13D Monitor Real-time Activist Newsfeed


P&G Continues to Review Vote Tally as Peltz Awaits Board Seat
" Reuters (11/22/17) Ramakrishnan, Sruthi; Sampath, Uday; LaCapra, Lauren Tara"

Procter & Gamble Co. (PG) said on Nov. 22 that it is still reviewing a tally of shareholder votes cast at its annual meeting last month following a proxy contest that handed Trian Fund Management's Nelson Peltz a board seat. The company said it has not yet decided whether it will launch a formal challenge to the results and is reviewing the count performed by IVS Associates Inc. to ensure its accuracy. Trian said in response that it was disappointed that P&G continues to question the outcome. "Regardless of how they voted, P&G shareholders should be concerned that P&G has opted to waste further time and shareholder money contesting the official tabulation of the independent Inspector," Trian said. The firm asked P&G to reconsider its decision to review and immediately give Peltz a seat on the company's board.

Starboard Threatens to Replace Mellanox's Board
" Calcalist (11/22/17) Abramson, Ran; Reich, Dror; Hazani, Golan"

A Starboard Value LP senior executive says the hedge fund is preparing to make changes in Mellanox Technologies Ltd. after taking a 10.7% interest in the Israel-based chip company.  "As in all of our investments, we are seeking to bring a positive change at the company," the unnamed senior executive said in an interview with Calcalist.  "As we proved in prior situations over the years, if the management and the board are not willing to work with us, certainly we are willing to seek changes to the board through an election process."  The executive cited Mellanox's assets, such as great technology and good products, and "its ability to generate over 70% gross margins" but pointed out that "because of elevated operating expenses, their operating margins are significantly below where they should be and significantly below their peer group."  High spending on research and development is a contributing factor to the company's inflated expenses.  The executive said the company's workers need not be concerned about their jobs, at least in the short term.  "There are many ways to drive operational improvements.  We want to see good things happen in Mellanox for the benefit of shareholders and employees."

BPS Technology: Will Board Bunfights Lure Bargain Hunters?
" Australian Business Review (11/21/17) Boreham, Tim"

A shareholder revolt at BPS Technology almost overthrew the company's board at its recent shareholder meeting, and while CEO Trevor Dietz has declared "peace in our time," investors are not convinced that management's pledged reforms will be enough to ease the concerns of Alceon and LHC Capital Partners given that its share price has hit a record low. Alceon and LHC—which have a combined stake of 8.8% in BPS—alleged poor corporate governance and performance shortcomings at the company. Management attributed recent trading volumes that were nine times higher than normal to "associated parties who recently called the EGM" selling out, but it remains unclear whether Alceon and LHC still hold a stake in the company. The funds had pushed to remove four directors and replace them with four of their own, but only 48% of votes were cast in their favor. However, observers say the vote was a wakeup call to the incumbents, given that Dietz and fellow directors Tony Wiese and Brian Hall hold 37% of BPS.

Myer Circles the Wagons Against Lew Assault
" The Australian (11/21/17) Murdoch, Scott; Carter, Bridget"

Australian retailer Myer is gathering a team of prominent lawyers, advisers, and experts in a bid to ward off shareholder Solomon Lew's advances.  The company reportedly hired Melbourne advisory firm Flagstaff Partners after Lew demanded new directors, assailing the board for its "New Myer" strategy.  Joining Flagstaff as well as Myer's long-time house adviser, Goldman Sachs, is Clayton Utz's Melbourne-based partner Fred Prickett to provide legal advice.  The retailer has also retained proxy solicitation expert Maria Leftakis from Morrow Sodali while GRA Cosway is working on public relations, even though Myer already has various in-house communications practitioners.  The combination of all these formidable players demonstrates the expense and efforts Lew is going up against.  Lew reportedly is working with UBS and lawyers Arnold Bloch Leibler on his bid to overhaul Myer's board.  He has proposed voting against the retailer's chairman-elect, Garry Hounsell, and two other directors at the annual meeting this Friday.

FrontFour Reports Owning More Than a 5% Stake in Obsidian Energy
" Canadian Press (11/21/17)"

FrontFour Capital has built a 5.5% interest in Calgary-based Obsidian Energy Ltd., obliging it to submit a Securities and Exchange Commission filing that is required when an investor owns more than 5% of a publicly traded entity. The hedge fund has approached company directors to talk about strategy and board composition. It believes Obsidian's shares are undervalued and offer great investment potential.

TCI Calls on Regulators to Intervene in London Stock Exchange CEO Spat
" Reuters (11/21/17) Jones, Huw"

TCI founder Christopher Hohn said on Nov. 21 that the Bank of England and the Financial Conduct Authority "both need to immediately intervene to instruct the board [of the London Stock Exchange (LSE)] to appoint a new chairman who should be tasked with solving this corporate governance crisis." He has forced the LSE to hold a shareholder meeting to vote on the hedge fund's resolution to oust Chairman Donald Brydon over the way he handled the planned 2018 departure of CEO Xavier Rolet. According to Hohn, it "appears" that Rolet is being "improperly threatened" by the LSE board with severe reputational damage if he does not immediately step down or confirm that he does not want to remain CEO.

