.K. companies that faced shareholder rebellions last year, 21 of them are repeat offenders from 2017, according to the Investment Association Public Register. The figures will raise questions over whether the companies are taking notice of shareholders with concerns over issues such as pay and boardroom appointments. "The number of repeat offenders from 2017 is striking," the association's director of stewardship and corporate governance Andrew Ninian said. "Companies can no longer ignore shareholder concerns." Wages are once again the leading issue for shareholders, with 14 of the 45 rebellions up until May 4 focused on pay. The Public Register was introduced in December to maintain a register of rebellions following a government consultation on corporate governance reform. The register is coming into force for the first time this meeting season. "The [Independent Association] expects these companies to set out how they are responding to the investor concerns within six months of their AGM," Ninian said. Of the 21 repeat re-offenders, 12 have been put back on the register for a second time after experiencing dissent on the same issue.

'The Ship Has Sailed'—Push Back Against Women on Boards Will Fail
" Sydney Morning Herald (Australia) (05/12/18) Williams, Ruth"

On May 10, the AMP board was faced with a shareholder question at its annual meeting asking whether gender or ability would take priority in future board appointments. The question came after the progressive departure of every woman on the Australian wealth giant's board. First, Chairman Catherine Brenner resigned following the recent revelations from the banking royal commission that AMP repeatedly misled the corporate regulator over its "fees for no service" scandal. This week, Holly Kramer and Vanessa Wallace withdrew their re-election bids, and AMP's longest-serving board member, Patty Akopiantz, announced that she would depart at the end of the year. This series of departures has raised questions about why only the women left the board, and why shareholders did not also reject Andrew Harmos, whose re-election passed with only 62% of votes cast. Shareholder Stephen Mayne questioned why Akopiantz did not leave the board at the same time as Brenner, indicating that such a move could have saved Kramer and Wallace and staved off "this whole debate about gender." Corporate leaders and gender diversity advocates are asking why the failings of one specific board at a company facing very specific circumstances has fueled negativity about the quality of women on boards. Meanwhile, experts continue to promote the benefits of gender diversity. "Anyone who has sat and watched a more balanced team sees how it operates differently," says Reserve Bank board member Kathryn Fagg, who is concerned that the current debate may deter women from taking on high-profile roles.

Proxy Voting Is the Latest Target for Blockchain Disruption
" Bloomberg (05/10/18) Katz, Lily"

The U.S. Patent and Trademark Office has granted a patent to Broadridge Financial Solutions for its distributed-ledger technology. The firm plans to apply the blockchain technology to proxy voting. The company believes its distributed-ledger technology has the potential to improve the proxy voting process by offering participants more granular insights into vote totals and progress against the proxy timeline, according to Horacio Barakat, vice president of corporate strategy for the provider of trade-processing technology, in an email. "Broadridge is employing blockchain technology to enhance proxy voting through increased levels of corporate governance and transparency, security, and operational efficiency," said Barakat.

Institutional Investors Lukewarm on CEO Pay-Ratio Disclosure
" IR Magazine (05/07/18) Ashwell, Ben"

Many institutional investors are not paying attention to CEO pay-ratio disclosures this year. T Rowe Price (TROW), which says it will consider its approach to the pay ratio next year, says there is not enough data to make a comparison. CalSTRS says executive compensation is complex, so the pension fund will not vote against a company based solely on the CEO pay ratio. Issuers should provide additional information to explain the ratio, including the number of overseas employees, number of hourly employees, and the ratio of CEO pay to the average employee, CalSTRS noted in a comment letter to the Securities and Exchange Commission last year. Many institutional investors share this view, according to Rosemary Lally, editor at the Council of Institutional Investors. IR Magazine contacted more than 20 institutional investors and all responses emphasize the importance of aligning CEO remuneration and shareholders' long-term interests, placing the burden of responsibility on the board of directors. In most cases, the asset managers also point to investment theses they published before the CEO pay-ratio requirement came into effect, but few specifically reference the new disclosure. Institutional Shareholder Services and Glass Lewis also are not factoring CEO pay ratio disclosures into their voting recommendations for 2018, says Peter Kimball, executive director with ISS Corporate Solutions.

