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Blackwells Launches Proxy Fight at Supervalu
" Wall Street Journal (03/22/18) Moise, Imani; Haddon, Heather"

Blackwells Capital LLC has nominated candidates for six seats on Supervalue Inc.'s (SVU) nine-person board, a move that Supervalu claims is an effort to take control of the company. Blackwells has a 2% stake in Supervalu, excluding certain options, and 4.35%, including those options. The investment firm—whose previous request for three board seats was rejected—has been pushing for changes since October, when it called on Supervalu to shed stores and appoint new leadership. Blackwells also has asked Supervalu to break itself up and explore a sale. Supervalu argues that the push is unfair to other shareholders and outsized to the stake Blackwells holds. Furthermore, it contends that its "transformation strategy is well under way" and that the proposed board changes are not necessary to increase shareholder value.

'Time-Consuming and Distracting Proxy Fight': Obsidian Energy Trades Barbs With Investor
" Financial Post (03/21/18) Morgan, Geoffrey"

On March 21, Obsidian Energy Ltd. (OBE) and investor FrontFour Capital traded barbs over the appointment of new directors. The hedge fund has launched what Obsidian Chairman Jay Thornton called a "costly, time consuming and distracting proxy fight" by nominating four directors to the company's nine-person board. Thornton said, "We are disappointed that after several months of attempting to work constructively with FrontFour, including the addition of Gordon Ritchie to the board at their suggestion, FrontFour has chosen to put its interests ahead of other shareholders at a critical time in the company's history," indicating that the four directors plus Ritchie would give the hedge fund a majority vote on its board. However, Stephen Loukas, portfolio manager at FrontFour, which owns 6.2% of Obsidian's stock, said the hedge fund did suggest Ritchie as a director, but the company already was considering him for a board seat. "Ritchie then, of his own volition, joined the Obsidian board as an independent director in Dec. 2017, explicitly on the basis that he was not a nominee of FrontFour," he said. In addition to Loukas, FrontFour is nominating former Chevron (CVX) executive Steven Evans, former ConocoPhillips (COP) executive Michael Faust, and Acting Cline Mining Corp. CEO Matt Goldfarb to the Obsidian board. In a letter to shareholders, FrontFour wrote that its nominees would "help drive the necessary decisions" to overhaul the company's assets, focus solely on its properties in the Cardium light-oil formation, and boost its share price.

Columbia Threadneedle Urges Unilever to Engage With Investors Over Move
" Reuters (03/22/18) Martin, Ben"

Columbia Threadneedle Investments, a top 10 shareholder in Unilever (UL), has voiced concerns about the consumer goods group's decision to overhaul its structure by choosing Rotterdam for its main headquarters, citing the possible impact on the company's listing on London's stock exchange. "We're disappointed by Unilever's lack of engagement with shareholders ahead of its decision to restructure, particularly in view of the likely impact on its premium listing in London," said Iain Richards, head of responsible investment at the group. "Given the potential implications and need for 75% approval, they need to do more to convince U.K. shareholders of the merits of the move." Unilever announced last week it would make Rotterdam its sole legal base, a move that could affect its U.K. listing and membership of Britain's benchmark FTSE 100 index. Index tracker funds may need to sell Unilever shares if the company is ousted from the FTSE 100.

Exclusive - ILG Explores Merger With Apollo's Diamond Resorts: Sources
" Reuters (03/21/18) Roumeliotis, Greg; Baker, Liana B."

ILG Inc. (ILG), a provider of vacation timeshare properties, is considering a tie-up with Apollo Global Management LLC's (APO) Diamond Resorts International Inc. as an alternative to a sale, according to sources. The deal would add more than 400 of Diamond Resorts' vacation destinations in 35 countries to ILG's 250 managed resorts in about 80 countries. ILG said last month that its board had formed a strategic review committee comprised of independent directors to discuss a potential transaction with multiple parties, which it did not name. Marriott Vacations Worldwide Corp. (VAC) and Hilton Grand Vacations Inc. (HLT) were reported to have held talks about acquiring ILG last year. Although ILG is still exploring a sale to Marriott Vacations, it is also in discussions about combining with Diamond Resorts, which is owned by private equity firm Apollo and could be valued at more than $3.5 billion (£2.4 billion), including debt, according to the sources. The talks with Diamond Resorts are aimed at giving ILG leverage in case its negotiations with Marriott Vacations are unsuccessful, a source added. In January, FrontFour Capital Group LLC announced it had nominated four candidates for election to ILG's board, accusing the company of refusing to engage in constructive talks about its strategy. ILG has disputed that it has not tried to engage with FrontFour. The hedge fund also urged Diamond Resorts to sell itself when it was a public company. In 2016, Apollo took Diamond Resorts private for roughly $2.2 billion.

Avis Adds Biggest Investor's Nominees to Board Slate
" Reuters (03/21/18) Herbst-Bayliss, Svea; Banerjee, Arunima"

Avis Budget Group Inc. (CAR) announced Wednesday it is nominating five candidates to its board, including three proposed by SRS Investment Management last month.  However, SRS responded that it will continue to run its original slate of five candidates, arguing the company's proposed slate "falls short of achieving the board refreshment that we believe is necessary."  The car rental company's peace offering to its top investor comes as tensions have been growing for months.  SRS owns a 31% stake in Avis, including 15% of the company's common shares and another 16% in derivatives, according to a filing.  In January, Avis installed a poison pill to restrict SRS from converting derivatives to more voting stock.  SRS—which typically stays out of the limelight and has never run a proxy fight—in February announced a slate of five candidates, including two people who are already serving on the board.  It has had board representation at Avis since 2016.  SRS said in a filing at the time that the company "cannot achieve its full potential under the stewardship of the current Legacy Board."  Avis included the SRS nominees to show "willingness to work cooperatively with a significant shareholder to advance the best interests of all shareholders," said lead independent director Leonard Coleman.

Crest Nicholson Faces Potential Shareholder Revolt
" Financial Times (03/21/18) Mooney, Attracta; Williams, Aime"

Institutional Shareholder Services (ISS) has recommended shareholders of U.K. housebuilder Crest Nicholson reject CEO Stephen Stone's appointment to executive chair at the annual general meeting on Thursday. The proxy advisor says the proposal—which would see Stone become executive chair for one year and then a non-executive chair for up to another two years—would violate corporate governance rules and shed doubts on the new chairman's ability to cast proper scrutiny over the company. The U.K.'s Corporate Governance Code stipulates that CEOs should not typically chair the same company. "Such a transition means that the chairman is less likely to bring a properly dispassionate perspective to the board. Further, the ability of the new [chief executive] to implement their strategy may be impaired," ISS said. Investment firm Royal London Asset Management declared it would reject Stone's appointment, believing the three-year period was excessive. "When you have an executive chairman who ran and built the business, what role does the chief executive play? Who runs the business?" said Ashley Hamilton Claxton, the firm's head of responsible investment. ISS also cast doubt over Stone's pay as chair, which would come in at 60% more than the current chair's pay. However, proxy adviser Glass Lewis recommended a vote for Stone's appointment, noting that "the board has appointed a senior independent director and has clearly outlined the processes by which it ensures a proper division between management and non-executive oversight."