Macerich Executives to Get $32 Million Sweetener if Firm Is Sold
" Bloomberg (11/21/17) Katz, Lily; Melin, Anders"

Macerich Co. (MAC) revealed in its quarterly filing on Nov. 3 that it had adopted a cash-severance plan, signaling the company could be preparing for a sale. The new severance agreements ensure that four top executives at the shopping-mall operator would get a hefty payout if the firm were sold and they lost their jobs as a result. Shareholder pressure and escalating deals among mall operators have led to speculation that Simon Property Group Inc. (SPG)—which offered to buy Macerich two years ago—will make another offer. At the time, Macerich rejected Simon's $16.8 billion bid, saying it was too low. Investors agitated Macerich after it spurned Simon's offer and it attempted to adopt a poison-pill provision and stagger the terms of its board members. Following shareholder pressure, it scrapped those plans and instead added two independent directors. Shares of Macerich had fallen as much as 26% this year, bottoming out at $52.72 on Sept. 22. Dan Loeb's Third Point revealed earlier this month that it acquired a stake during the third quarter and is expected to push for changes, which could include a potential sale, sources have said. Starboard Value also disclosed a stake. The stock has jumped about 17% since Macerich published its new severance policy on Nov. 3, which states that the four senior managers will be eligible for more than $32 million if they leave or are fired within two years of a change of control.

Mellanox Shares Jump 11% After Starboard Stake Purchase
" Reuters (11/21/17) Scheer, Steven"

Mellanox Technologies (MLNX) saw its shares surge on Nov. 21 after Starboard Value acquired a 10.7% stake in the Israeli chip maker to influence strategy. Starboard's stake, valued at around $300 million, makes it the company's biggest shareholder. In a filing with the U.S. Securities and Exchange Commission on Nov. 20, the hedge fund said, "Tremendous value can be created through operational improvements or other strategic alternatives." Starboard also indicated a "growing disparity" between Mellanox's margins, growth, and stock price performance compared to its peer group. The hedge fund is concerned that the company rejected a potential merger with Marvell Technology (MRVL). "In line with our commitment to drive enhanced shareholder value, the Mellanox board of directors and management team continually review our operational and strategic priorities and are committed to acting in the best interests of our shareholders," the company said.

ISS Announces 2018 Updates to US Proxy Voting Guidelines
" Lexology (11/20/17) Breheny, Brian V.; Gerber, Marc S.; Grossman, Richard J."

Institutional Shareholder Services' (ISS) updates to its U.S. proxy voting guidelines for the 2018 proxy season reflect institutional investors' continued focus on environmental, social, and governance matters. The voting policy updates will be effective for shareholder meetings held on or after Feb. 1, 2018. Among the changes, ISS will recommend against all directors at a company every year for so long as a nonshareholder-approved long-term rights plan remains in place. The proxy advisory firm has adopted a new policy providing for adverse voting recommendations for members of the board committee responsible for approving or setting nonemployee director compensation where there is a pattern (over two or more consecutive years) of "excessive" nonemployee director pay without a compelling rationale or other mitigating factors. ISS will now take into consideration the rankings of CEO total pay and company financial performance relative to an applicable peer group over a three-year period. The disclosure of shareholder engagement efforts affecting ISS' view of a board's responsiveness will now include disclosure of the timing and frequency of shareholder engagements and whether independent directors participated; the specific concerns voiced by dissenting shareholders that led to the say-on-pay opposition; and specific and meaningful actions to address shareholders' concerns. Also, ISS has updated its policy on shareholder proposals related to climate change risk to generally recommend in favor of proposals seeking disclosure on how the company identifies, measures, and manages those risks.

Jana Discloses Large Stake in Outback Steakhouse Owner
" Wall Street Journal (11/20/17) Armental, Maria"

Jana Partners LLC unveiled a roughly 8.74% stake in Bloomin' Brands (BLMN) on Monday and intends to call for a review of strategic alternatives, including a potential sale.  The hedge fund believes Outback Steakhouse owner's stock is undervalued, according to a securities filing.  It shot up 12% to close Monday at $20.54, representing the biggest one-day gain in almost four years.  Jana's roughly 8 million shares in the company would make it the second-biggest shareholder, according to FactSet data.  Jana recently led the campaign to overhaul Whole Foods Market that helped trigger the grocer's sale to Inc. (AMZN).  Bloomin' Brands also manages Carrabba's Italian Grill, Bonefish Grill, and Fleming's Prime Steakhouse & Wine Bar.  As of Sept. 24, the company had almost 2,000 restaurants and franchised 294 locations, according to regulatory filings.

