13D Monitor Real-time Activist Newsfeed


RBR Engages Credit Suisse Despite Signs of Turnaround Success
" Financial Times (10/17/17) Noonan, Laura; Mooney, Attracta"

Although analysts just months ago celebrated a "watershed" moment in the turnaround of Credit Suisse, the Swiss banking company is being engaged by RBR Capital Advisors, which owns less than half a percent of the company. Although the bank still has work to do—return on equity for the six months to June was 4.4% and the bank's cost of equity is approximately 10%—some analysts say RBR's engagement will fail to appeal to investors prior to its next strategy day, Nov. 30. Citigroup analyst Andrew Coombs, for example, told clients he "questions RBR's rationale" because there are "clear synergies" between the wealth management and investment bank. Coombs forecasts that return on equity will advance from 5.5% this year to 9.5% next year.

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Hedge Fund Seeks Credit Suisse Break-up
" Financial Times (10/17/17)"

Credit Suisse is being engaged by shareholder RBR Capital Advisors, which is working to win support for a plan to break up the Swiss banking group. Guests on this podcast discuss whether the plan has merit.

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EQT Makes Case for Acquisition of Rice Energy
" Pittsburgh Business Times (10/17/17) Gough, Paul J."

EQT (EQT) is resisting pressure from Jana Partners about its $6.7 billion acquisition of Rice Energy (RICE). The hedge fund previously urged shareholders to vote against the deal at the Nov. 9 meeting. However, EQT claimed that Jana was wrong when it said a combined EQT-Rice would not be able to meet the operational targets and $2.5 billion in synergies. Having noncontiguous acreage in its portfolio will be addressed through future acquisitions and fillings, the company said. "Each of these methods are routinely employed by EQT and other Appalachian operators to build their respective development programs," EQT said. "Given the multitude of legacy natural gas leases across Appalachia, it is commonplace for small acreage plots to exist given the historical ownership of land in the region." The company noted that the purchase of Rice Energy would help EQT with what it calls the "sum-of-the-parts discount," or how EQT is undervalued by the market due to the upstream and midstream assets it holds. EQT has pledged to create a board committee in 2018 to address this issue, potentially through a sale or split of the company.

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Orchestra-Prémaman S.A. Issues Urgent Letter to Destination Maternity Shareholders
" PR Newswire (10/17/17)"

Orchestra-Prémaman S.A. and Yeled Invest S.A. sent a letter to fellow shareholders of Destination Maternity Corp. (DEST) on Tuesday urging them to vote against the current incumbents on the board and to disregard the company's "misleading information." The letter states that the current directors have refused to discuss their "devastating" tenure, during which the stock has fallen about 85% to 93%, depending on the director, before Orchestra announced its proxy campaign. The letter also points out that under the current directors, the company has underperformed the broad market and its peer indexes. "Destination's upcoming annual meeting may be your last chance to hold the directors accountable," the letter states, and urges them to vote against each of the "failed Status Quo Directors."

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India Proposes Board Rules to Challenge Tycoons
" Financial Times (10/16/17) Mundy, Simon"

During the past year, the Tata conglomerate and IT services group Infosys have been wracked by infighting that has cast a shadow over India's reputation for corporate governance. Now, the Indian securities regulator is gearing up to overhaul governance rules, aimed at addressing complaints about the power of company founders and their families, and boards that too often fail to properly examine decisions. On Nov. 4, the Securities and Exchange Board of India will close a consultation on recommendations put forward this month by a committee it commissioned under Uday Kotak, billionaire founder of Kotak Mahindra Bank. Proposals include the separation of chairman and chief executive roles, as well as boosting the presence of independent directors and shoring up their obligations.

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P&G Says Nelson Peltz Lost Bid for Board Seat by About 0.2 Percent of Share Count
" Wall Street Journal (10/16/17) Benoit, David; Terlep, Sharon"

Procter & Gamble Co. (PG) revealed it bested Nelson Peltz by 6.15 million votes, only about 0.2% of its shares outstanding. A weeks' long recount is expected to determine the final outcome of the most-expensive proxy fight in history. In a securities filing, P&G disclosed that Peltz received 973 million shares and that Ernesto Zedillo, the P&G director with the least number of votes, won 979.2 million. Zedillo got 48.9% of the shares voted at the meeting, while Peltz received 48.6%, according to P&G's preliminary tally. "Trian continues to believe that the election is too close to call," Peltz's Trian Fund Management stated on Oct. 16. It could take several weeks for an independent inspector to confirm the results.

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Swiss Investor Bohli Engages Credit Suisse
" Bloomberg (10/16/17) Foerster, Jan-Henrik"

Rudolf Bohli's RBR Capital Advisors is calling for Credit Suisse Group AG (CS), Switzerland's second-largest bank, to break into three parts.  The local investor has acquired a 0.2% stake in Credit Suisse, worth about 100 million francs, according to a source.  Bohli has met with executives in recent weeks to discuss some of his ideas, including a split of the firm's investment bank from the private-banking units, the source said.  Credit Suisse launched a restructuring led by CEO Tidjane Thiam two years ago, reducing turbulent trading operations and focusing more on managing money for the wealthy.  Progress on improving profitability has been tepid and the shares have fallen by one-third under Thiam.  However, the stock is up about 10% this year amid greater optimism about the cost cuts; and profit rose 78% in the second quarter as reduced expenses buoyed the global markets business.  While Bohli indicated earlier this year that he did not plan on engaging a bank soon because of their size and complexity, he wrote in an investor update that Credit Suisse was a "misunderstood jewel" with an undervalued wealth-management business.  Gael de Boissard, former co-head of Credit Suisse's investment bank, reportedly is backing Bohli.  The hedge fund is expected to announce its strategy this week at the Robin Hood investors conference in New York.  Analysts and investors suggested it is unlikely Bohli could force a breakup of Credit Suisse, with one noting that the businesses are too integrated and the bank is still undergoing a major restructuring.

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Elliott Urges Ocean Rig to Hire Advisers to Review Opportunities
" Reuters (10/16/17) Benny, John"

Elliott Management on Monday pressed offshore driller Ocean Rig UDW (ORIG) to retain advisers to explore opportunities including potential strategic deals.  The hedge fund is Ocean Rig's top shareholder, with a 20.4% stake as of earlier this month.  Elliott said it planned to recruit the company's second-largest shareholder—BlueMountain Capital, which owns a 10.86% stake—in the efforts as well.  Ocean Rig finished restructuring its business last month after filing for Chapter 15 bankruptcy protection in March, burdened by big oil companies withdrawing from deep water projects amid declining oil prices.  Ocean Rig's stock is up nearly 10% since the company completed the restructuring on Sept. 22.