Telecom Italia Open to Network IPO Once Fully Regulated: Sources
" Reuters (03/22/18) Flak, Agnieszka"

Telecom Italia (TIM) would consider selling a stake in its future network company and list the unit, but only once it becomes a fully regulated business to guarantee stable returns, according to sources.  TIM, whose top shareholder is French media company Vivendi with a 24% stake, is putting its network assets into a separate company (NetCo) fully controlled by TIM, a move likely to take 12-18 months.  Last week, Elliott—which is pushing to replace six board members to shake up Vivendi's control of the company—said it would push for NetCo's listing to unlock value.  TIM CEO Amos Genish has not ruled out selling a stake in NetCo in future, but would like control to remain with TIM.  Elliott has also said it prefers the creation of a single national network, which suggests it would agitate for the merger of NetCo with competitor Open Fiber, a broadband firm jointly owned by utility Enel and CDP.  TIM is open to purchasing Open Fiber, a source said, but not at any price.  Regarding Elliott's plan to replace six board members, the source said TIM rebuffed the idea of a board overhaul, adding a fully independent board would make reaching agreement difficult.  "Management would not be confident it has the backing of the majority of the board," the source said, adding an alternative would be to let Elliott appoint two members to the board.  TIM's board will discuss Elliott's proposals on Thursday, while shareholders will vote on the suggested board changes on April 24.

Land & Buildings Issues Open Letter to Board of Taubman Centers
" Business Wire (03/21/18)"

Land & Buildings Investment Management, LLC sent a letter to the board of Taubman Centers, Inc. (TCO) on Wednesday reiterating its belief that the appointment of its nominee, Jonathan Litt, as a director is necessary "to bring a true shareholder representative into the boardroom."  Land & Buildings notes that as it "sits on the verge of a second proxy contest against Taubman Centers," it believes all close observers of the company would similarly urge it to embrace the change needed to reverse its trend of self-preservation and underperformance.  Taubman has continued to significantly underperform since last year's annual meeting, the letter notes, with a 16% decline in its shares.  Land & Buildings also questions the independence of Taubman's board, and argues that the dual class voting share structure has "served to disenfranchise common shareholders."  The letter argues that Taubman's board needs "a true shareholder representative with a deep knowledge of REITs and regional shopping malls," which can be found in Litt, Land & Buildings' Founder and Chief Investment Officer.  Finally, it recommends that following the board addition, a special committee be formed to develop a plan for the elimination of the dual-class voting structure.

Elliott Said to Back Ferrari-Like Spinoff for Telecom Italia
" Bloomberg (03/21/18) Lepido, Daniele; Ebhardt, Tommaso"

Elliott Management Corp. is weighing a plan to separate the fixed-line network of Telecom Italia SpA that includes an initial public offering by the end of 2019 and wants to reduce the carrier's stake in the grid to a minority, according to sources. The move would mimic a strategy pursued by Fiat Chrysler with Ferrari in 2016, when the carmaker spun off the sports-car unit to investors, more than doubling the market value for its shareholders. Elliott owns 5.74% of Telecom Italia as of March 15, according to a filing Wednesday, and may nearly double that holding to secure a stronger voice in the company as it pushes for a board shakeup, the sources said. Elliott has entered a battle with Telecom Italia's largest shareholder, the French media conglomerate Vivendi SA, which owns 24%. The fund has proposed ousting the carrier's chairman, Arnaud De Puyfontaine, and five other directors and replacing them with six independent board members. In a letter to shareholders last week, Elliott proposed separating and selling part of the network unit—which is valued significantly higher than the current value of the Milan-based company. The aim is to boost the carrier's value with a sum-of-the-parts approach to extract the highly-valued landline network, the sources said. A listed network with Telecom owning a minority interest could grant similar returns to those secured by Fiat with the Ferrari separation, they added. Elliott's proposal may conflict with an existing plan by Telecom Italia executives to separate the network but maintain full control of the business.

N.Y. State Pension Plan to Oppose All Board Directors at Companies Without Women Members
" Pensions & Investments (03/21/18) Steyer, Robert"

The New York State Common Retirement Fund, Albany, intends to vote against all boards of directors standing for re-election at companies that lack female board members.  "We're putting all-male boardrooms on notice: diversify your boards to improve your performance," said Thomas DiNapoli, the state comptroller, on Wednesday. DiNapoli added that the $209.1 billion pension fund will cast votes against members of corporate board governance committees for firms with only one female board member. Separately, DiNapoli announced that the pension fund had reached accords with Bristol-Myers Squibb (BMY), Leucadia National (LUK), Packaging Corp. of America (PKG), and PulteGroup (PHM) to withdraw shareholder proposals on board diversity in return for the four companies agreeing to formally commit to seeking "highly qualified" females and minority group members for consideration as directors.

MutualFirst in Ind. Reaches Compromise With Investor
" American Banker (03/20/18) Burns, Hilary"

Muncie, Ind.-based MutualFirst Financial (MFSF) disclosed in a regulatory filing that it will nominate James Bernard, a representative of Ancora Advisors, to join its board. Ancora has a 7.2% stake in the company. Bernard will remain on MutualFirst's board until its 2020 annual meeting and also is expected to join the board of MutualFirst's bank. In exchange, Ancora has agreed to buy no more than 9.99% of MutualFirst's stock, or acquire any company assets. Furthermore, the firm will not attempt to restructure, control, or change MutualFirst's management, board, or policies, and cannot pursue litigation against the bank or its management. The standstill agreement is in effect until the end of next year's annual meeting, and during this period, Ancora will support MutualFirst's board nominees and recommendations.

Elliott Has Potential Holding of 5.75% in Telecom Italia—Filing
" Reuters (03/21/18) Quaglia, Maria Pia"

A March 21 filing with Italian market watchdog Consob reveals that Elliott Advisors holds a 3.75% equity stake in Telecom Italia (TI) and another 1.99% holding through derivative contracts. Elliott is calling for a "truly independent" board at the company and has proposed removing some of the directors nominated by top shareholder Vivendi, including Telecom Italia Chairman and Vivendi CEO Arnaud de Puyfontaine. Shareholders will vote on the matter on April 24.

Pressure Builds on GEA for Swift CEO, Strategy Change
" Reuters (03/21/18) Palmen, Anneli; Kaeckenhoff, Tom"

A major investor in German food processing company GEA is urging it to review its businesses and rapidly replace its CEO following a string of disappointing earnings. GEA is seeking a new CEO after Juerg Oleas last week said he would not stand for another term, following a series of profit warnings. Sebastian Growe, an analyst with Commerzbank, said a leadership change would not be enough to restore confidence and only a thorough review of the business would do. One top-10 investor in the company, who declined to be named, was also pressing for change at the top. “We see this as a catalyst for a positive new chapter at the company,” the investor said. “The executive board needs to review capital allocation, limiting or desisting from acquisitions,” he added. Cost savings could come from reviewing production and procurement and by selling off low-margin businesses. The company should also consider a meaningful share buyback, the investor said. GEA is struggling to win back shareholder confidence after downgrading its earnings targets in both 2016 and 2017. Top investors in GEA include the Kuwait Investment Office, Blackrock, MFS Investment Management, Albert Frere, and U.S. hedge fund Elliott.