In the Long Run, Fear of Short-Termism Is Mostly Bunk
" Wall Street Journal (05/10/18) Mackintosh, James"

Frenetic trading rules Wall Street, but the evidence does not support the idea that it makes listed companies focus on the short term. Back in 1936, economist John Maynard Keynes set out the basic critique of investing in the hope of short-term gains, and since then, turnover of stocks has soared, with the average holding period now less than 12 months. Activist investors—often derided as short-term plunderers—take on almost one in 10 U.S. companies each year. In a forthcoming paper, Harvard Law School professor Mark Roe notes that there should be three effects, if short-termism really has spread from Wall Street to management. R&D should be lower, business investment should fall faster in the United States than in countries less reliant on stock exchanges, and corporate cash should be lower as shareholders demand it back via buybacks and dividends. However, R&D spending by S&P 500 companies is at the highest proportion of sales since at least 1990, according to Goldman Sachs. Capital spending by S&P 500 companies is expected to be up 24% over the previous year, according to Credit Suisse. Share buybacks have surged, but companies usually aren't buying back stock with cash that could instead be invested for the future. They are borrowing to pay for the buybacks, taking advantage of low interest rates, and aren't deprived of cash as a result.

State Street's 'Fearless' Advocacy for Board Diversity
" Wall Street Journal (05/11/18) Lemos Stein, Mara"

Rakhi Kumar is the head of environmental, social and governance investments and asset stewardship for State Street Global Advisors (SSGA), which famously unveiled the bronze statue of "Fearless Girl" near Wall Street in a campaign to push for board diversity. In this interview, Kumar speaks about sustainability as part of corporate strategy for long-term returns and how that translates into engagement globally. In the current proxy season, SSGA is taking voting action and engaging with companies, Kumar said. "More companies are clearly aware of the need for greater gender diversity in boardrooms. Some of the biggest changes are in Canada and Japan." SSGA's other priorities this proxy season include "environmental issues such as climate change and water, and executive compensation. We are looking at how companies are incorporating sustainability in their long-term strategy, at how that ties in with overall compensation and incentives," Kumar said. She noted that the rise of stewardship codes has led to an increasingly proactive stance among large investment management firms in recent years. "What has led to some ESG factors becoming more important is the understanding of the low-probability-but-high-impact nature of these factors such as climate risk, health, and safety," she added. In addition, SSGA will this year be focusing on the pharmaceutical sector, materials, and retail. It is being proactive in seeking meetings with management and is also calling for gender diversity at these companies, Kumar said. "We have devised a screen to proactively identify [poor diversity] and we will take voting action. We are taking a comply-or-explain approach, where the company has to explain why they don't think they need greater diversity, if that is the case," she explained.

Elliott Victory Cannot Hide Telecom Italia's Weakness
" Financial Times (05/10/18) Sanderson, Rachel"

Elliott Management might not be able to save Telecom Italia from its continued decline.  Last Friday, shareholders approved Elliott's proposed slate of directors following weeks of debate and regulatory intervention focused on allegations that French media group Vivendi was snubbing governance norms.  Elliott, which owns 8.8% of Telecom Italia, now has 10 of the 15 board seats.  Marina Brogi, professor at Rome's La Sapienza university and an expert in finance and capital markets, argues that the appointment of the newly appointed board at Telecom Italia “testifies that Italy's corporate governance practices have improved considerably.”  Still, it has been a long way down for what was once one of the most promising of Europe's former nationalised industries—and the past does not offer much hope of a happy ending.  Since privatisation, Telecom Italia has lurched from one financial investor to another.  A $65 billion leveraged buyout in 1999 saddled it with a debt it has never really escaped and set up a still unresolved governance psychosis.  Telecom Italia has in the past two decades missed out on the globalisation and convergence that has swept the industry as politicians thwarted mergers with AT&T and Deutsche Telekom, and financial owners piled it with debt and bled it of assets and dividends.  Elliott's plan was to sell part or all of the fixed-line network, the undersea cables unit and wireless infrastructure business, and a conversion of savings shares to lower leverage and unlock value.  But with a split board at the company and a political vacuum in Italy, with a government still not formed after inconclusive elections in March, getting a clean and swift decision on asset sales seems improbable.