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Credit Suisse's Biggest Shareholder Dismisses Investor's Plan
" Bloomberg (10/17/17) Foerster, Jan-Henrik; Winters, Patrick"

Credit Suisse Group AG's (CS) top shareholder has denounced a plan by RBR Capital Advisors to break up the company into three.  David Herro, who says his Harris Associates owns 9% of the Swiss bank, argued Tuesday that the current strategy is beginning to produce results.  He added that Swiss hedge fund manager Rudolf Bohli, whose RBR Capital Advisors holds a 0.2% stake in Credit Suisse, has "hardly any skin in the game."  The Swiss lender began a restructuring two years ago, and Herro believes the current plan will revitalize the bank if given more time to work.  "You can't turn around an aircraft carrier in a couple of months or quarters," he said in an interview on Bloomberg TV.  "I think management is doing a good job."  Bohli—whose firm manages 250 million francs ($256 million)—is calling for Credit Suisse to be split into an investment bank, a wealth manager, and an asset-management business, according to sources.  "The reason why the activist is going after this bank is that its really undervalued—our view is that there is substantial upside here," Herro said.  His firm has held Credit Suisse shares for more than 12 years.

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Solomon Lew Ups Pressure on Myer's Incoming Chair Ahead of Strategy Day
" The Australian (10/16/17) Greenblat, Eli"

Solomon Lew has ramped up the pressure on Myer and its board ahead of the department store operator's crucial strategy day on Nov. 1.  The billionaire retailer has demanded an update on first quarter trading and promised to scrutinize any changes made to the "New Myer" strategy launched in 2015.  And Lew's flagship investment company and Myer's biggest shareholder, Premier Investments, has said it will closely examine Myers' recent performance and the sustainability of the New Myer strategy after Garry Hounsell, incoming Myer chairman, last week publicly voiced his support of the strategy unveiled by Myer CEO Richard Umbers in 2015.  In a statement on Monday, Myer signaled it would not give in to Lew's demands to release its first quarter trading performance at the strategy day.  Last month, Lew launched a scathing attack on Myer's recent performance, its board, and what he derided as its very poor retail execution.  The spat led to pressure last week that saw Myer Chairman Paul McClintock announce his intention to resign ahead of schedule at its AGM in late November to make way for Hounsell.  Lew also asked for a copy of the Myer share register, which he has now received.  He might mount a campaign to vote against the election of Hounsell to the board.

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Prisa Chairman to Step Down After Amber Blocks Monzon Pick
" Bloomberg (10/13/17) Baigorri, Manuel"

Promotora de Informaciones SA (Prisa) Chairman Juan Luis Cebrian intends to step down early in 2018 after failing to turn around the troubled media company and appease investors including hedge fund Amber Capital, according to sources. Amber is Prisa's largest owner, with a stake of about 19%. Prisa said Oct. 13 in a filing that Cebrian asked a board committee to activate its succession plan. He will step down as soon as the company has finished its capital increase and debt restructuring. A proposal to appoint former Indra Sistemas SA Chairman Javier Monzon as Cebrian's successor has been blocked by some board members and investors including Amber, the sources said. Prisa also revealed it is continuing with its planned capital increase of 450 million euros to 500 million euros. Amber has been pushing for a capital increase for months. Some other shareholders are opposed, including Grupo Herradura Occidente SA, which has an 8.9% stake, sources said.

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Brambles Under Pressure Ahead of AGM
" Australian Financial Review (10/15/17) Ferguson, Adele"

Brambles has learned disgruntled Australian fund managers intend to lob a protest vote Wednesday at the global supply-chain logistics company's annual meeting against the re-election of chairman Stephen Johns, director and chairman of the audit committee Brian Long, and the company's compensation report. At least 20% of shareholders are expected to vote against John's re-election; typically an incumbent chair of an ASX 100 company gets an average vote of 98%. Brambles said it could not give any guidance on voting, because proxy voting closes on Monday afternoon. Citi analyst Anthony Moulder issued a note over the weekend, saying: "We believe a faster rotation of the board would be welcomed by the investment community. ... Investors would like to see accountability from the chairman and wider board in regards to the FY19 targets, coupled with the financial pain of the Ferguson acquisition and expansion of Aerospace, which have been costly for shareholders. Yet the board's review of its members seeing re-election is unanimously positive, which we expect shareholders to challenge." Proxy adviser Ownership Matters recommended investors vote against Brambles' remuneration report and against the re-elections of chairman Stephen Johns and director Brian Long to send a message about board accountability.

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Aristeia Urges Sina Corporation Shareholders to Make the Right Choice and Add Fresh Voices to the Company's Board
" Business Wire (10/16/17)"

Aristeia Capital LLC sent a letter to Sina Corp. (SINA) on Monday in regards to its two candidates for election to the board at the annual shareholder meeting on Nov. 3. Aristeia is one of the company's top-five shareholders with about 3 million shares, it says. The contest comes down to three core issues, the letter states. First, Sina is "severely" undervalued: its shares are trading at a 39% discount to net asset value (NAV) and total shareholder return (TSR) has significantly underperformed its potential, it says. Second, Aristeia declares that the valuation gap is directly connected to Sina's poor corporate governance and lack of fresh perspectives on its insular, small board. Third, the addition of new perspectives and genuinely independent voices in the boardroom can create long-term value for shareholders, it concludes. Aristeia adds that its nominees add complementary and relevant skills to the board, and urges fellow shareholders to vote for its candidates via the blue proxy card.

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Worley Parsons Bonuses Face Shareholder Heat at AGM
" Australian Business Review (10/17/17) Carter, Bridget; Murdoch, Scott"

Worley Parsons has drawn the attention of the Australian Shareholders Association (ASA), which could speak up at the annual general meeting (AGM) on Oct. 27. The group is concerned about bonus payments being offered to executives in the past financial year, even as the company's share price hike has been due to potential takeover activity and cost cuts rather than fundamental earnings growth of the business. Worley Parsons has been struggling since the mining downturn, and as a result has slashed jobs and its overall operations. Last year, the Middle Eastern-based Dar Group made a takeover bid for the company then acquired a 19.5% blocking stake in the business in recent months, sending its shares soaring. The suitor appears to be staying around only as a strategic investor. While shares have rallied, the company is actually treading water, according to some shareholder advocates. Meanwhile, CEO Andrew Wood received $2.9 million in total pay for the 2017 financial year, including a $1.4 million cash salary and a $317,000 cash bonus, increasing 49.5% from the prior year. The argument is that the company is offering top management 25% of their cash bonus payments even though performance does not meet the company's own criteria involving earnings growth. However, the board has opted to offer the payments regardless as a reward for the group's cost-cutting efforts. Yet some shareholders support its remuneration policy for the past year, saying higher bonuses were needed to prevent departures as the industry starts to improve. The ASA protested the pay structure at last year's AGM.