Nestle Is Among Potential Suitors for Hain Celestial
" Bloomberg (11/20/17) Hammond, Ed; Nair, Dinesh; David, Ruth"

Swiss giant Nestle SA reportedly has held preliminary talks about purchasing all or parts of Hain Celestial Group Inc. (HAIN), as both companies face shareholder pressure.  Nestle would benefit from Hain's U.S. distribution network as it seeks to expand into healthier foods; but an acquisition would be costly at current valuations, said MainFirst analyst Alain Oberhuber.  With changing consumer tastes afflicting many food companies, Hain's profit has fallen from a peak of $180 million in 2015.  In June, Engaged Capital disclosed a 9.9% stake in Hain Celestial and began pushing for changes, including a possible sale.  Engaged Capital believes the company could secure $46 to $73 a share in a sale based on recent acquisitions in the food industry, a source said at the time.  Shares of Hain Celestial closed up 2.6% to $40.89 on Monday, valuing the company at more than $4.2 billion.  Hain Celestial announced in September that it was working with advisers to explore strategic alternatives and also agreed to add six new directors nominated by Engaged Capital.  Meanwhile, Nestle's sales fell to $91 billion last year from a peak of more than $100 billion in 2014, according to data compiled by Bloomberg.  Since Dan Loeb disclosed a stake in Nestle in June, CEO Mark Schneider has initiated acquisitions in niche markets like organic food and hipster coffee as the company anticipates the slowest sales growth in at least two decades this year.

Starboard Value Takes 10.7% Stake in Mellanox Technologies
" Wall Street Journal (11/21/17) Benoit, David"

Starboard Value LP has acquired a 10.7% stake in Mellanox Technologies Ltd. (MLNX) and is pushing the company to boost its margins and stock and explore a possible sale.  The investor contends that Mellanox is spending too much on research and development and other corporate expenses in an effort to increase revenue.  In doing so, it is sacrificing margins compared with its peers, sources say.  To boost the stock, Starboard wants the company to improve its operations and potentially explore a deal.  A Mellanox spokesman responded: "In line with our commitment to drive enhanced shareholder value, the Mellanox board of directors and management team continually review our operational and strategic priorities and are committed to acting in the best interests of our shareholders."

Struggling Retailer Specialty Fashion to Close 300 Stores Amid Shareholder Revolt
" Sydney Morning Herald (Australia) (11/21/17) Hatch, Patrick"

Embattled retailer Specialty Fashion has announced plans to revitalize the business following a shareholder rebellion at its annual meeting on Tuesday.  A majority of shareholders (51%) rejected the group's remuneration report—twice the amount needed to score a "first strike" that place the board at risk of a shakeup if there is a protest vote again next year.  In addition, 34% of shareholders voted against the re-election of director Michael Hardwick.  The revolt came after the company suffered an after-tax loss of $8.8 million last year, a $2.1 million loss in 2016, and a $4.4 million loss in 2015.  Specialty also issued a profit warning last month, and the stock is down more than 60% over the past year.  It sought to appease shareholders by announcing that one of the board representatives of NAAR—Specialty's biggest shareholder—would not stand for re-election at next year's meeting.  NAAR currently claims two of five board seats, despite only owning 20% of the company.  On Tuesday, Specialty announced it would shutter approximately 300 underperforming stores over the next three years, to bring it down to about 700 outlets.  Chairman Anne McDonald said the company had already lowered costs by $3.6 million in the first quarter by reducing its support office and that it was launching a "comprehensive structural review" to enhance shareholder value.  Specialty has also said it would adjust is remuneration plan so executive pay would be more closely linked to shareholder returns.

Proxy Adviser ISS to Call Out Companies With All-Male Boards
" Bloomberg Big Law Business (11/20/17) Vittorio, Andrea"

Institutional Shareholder Services Inc. (ISS) plans to single out companies with no women on their boards, according to a recent revision to the policies underpinning its voting guidance for investors.  The move is aimed at assisting investors seeking greater board diversity.  ISS will not consider a lack of gender diversity in recommendations for voting on directors at U.S. companies' next round of annual meetings.  However, poor gender diversity will be taken into account in Canada, where securities regulators have instructed companies to disclose whether they have a written policy for adding female directors.  In a recent survey, more than two-thirds of investors told ISS that they consider all-male boards "problematic."  Meanwhile, House lawmakers are examining whether ISS and Glass Lewis & Co. should provide more disclosure on how they determine their voting advice and analysis.  H.R. 4015 would mandate such disclosure and also would require reporting on any potential conflicts of interest.  Bill supporters say proxy advisers should be more strictly regulated because of the sway they have over investors' votes.  Their recommendation against company management can shift votes on directors and executive pay by between six and 25 percentage points, according to a government review.