Embattled Noble Group Hit by Lawsuit From Shareholder
" Reuters (03/20/18) Daga, Anshuman"

A top Noble Group Ltd. shareholder has filed a lawsuit with the Singapore High Court against the commodities trader and some of its executives, claiming the company inflated its assets. The move by Goldilocks Investment Co.—an Abu Dhabi Financial Group equity fund—comes days after Noble said it would not make the redemption payment for its $379 million bonds which matured on Tuesday as it seeks a debt restructuring. Noble's debt restructuring deal has been protested by some bondholders and shareholders. Noble was hit with a crisis in February 2015 when Iceberg Research questioned its books. Noble has defended its accounting. Noble said last week it had finalized the restructuring deal with a group of senior creditors owning 46% of its debt, and is in discussions with others, as it races to launch the deal essential to its survival.

South Korean Groups Forced to Seek Out Votes of Small Investors
" Financial Times (03/20/18) Jung-a, Song"

South Korean companies have lost a major source of proxy votes needed to meet quorums and are scrambling to encourage minority shareholders to exercise their voting rights as the annual meeting season begins. This would mark a major change in the country's governance standards, as companies traditionally have not welcomed minority shareholders at annual general meetings (AGMs). "These changes could be troubling for companies, which have seen AGMs just as a formality to push through management decisions," said Park Ju-geun, head of corporate watchdog CEO Score. "But they are going in the right direction in terms of guarding against the excessive clout of major shareholders, especially controlling families." Many South Korean companies—especially smaller ones with a larger weighting of ownership by individual investors—have had a hard time meeting quorum thresholds to appoint board members or execute important actions since the practice of using shares registered with the Korea Securities Depository to pass measures was abolished last year. Now, a minimum of 25% of voting stock is required to appoint directors, and a third is needed for key management decisions such as mergers and acquisitions or share splits. According to Park, the concentration of meetings was designed to limit minority shareholders' participation at AGMs, and "they cannot really talk about shareholder rights without changing this practice."

Barclays CEO Awaiting First Meeting With Investor Edward Bramson
" Bloomberg (03/21/18) Morris, Stephen; Lacqua, Francine"

Barclays Plc (DTYS) CEO Jes Staley said Wednesday he welcomes the views of the bank's new investor, Edward Bramson, after he acquired 5.2% of the voting rights this week. The London-based bank's head of investor relations has already "had a brief meeting" with Bramson's Sherborne Investors, said Staley. "We look forward to hearing what his thoughts are," Staley said in an interview on Bloomberg Television Wednesday, adding he has not heard anything from Bramson about what he wants accomplished at the bank strategically. "We have a very active dialogue with all our shareholders." Pressure on the CEO increased this week with the news of Bramson's stake, which comes with the aim of pushing for strategic change to boost the shares, according to a source. Staley has bet his reputation on improving returns and revitalizing the investment bank, which is Barclays's worst-performing division. Staley also said the lender will be in a position to consider share buybacks once legacy misconduct issues are resolved. Last month, Barclays announced it will return its dividend to previous levels, and consider stock buybacks for the first time in more than two decades, as its capital buffer rose beyond its target. The dividend boost, which will restore the payout that Staley slashed in 2016, indicates executives are confident the bank's slimmed-down balance sheet has enough capital to survive another crisis and settle some remaining misconduct issues.

Land & Buildings Blasts Management of RLJ Lodging Trust
" Wall Street Journal (03/20/18) Grant, Peter"

Jonathan Litt's Land & Buildings Investment Management LLC sent a letter to RLJ Lodging Trust (RLJ) shareholders on Tuesday revealing it plans to nominate two directors to the board at the annual meeting later this year. The investor has been critical of RLJ management since the company acquired FelCor last year in a $3 billion deal, blasting a range of issues including the company's guidance, communications, and stock performance. Land & Buildings, which had been a top shareholder in FelCor, ended up with a roughly 2% stake in RLJ in the wake of the all-stock acquisition. In its letter Tuesday, Land & Buildings also urged RLJ to create a special committee of independent directors to evaluate "all strategic alternatives….given RLJ's significant undervaluation and underperformance." Management of RLJ—one of the largest hotel-focused REITs—predicted the merger with FelCor would lead to savings and greater efficiencies, but the deal was criticized by some who said RLJ was paying too much. Criticism grew just before the shareholder vote, when RLJ revealed it was approached by an unidentified buyer to purchase RLJ for about a 20% premium to its share price. Land & Buildings sent a letter to RLJ shareholders blasting management less than 10 days after the FelCor deal closed. "Our engagement with leadership…has been underwhelming," that letter stated. In Tuesday's letter, the investment firm reiterated past criticism and criticized management compensation. "During a period of poor performance, the senior executive team of RLJ has been paid handsomely," it said.

FrontFour Releases Letter to Obsidian Shareholders
" PR Newswire (03/20/18)"

FrontFour Capital Group LLC sent a letter Tuesday to shareholders of Obsidian Energy Ltd. (OBE) announcing its intention to nominate four board candidates for election at the annual general meeting. FrontFour owns about 6.2% of Obsidian's outstanding shares. The investor says that since issuing its first public letter on Jan. 17, Obsidian's shareholders have expressed frustration with the company's "inconsistent and unsound strategic plan, flawed hedging strategy, and poor leadership team." Thus, FrontFour plans to formally nominate the following directors for election once the meeting is called: Steven P. Evans, Michael J. Faust, Matthew Goldfarb, and FrontFour's own Stephen E. Loukas. FrontFour said it will also release its value creation strategy at Obsidian in coming weeks, initially focused on streamlining the company's organizational profile through the disposition of its remaining non-core legacy gas-weighted production, and the divestiture of its operations in the Alberta Viking and Peace River. In addition, the investor intends to vote against the company's proposed reverse stock split proposal at the meeting.

Elliott's Plan for Telecom Italia in Line with Government's Strategy - Minister
" Reuters (03/21/18) Quaglia, Maria Pia"

Elliott Management's plan for Telecom Italia (TI) has received support from an Italian minister, who said Wednesday the investor's ideas appeared consistent with the government's strategy to protect the network as an asset of national importance. "The plan looks consistent with what we want to do in order to defend public interests," said Italian Industry Minister Carlo Calenda on the sidelines of a conference in Rome. He added that Telecom Italia seemed to be aligned with that strategy as well. Elliott has proposed that Telecom Italia's soon-to-be separated network company (NetCo) be listed or partially sold to maximize value for Telecom Italia shareholders.

Vanguard Defends Proxy Powers for Small-Time Shareholders
" Reuters (03/20/18) Kerber, Ross"

An executive at Vanguard Group, the world's largest mutual fund provider, has warned that restricting shareholder resolutions could exclude many minor investors with concerns about corporate governance. The remarks represented the strongest public defense yet of small shareholders' rights by a top asset manager. Glenn Booraem, investment stewardship officer at Vanguard, said in an interview that higher ownership thresholds could undermine shareholders pushing for changes such as annual director elections or independent boards. "Some of the proposed higher limits feel like they all but eliminate the ability of anyone but a handful of shareholders to get proposals out there, which we think would be a step back," he said. Booraem did not rule out supporting some higher thresholds, however. Along with corporate governance issues, shareholder resolutions have taken on new importance lately with growing investor interest in topics like boardroom diversity or climate change. Currently shareholders with $2,000 in a major company's stock can submit proposals to be voted on at its annual meeting, a standard opponents say should be revised to avoid expensive and distracting debates. Some proposals, such as a bill that passed the U.S. House in June that would require resolution filers to own at least 1% of a company's stock, could shut down some investors, said Booraem. He gave the example of Apple Inc. (AAPL), where 1% of shares would be nearly $9 billion. Vanguard also remains concerned about a trend away from equal voting rights, Booream said. "Shareholders deserve the right for their voice to be heard," he said.