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P&G's Too-Close-To-Call Battle With Investor Is Expected to Enter Rare 'Snake Pit' Stage
" CNBC (10/16/17) Picker, Leslie"

Procter & Gamble (PG) declared last week it had won a proxy battle against Nelson Peltz's Trian Fund Management, while the hedge fund claimed the vote was "too close to call."  The fight is now likely to descend into the "snake pit," a term used for the process where proxy-fight participants investigate each contested vote.  "You're talking about the end stage of an election campaign, where the parties haven't kissed and made up," explained Bruce Goldfarb, head of Okapi Partners, a proxy-solicitation firm.  "There's a little bit of venom to the process."  P&G is expected to file an 8-K on Monday describing the preliminary results announced last Tuesday at its annual meeting: that its slate of 11 directors had been elected and that Peltz had not received enough votes for a board seat.  Afterward, Peltz said in a CNBC interview that his numbers show the vote is as "close to a dead heat as possible," with a difference of "plus or minus 1 percent."  IVS Associates, an independent inspector for contested elections, will first compose its own estimates; then the two sides will likely choose to move onto the review and challenge period—the snake pit.  P&G has an unusually high retail proportion, accounting for roughly 40% of its shareholders.  Individual investors are more likely to submit paper cards than voting over the phone or digitally; and shareholders can vote multiple times, with only the latest vote counted.  There are estimated to be some 200,000 paper ballots, each of which will be scrutinized by IVS.  A final, certified result is expected to take about eight weeks.

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Elliott Advisors Set to Make an Entrance at BHP Meeting
" Financial Times (10/15/17) Hume, Neil"

Elliott Advisors is expected to attend BHP Billiton's annual general meeting in London on Thursday, a sign the investor has not been appeased by recent actions.  A source said that Elliott—which has not proposed any resolutions for the meeting—intends to maintain pressure on management until there is sufficient progress.  Since Elliott launched its campaign for strategic change at the miner earlier this year, BHP has announced plans to sell its unprofitable U.S. shale business and said it will not seek approval next year for the development of a contentious potash project in Canada.  However, Elliott believes BHP can do more to improve shareholder returns—specifically by scrapping its dual listing structure and spinning off its oil business.  BHP counters that its share structure and portfolio are under constant review and says Elliott's proposal to combine the company would wipe out at least $1.3 billion in value to save less than $2.5 million annually.  Meanwhile, new Chairman Ken MacKenzie will make his first public appearance at the meeting, where he is anticipated to discuss the company's annual report.  In that document, MacKenzie pledged to bring "fresh perspective" to BHP's assets, introduce stricter rules for future investments, and review the board makeup.  MacKenzie will also be tasked with succession planning for the CEO.  Analysts and bankers say BHP will need to search outside the company as some shareholders may not back an insider.

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Ager-Hanssen Plans to Oust Johnston Press Chairwoman at EGM
" Prolific North (10/16/17) Austin, Simon"

The second-largest shareholder in Johnston Press is planning to call an emergency general meeting to force out the company's chairwoman.  Norwegian billionaire Christen Ager-Hanssen acquired a 12.6% share in the newspaper publisher over the summer and says he is "very confident" about getting enough support to remove Camilla Rhodes as chairman.  "Johnston Press is like a horse without a jockey.  The executives get well paid but are doing nothing to build the company," Ager-Hanssen said, describing the board as "fee suckers."  Richard Bernstein, head of Crystal Amber, has indicated he could support Ager-Hanssen.  "Clearly we are frustrated with the lack of progress," Bernstein said.  "We have been engaging with the company for a year."  Crystal Amber is the company's top shareholder, with an 18% stake.  Ager-Hanssen intends to install himself as chairman to spur a sweeping shake-up of management and strategy.  He has proposed Steve Auckland, a veteran newspaper executive, to oversee print operational changes alongside digital development of Johnston Press.  Auckland also plans to join the board as a non-executive director.  Ager-Hanssen's investment fund, Custos, intends to refinance the company's bond debt with new, cheaper borrowing from Chinese investors.  Custos reportedly is seeking to further boost its stake by buying out other major shareholders.

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Fox Defends 'Transformation' in Reply to Call for Board Shake-Up
" Bloomberg (10/14/17) Sakoui, Anousha"

21st Century Fox (FOXA) is in the process of defending the internal changes it has made following a shareholder call for a board shakeup after a sexual-harassment scandal at its news division, according to a letter from the entertainment group to Dieter Waizenegger, executive director of CtW Investment Group.  Viet Dinh, the chair of Fox's nominating and corporate governance committee, stated in the letter that the company had moved to bolster its human-resources efforts and governance.  The move counters the shareholder's call for a board overhaul—including the hiring of more women as well as new human resources and control measures.  The letter was issued prior to a shareholder meeting in Los Angeles next month and amid Fox's efforts to convince U.K. regulators that it has sufficiently robust standards in place to acquire broadcaster Sky Plc.  "The transformation of Fox News is proof that our long-held commitment to a diverse workplace is a key driver of success throughout 21st Century Fox—where, incidentally, women serve as the Chair and CEO at the film studio, the television studio, and television network," Dinh noted.  The board has begun a process to boost diversity by adding more independent directors.  "The magnitude of the sexual and racial harassment crisis demonstrates a tone at the top that is permissive of unethical behavior and a troubling lack of attention on the part of the Board to the company's human capital management practices, as well as the associated risks to the company's reputation, operations, and long-term value," Waizenegger wrote in a letter to Dinh on Oct. 12.  CtW also wants board changes, including the resignation of Australian businessman Roderick Eddington; the addition of two new directors with HR experience; more independent directors; a decrease in the number of insiders; and greater gender diversity at board level, up from the current 8% of female representation.  