21st Century Fox in $90 Million Settlement Tied to Sexual Harassment Scandal
" Reuters (11/20/17) Stempel, Jonathan"

Twenty-First Century Fox Inc. (FOXA) has entered into a $90 million settlement of shareholder claims arising from the sexual harassment scandal at its Fox News Channel.  The settlement, which resolves what are known as "derivative" claims against Fox officers and directors, requires a judge's approval.  The defendants did not admit to any wrongdoing in connection with the settlement filed with the Delaware Chancery Court. The settlement calls for insurers of Fox officers, Fox directors, and Roger Ailes' estate to pay $90 million to the company for the benefit of shareholders. In addition, Fox will enhance governance and create the Fox News Workplace Professionalism and Inclusion Council to ensure a proper workplace environment, shore up training, and further the recruitment and advancement of females and minorities.

WPP Accepts Bain's Offer for Japan's ADK, Says Bain
" Reuters (11/20/17) Fujita, Junko; Holton, Kate"

U.S. private equity firm Bain Capital LLC confirmed Tuesday that its $1.35 billion offer for Asatsu-DK Inc. (ADK) was accepted by WPP, the Japanese company's 25% shareholder.  WPP—which partners with ADK—criticized Bain last month when it sought to purchase the advertising agency, arguing that the offer undervalued the firm.  Other ADK shareholders, including London-based fund manager Silchester International Investors LLP and Hong Kong-based hedge fund Oasis Management Co. Ltd., also considered Bain's offer too low.  However, Bain said Tuesday that WPP has now agreed to sell its ADK shares for 3,660 yen ($32.53) each, the same price it rebuffed last month.  WPP and Bain would now discuss the possibility of WPP holding roughly 25% of a group that would own ADK, the Japanese agency said.  Bain's first offer came after ADK asked it to purchase WPP's stake to end a two-decade business partnership which ADK said failed to produce synergy.  WPP sought a higher price and filed for arbitration, seeking a ruling that ADK's plan to end the alliance was invalid and that ADK had no right to request or require WPP to sell its shares.  Bain said that WPP would end arbitration and injunction proceedings if the tender offer succeeds.

Fir Tree Partners Oppose SandRidge's $746 Million Bid for Bonanza
" Reuters (11/20/17) Benny, John"

On Nov. 20, Fir Tree Partners opposed the $746 million acquisition of Bonanza Creek Energy (BCEI) by SandRidge Energy (SD). Fir Tree, which is SandRidge's second-biggest investor with an 8.3% stake, believes the proposed deal would "drain SandRidge of its entire cash balance."

Johnston Shareholder Says Salmond RT Role 'Totally Good'
" Times (UK) (11/19/17) Glackin, Michael; Boothman, John"

Johnston Press shareholders are questioning the credibility of investor Christen Ager-Hanssen for supporting Alex Salmond's decision to work for controversial Russian state-owned broadcaster RT. Ager-Hanssen hopes to install the former first minister as chairman of the publisher. His plan also involves ousting Chairman Camilla Rhodes and other directors and bringing in newspaper veteran Steve Auckland to revitalize the company. However, investors controlling 20% of Johnston's shares are concerned about Salmond's job at RT and the absence of detailed proposals from Ager-Hanssen, whose investment vehicle Custos is the company's biggest shareholder with 20% of stock. Ager-Hanssen has said Salmond's appointment as a talk show host on the Kremlin-funded channel was "totally good" for the publisher. He added, "People should remember we will install a strong and experienced chief executive in Steve Auckland so the editorial independence of the newspapers will be very well protected. Shareholders will get the chance to hear my plans and decide the future of this company. I want to install a team that will deliver quality journalism and monetize this operation. In the right hands this business can deliver shareholder value. It's not in the right hands at the moment and that is what's important."

Nelson Peltz Will Bring 'Fresh Perspective' to P&G: CalSTRS
" CNBC (11/17/17) Fox, Michelle"

CalSTRS, the California State Teachers' Retirement System, believes that adding Nelson Peltz to the board of Procter & Gamble (PG) will be positive for shareholders.  "Someone like Nelson would bring a fresh perspective to the boardroom at P&G.  They really have had a lot of insiders there.  They've done well over the years, but I think bringing a fresh set of eyes and a new start there would be beneficial to shareholders," Anne Sheehan, director of corporate governance at CalSTRS, told CNBC on Friday.  Peltz, the manager of $12.5 billion Trian Partners, won a proxy-vote recount for a board seat in a surprising turn earlier this week, although P&G can still challenge the result.  Sheehan said that after the vote is certified, P&G should award board representation to Peltz, who began agitating P&G this summer after the company rebuffed his request for a board seat.  CalSTRS, which owns nearly 5.6 million shares of P&G stock, announced its support of Peltz last month.  The pension fund has been an investor with Trian since 2011.  According to Sheehan, CalSTRS supports numerous activists.  "They play a positive role in the capital markets.  They help generate enhanced shareholder return for us," she explained.  P&G on Wednesday said the vote results are preliminary and subject to a review and challenge period.