ACCA Spotlights Corporate Governance
" Accounting Today (05/09/18) Cohn, Michael"

The Association of Chartered Certified Accountants (ACCA) has issued a report on the importance of proper corporate governance in fostering a positive relationship between businesses and the public.  Titled "Tenets of Good Corporate Governance," the report discusses several key issues in global corporate governance practice.  They include greater diversity and balance on corporate boards, the compensation gap between the top and the bottom of some companies, and enabling an effective board.  "While the corporate governance debate has come some way over the last decades, many still see it as a compliance exercise," states Jo Iwasaki, head of corporate governance at ACCA.  "Hopefully this report helps businesses to examine their vision and strategic direction in a broader context, which will in turn allow their companies to achieve long term growth."

How Netflix Redesigned Board Meetings
" Harvard Business Review (05/08/18) Larcker, David; Tayan, Brian"

Netflix (NFLX) takes a novel approach to sharing information that directors need to make fully informed decisions on matters such as strategy, succession, and performance, according to a study from David Larcker and Brian Tayan, researchers at the Rock Center for Corporate Governance at Stanford University. First, board members attend monthly and quarterly senior management meetings, and are expected to observe the proceedings, but not influence or participate in the discussion. Directors gain a better understanding of Netflix's issues and its analytical approach to managerial decisions. Netflix directors believe direct exposure to active strategic discussions provides them with a substantially deeper knowledge of the company. Second, directors can use online memos, essentially a living document, to ask questions and make comments, and executives can amend the text and answer questions. Board members receive the memo a few days before board meetings, and are self-directed in reviewing the material and clicking through to review supplemental analysis of topics. As a result, directors are prepared for board meetings, which are more efficient and focus on questions and discussions rather than presentation. Larcker and Tayan believe Netflix provides a model for overcoming the governance shortfall in sharing information with boards.

Activist Investors Flex Their Muscles in Asia
" Wall Street Journal (05/08/18) Russolillo, Steven"

Activist investors are increasingly engaging companies in Asia, as a growing awareness of corporate governance in the region makes many big companies vulnerable to investors who call for for change. A new J.P. Morgan report finds that shareholder activists launched 106 campaigns in Asia during 2017 compared to just 10 such campaigns that took place six years ago. Asia now comprises 31% of all activist investment campaigns outside the United States, with the percentage almost tripling from six years earlier.  An increasing share of foreign investors who own Asian equities, combined with new corporate-governance regulations, have turned the area into fertile ground for shareholder activism.

Hiding Gender Gap Won't Make It Go Away, Natasha Lamb Says
" Bloomberg (05/08/18) Green, Jeff; Greenfield, Rebecca"

Arjuna Capital's message for public companies is "show, don't tell," when it comes to the gender wage gap. Too few corporations make public any useful detail on what they pay their male and female employees, said managing partner Natasha Lamb at the Bloomberg Business of Equality summit Tuesday in New York. "The reason for transparency is simple accountability," Lamb said. "The real source of the problem is that we've had this conversation locked up in a black box for decades. There's a reason for that. Because where there is money, there is power, and all of these conversations are about power and shifting the power balance." Companies in the U.K. were required to publish their overall pay gap for the first time this year—revealing disparities as big as 59% at major banks such as HSBC Holdings Plc (HSBC), Britian's largest bank—but companies in the U.S. have no such requirement. Arjuna started by pushing eBay Inc. (EBAY) to close the pay gap and was among the investors that urged Apple Inc. (AAPL) and Intel Corp. (INTC) to publicly disclose the data. This year, under pressure from the investor, American Express Co. (AXP), Mastercard Inc. (MA) and most of the big U.S. banks have also agreed to disclose their gender pay gap and to take steps to narrow it. In April, Arjuna issued rankings on 33 companies based on their gender-pay-gap disclosure, giving Apple and six other companies an A-, the top grade, and 11 companies received a grade of F, including Facebook (FB) and Walmart (WMT) for not disclosing enough information. "Sunlight is the best disinfectant," Lamb said. "If we can really expose what the issue is and we can fix it."