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Fund Seeks Break-Up of £35bn Pharma Group Shire
" Sky News (10/14/17) Kleinman, Mark"

Sachem Head Capital Management reportedly is urging the board of biotech group Shire to explore a sale or spin-off of several of its assets.  The U.S. hedge fund—which unveiled a stake in the company this summer—proposed the move during talks with the board in recent months.  Sachem Head's requests have not yet resulted in a formal letter to the company's board, according to a source.  Shire, which spent $32 billion last year on a takeover of U.S.-based rival Baxalta, has faced pressure from investors due to its ailing share price performance since that deal.  The company's shares have tumbled more than 25% during the last year, leaving it with a market value of just under £35 billion at Friday's close.  Shire CEO Flemming Ornskov has already indicated that he is debating a plan to spin off its neuroscience division, having said in August that a decision would be made by the end of the year.  Investors including Sachem Head are said to be pushing for faster and more dramatic action.  Shire specializes in treatments for rare diseases and neuroscience products.  The company—based in Dublin but listed in London—has been the target of repeated takeover interest in the last few years.  Sachem Head acknowledged the complexity of a full breakup of Shire, but wanted the board to weigh a broader range of corporate actions to improve its valuation, according to sources.

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Destination Maternity Highlights ISS Support of Company's Nominees and Equity Plan Proposal
" PRNewswire (10/13/17)"

Destination Maternity Corp. (DEST), a maternity apparel retailer, has issued a letter to stockholders in connection with the annual meeting of shareholders on Oct. 19, 2017.  The letter encourages Destination Maternity investors to follow the recommendation of Institutional Shareholder Services and vote "FOR" the company's slate of nominees.  They also are urged to cast their ballots "FOR" approval of the proposed amendment to Destination Maternity's equity incentive plan; and in favor of the other proposals recommended by the board of directors.  The company also advises shareholders to ignore a dissident's campaign.  In the letter, the company asks, "Why hasn't [French children's clothing retailer] Orchestra-Prémaman submitted any director nominations?  It is impossible to discern why OP would behave in this irresponsible manner.  Despite having multiple opportunities to do so, not once did Orchestra suggest a stockholder proposal or recommend a board nominee.  Now, instead of providing an alternative vision for the Company and our Board, they propose to inject unnecessary risk and uncertainty into the Company's corporate governance. ... Orchestra's stock price has fallen by more than 60% in less than one year, and in 2016, its net income dropped by 250%.  We can only wonder if Orchestra's resources would be better spent working to reverse its own underperformance with its own directors."

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21st Century Fox Pressed by Investment Group to Overhaul Board
" New York Times (10/12/17) Steel, Emily"

CtW Investment Group sent a letter to the board of Rupert Murdoch's 21st Century Fox (FOXA) on Thursday calling for sweeping corporate governance reform, following sexual and racial harassment scandals at its Fox News division.  CtW, which advises several union pension funds with holdings in 21st Century Fox, accused directors of failing to effectively address a "longtime ethics crisis" at Fox News and risking the company's reputation and long-term value.  "If the board was aware of the settlements and refused to investigate and mitigate the risk, instead allowing the problem to fester, then it failed in its risk oversight function and facilitated a tone at the top that permits unethical behavior by high performers," the letter stated, referring to payoffs to women at Fox News who leveled sexual harassment allegations.  "If the information of the settlements did not reach the board, then it failed to ensure that the proper corporate controls were in place," it added.  CtW called specifically for the removal of Roderick Eddington, lead director and chairman of the audit committee.  The group also wants 21st Century Fox to add two new directors with backgrounds in human resources, appoint more independent directors, and increase the number of female directors from just one currently.  Some argue the broader corporate governance issue at 21st Century Fox is the company's dual-class share structure, which gives the Murdoch family about 40% of the voting stock.  Shareholders are expected to vote at the company's annual meeting next month on a proposal that would end the dual-class share structure in favor of giving each share of common stock one vote.

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Investor Says Weibo Backer Sina Could Fetch $190 a Share in a Sale
" Bloomberg (10/12/17) Deveau, Scott"

Aristeia Capital figures Sina Corp. (SINA) could command as much as $190 a share in a sale, a 67% premium to its current price.  The investor—which unveiled a 4.2% stake last month—has proposed two board nominees and is pressing the company to explore ways to unlock shareholder value, including a potential sale.  "Sina's insular and opaque governance policies, which deviate radically from standard practices for public companies listed in the U.S., have consistently eroded shareholder value and hindered the company from seizing shareholder-friendly opportunities," Aristeia said in a presentation Thursday.  It also is urging the company to spin off all or part of its stake in Chinese Twitter-like service Weibo Corp. (WB).  It called on the company to immediately deliver 30 million shares in Weibo to Sina shareholders, which it said would unlock $38 a share in value.  "This distribution would allow Sina to maintain control of Weibo and continue as its largest economic owner without compromising any of the strategic options listed above," Aristeia said.  The investor additionally is pressuring the company to consider a reverse merger by which Weibo would acquire Sina for cash and stock that could realize $162 a share in value, and it is pushing for a buyback of $500 million to $1 billion in stock with cash on hand.  "These options and others are unlikely to receive full and fair consideration without fresh, independent viewpoints on Sina's board," Aristeia said.  Sina fired back in its own presentation Thursday, declaring that Aristeia's nominees lack experience and that its proposals would not work and could actually diminish shareholder value.

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Investor Takes Large Stake in Babcock & Wilcox, Calls for Changes
" Charlotte Business Journal (10/12/17) Downey, John"

VIEX Capital Advisors has acquired a 6.4% stake in Babcock & Wilcox Enterprises (BW) and is calling for "a credible plan on cost reductions and asset divestitures" to revitalize the embattled company. The investor says if the board does not produce such a plan with B&W's third-quarter financial report due next month, they "may seek to reconstitute the board" at the annual shareholders meeting in March, according to a filing with the Securities and Exchange Commission. A B&W spokesman said the company is in contact with VIEX, but did not comment on whether B&W is planning to sell parts of its business or introduce a new round of cost-cutting measures. B&W Enterprises has struggled since spinning out of The Babcock & Wilcox Co. The plan was to expand through strategic acquisitions, reduce B&W's dependence on the design and manufacturing of coal-fired power technology, and focus on its renewable segment's waste-to-energy business. But the new company immediately began reporting problems with those waste-to-energy projects. It has recorded nearly $260 million in losses on renewable energy projects, and its stock has lost nearly 80% of its value. A shareholder suit, filed in March and amended last month, accuses the company, CEO, and CFO of fraud and intentional misrepresentation. It claims they intentionally withheld information about the severity of problems in the renewable segment to inflate the value of the stock. The lawsuit also argues that cost-cutting efforts contributed to the financial issues because they left the company without the resources needed to support the expansion of its renewable energy business.