Marvell Technology Clinches Roughly $6 Billion Deal to Buy Cavium: Sources
" Reuters (11/19/17) Baker, Liana B."

Sources confirm that chipmaker Marvell Technology Group Ltd. (MRVL) has agreed to buy smaller rival Cavium Inc. (CAVM) for approximately $6 billion, as it aims to expand further in the networking equipment sector. The transaction will permit Marvell to diversify away from its traditional storage devices business following an agreement with Starboard Value LP last year to accept three new directors nominated by the hedge fund to its board. Marvell CEO Matt Murphy, who took the helm in 2016, has embarked on a restructuring of the company, trimming payroll and seeking to add offerings in such areas as data centers and wireless communications.

LSE Directors Weigh Publishing Dossier on Rolet
" Financial Times (11/17/17) Gapper, John; Stafford, Philip"

A board committee at the London Stock Exchange Group (LSE) is considering how detailed to get in a dossier about the behavior of CEO Xavier Rolet, following accusations by The Children's Investment Fund (TCI) that the board unjustly ousted him.  The panel is working on a "shareholder circular" regarding its concerns regarding the aggressive management style favored by Rolet, who announced last month that he would depart amicably by the end of 2018.  He is credited with transforming the LSE and bringing about a number of deals that boosted its value from £800 million to £13.4 billion during his eight-year tenure.  However, he is also perceived as controlling, abrasive, and dismissive of other' views, as documented in what one source called "an accumulation" of incidents over the past two years.  The board committee is debating whether to publish details of emails sent by Rolet during that time.  This month, TCI challenged Rolet's exit and called for Chairman Donald Brydon's resignation, saying Rolet had been dismissed unfairly and should be reinstated until at least 2021.  The company has called an emergency general meeting and will publish the circular to investors in order to provide more information about Rolet's departure, but it is still contemplating the level of detail to include.  TCI last week requested to know "the specific reasons that the board dismissed Xavier Rolet" and whether he was considered "fit and proper" by the LSE's regulators.

Toshiba Gains Breathing Room With $5.4 Billion Share Issue to Overseas Investors
" Reuters (11/19/17) Yamazaki, Makiko; Hughes, Jennifer"

In a bid to avoid a delisting, Toshiba Corp. has announced plans for a $5.4 billion new share issue to more than 30 overseas investors—including Third Point LLC, Oasis Management Company, and Cerberus Capital Management.  As Toshiba faces billions of dollars in liabilities at Westinghouse—its bankrupt U.S. manufacturer of nuclear reactors—the company has been working to make up the difference by the end of the financial year in March or be delisted.  An extended auction for its lucrative chip unit has meant it cannot depend on realizing those funds on time.  The share issue, decided at a board meeting Sunday, is equivalent to a 35% stake in the struggling Japanese conglomerate.  The deal was designed for overseas investors as Toshiba has only recently come off a Tokyo Stock Exchange watchlist it had occupied after a 2015 accounting scandal, making it tough for domestic firms to invest.  For some foreign investors, it is an investment that will succeed even if the agreed sale of Toshiba Memory—the second-biggest producer of NAND chips—to a consortium led by Bain Capital fails.  If the sale does in fact survive legal challenges and goes through, Toshiba will still own 40% in the semiconductor unit as it plans to reinvest.  Singapore-based fund Effissimo Capital Management will become the biggest shareholder in Toshiba, with an 11.34% stake.

GE Housecleaning Will Alter Board's Makeup
" Wall Street Journal (11/19/17) Lublin, Joann S.; Gryta, Thomas"

A General Electric Co. (GE) board "housecleaning" will remove many long-term associates of former CEO Jeff Immelt.  The shakeout will claim nine of the company's 18 directors and add three new ones to comprise a board of 12. According to a 2017 survey by the National Association of Corporate Directors, U.S. companies with market capitalizations of at least $10 billion have an average of 10.9 board members. The goal in GE's case is to create a board that is more closely aligned with CEO John Flannery's strategy to streamline the industrial giant. Last week, Flannery said he wanted a smaller board "with some new members with key skills relative to where the company is going." The board has yet to decide which incumbents will lose their seats. Since 1977, GE has had a median of 16 directors.

Hudson's Bay Agrees to Delay Deal That Would See Rhone Capital Buy Stake in Retailer
" Canadian Press (11/17/17)"

Hudson's Bay Co. (HBC) has agreed to suspend a deal for private equity firm Rhone Capital to purchase a stake in the retailer.  U.S. investor Land & Buildings Investment Management LLC applied last week for the Ontario Securities Commission (OSC) to review the Toronto Stock Exchange's Nov. 7 decision to provide conditional support to Rhone's $632 million equity investment in the form of eight-year mandatory convertible preferred shares.  The funding was part of a deal that included the sale of HBC's Lord & Taylor Fifth Avenue building to WeWork Property Advisors for almost $1.1 billion and to enter a partnership with WeWork to pursue future real estate transactions.  Per its Nov. 17 order, the OSC says HBC and Rhone will not close the transaction before Dec. 4 or the end of the hearing and review of the TSX decision, whichever comes first.  HBC expects that Rhone will initially own a 21.8% voting and equity interest in the company on a partially diluted basis and that could increase to 30% if the preferred shares are held to their eight-year maturity.  Land & Buildings has pressured the retailer to weigh an offer for its German operations by Signa Holding and blasted HBC for selling a controlling stake without the approval of minority shareholders.