So Few Women Are on Colorado Corporate Boards the State Ranks Next to Last in New Report
" Denver Post (CO) (05/08/18) Svaldi, Aldo"

In Colorado, females are struggling to gain representation on corporate boards. According to a new Women's Leadership Foundation survey, women hold about one of every eight board seats at the state's publicly traded companies. Meanwhile, 45% of Colorado's public companies have all-male boards. Of the two dozen U.S. states with 10 or more Fortune 1000 companies, Colorado placed 23rd for female representation on corporate boards. Studies show companies lose out when they exclude women. Boards with three or more females registered 37% earnings per share growth over five years versus an 8% decline for companies with no female directors, MSCI ESG Research reports. Red Robin Gourmet Burgers (RRGB) stands out among Colorado companies, due to its female CEO and a board where four of the eight director seats, including the chair, are held by women.

Looking for a Few More Good People: Why Independent Directors Are in Short Supply
" Financial Post (05/08/18) Dias, David"

Activist investors put pressure on independent directors as they advocate for change at Canadian companies. The rise in stakeholder involvement has led to more disputes, which has increased the burden on independent directors called upon to mediate these matters. Board candidates with the most industry experience often have the kinds of connections and "material relationships" that automatically disqualify them from independence. In the worst-case scenario, those who do meet independence standards are called upon to go to war, potentially burn their bridges, and have their credentials dragged through the court. Boards now complain that an increased workload and reputation risk have scared off qualified candidates, resulting in a shortage. In an effort to address complaints from controlling shareholders that the current approach to independence is flawed, the Canadian Securities Administrators last fall published a consultation paper requesting comments on whether regulators should ease rules on board independence. Shareholder groups opposed the idea. Lawyer and veteran corporate director Peter Dey says his landmark 1994 report on governance, commissioned by the Toronto Stock Exchange, "overemphasized" the importance of rigid criteria for independence. As a result, many boards have focused less on industry experience and other important qualifications.

Ex-Everest Hedge Fund Managers Engage Japan Stock
" Bloomberg (05/06/18) Redmond, Tom; Sekine, Hiroyuki"

Activist investing is on the rise in Japan at a time when Prime Minister Shinzo Abe's government is pushing firms to become more responsive to shareholders. Volta Global, which has owned Asanuma Corp. shares since January, is now pressing the small construction company to spend 10 billion yen ($92 million) on a special dividend or share buyback, and to hand over all its profit for the current financial year to shareholders. A March 19 letter to the Japanese company from the family office run by former managers of hedge fund firm Everest Capital also urges it to publish more information in English. In a May 1 phone interview from Miami, Jeffrey Evans, partner and managing director at Volta, said the family office will consider moving to a proxy fight if Osaka-based Asanuma doesn't respond sincerely to the requests. Volta tends to hold its public market investments for at least 18 months, he said. Yoshimichi Yagi, investor relations manager at Asanuma, said the company is aware of the letter. "We take the contents seriously, and will proceed in a positive manner to do what should be done," said Yagi. "We have received various requests from other shareholders, and we are, of course, giving them proper consideration."

Increased Number of Women Directors a Win for Nevada, Experts Say
" Las Vegas Review-Journal (NV) (05/05/18) Schulz, Bailey"

Nevada-based companies are looking to increase the number of female board members. Only 35 women who live in Nevada serve on the boards of publicly traded companies versus 245 men. Jan Jones Blackhurst, a Caesars Entertainment Corp. (CZR) executive who sits on the U.S. Chamber of Commerce board, is urging companies to do more than just add one woman to make a difference. "You need enough women to have a voice," she said. "One woman usually won't do it. Thirty percent will change the dynamic." Some progress is being made. For instance, Las Vegas' six biggest gaming employers have increased the number of female corporate board members to 20% from 14% combined within the last three months.