Exclusive: Former Newell Director Martin Franklin Says He May Buy Newell Assets
" Reuters (03/20/18) Herbst-Bayliss, Svea"

Former Newell Brands Inc. (NWL) board director Martin Franklin, who teamed up with Starboard Value LP in a proxy fight, said Tuesday he is considering acquiring some of the company's assets though his blank-check acquisition vehicle J2 Acquisition Limited. "We are literally on the hunt and we will look at some of the Newell assets. I know those assets well and why shouldn't we look at them. Our money is as green as anyone else's," Franklin said. Newell said Monday that assets sales could help bring in approximately $10 billion of after-tax proceeds. Starboard had proposed a 12-member slate to overhaul Newell's board, arguing the company had underperformed peers and mismanaged its $15.4 billion acquisition of Jarden Corp. from Franklin in 2016. But on Tuesday Starboard put its proxy contest on hold following an agreement between Newell and Carl Icahn over the board's makeup. "If we can help drive value quickly for the company, I'm sure they would welcome it," Franklin said about his plans to review what may be for sale at Newell. "When the dust settles, we'll have that conversation with the company and Carl," he said. Franklin co-founded Jarden—which owned businesses spanning from Yankee Candle to Crock-Pot cookware—and said he would love to get some of those assets back.

Verizon Shareholders Want Executive Pay Tied to How Well It Improves Its Cybersecurity
" Fast Company (03/19/18) Captain, Sean"

Verizon (VZ) shareholders filed a proposal for the May 3 annual meeting requesting that the board consider tying senior executives' pay to the company's security performance. The effort is led by investment management firm Trillium Asset Management and the New York State Common Retirement Fund, which has roughly $192 billion in assets. The proposal cites recent Verizon data breaches and also the company's recent purchase of both AOL and Yahoo—the latter which is infamous for hackers compromising the data of a billion users. In combining these companies, Verizon intends to massively extend its digital advertising business to reach up to 2 billion additional people, the proposal states, and advertising partnerships will mean sharing information with additional third parties. Linking compensation to something beyond financial performance would not be unheard of, the shareholders argue, since Verizon already connects senior executive pay to diversity and carbon-intensity metrics.

SandRidge Energy Rejects Midstates Petroleum's Bid but Hires Advisers to Review Strategic Alternatives
" Wall Street Journal (03/19/18) Armental, Maria"

SandRidge Energy (SD) has turned down an unsolicited offer from Midstates Petroleum (MPO), but says it is open to other options. Carl Icahn and other investors have pushed back against the early player in the American shale boom since its bid to buy Bonanza Creek Energy (BCEI) was killed. Announced in early November and terminated in late December, the Bonanza Creek offer cost SandRidge about $8.2 million, according to a securities filing. SandRidge announced in February that it would cut expenses sharply and that CEO James Bennett was leaving the company as part of a management shake-up. SandRidge said the decision to reject Midstates' stock-merger bid "was primarily based on significantly differing opinions of Midstates' proven oil and gas reserves, largely related to the assessment of the number of economically viable drilling locations at current oil and gas prices." The company said other oil and gas companies had expressed interest and that it was hiring RBC Capital Markets to help it consider alternatives such as divesting, forming a joint venture, and other combination options, which could involve Midstates.

Coffee-Shop Spat, Weak Guidance Lead to Board Fight at Natus Medical
" Wall Street Journal (03/20/18) Benoit, David"

Voce Capital Management LLC nominated two directors to Natus Medical Inc.'s (BABY) board on Tuesday, according to sources, escalating a fight at the $1 billion neurological and infant diagnostics company. The fund is a longtime investor in Natus, but it amassed a more than 2% stake after a disappointing forecast sent Natus stock plummeting in January, the sources said. It has not detailed specific demands, but reportedly wants to upset a six-person board with only one new member since 2004. Voce decided to seek board seats after trying unsuccessfully to meet with the board this year, according to sources. The sides appeared to reach a breaking point earlier this month at a contentious meeting at a hotel coffee shop, when an analyst for the fund and executives from the company clashed. Natus CEO James Hawkins said in an interview the company has received communication from Voce about its coming annual meeting and is reviewing it now. He denied the detail about the coffee shop meeting. The stock is down 15% this year to $32.50, and has risen nearly 150% over five years. Voce's stake would make it at least a top-15 investor in Natus.

New York State Fund Snubs All-Male Boards
" Wall Street Journal (03/20/18) Lublin, Joann S."

The New York State Common Retirement Fund is expected to announce Wednesday that it will oppose the re-election of all directors at hundreds of U.S. corporate boards without a single woman. The third-biggest U.S. public pension fund owned shares in more than 400 U.S. businesses without any female directors last year. The fund already has opposed or will soon oppose directors up for re-election at companies such as TransDigm Group (TDG), Seaboard (SEB), and Sonic Automotive (SAH). Large investors have long pressed corporate boards to increase their ranks of women, and several studies in recent years have linked increased female representation on boards with improved shareholder returns. They are now starting to specify the number of female members that they believe is appropriate. Last month, BlackRock (BLK) stated publicly for the first time that companies in which it invests should have at least two female directors. Women held 16.5% of directorships at Russell 3000 companies at year-end and are not likely to achieve gender parity until 2048, predicts governance researcher Equilar. "We need to speed up that time frame," says New York State comptroller Thomas DiNapoli.

Dover Jumps After Naming New CEO
" Bloomberg (03/20/18) Ebhardt, Tommaso; Clough, Rick"

Manufacturer Dover Corp. (DOV), which is under scrutiny from investor Dan Loeb, has named Richard Tobin its new CEO. Tobin will replace Robert Livingston on May 1, the company announced. Tobin unexpectedly resigned Monday from CNH Industrial NV, a European maker of trucks and tractors. Dover is in the process of spinning off its billion-dollar Wellsite business, now known as Apergy, which makes drill bits and other oilfield equipment. Loeb's Third Point disclosed a stake in Dover last year. A representative for Third Point declined to comment.

Noble Group Hit by Lawsuit From Top Holder
" Bloomberg (03/20/18) Tan, Andrea; Ng, Jasmine; Wee, Denise"

On March 20, Goldilocks Investment Co. filed a lawsuit in the Singapore High Court against Noble Group Ltd. and its executives, including founder Richard Elman, for allegedly inflating profits to raise money. Once Asia's largest commodity trader, Noble is on the brink of collapse following an accounting scandal that started three years ago. Chairman Paul Brough is leading the push for a restructuring plan that will hand control of the company to a group of senior creditors, but the move faces opposition from shareholders and some creditors. "If anything, this will likely drag out the debt restructuring process and increases the uncertainty [of] the outcome," said iFast Corp. credit analyst Ang Chung Yuh. "It remains to be seen how much strength Goldilocks can muster in terms of their shareholding." The lawsuit accuses managers of paying themselves inflated salaries and then attempting a cover-up when the accounts came under increased scrutiny. Other defendants include CEO Will Randall and CFO Paul Jackaman. Goldilocks is seeking relief from Hong Kong-based Noble on behalf of shareholders, including about $169 million paid to executives between 2011 and 2017, as well as any interest and damages assessed by the court.