ValueAct Founder Ubben Steps Down From Willis Board
" Insurance Insider (11/17/17) Board, Laura"

Jeffrey Ubben, chief of ValueAct Capital, has stepped down from the board of Willis Towers Watson (WLTW). Ubben acquired a board seat at Willis in July 2013 and joined the board of Willis Towers Watson when the group was formed in January 2016. In a letter to Chairman James McCann, Ubben said he was resigning "for personal reasons and not due to any disagreement with the company."

Billionaire Hedge Fund Manager David Einhorn Overwhelmingly Loses GM Shareholder Vote
" Forbes (06/06/17) Vardi, Nathan"

On June 6, shareholders of General Motors (GM) voted overwhelmingly against hedge fund billionaire David Einhorn's push for a dual-class common stock structure, with 91% of the votes cast against the proposal. The shares cast by Einhorn's Greenlight Capital were just about the only votes in favor of the proposal, as 96% of non-Greenlight votes cast rejected it. Einhorn's efforts to get three directors on GM's board also were unsuccessful, with shareholders electing all 11 of GM's board nominees, who received between 84% and 99% of the votes cast. "We are disappointed that shareholders have elected to maintain the status quo," Einhorn said in a statement. "We congratulate GM's management on their win today."

Billionaire Hedge Fund Manager David Einhorn Overwhelmingly Loses GM Shareholder Vote
"Associated Press (06/06/17) Gordon, Marcy"

On June 6, shareholders of General Motors (GM) voted overwhelmingly against hedge fund billionaire David Einhorn's push for a dual-class common stock structure, with 91% of the votes cast against the proposal. The shares cast by Einhorn's Greenlight Capital were just about the only votes in favor of the proposal, as 96% of non-Greenlight votes cast rejected it. Einhorn's efforts to get three directors on GM's board also were unsuccessful, with shareholders electing all 11 of GM's board nominees, who received between 84% and 99% of the votes cast. "We are disappointed that shareholders have elected to maintain the status quo," Einhorn said in a statement. "We congratulate GM's management on their win today."


Business Risk From Climate Change Now Top of Mind for Canada's Corporate Boards
" Toronto Globe and Mail (11/22/17) Posadzki, Alexandra"

Corporate boards in Canada are focusing more on climate-related business risks. The move come as institutional investors press Canadian companies for more information on how they will manage the transition to a low-carbon economy. Investors fear being stuck holding stranded assets: companies that fail to plan for the future and will likely have plummeting valuations as a result. The pressure has catapulted climate risk to the top of the agenda in many of Canada's boardrooms as companies grapple with how to measure, mitigate, and disclose potential liabilities. Last year, the board at Suncor Energy recommended that shareholders approve a proposal put forward by NEI investments to enhance the company's climate-related disclosures, and shareholders voted overwhelmingly in favor of the resolution. But even as directors set their sights on climate-related risk, experts caution that a lack of consistency between how companies measure and disclose such risks leaves much work to be done. Canada lags its global peers in terms of the amount of disclosure provided to investors, because its companies are not required to report their direct and indirect greenhouse gas emissions. The Canadian Securities Administrators earlier this year launched a review of the current state of climate-change disclosure and is expected to publish a report next year.

Activists at the Gate: Court of Chancery Weighs in on Claims Involving Activist Stockholders
" Lexology (11/21/17) Micheletti, Edward B.; Kunz, Jessica R.; Davis, Chad"

Several recent decisions applying Delaware law offer helpful insight about the impact that investor involvement has on board decision-making leading to a transaction and how those decisions will be reviewed by the courts in any subsequent litigation. In Morrison v. Berry, a case addressing the implications of activism in the context of the Corwin doctrine, Vice Chancellor Sam Glasscock III dismissed an action challenging the sale of The Fresh Market to the private equity fund Apollo Management. The court rejected the disclosure challenge, observing that although the company did not reveal the details of a letter by a significant shareholder, it had disclosed "that the Company 'could become the subject of shareholder pressure and communications' if it didn't 'enhance efficiency,' and in fact already 'initiate[d] a comprehensive strategic review' and 'hir[ed] outside financial advisers' as recommended by Neuberger Berman." Meanwhile, In re MeadWestvaco Stockholders Litigation, In re American Capital Ltd. Shareholder Litigation, and venBio Select Advisor LLC v. Goldenberg address the potential effect activist involvement can have on the judicial standard of review of a transaction. Three recent cases resulted in three different standards of review: business judgment, enhanced scrutiny, and entire fairness. In the first case, Chancellor Andre G. Bouchard applied the business judgment rule to dismiss a post-closing damages action that challenged a strategic stock-for-stock merger of equals. Finding that the stockholder plaintiffs failed to plead a nonexculpated breach of fiduciary duty, the court observed that "[t]he thesis of the complaint is that the directors entered into the merger in bad faith in reaction to a threatened proxy contest by an activist investor." These cases demonstrate that there is no "one size fits all" approach to how a court will review board conduct and decision-making in response to activist involvement and that careful attention to facts, and reliance on advisors before making decisions, is crucial in these circumstances.