Activist Investment Rising in Asia, Led by Local Players: JP Morgan
" Reuters (05/06/18) John, Alun David"

Shareholder activism in Asia is on the rise as the region's regulators pay greater attention to corporate governance, according to research from JP Morgan (JPM). Domestic players were responsible for nearly two-thirds of activist campaigns between 2011 and 2017, according to JP Morgan.  "In Asia, as regulators look to protect the interests of minority shareholders, corporate governance has risen up the agenda ... activist investors now have more power to push for change in the companies in which they have invested," said David Hunker, JP Morgan's head of shareholder activism defense.  In Japan, Prime Minister Shinzo Abe has been advocating for corporate governance overhaul, providing a boon to activists.  Hong Kong Exchanges and Clearing recently finalized new rules for capital raisings by listed issuers aimed at "restricting abusive practices ... and protecting the interests of minority shareholders."  In addition, South Korea's Financial Services Commission has unveiled a plan to encourage minority shareholder participation at meetings for listed companies.  Another factor in the rise of shareholder activism is the growing presence of large global institutional investors among Asian listed companies' top shareholders, Hunker said.  These investors have already shown a willingness to back activist investors, he said, adding that such firms are certainly willing to disagree with management.

Investors Revolt Against Directors With Too Many Jobs
" Financial Times (05/04/18) Mooney, Attracta"

A new trend is emerging during the annual shareholder meeting season in the United Kingdom, with investors taking aim at directors for governance failures and voicing concerns about their dedication to the job. So far, the largest votes against management at FTSE 350 companies have been over pay, but shareholders increasingly are targeting individual directors as well. For instance, more than 40% of investors at British American Tobacco voted against the re-election of Marion Helmes over concerns that she sits on too many boards; she also is a director at energy company Uniper and industrial construction firm Bilfinger. According to Peter Reilly, director of corporate governance at FTI Consulting, "There was a hesitance in the past to air dirty linen in public by voting against directors. That has totally gone now. Investors expect much more of directors. They expect them to sit on fewer boards. They [are] more willing to hold directors to account." Data from FTI Consulting shows that more than a fifth of the FTSE 350 companies that already have held their AGMs have seen "significant" shareholder dissent, meaning anything less than 80% support, on at least one resolution. The average support for pay reports so far this year is 91.7%, excluding abstentions, compared with 93.9% for all of 2017, according to Proxy Insight.

Are Activist Investors Expecting Too Much of Energy Companies?
" Forbes (05/04/18) Silverstein, Ken"

Under legislation passed by the U.S. House, the powers of proxy firms like ISS and Glass Lewis would be substantially curbed. Energy companies would be among the most affected given the shareholder emphasis on climate change and sustainability. The bill, now before the U.S. Senate, would require proxy firms to register with the Securities and Exchange Commission (SEC) to eliminate any potential conflicts of interest that they might have. Most Democrats oppose the bill, arguing that it would create a "costly" regulatory burden and make it more problematic to access "impartial analysis." Further, they argue that it "would stifle, rather than promote, competition in the industry by erecting significant barriers to entry for new proxy advisory firms." However, a report by the American Council for Capital Formation found that ISS and Glass Lewis dominate the market, and large institutional investors follow the guidance of their proxies 80% of the time. Moreover, problems arise because the proxies also offer consulting services to the same companies, allowing them to work with separate advisors to avoid proxy fights between their boards and shareholders. "The main concern is that the proxies are relatively unchecked," says Tim Doyle, the group's general counsel. "Investors should know how and why the recommendations are being made. The recommendations that they are giving have to be more transparent and they should increase the values of companies." At issue is whether proxies' recommendations and the demands of institutional investors actually increase shareholder value. Some major corporations believe there is a positive correlation between being sustainable and being profitable.