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Murdoch Re-Elected as Sky Chairman With Independent Support
" Bloomberg (10/12/17) Mayes, Joe"

Sky Plc announced Thursday that Chairman James Murdoch secured 78% support at the annual general meeting, narrowly winning backing from individual investors despite concerns about his independence amid a takeover bid from the Murdoch family's 21st Century Fox Inc. (FOXA). Those votes included the roughly 40% of Sky owned by Rupert Murdoch's Fox, where James is CEO. He won about 51% of the independent shares, said a source. The win removes one obstacle for the Murdochs to complete Fox's proposed $15.5 billion takeover of Sky. While the stake held by Fox ensured that James Murdoch would be re-elected, the Institute of Directors had urged the board to replace him if he did not secure a majority of shares cast that were not affiliated with Fox. "The significant size of the opposition should serve as an indicator to the board that concerns over his position remain," Stephen Martin, director general of the institute, said in an email. Mutual fund firm Royal London Asset Management had said it would oppose his re-election, while advisory firm Institutional Shareholder Services (ISS) expressed concerns over board independence at Sky and a conflict over James Murdoch's dual role within the family empire built by his father. Royal London and ISS also criticized the amounts paid to top Sky executives, who are poised to benefit if the Fox deal is completed. Independent shareholders agreed, and voted against the company's remuneration report. With the help of Fox's votes, it passed with 71% overall support. "I think the board lacks independence," independent shareholder Hugh Lawson said at the meeting. "Fox is getting a very sweetheart deal out of this, and mainly I think it's because of the lack of independence on the board."

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James Murdoch Wins Backing of Sky Shareholders to Stay as Chairman
" Reuters (10/12/17) Davey, James"

James Murdoch will remain as chairman of European pay TV group Sky after a majority of independent votes cast at the annual shareholder meeting on Thursday backed his re-election, a company spokesman confirmed.  Some shareholders had said they would vote against Murdoch on the grounds that he cannot sufficiently represent independent shareholders given his role as CEO of Twenty-First Century Fox (FOXA).  The company—which already owns 39% of Sky—agreed in December to purchase the rest of it, in a deal still under review by Britain's competition regulators.  Independent director Martin Gilbert expressed confidence at Thursday's meeting that past events at Fox News in the United States would not influence the U.K. Competition and Markets Authority's current evaluation of the deal.  His comment was a reference to allegations of sexual and racial harassment at Fox News.

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Elliott Again Ups Hitachi Kokusai Stake, KKR Raises Offer Price
" Reuters (10/11/17) Kim, Chang-Ran; Uranaka, Taiga"

Elliott Management Corp. has increased its stake in Japan's Hitachi Kokusai Electric from 7.11% to 8.59%, according to a regulatory filing, just one day after KKR & Co. LP sweetened its offer price for the Hitachi Ltd. unit.  KKR improved its bid from 2,503 yen a share to 2,900 yen ($25.80) after a third-party committee reporting to Hitachi Kokusai said it did not support the initial terms.  Elliott—which has a history of investing in companies during takeovers and seeking better deals for shareholders—is now Hitachi Kokusai's No. 2 shareholder after Hitachi Ltd., which owns slightly more than 50%.  Since Elliott first unveiled its stake on Sept. 11, Hitachi Kokusai's share price has climbed 5% and is now roughly 20% above KKR's first offer.  Elliott gradually acquired more shares each day over the past two weeks, the filing indicates, upping its position on Wednesday after reports of KKR's plan for a higher offer.  Elliott has said the purpose of owning Hitachi Kokusai shares was "investment," but it has also said it would "discuss matters such as important proposals depending on situations."

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U.K.'s Institute of Directors Urges Sky to Remove James Murdoch
" Business Day (Australia) (10/11/17) Hellier, David; Mayes, Joe"

U.K. pay-TV provider Sky is coming under pressure from a prominent business lobby group to remove James Murdoch as chairperson if a majority of independent shareholders oppose his leadership at the company's annual meeting on Oct. 12.  The Institute of Directors has urged the broadcaster's board to honor the votes of independent investors, who own more than three-fifths of the company.  Institutional Shareholder Services and other advisory firms have recommended voting against re-electing Murdoch because of a conflict of interest over his role as CEO at 21st Century Fox (FOXA), which owns nearly 40% of Sky and is trying to buy the rest.  Roger Barker, head of corporate governance at the Institute, states, "We'd like to think a no vote will give the board strong pause for thought."

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Bill Ackman Explains Why He's Not Impressed by ADP's Triple-Digit Return
" Yahoo Finance (10/11/17) La Roche, Julia"

Automatic Data Processing (ADP) shares have yielded triple-digit returns over recent years while also outperforming the S&P 500, yet Bill Ackman—head of Pershing Square Capital Management—believes the company is "vastly underperforming its potential."  ADP has said its total shareholder return under CEO Carlos Rodriguez is upwards of 200%, but Ackman calls that an exaggeration.  "They say the stock is up 200% since he's been CEO.  The answer is it's up 140%," he told Yahoo Finance.  Moreover, he estimated, the company has underperformed the industry by more than 25% over the same period.  Ackman noted that while human capital management industry stocks have outperformed as a whole, ADP has been lagging its peers.  "The way you benchmark a company—you don't look at the absolute performance," he explained.  "The absolute level of the performance has been good.  You look at the potential."  He also pointed out that ADP used a high intraday price as the endpoint for the total shareholder return calculation—where recent gains likely were influenced by Pershing Square's investment—and argued that ADP should have accounted for its CDK spinoff differently in its stated return.  Ackman also compared the company to rival Paychex (PAYX).  "If you look at Paychex, over the last six years, Paychex has gotten more and more profitable and productive," Ackman said.  "Their margins are up to 41% versus ADP's on a like for like basis—ADP's core employer services business is at a 19% margin—so basically less than half a direct competitor for a big part of ADP's business.  And we said, 'Wow, this doesn't make lot of sense.'"

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SEC Moves to Simplify Corporate Compliance Paperwork
" Reuters (10/11/17) Rucker, Patrick"

The Securities and Exchange Commission (SEC) issued proposed rules on Oct. 11 to streamline the disclosures that publicly traded companies must file with the agency when communicating with investors. President Donald Trump has pledged that his administration will cut the compliance burden for businesses and SEC Chairman Jay Clayton endorsed the proposed rules. Under the new rules, companies may omit some references to risk factors and incorporate online references such as hyperlinks that could cut paperwork. The SEC said in a statement that the changes are "intended to improve the readability and navigability of disclosure documents and discourage repetition and disclosure of immaterial information." Comments on the proposal are due within 60 days.