Canadian Companies Urged to Rethink Executive Pay Practices
" Toronto Globe and Mail (11/21/17) McFarland, Janet"

The Quebec-based Institute for Governance of Private and Public Organizations has suggested changing the model for executive pay in Canada.  The report says companies should give CEOs share units less frequently and stop paying them with stock options to motivate better long-term performance and minimize the role of luck in compensation payouts.  The group says pay structures need to be tailored for the unique business model or each company and the time horizons of its strategies.  As a first step, the institute's new report says companies should abandon the idea of setting CEO pay based on comparisons to a peer group of companies, saying it is the main factor driving pay higher. Additionally, while stock-option use has been declining over the past decade—accounting for 19% of CEOs' median compensation value in 2016—the report recommends companies should not grant stock options at all, and should also abandon the "ritual" of granting new share units to CEOs every year.

Why Is This Man Eyeing Taubman Centers?
" Crain's Detroit Business (11/19/17) Pinho, Kirk"

Paul Singer's Elliott Management Corp. has acquired a 3.8% stake in Taubman Centers Inc. (TCO). The luxury mall giant will battle the New York hedge fund at the same time it faces pressure from Connecticut-based investor Jonathan Litt. Observers believe Elliott will seek changes that could include taking Taubman private or a sale. Some believe the hedge fund could even push out the company's founding family. "Singer doesn't care if you hate him," says professor Erik Gordon of the University of Michigan's Stephen M. Ross School of Business. "His goal is to push companies, and even countries, into making changes that create wealth. That's it." Oakland University School of Business Administration dean Michael Mazzeo says it is telling that Elliott disclosed its stake when it was not legally obligated to, as it falls below the 5% threshold. "They are signaling that they are in play," he says. "While it's not really clear what they are seeking at Taubman, since there are two competing aggressors in this case, that would suggest that this company is undervalued. They may be taken over and then split apart, or they may keep what's good and sell what's bad." Sudip Datta of Wayne State University's Mike Ilitch School of Business, adds, "When a company comes in the crosshairs of Elliott and Paul Singer, that company most likely will succumb to Elliott." Meanwhile, Gordon believe's Taubman's inability to shake Litt has made the ground fertile for Elliott, and he speculates that Elliott, within a year or two, will have radically altered Taubman's board and forced the family to sell off a substantial portion of its ownership stake.

New Canadian Alliance Created to Achieve Gender Parity on Boards
" Women's Post (11/18/17)"

A new alliance has been formed to help foster gender parity on Canadian corporate boards. The Canadian Gender and Good Governance Alliance (CGGGA) comprises seven Canadian organizations dedicated to pushing forward gender equality in the workplace, especially in boardrooms. Despite decades of advocacy, females are still outnumbered in senior executive roles, especially within financial services. Women hold approximately 14% of all board seats, and only 26% of open board positions are filled by women applicants. A McKinsey & Co. study last year showed that just 6% of Canadian CEOs are women. The CGGGA comprises Women in Capital Markets, the 30% Club Canada, Catalyst Canada, the Business Council of Canada, the Institute of Corporate Directors, the Canadian Coalition for Good Governance, and the Clarkson Centre. This is the first such coalition in North America.

GAMCO Trying to Get on Scripps Board
" Cincinnati Business Courier (11/16/17) Watkins, Steve"

Mario Gabelli has upped his stake in E.W. Scripps Co. (SSP) and intends to pursue board representation, he revealed in a Securities and Exchange Commission (SEC) filing last month.  Gabelli's GAMCO Investors Inc. (GBL) owns 11.3 million, or 16.1%, of Class A shares of Scripps, according to regulatory filings.  Scripps also has a voting class of shares that is 93% controlled by members of the Scripps family.  GAMCO—which manages $43 billion in assets—said in the SEC filing that it "intends on moving forward with the submission of nominations of up to three individuals for election" to Scripps' board.  It said it will nominate directors at a future point in time.  Of Scripps' 11 directors, eight are elected by the holders of voting shares—meaning the Scripps family essentially determines those board members.  The other three are elected by the Class A shareholders, and those are the seats Gabelli is seeking at the annual shareholders meeting next spring.  Scripps spokeswoman Carolyn Micheli said company officials have met with Gabelli but there has not been any effort to adjust strategies.  "We have had a lot of conversations with him," she said.  "We talk to Mr. Gabelli and many of our shareholders on a regular basis."  Some of those conversations have revolved around Scripps' Oct. 2 acquisition of Katz Networks, she said.  That involved four national networks—Bounce, Escape, Grit, and Laff—that reach about 90% of U.S. households.  Scripps, whose stock is down 25% this year, is one of the biggest independent TV station owners in the country.