Groupe Bolloré and Elliott Go Head-to-Head Over Telecom Italia
" Financial Times (05/03/18) Mahtani, Sahil"

Sahil Mahtani, vice president of research at a European bank, says in this guest post that the May 4 vote over the makeup of Telecom Italia's (TI) board pushes to the forefront such issues in shareholder capitalism as the role of "passive" investment vehicles in key voting decisions. He notes that unlike in the United States, shareholder votes in Italy are part of the public record, and the showdown between U.S.-based Elliott and the French conglomerate Groupe Bolloré will turn on the votes of the biggest passive institutional investors: Vanguard, BlackRock (BLK), and State Street (STT). The three institutional investors, which collectively own about 7% of Telecom Italia's shares, will choose between competing slates of 10 directors: one put forward by Vivendi, which has 24% of Telecom Italia's voting rights and is controlled by French billionaire Vincent Bolloré, and another by Elliott, which has up to 9% of voting rights. "Press reports suggest the vote is extremely close and therefore will hinge on the decision of the passive funds," says Mahtani, who adds that the fundamental issue at stake relates to corporate governance. "For passive institutional investors, the Telecom Italia case is therefore a textbook opportunity to act on their commitment to good governance and stewardship. A win for the independent directors would reach far beyond Italy; sending a powerful signal that passive funds are embedding governance objectives into their investment decisions globally."

U.S. Hedge Fund Elliott Amps Up Campaigns in Europe
" Reuters (05/03/18) Keidan, Maiya; Schuetze, Arno; Flak, Agnieszka"

Elliott is escalating its activities in Europe, according to a Reuters review of data. Filings with regulators reveal that eight of the fund's 15 disclosed positions in the first four months of 2018 were in Europe, compared to three out of eight in the same period of 2017. Sources familiar with Elliott's thinking said the region offered greater scope, as fewer activist funds operated there than in the U.S., and European companies have been the focus of activist attention for less time. The first quarter was the most active in Europe for Elliott in at least five years, according to separate data from Activist Insight. A spokesman for Elliott said: "Our activity in Europe is not a specific strategy shift. It's just a function of the way this market is growing." He added, "There has just been a shift in the last few years in thinking and you’re seeing it now in terms of capital deployed." Last month, Elliott purchased British bookshop chain Waterstones, unveiled stakes in software firm Micro Focus, shopping centre operator Hammerson, and hotel and coffee-shop company Whitbread, and increased its holdings in Sky and Telecom Italia (TI). The Elliott spokesman noted that activist investors were starting to get a better reception. "In the last 12 months, a lot more shareholders are willing to consider that maybe management doesn't know best," he said. Europe has long been considered less fertile ground for activists due to cultural and structural impediments. But sources say government thinking in Europe is changing. Shortly after Elliott's investment in Telecom Italia (TI), state lender CDP bought a 4.8% stake, a move seen as political endorsement of the investor.

The Math Behind the Fight at Xerox
" Financial Times (04/30/18) Indap, Sujeet"

On April 27, New York State Judge Barry Ostrager enjoined Xerox (XRX) from pursuing a shareholder vote on its sale to Fujifilm. Longtime shareholder Darwin Deason and a class of other shareholders have alleged that Xerox CEO Jeff Jacobson orchestrated a dishonest transaction in an effort to save his job, and that the circumstances of the transaction saved Fuji from having to deal with Xerox's largest shareholder, Carl Icahn. Ostranger indicated that the circumstances of the transaction precluded the court from deferring to independent directors' judgment, as the deal that was approved by the board transferred control of Xerox to Fujifilm without any payment to shareholders, named Jacobson as CEO of the combined entity, and gave Jacobson and Xerox say over the makeup of the combined entity's board. The terms of the deal are complicated, with experts noting that Xerox shareholders would not be paid an upfront premium but that the deal is structured as a merger with a large special dividend. Xerox would own 49.9% of the new company, and Fuji would own 50.1%. Fuji would shift its ownership from 75% of the Fuji Xerox (FX) joint venture to 50% of the new company, which would be a combination of FX and the rest of Xerox. There are multiple sources of value in the deal from the Xerox shareholders' perspective: the dividend, the 49.9% stake in the combined Xerox/FX, and the 49.9% stake in the deal synergies. However, Icahn disagrees with the valuation of FX provided by Xerox, applying the 7.5x EBITDA multiple that Xerox had used on FX—which inflates the value of Xerox and makes it appear as though the company sold for less than it should have.