Investor Arrival Brings Added Threats to Barclays Boss Staley
" Financial News (03/20/18) Crowe, Portia"

Analysts believe Barclays (BCS) CEO Jes Staley and the company's underperforming investment bank will face additional pressure now that Edward Bramson's Sherborne Investors has acquired 5.2% of the voting rights in the company. The disclosure comes less than a month after the U.K. banking group reported a loss of nearly £2 billion for last year. While Bramson has not indicated what changes he will push for, observers believe it is possible that he will call for cuts to or a spin off of Barclay's investment bank. According to AJ Bell investment director Russ Mould, "If the investment bank does come under question, clearly that's questioning the strategy that Staley has laid out." KBW banks analyst Edward Firth adds, "People see [Staley's] strategy has not created value." However, Firth noted that "I don't believe Jes would be interested if the investment bank was being shrunk or sold off because that's at complete odds with his history, his expertise, his strategy—everything."

Silicon Valley Firm Floats Listings Plan Via 'Flash Boys' Exchange
" Reuters (03/19/18) McCrank, John"

The Long Term Stock Exchange (LTSE) wants to launch a corporate listings program on IEX Group's Investors' Exchange that would hold listed companies to stricter standards of corporate governance. The Silicon Valley-based startup's listings program would put long-term growth ahead of short-term profits. The stock exchange operator recently filed listings rules concerning things like executive compensation, disclosure, shareholder voting, and board and stakeholder policies on behalf of LTSE with the Securities and Exchange Commission. Companies that go public on LTSE will say that they are committed to enacting these provisions, says Eric Ries, chief executive officer of LTSE. The commitment could help them attract growth-oriented investors looking to put their money behind firms aligned with their values, adds Ries. LTSE's listings program would be optional and separate from IEX's own corporate listings program. Companies could be dually listed on another exchange but they must abide by the stricter rules or LTSE could delist them. LTSE will apply to start its own stock exchange after launching the listings program.

U.S. Judge Declares Mistrial in Trial of Ex-Georgeson Employees
" Reuters (03/19/18) Raymond, Nate"

U.S. District Judge Richard Stearns in Boston on March 19 declared a mistrial in the case of four former employees of Georgeson LLC, a proxy solicitation firm owned by Computershare Ltd. Michael Sedlak, Donna Ackerly, Charles Garske, and Richard Gottcent were on trial for participating in a scheme to pay bribes to learn how a proxy adviser's clients voted. The mistrial was declared due to a medical issue involving the wife of one of the 12 jurors hearing the case. The four ex-Georgeson employees have pleaded not guilty to wire fraud and honest services wire fraud charges. Although three defendants consented to going forward with only 11 jurors, prosecutors were willing to do so only if all four agreed. David Spears, an attorney for Sedlak, said that in light of prosecutors' decision he would seek to prevent a retrial given the U.S. Constitution's prohibition against being tried twice for the same crime. Georgeson in November agreed to pay $4.5 million and enter into a deferred prosecution agreement to resolve charges that it schemed to bribe an Institutional Shareholder Services (ISS) employee. Prosecutors stated that Brian Bennett from 2007 to 2012 used his job at ISS to supply Sedlak with information in exchange for concert and sports tickets worth $14,000. Sedlak passed the information to Ackerly, Garske, Gottcent, and another Georgeson employee, Keith Haynes, prosecutors stated. Ackerly and Garske then arranged for clients to be billed for some of the bribes using bogus descriptions such as "courier services," prosecutors stated. The goal, according to prosecutors, was to gain an illegal edge in their work helping companies shape strategies that could impact the outcome of shareholder votes.

Three Former Newell Directors to Drop Their Proxy Fight
" Wall Street Journal (03/20/18) Terlep, Sharon"

Three former Newell Brands Inc. (NWL) directors who had partnered with Starboard Value LP in a proxy fight have split up with the hedge fund after the company struck a deal with Carl Icahn.  Starboard, which recruited the directors in a bid to oust Newell's entire board and CEO, said Tuesday it still may seek some board seats this spring, but is open to giving Icahn a shot at fixing the consumer-products conglomerate.  "My agenda was not to win but to change the attitude within the company," said Martin Franklin, one of the three former Newell directors aligned with Starboard.  "Carl Icahn is putting his money where his mouth is and if he wants to sort this out, I wish him all the best."  Newell CEO Michael Polk has been increasingly clashing with the board, which has seen four directors step down in recent months.  Franklin, who left after the Newell board spurned his proposal to fire Chairman Michael Cowhig, said Icahn "will be shocked" when he discovers inflated costs and financial maneuvering within Newell.  The agreement with Icahn, unveiled Monday, will give the investor control over five of 11 board seats.  Newell also agreed to explore selling more of its businesses.  Without Franklin and his team, Starboard said it may still nominate its remaining director candidates.  Starboard is expected to urge Newell and Icahn to scrutinize the company's entire portfolio for possible asset sales, and to argue that major operational improvements are needed at the company, sources said.  Icahn recently disclosed a 6.9% stake in Newell, while Starboard owns roughly 4.5%.

SPS Commerce Changes Board After Deal With Investors
" Minneapolis/St. Paul Business Journal (03/19/18) Grayson, Katharine"

SPS Commerce Inc. (SPSC) announced a deal with Legion Partners Holdings and Ancora Advisors on Friday to appoint three independent directors to its board. One board member will not stand for re-election at the annual meeting, the company said, and the number of board seats will increase from seven to nine. The parties have also entered a standstill period, during which the shareholder group has agreed not to propose significant changes, such as a restructuring or company sale. The investors have also agreed not to say anything that could be construed as "derogatory" about the Minneapolis-based tech company. Legion Partners and Ancora together own a roughly 2.9% stake in SPS. "Our investment in SPS Commerce reflects our confidence in the company as a leader in cloud-based supply chain management solutions," said Christopher Kiper, a Legion Partners managing director. "I am confident the skillset and expertise of [the new board members] will further our common goal of enhancing value for SPS shareholders."

Life Storage Deal With Investor Litt Could Put Company in Play
" Bloomberg (03/19/18) Deveau, Scott; Clark, Patrick"

Life Storage Inc. (LSI) has struck a deal with shareholder Jonathan Litt to shake up the board, in a move that could make the company a takeover target as self-storage REITs come under pressure.  The storage-facilities owner said its co-founders will retire after this year's annual general meeting.  In addition, Life Storage CEO David Rogers will join the board, along with Dana Hamilton—head of real estate at Pretium Partners LLC, who has worked with Litt before—and Edward Pettinella, former CEO of Home Properties Inc.  There will be eight board members after the changes.  The move was more likely intended to improve the board than to put the company in play, said George Hoglund, a New York-based analyst with Jefferies.  Still, he said the company has been underperforming its peers and the board may need to consider alternatives or conduct a strategic review if it cannot boost its numbers.  Litt's Land & Buildings Investment Management LLC, which owns a roughly 1.8% stake in Life Storage, believes the company is both underperforming and undervalued, according to sources.  Life Storage could be an attractive takeover target for some of its bigger competitors, such as Public Storage (PSA) and Extra Space Storage Inc. (EXR), the sources said.  "The changes to the board increase independence and remove what we previously viewed to be a potential impediment to a transaction," noted Todd Thomas, an analyst with KeyBanc Capital Markets Inc.