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KKR Raises Hitachi Kokusai Offer Following Pressure From Elliott Management
" Reuters (10/11/17) Fujita, Junko"

KKR & Co. LP (KKR) has upped its bid for Hitachi Kokusai Electric Inc. to 2,900 yen a share from 2,503 yen, the Japanese firm said on Wednesday, following pressure from Elliott Management to revise terms. KKR agreed in April to buy the chip-making machinery and communications and video equipment unit from Hitachi Ltd., but the deal was postponed in August when KKR said it would continue talks with Hitachi Kokusai after a third-party committee reporting to the Japanese firm's board said it did not support the terms. KKR's improved offer price also comes after Elliott—which has a history of intervening in acquisitions and pushing for better deals for shareholders—revealed a roughly 5% stake in Hitachi Kokusai last month. Elliott then elevated its stake in Hitachi Kokusai to 7.11%, according to a Sept. 28 filing. Since Elliott's first stake disclosure on Sept. 11, Hitachi Kokusai's share price has risen 12.5% and is now trading 24% above KKR's original offer. Trading in Hitachi Kokusai's shares closed on Wednesday at 3,115 yen.

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Fink Says BlackRock Does Better Than Hedge Funds With Corporate Governance
" Bloomberg (10/11/17) Melin, Anders"

BlackRock Inc. (BLK) CEO Larry Fink has responded to comments from hedge fund manager Paul Singer, arguing that his company does a better job than hedge funds in providing corporate governance. "I think we do as credible a job as anybody, better than any hedge fund, better than any firm, we are very committed to corporate stewardship," Fink said Oct. 11 in a CNBC interview. Singer has said that passive investors lack incentives to compel companies to make improvements. "In active management if you don't like a company you need to sell it," Fink said. But as a passive investor, "the only power I have is the power of the vote, so we take a huge responsibility in trying to navigate this."

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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."

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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."

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Sidebar: Mixed Results for Investors Engaging Banks
" Financial Times (10/17/17) Fortado, Lindsay"

Activist investors tend not to engage banks as frequently as they do companies in other industries, partly due to the size of many of the biggest banks, insufficient transparency around their revenues and structure, and the vast amount of regulation that covers the industry. However, there has been some engagement. When Monaco-based Knight Vinke engaged both UBS (UBS) and HSBC (HSBC), two of the biggest banks in Europe, shares in both banks climbed. Dan Loeb's Third Point currently has a stake in Italian lender UniCredit but has not yet made any public demands. And ValueAct acquired a stake in Morgan Stanley (MS) last year; shares rose after the fund asked the bank to invest more time and resources in its wealth management unit and advisory businesses.

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Can a New Long-Term Stock Exchange Disrupt Capitalism?
" Wall Street Journal (10/17/17) Osipovich, Alexander; Berman, Dennis K."

Some of Silicon Valley's technology companies intend to launch a new framework for corporate governance, investing, and trading called the Long-Term Stock Exchange (LTSE). Backed by key Valley players, the LTSE says it intends to seek regulatory approval by the end of this year to become the newest U.S. stock exchange. Its primary feature will be a system in which the voting power of shares increases the longer investors hold them. Firms listed on the exchange would need to use such a structure, often called "tenure voting," while abiding by numerous other rules, such as a ban on linking executive pay to the company's short-term financial performance.

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Light Backing From State Street Weighs on U.S. Diversity Drives
" Reuters (10/16/17) Kerber, Ross"

State Street Corp. (STT) did not fully back boardroom diversity measures this year, according to a new analysis by Proxy Insight.  Of eight shareholder resolutions on board diversity in 2017 at Russell 3000 companies, funds run by State Street's asset-management arm supported one, opposed four, and abstained on three others, the research shows. Rival asset managers BlackRock Inc. (BLK) and Vanguard Group backed five and six of the eight resolutions, respectively.  State Street has been applauded for its past efforts to put more women on corporate boards, including the "Fearless Girl" statue it installed near Wall Street.  But activist shareholders are frustrated that the firm's public stance on diversity did not translate into a greater show of support during shareholder votes—especially since its $2.6 trillion under management gives it considerable clout on corporate matters.  For example, State Street opposed a shareholder resolution calling for Apple Inc. (AAPL) to accelerate efforts to diversify its senior management and board.  The proposal received 4.9% support at Apple's meeting in February, missing the 6% threshold needed to be refiled.  State Street abstained, meanwhile, on a measure asking Discovery Communications (DISCA) to include qualified women and minority candidates in board searches, backed by 35% of votes cast.  State Street said it engages with companies in various ways and voted against directors when necessary.  Representatives noted that, including abstentions, State Street did not support management in half of the eight cases and that its funds often voted against directors as well.

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Financial Services Found to Have Widest Gender Pay Gap in U.K.
" Financial Times (10/15/17) Gordon, Sarah"

Financial services companies in the United Kingdom have the biggest gender pay gap, according to early returns on the government's gender pay gap registry.  Financial services has a median gender pay gap of 31%, according to analysis by data analytics company Staffmetrix.  The number is based on data logged by companies and public sector organizations on the government's website.  Electricity and gas suppliers have the second highest gap, at 26%, followed by the construction sector at 23%.  Companies with more than 250 employees must publish the gap for mean and median wages and bonuses, as well as the percentages of men and women receiving bonuses at a number of pay scales.

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Dual-Class Shares Should Build in Expiration Plan
" (10/16/17) Indap, Sujeet"

This year will perhaps be remembered as a tipping point in the debate over the concept of dual-class stock that places disproportionate power in the hands of a few people. Snap's (SNAP) shares have dipped 15% since the tech group introduced no-vote stock in its March initial public offering, and Mark Zuckerberg of Facebook (FB) and Barry Diller of IAC (IAC) have abruptly abandoned plans to create new, no-vote shares. Major indices such as S&P Dow Jones and FTSE Russell have announced plans to exclude companies that have multi-class structures from the baskets that passive mutual funds track. Prominent shareholder advocacy groups are leery of dual-class shares because the structure means that ordinary shareholders who have the same economic interest in a company do not receive an equal say in corporate governance. Those less alarmed by dual-class shares point out that the arrangement can help shield companies from activists seeking short-term gain so founders can pursue long-term value creation. The present system creates a fair choice, but some academics favor a compromise in the form of "sunset" provisions that force super shares to collapse into ordinary shares. The ideal dual-class structure is one that lasts 10 to 15 years post-IPO with the option for shareholders to extend if they consent, according to research from Harvard professor Lucian Bebchuk. The most reasonable sunset provision should rest on the founder's level of engagement, says Stanford academic Andrew Winden.