Old Rules, Algorithmic Traders Add Costs to U.S. Share Buybacks
" Reuters (04/27/18) McCrank, John"

While U.S. companies are on pace to buy back a record amount of their own stock this year, some observers say the fact that "safe harbor" rules have not been revised since 2003 and do not reflect the electronic, fragmented nature of today's market make these trades easy to game and likely have cost companies billions of dollars in recent years. Under a condition of the Securities and Exchange Commission's (SEC's) Rule 10b-18, companies must bid to buy back their stock at the last purchase price set by another investor or at the best bid available in the market, but they cannot buy shares at the best offer available as doing so could cause the company's shares to move and be deemed manipulative. Ted Morgan, CEO of brokerage Abel Noser, says companies must announce their repurchase plans, so the restrictions make it easier to detect stock buyback activity. Observers say high-speed traders can make huge profits by exploiting the buyback vulnerability, and companies effectively are forced to waste some of the buyback money because they cannot mask their activities. In response, exchange operator IEX Group has petitioned the SEC to let firms buying back shares do so using hidden orders that only execute at the midpoint between the best bid and the best offer, which would make it difficult to move the stock price while making the activity harder to spot. "The change we are arguing for could save public companies millions of dollars or more in execution costs," said IEX CEO Brad Katsuyama.

Social and Sustainable Investing Gets a Boost From an Unlikely Source: Wall Street Activists
" CNBC (04/27/18) Franck, Thomas"

Activist investors are starting to use their money to promote social and environmental change. They are doing this not only as a matter of moral responsibility, they say, but for their original mission of generating better returns for their clients. Socially responsible investing now counts several major names—including Clifton Robbins of Blue Harbour Group and Barry Rosenstein of Jana Partners—among its followers. At the 13D Monitor Active-Passive Summit last week, Robbins said that social and environmental considerations have become integral to how the fund's partners decide where to invest its $3 billion in assets. "This is hugely important—I think this is a new paradigm for smart investing," he said. "Now when I'm calling up a CEO three months after we make an investment, in addition to saying: 'Where are we on the spin-out? Where are we on the balance sheet? Where are we on the margins?' I'm saying, 'Where are we on that commitment you made to me to make the board more diverse?'" Rosenstein's Jana Partners also has been exploring the space, most recently hiring former BlackRock fund manager Dan Hanson to oversee a new fund agitating companies on issues like climate change and wage inequality. Meanwhile, a forthcoming paper from Harvard Business School has given investors hope that these types of investments could lead to more than good public relations. The researchers found that firms scoring in the top quintile of the total quintile of the total MSCI KLD index—a list of 400 U.S. securities with exposure to companies with ostensibly good ESG ratings—post significant, 2.16% higher annualized stock returns. This outperformance, the research finds, is driven solely by firms at the top quintile of a custom-designed materiality index, with companies in the top quintile of the index outperforming the market by 6.47% annually.

The Type of Diversity Boardrooms Prize Most Is Age—and They Can't Even Manage That
" Quartz (04/25/18) Staley, Oliver"

A new PwC report says corporate directors contend age is an even bigger factor than gender or race in achieving diversity of thought in the boardroom. In fact, 90% called it "important" or "very important."  Yet boards of the largest American businesses are actually getting older.  The average age of an S&P 500 independent director is now 63, an increase from 61 in 2007. The age skew is especially puzzling because boards are quite aware of the challenges they face preparing for a digital future. A separate JWC Partners survey of corporate directors showed that a majority agreed that technology and cyber security will become the most important topics for board members in the future. A board wanting to add digital expertise may want to consider an executive whose career has been spent mainly in the internet era.


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