Korn Ferry Study Finds Hispanic Representation on Large Corporate Boards Remains Extremely Low, but There Are Signs of Improvement
" Korn Ferry News Release (11/16/17)"

A new analysis by Korn Ferry (KFY) shows that while there are still very few Hispanics on large corporate boards, there are signs of improvement. The study finds that the percentage of Hispanics on Fortune 500 Boards has remained stagnant since 2015, with 2.6% of board members being Hispanic as of summer 2017, and 2.5% at the end of 2015. Three-quarters of Fortune 500 companies have no Hispanic board members. The numbers are even lower when analyzing the Fortune 1000, with the number of Hispanic board members remaining at 2.1% since 2015. More than 82% of Fortune 1000 companies still have no Hispanic board members. Despite the lack of overall growth of Hispanic representation, the study did find some bright spots. The percentage of Hispanic women board members at Fortune 500 companies has increased 19% since 2015, from 29 to 35 women. The Fortune 1000 has seen a 15% increase, from 52 Hispanic women board members to 60. The study uncovered strong trends toward increasing the percentage of Hispanic board representation in the future. In 2016 and the first half of 2017, there were 27 Latinos elected to new seats—67% of whom were first-time directors. Similarly, in the Fortune 1000, there were 39 Hispanics elected to new seats, with 62% being first-time directors.

How Not to Handle Investors: A Lesson From London
" Wall Street Journal (11/15/17) Davies, Paul J."

In the two weeks since a shareholder first agitated the London Stock Exchange Group (LSE) over its reasons for removing CEO Xavier Rolet, the company has only further dug itself into a hole. Chris Hohn's the Children's Investment Fund (TCI) has been asking the exchange to reveal the reasons behind Rolet's planned exit. However, LSE Group has only issued brief statements on process and has evaded the core question. Now, LSE Chairman Donald Brydon faces a vote to oust him instead of Rolet at a shareholder meeting requisitioned by TCI, which owns a 5% stake. On Wednesday, TCI sent a third letter to Brydon demanding he answer questions ahead of the meeting, including why Rolet was "dismissed" and whether he is getting conditional severance payments. The LSE refuses to confirm or deny any of this, which is unusual because a simple statement from Rolet that he wants to retire would settle the matter. Rolet did this once before: when the LSE was trying to merge earlier this year with Deutsche Börse, the rival German stock exchange, Rolet said he would happily retire to his winemaking hobbies once the deal was finalized. The merger fell apart in March and Rolet postponed retirement. That decision could still fit with the LSE's announcement that it was searching for a new CEO, but the situation has grown suspicious due to the LSE's refusal to engage TCI's questions. If there has been an internal fight over strategy, or Rolet is being blamed for the merger's failure, this will ultimately come to light. Brydon's decision to face a vote of no confidence without any explanation is risky and creates further instability for investors ahead of the shareholder meeting.

Roark Acquisition Could Be Win-Win for Buffalo Wild Wings and Marcato
" CNBC (11/14/17) Whitten, Sarah"

Marcato Capital could push for a higher bid for Buffalo Wild Wings (BWLD), according to analysts.  Roark Capital reportedly has made an offer of more than $150 per share for the company, or more than $2.3 billion, catapulting the stock as much as 27% Tuesday.  The proposed deal is roughly a multiple of 10 times the company's EBITDA—just below the average multiple for U.S. restaurant deals over $10 million, which is 11 times EBITDA, according to Dealogic.  "We believe the greatest hurdle could be Marcato and its board seats; the majority of its stake was acquired in 2Q16 at $140-$150 with the thesis that shares could be worth $400," BTIG analyst Peter Saleh wrote in a research note Tuesday.  Marcato, which began acquiring a stake in Buffalo Wild Wings last year, secured three of the four board seats it was seeking after a proxy fight.  However, the hedge fund is unlikely to gain much from a deal with Roark at its current price.  It first started purchasing Buffalo Wild Wings shares in July 2016, when the stock was about $143 a share.  Ahead of the proxy battle, Marcato owned 9.9% of Buffalo Wild Wings' outstanding shares; as of Aug. 1, the investor lowered its stake to about 6.4%, according to FactSet.  Jim Badum, executive vice president of client partnerships at Ansira, suggested other firms could begin offering rival bids for the company.  He also anticipates that Marcato will seek to get a higher premium for the shares.  "The acquisition could ... provide an attractive exit for Marcato Capital," said Stifel analyst Chris O'Cull.

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