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The Hedge Fund, the CEO, and the Fight for P&G's Future
" (10/13/17) Nicolaou, Anna; Daneshkhu, Scheherazade"

Trian Partners' Nelson Peltz recently was denied a seat on the board of Proctor & Gamble (PG). In one of the largest and most expensive proxy battles corporate America has ever seen, Peltz charged P&G, which has been losing market share for a decade, with being slow, closed-minded, and too focused on its big brands at a time when consumers are looking for more distinctive products. Trian, which paid $3.5 billion for a 1.5% stake in P&G in February, wants to simplify the consumer goods group's corporate structure from 10 business units to three, but has not demanded more extreme measures, like a change of leadership or spinoffs. Both sides spent tens of millions of dollars on campaigns and nearly double the number of shareholders—more than 400—showed up to the meeting in Cincinnati compared to previous years. Trian drew the "vast majority" of its support from institutional investors, but P&G won over retail investors and employees, who make up an unusually high share of its investors. Analysts say P&G has made progress, with shares growing more than 20% since CEO David Taylor took over two years ago, keeping pace with the S&P 500. However, the message from large investors is clear and Peltz is unlikely to go away, according to market observers.

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Japan Inc. Scandals Build a Case for Corporate Reform
" Bloomberg (10/12/17) Smith, Noah"

Kobe Steel Ltd., which has admitted faking data about the quality of its materials, offers further evidence that Japanese companies need to adhere to better corporate governance, rather than relying on apologies after the fact. Corporate governance would prevent scandals and also foster productivity. Investors and independent directors are the best people to force Japanese managers to improve, according to research by economists Naoshi Ikeda, Kotaro Inoue, and Sho Watanabe of the Tokyo Institute of Technology. Without shareholder pressure, they say, managers tend to favor "satisficing" or "the quiet life"—avoiding big decisions and contenting themselves with managing stable corporate empires, which allows their companies to stagnate. This tendency was recognized in the 1930s, and Ikeda and his colleagues say that this is going on in modern corporate Japan. Numerous Japanese companies engage in cross-shareholding, where corporations own one another's stock, resulting in a "you don't push us too hard, and we won't push you" mentality. Exacerbating the problem is the fact that Japanese companies don't have a lot of independent directors on their board, which often leaves managers themselves in control. The researchers also discovered that companies with more cross-shareholding spend less on both capital investment and research and development, and engage in less corporate restructuring. Capital expenditure and R&D suggest a desire for growth and expansion into new markets, while restructuring suggests a push for efficiency. Japanese managers who are protected from shareholder pressure tend not to do either of these things. The presence of independent directors on a company's board is correlated with more investment, R&D, and restructuring, the researchers say.

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Boards of Directors Should Be Aware of Potential Defense to Books and Records Demand
" Delaware Business Court Insider (10/11/2017) Chuff, Christoper B.; Cline, Joanna J.; Herrmann, Douglas D."

The Delaware Court of Chancery in Mehta v. Kaazing reiterates that stockholder requests to examine corporate books and records based on the desire to value a stockholder's shares may be legitimately denied if the stockholder is unable to demonstrate that it has a "present" need to value its shares. Merely reciting a proper purpose, such as valuing one's shares or investigating mismanagement, is not sufficient, the court clarified. To justify inspection, the stockholder must set forth the circumstances underlying its need for inspection and demonstrate that the stockholder has a need to inspect corporate books and records in the present.

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The Next Phase in Sustainability Disclosure Is Coming
" Bloomberg (10/12/17) Chasan, Emily"

Jean Rogers is the founder of the Sustainability Accounting Standards Board (SASB), a San Francisco-based nonprofit that has spent the last four years developing industry-based standards companies can use to improve material sustainability disclosures in Securities and Exchange Commission filings; SASB is in the final stages of preparing its set of standards. In an interview with Bloomberg, Rogers discusses sustainability disclosure. Rogers says there is a disconnect in the way sustainability is addressed in filings today because more than 50% of that disclosure is boilerplate, but investors are increasingly saying that sustainability information is material and they ought to have access to it. "There should be a mutual interest because companies want to attract the kind of long-term capital that cares about these issues," says Rogers. Based on feedback over the past six months, investor concerns were mostly around the information being decision-useful, comparable, and material, while company concerns were mostly around cost-effectiveness, implementation of standards, and also materiality. The feedback resulted in 248 proposed changes to the provisional standards. SASB's plan is to codify the standards for use in the first quarter of 2018. "This will be the start of better corporate uptake and disclosure, and hopefully a reduced need for sustainability questionnaires and shareholder proposals on these topics," according to Rogers. "This is really about making sustainability communication fit a purpose."

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Seven Key Ways the SEC's Disclosure Proposal May Affect Your Periodic Reporting
" Davis Polk’s Corporate Governance Briefings (10/13/17) Chiu, Ning"

The Securities and Exchange Commission (SEC) on Oct. 11 proposed amendments to its disclosure requirements for public companies based on recommendations in the staff's FAST Act Report and as part of a broader review of the disclosure system. The changes have been characterized as "modest and technical." There are seven main areas that would affect periodic reporting and do not relate to securities offerings. First, the proposal requires that companies disclose physical properties only to the extent material. Second, the earliest year in MD&A may not warrant discussion. Third, year-to-year comparisons in MD&A are not required. Fourth, it is unnecessary to repeat executive officer information in a proxy statement if it is already in the Form 10-K. Fifth, the proxy statement does not need to include a section on Section 16 reporting compliance if there are no delinquencies to report. Sixth, the audit committee report will need to be updated. Finally, the proposal includes several modifications to filing exhibits, including a new exhibit to provide a brief description of a company's registered securities.