Kindred Shareholder Opposed to Humana Deal Calls for Leadership Shakeup
" Louisville Business First (03/19/18) Larson, Chris"

A top Kindred Healthcare Inc. (KND) shareholder has reiterated its call for the board to re-evaluate a sale to insurer Humana Inc. (HUM) and is also demanding new leadership. Funds affiliated with Brigade Capital Management—which owns 5.7% of Kindred's shares outstanding—said it continues to question the motivation of Kindred's board and senior management in agreeing to sell the company to Humana and two private-equity firms, TPG Capital and Welsh, Carson, Anderson & Stowe, for $4.1 billion. Brigade Capital CEO Donald Morgan III said in a letter to Kindred CEO Benjamin Breier that the deal is "ill-timed" and "short-changes stockholders"; that Kindred conveniently revised forecasts for the company's performance more negatively just before the deal was announced; and that the board should re-evaluate its membership and Kindred's senior management if the deal fails to receive shareholder approval. Morgan also said Brigade Capital is continuing a lawsuit in Delaware Court of Chancery that aims to enjoin the shareholders' merger vote. However, Kindred said in a proxy filing Friday that the court has tossed out all but one of the claims in Brigade's case and has scheduled expedited discovery for the case on March 22, a week before the March 29 shareholders meeting. Morgan said the remaining issue in the Delaware case involves an alleged conflict of interest of a Kindred board member, who is also a senior adviser for TPG Capital. Morgan said the court is exploring whether this alleged conflict of interest undermined the sale process or prevented the board from maximizing the price in the deal.

U.K. Announces New Crackdown on Irresponsible Company Directors
" Bloomberg (03/19/18) Morales, Alex"

The United Kingdom has put forth a series of measures to punish directors who behave irresponsibly and protect workers and suppliers from the worst effects of bankruptcies. Proposals range from fines and disqualification for company directors who sell companies "recklessly" to giving the government's Insolvency Service the authority to investigate directors who dissolve companies to avoid big debts. In addition, ministers will examine how to improve decision-making around the payment of dividends to make it more transparent. Officials will also shore up the role and responsibilities of shareholders in determining how companies they invest in are run, and a new law will be introduced in the coming months mandating that companies reveal the pay ratio between bosses and employees.

Starboard Comments on Mellanox's Decision to Delay Its Annual Meeting
" (03/19/18)"

Starboard Value LP, the largest shareholder of Mellanox Technologies Ltd. (MLNX), with a beneficial ownership interest of approximately 10.6% of the outstanding shares, has issued a statement in response to Mellanox's announcement on March 15, 2018, that it will continue to proceed with its plans to hold an Extraordinary General Meeting and delay its 2018 annual meeting of shareholders until July 25, 2018. "We are disappointed by Mellanox's decision to continue with its plans to hold an Extraordinary General Meeting in May and significantly delay its 2018 Annual Meeting until the last possible day allowed under Israeli law. We are further disappointed that Mellanox chose not to even engage in discussions with us regarding the reasonable proposal we submitted that would have allowed the Company to both hold its 2018 Annual Meeting on schedule and concurrently enact the exact same governance changes that are the purported purpose of the EGM. Rather than engage with us to allow shareholders to vote on directors in a timely manner, Mellanox has instead resorted to manipulating its corporate machinery for its own benefit under the thinly veiled guise of 'good corporate governance'. These delays are totally unacceptable to us, and should be unacceptable to all shareholders. It further emphasizes our belief that meaningful change is needed at Mellanox."

Elliott Sets Sights on Troubled Fortis
" Times of India (03/19/18) Kurian, Boby"

Elliott Management reportedly is scooping up shares in Fortis Healthcare, an Indian firm that is under investigation for financial irregularities and is facing takeover bids. Sources say Elliott is working with Alvarez & Marsal and others in talking to Fortis creditors, which have converted loans into shares. The fund could accumulate a large enough stake to intervene in the Fortis boardroom and work with an independent management.

Elliott Calls for TIM to Sell Off Network Assets and Sparkle Unit
" Telecompaper (03/19/18)"

Elliott is calling on Telecom Italia (TI) to list or partially sell off its international services arm Sparkle and its national fixed access network (Netco) as part of a bid for major change at the company. In a letter to shareholders, the fund wrote that a "truly independent" board is required to improve governance and performance at Telecom Italia. Elliott—which owns more than 3% of the company's ordinary stock and financial instruments that could push its potential interest above 5%—noted that "poor stewardship under the Vivendi-controlled board has resulted in deeply troubling corporate governance issues, a valuation discount, and strategic failures." The fund indicated it also would encourage a new board to convert Telecom Italia's saving shares into ordinary ones and reintroduce dividends last paid in 2012. Elliott is pushing to replace six board members, including the chairman, at the company's April 24 shareholder meeting, stressing that it wants to be a catalyst for change—not to gain control of the company.

RBS Investors Win Two-Year Fight for Shareholder Committee Vote
" Financial Times (03/19/18) Mooney, Attracta"

The Royal Bank of Scotland (RBS) will hold the first-ever vote in the United Kingdom on whether to give investors more power over executive pay and other controversial issues, accepting a special resolution supported by more than 140 investors that calls for the creation of a shareholder committee. The resolution will go to a vote at the bank's annual meeting in May. A similar proposal was rejected last year on legal grounds. Experts say the U.K. government—which bailed out RBS in 2008 and is its largest shareholder with a 70% stake—could play a key role in the matter, as 75% of votes cast need to be in favor of the resolution in order for it to pass. According to ShareSoc Chairman Mark Northway, "Getting the shareholder resolution on the RBS AGM agenda is a huge step forward in making all U.K. plcs aware of the importance of individual investors and the need for company boards to engage more effectively with all shareholders."

Bezeq Chief Resigns as Netanyahu-Linked Corruption Probe Bites
" Bloomberg (03/19/18) Benmeleh, Yaacov"

Bezeq Israeli Telecommunication Corp. CEO Stella Handler will exit the company on July 1 amid a corruption probe tied to Israeli Prime Minister Benjamin Netanyahu. Handler was arrested in February as part of a criminal investigation into alleged influence peddling by close associates of Netanyahu. Handler was released under house arrest on Feb. 28, as the company appointed Yakov Paz as acting CEO. Controlling shareholder Shaul Elovitch, who is at the center of the investigation alongside Netanyahu, left his position as chairman in 2017. Investors and analysts want Bezeq to make changes to management as a way to move past the scandals and boost the business, where profits have been sliding for years due to stiff competition. Elliott Management Corp. and other institutional shareholders are calling on Bezeq to appoint independent directors to the board. Bezeq plans to hold a shareholder meeting to address their concerns, according to a Tel Aviv Stock Exchange filing on March 19. "Investors would like to see changes to top management and a board that is less associated with the investigations," says Roni Biron, the co-head of research at Excellence Nessuah Brokerage Ltd. "Cleaner corporate governance is essential in restoring investor confidence, but secondary to the regulatory and underlying challenges at hand."

Proxy Adviser Manifest Has Just Collapsed Into Administration
" City A.M. (03/16/18) Gill, Oliver"

Shareholder advisory group Manifest is facing insolvency. The proxy adviser had 1.3 million pounds of debt payable within the next 12 months, according to March 2017 accounts of Manifest's latest filing with Companies House. Moore Stephens has been appointed as administrator of Manifest. Representatives of Moore Stephens did not comment on the reasons for the failure of the proxy adviser. Manifest's clients manage more than $1 trillion of assets, and the firm has worked closely with regulators such as the Financial Reporting Council. Similar to other shareholder groups like Institutional Shareholder Services and Glass Lewis, Manifest has filled a leading role in calling for better corporate responsibility. "Manifest has been a pioneer in providing the tools and enabling institutional investors to engage more closely in corporate governance issues," says Jeremy Willmont, a partner at Moore Stephens and administrator of Manifest. "Whilst they have entered administration, Manifest continue to operate and continue to add to their vast and valuable databases and research for their clients."

SEC Commissioner Jackson Sees Cyber Threat as a Corporate Governance Issue
" Cooley PubCo (03/19/18) Posner, Cydney"

Securities and Exchange Commission (SEC) Commissioner Robert Jackson recently dubbed cyber threats as "the most pressing issue in corporate governance today." He cited research from the Identity Theft Resource Center which found there were over 1,000 data breaches with an aggregate cost of over $100 billion last year. "In short: the cyber threat is a corporate governance issue," Jackson said. "The companies that handle it best will have relevant expertise in the boardroom and the C-suite, a strategy for engagement with investors and the public, and—most of all—sound advice from corporate counsel who can navigate uncertain times and uncertain law in a critical area for the company's business." Jackson advised counsel to encourage their boards to be transparent in this area, noting that boards face exposure to litigation in the event of incidents. Also, boards should ensure that senior management share critical information early and often with their colleagues so that when any member of the senior management team learns material nonpublic information about a cyberattack, all members of the team avoid insider trading. Jackson noted that one problem companies have in developing effective systems is that the "technologists," who best understand the cyber threats, are typically in a separate silo from the lawyers and business people who would typically be involved in developing controls and procedures. SEC Commissioner Kara Stein expressed similar views in a recent speech at Stanford, noting that "companies need to do more than simply recognize the problem. They need to heed the calls of their shareholders and treat cyberthreats as a business risk."

Newell Strikes Deal With Icahn to Fend Off Other Shareholders
"Wall Street Journal (03/19/18) Terlep, Sharon; Lombardo, Cara"

Newell Brands Inc. (NWL) reached a deal with Carl Icahn on Monday to appoint five board members chosen by the billionaire and to consider selling more of its businesses. The move comes as the company faced a proxy fight with Starboard Value LP, which is seeking to remove the entire Newell board and CEO Michael Polk. A deal with Icahn, if approved by investors, would save Polk's job but oust the company's chairman, Michael Cowhig. Icahn also aims to expand Newell's plan to sell assets, while Starboard sought to halt those efforts. Under the deal with Icahn—who owns a nearly 7% stake in the consumer-products conglomerate—Newell has agreed to appoint four individuals immediately and a fifth at the 2018 annual meeting. These include Brett Icahn, a consultant for Icahn Enterprises and Icahn's son; Andrew Langham, general counsel of Icahn Enterprises; Courtney Mather, portfolio manager of Icahn Capital; and Patrick Campbell, the former CFO of 3M Co. (MMM) as chairman. Newell also said it would expand its turnaround plan to sell some of its business units and close factories by looking for further sales that could bring the total yield to about $10 billion after tax, up from the $6 billion previously announced. Starboard last month teamed up with former executives of Jarden Corp., which Newell purchased less than two years ago for $15 billion. Starboard, which owns a 4.5% stake in Newell, has argued that "governance deficiencies" are behind the company's reversal of fortune in the last year, while Newell has contended that Starboard lacks a clear plan to improve the company.

Packaging Firm Bemis Adds Four Directors in Deal With Starboard
"Reuters (03/16/18) Banerjee, Arunima"

U.S. packaging company Bemis Co Inc. (BMS) announced Friday it has reached a deal with Starboard Value LP to add four independent directors to its board. The company will appoint Guillermo Novo, Marran Ogilvie, George Wurtz III, and Robert Yanker, and two current board members will not stand for re-election. Starboard, which owns a roughly 3.3% stake in Bemis, will vote its shares in favor of all of the board's nominees. In addition, Bemis has created a finance and strategy committee—which will include Ogilvie and Yanker—to review possible mergers and other financial matters.

Barclays in Shareholder Crosshairs as Bramson Takes 5.2% Stake
"Bloomberg (03/19/18) Morris, Stephen"

Edward Bramson's Sherborne Investors has unveiled a 5.2% stake in Barclays Plc (DTYS) and plans to push for change, according to a source. Sherborne sees an opportunity to double the stock price of Barclays through a turnaround, said the source, who declined to elaborate on the investor's strategy. The stock trades roughly a third below the value of the bank's assets, according to data compiled by Bloomberg. "There is clearly substantial opportunity for shareholder value creation from a change in direction," Keefe, Bruyette & Woods analysts Edward Firth and Richard Smith wrote in a note, calling the bank the "perfect activist investment." Still, "Barclays' board has proved intractable in the past." Barclays is in the middle of an overhaul of its investment bank, which is the firm's worst-performing division and has been losing market share to rivals. The London-based bank is emerging from a mixed 2017, saying last month it will return its dividend to previous levels, while considering stock buybacks for the first time in more than two decades. "As with all its shareholders, Barclays will continue to engage with Sherborne, and welcomes them as a shareholder," Barclays said. Bramson is known for engaging smaller British money management firms, including Electra Private Equity Plc, one of the U.K.'s oldest private-equity firms. Bramson has said he likes to push for changes from within, and typically seeks at least one seat on the board, preferably as chairman. Once he has that, he will spend a month or two meeting staff, asking questions, and listening. Staying quiet is tactically smart in a turnaround, Bramson says.

Eight Investment Partners Comes Under Aurora Attack
"Australian Financial Review (03/18/18) Shapiro, Jonathan"

Aurora Funds Management is calling for the replacement of three directors at Eight Investment Partners (8IP). Aurora, which controls nearly 20% of 8EC—the $50 million listed investment company managed by 8IP—cited the fund's trading discount relative to its assets and its investment strategy as reasons for the board shakeup. The group also called out 8IP's position in suspended technology stock Big Un, which had been one of the fund's larger positions, citing concerns about the private exposure to the company of 8IP principal and chief investment officer Kerry Series. Big Un's stock is currently suspended from trading after the company admitted to inappropriate financing arrangements. In a statement to the ASX, Aurora pointed to 8EC's discount to net tangible assets that has reached roughly 20% while criticizing its investment strategy. Aurora also called out 8EC's public comments in 2015 favoring investments in 1-Page and Yowie Group which have both declined by more than 90% even though the fund exited for a profit. "Whilst it is possible that 8EC may have benefited from positive returns on these investments, Aurora is highly concerned that investing in such speculative companies requires the taking of risk that 8EC investors may not be aware of and seems to rely on the greater fool theory," Aurora said. The extraordinary general meeting is slated for April 16. Aurora said its directors would push for a payout of realized and unrealized tax assets, implement a buyback of 30% of shares in 8EC, and pursue an on-market buyback of another 10% of outstanding shares.