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Procter & Gamble's Win Is Rare In a Year of Activist Gains
" Institutional Investor (10/11/17) Celarier, Michelle"

The outcome of Nelson Peltz's battle for board representation at Procter & Gamble (PG) could be the exception to the rule this year.  There have been many activist victories in 2017; and although the head of Trian Fund Management claims the vote was too close to call, P&G on Oct. 10 declared him the loser.  If true, it would represent the first big loss in a year of significant wins.  Just a day earlier, Trian partner Ed Garden won a seat at General Electric (GE), where the fund has a $2.5 billion position.  Other successes this year include Mantle Ridge winning five board seats at CSX Corp. (CSX), Elliott Management scoring three spots at Arconic (ARNC), and Marcato Capital claiming three seats at Buffalo Wild Wings (BWLD).  In the year ended June 30, activist investors won at least one board seat 46% of the time—up from 41% a year earlier, according to a report by J.P. Morgan.  Just 19 of 54 proxy contests saw votes cast, and many of those contests were small.  Among the big activist campaigns still to come are Bill Ackman's effort to win three seats on the board at payroll processor ADP (ADP).  He is attempting to court both retail and institutional investors, as Trian did with P&G.  Trian and P&G spent tens of millions of dollars to woo investors; and whatever the ultimate outcome of the final certified election results, Trian says it "believes management and the Board have been put on notice by shareholders—a continuation of the past decade's underperformance is simply unacceptable."  13D Monitor founder and principal Kenneth Squire notes that Peltz is "not going anywhere.  It's a great time to be a P&G stockholder.  Over the next year the company is going to create value for shareholders or he'll be back again.  I said that about DuPont, and it did not even take them a year."

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Billionaires Challenged by Rise of India's Minority Investors
" Bloomberg (10/12/17) Sundria, Saket; Sanjai, P R"

Indian billionaire Anil Ambani—whose telecom business is fighting insolvency proceedings—is blaming some of its problems on minority investors.  Until recently, minority shareholders in India rarely fought with management, and individual investors were more likely to use meetings to praise the country's industrialist families.  However, retail investors are recently funneling more savings into the stock market—especially through mutual funds, or through insurance and pension providers, which are being forced by regulators to take a more active role in corporate governance.  "Earlier, the only option an investor had was to sell if they have a difference in opinion with the management," said Amit Tandon, founder of proxy advisory firm Institutional Investor Advisory Services. "Now, investors have an option of voicing their concerns too.  Companies are now disclosing far more details in anticipation of minority shareholder demands."  Institutional shareholders have become more engaged since 2014, when the Securities and Exchange Board of India required mutual funds to explain their voting decisions on proposals linked to mergers and appointment of directors.  The changes have helped to lift India in the World Bank's ranking of protections offered to minority investors to 13th place, ahead of nations including France and the United States.

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Serving Shareholders Doesn't Mean Putting Profit Above All Else
" Harvard Business Review (10/12/17) Hart, Oliver; Zingales, Luigi"

Milton Friedman argued in 1970 that the sole responsibility of business is to maximize profits.  However, an alternate perspective suggests that companies should maximize shareholder welfare, not value.  Many shareholders care about not just money, but at least somewhat about the health of society—and want the companies they invest in to embrace similar values.  For example, until a few years ago the only complaints from institutional investors were excessive executive compensation and dearth of independent directors.  Now, research has shown that the majority of shareholder proposals in the United States now concern ESG, or the environmental and social impact of companies' investments.  The fiduciary duty a board has to a company's shareholders is to maximize their welfare, not just value.  But how can boards incorporate shareholder welfare?  On decisions with major social consequences, a referendum should be used to elicit shareholders' preferences—through the formation of mutual fund companies specializing in voting on certain issues.  Issue-oriented index funds would eliminate overload for investors and would not be more costly than a standard index fund, which has to pay a proxy adviser to instruct it on how to vote.  Existing proxy access rules make it difficult for moral issues to be put up for a shareholder vote; but if these rules were relaxed, this kind of ethical fund could be expected to materialize.  Although moving from shareholder value maximization to shareholder welfare maximization may seem like a small step, it could a huge improvement in the way companies are run.

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The House Wants to Squelch Voices of 'Small' Shareholders. Research Shows Those Voices Matter.
" Harvard Business School Working Knowledge (10/11/17) Nobel, Carmen"

Corporate managers frequently seek to exclude proposals that are actually viewed as legitimate by the majority of the firm's shareholders, according to a new study from researchers at Harvard Business School and the University of British Columbia's Sauder School of Business. The researchers collected 12,627 shareholder proposals submitted to public companies between 2003 and 2015, and found that firms had contested and sought to exclude 38% of the shareholder proposals they received, and that the Securities and Exchange Commission (SEC) had disallowed the firms from excluding 27% of those. Of the 1,332 proposals that the SEC had allowed to be included on the annual proxy statement despite a firm's objections, some 21% had gone on to win shareholder or firm support. The findings come at a time when the House has passed legislation (the Financial CHOICE Act) that would limit the submission of proposals to shareholders who own at least 1% of the company's shares. The researchers identified 280 proposals that gained eventual shareholder support despite the firms initially trying to contest them, and found 155 proposals would have been automatically deemed ineligible under the Financial CHOICE Act because of the 1% minimum holding requirement. And companies sought to exclude proposals from both small and large investors. Shareholders who submitted contested proposals had median shareholdings of $39,000. The mean amount was $10.7 million in shares, owing to proposals from pension funds, hedge funds, and other large institutional investors.

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Retail Shares Matter Against Activism, Says Daly
" Bloomberg TV (10/11/17)"

Richard Daly, CEO at Broadridge Financial Solutions Inc., discusses how companies fight activist investors on "Bloomberg Daybreak: Americas."

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Activist Investors Are Getting a Warmer Welcome in South Korea
" Bloomberg (10/10/17) Kim, Sohee"

South Korean officials are working to change perceptions that Korean markets may be rigged to favor the nation's family-run conglomerates, according to Fair Trade Commission Chairman Kim Sang-jo. President Moon Jae-in and his deputies have met with overseas money managers to discuss Korean markets, and some of those meetings were held by Moon during a recent trip to the United States. "It's a shame foreign investors have been so passive in Korea and haven't displayed levels of activism they would otherwise engage in developed markets," says Kim, 54, who supervises the conglomerates known as chaebol. The meetings are part of a broader government effort to take on the dynasties that have fended off foreign activists and dominated Korea's economy for decades. Kim's office is taking steps to rein in potential chaebol misdeeds and he says groups should have truly independent directors and allow individual units the freedom to review directives coming from the top. Corporate-governance activists such as Kim have long argued that chaebol families are the primary reason why the country's stocks trade at lower valuations than in other markets—a phenomenon called the "Korea discount."

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