BlackRock Offers More Details in Its Corporate Governance Efforts
"Pensions & Investments (03/16/18) Kilroy, Meaghan"

Two months after BlackRock (BLK) Chairman and CEO Laurence Fink sent letters to CEOs telling them they need to contribute to society in order to survive, the world's biggest money manager followed up with some of the topics the firm is covering in engagement sessions with companies. These topics focus on board and management's efforts regarding human capital management, which BlackRock had previously identified as one of its priorities for this year. Some of the issues that BlackRock is likely to discuss with the corporate boards include board and workforce diversity; board oversight of corporate culture; tying human capital management performance to executive pay; and oversight of policies designed to safeguard employees such as those related to whistleblowing. Issues the firm is likely to discuss with management teams include compensation gaps across employee demographics and oversight of supply chain matters.

Kobe Steel to Push Governance Reform Under New Chief
"Nikkei Asian Review (03/17/18) Inoue, Minami; Onishi, Tomoya"

Kobe Steel, which has been embroiled in a data-doctoring scandal, will take steps to prevent a recurrence and strengthen corporate governance under its new president. Mitsugu Yamaguchi, currently an executive vice president, has agreed to lead the steelmaker after Chairman and President Hiroya Kawasaki exits on April 1. Yamaguchi, the company's first president to hail from its machinery business, a noncore segment, will be tasked with overhauling Kobe Steel's corporate culture. The company will scrap the position of chairman, instead selecting one of its outside directors to lead board meetings in the hope of encouraging an unbiased perspective.

Investor TCI Pushes for Sale of Legacy Yahoo Assets
" Financial Times (03/16/18) Johnson, Miles"

Sir Chris Hohn's TCI has called on Altaba (AABA), the company containing the legacy assets of Yahoo, to wind down and sell off its $76 billion holding in China's Alibaba (BABA). TCI, which holds a $6 billion stake in Altaba, said the company was trading at an unnecessarily large discount to the value of its assets and should take advantage of recent U.S. tax reform to liquidate. The company currently trades at a 26% trading discount to net asset value, which TCI said it believes could be reduced to 17% to 18% if its assets were sold or distributed to its investors. If successful, this would mark the final phase in a long series of investor campaigns at Yahoo, with Carl Ichan, Third Point, and Starboard Value all having engaged with the company before it ultimately sold its operating business to Verizon (VZ). Hohn indicated that a liquidation could involve Alibaba buying back Altaba's 15% stake in the company at a discount, with Alibaba exchanging its shares for Altaba shares or making an all-stock bid for the company. "Altaba has the highest probability of creating value for its shareholders by taking this action," he said. "It does not preclude a sale to Alibaba, if Alibaba has an interest." However, Altaba responded by saying it would continue its own plan to reduce the discount.

A10 Networks Reaches Settlement With VIEX Capital Advisors, Tor Braham Appointed to Board
" (03/16/18)"

A10 Networks (ATEN) has reached a settlement agreement with VIEX Capital Advisors, which has a stake of approximately 5.3% in A10. A10 has appointed Tor R. Braham to its board of directors effective March 14, 2018. Furthermore, A10's board of directors will submit for stockholder approval a proposal to declassify the board of directors at its 2018 annual meeting. "We are pleased to have quickly and collaboratively resolved this matter," said Lee Chen, chairman, president, and CEO of A10 Networks. "A10 has always been committed to the highest standards of corporate governance and after productive consultation with stockholders, we believe that now is the appropriate time to begin the process of declassifying the board of directors. Tor brings valuable experience and perspectives to A10 during this important time for the company and we welcome him to the board of directors." Eric Singer, managing member of VIEX Capital Advisors, said, "We applaud A10 for its constructive and collaborative approach to implementing actions that addressed our concerns and will benefit all A10 stockholders. We look forward to continue working constructively with A10." If the proposal to declassify the board of directors is approved by stockholders at the 2018 annual meeting, declassification of the board will be implemented on a rolling basis beginning with the 2018 annual meeting such that each director serving as of immediately prior to the opening of the polls at the 2018 annual meeting will serve through the remainder of his term and, in general, each director elected or appointed at or after that meeting will serve a one-year term.

Apple Adds New Website That Teaches Parents How to Better Control Their Children Online
" Fortune (03/15/18) Vanian, Jonathan"

Apple (AAPL) has launched a new website, called Families, that offers tips and tutorials to parents about how they can better monitor their children's activities on iPhones and iPads and other Apple devices. The site comes in the wake of concerns by researchers, activists, and parents about children becoming addicted to their technology. Apple shareholders Jana Partners and the California teacher pension group CalSTRS contacted Apple in January, urging the company to do more to address any negative consequences of children and technology addiction. Jana and CalSTRS said that the sooner Apple deals with the harmful aspects of excessive smartphone use, the more likely it would be able to improve its reputation as a company that's concerned about children. Doing so, "could enhance Apple's business and increase demand for its products," the shareholders stated.

FrontFour Issues Public Letter to ILG Board
" (03/15/18)"

FrontFour Capital Group LLC has nominated four director candidates for election to ILG Inc.'s (ILG) board of directors at the 2018 annual meeting. In a public letter to the board, FrontFour states that it is encouraged by the company's formation of a strategic review committee, but it still has lingering concerns. The investor also sheds doubt on ILG's motives for its notification of three separate dates for the annual meeting, and urges the board to immediately clarify the true meeting date. In addition, FrontFour argues that fresh shareholder representation is needed on the board at this "key strategic juncture," and says it continues to believe that a merger with Marriott Vacations Worldwide (VAC) will maximize value for ILG shareholders.

BHP's Fight With Elliott Is Next Chapter for U.K.'s Dual Listings
" Financial Times (03/16/18) Hume, Neil"

BHP Billiton (BBL) and investor Elliott Advisors will be closely scrutinizing Unilever's decision to unify its parent companies in the U.K. and the Netherlands. The New York-based fund, run by billionaire Paul Singer, has been pressuring the world's biggest miner to end its dual-listed company structure by dropping a main market listing in London while keeping one in Sydney, claiming a Unilever-style unification could create more than $22 billion in value at a cost of just under $400 million. However, BHP rejects the idea, saying Elliott is taking a "particularly optimistic view" on the benefits of unification while underestimating the risks. The Melbourne company calculates the costs of collapsing its dual-listed company structure at more than $1 billion because of the loss of tax shields and higher taxes in Singapore, where it sells most of its commodities. BHP and Elliott are likely to seize on Unilever's decision as a way to bolster their own argument. The two sides have been at odds on the issue of unification since Elliott revealed a stake in BHP nearly a year ago. Unilever, which saw its shares fall more than 1.5% after Thursday's announcement, said unification would "provide greater flexibility for strategic portfolio change and help drive long-term performance."

Blackwells Comments on Supervalu Plan to Sell Some Farm Fresh Stores
" Business Wire (03/15/18)"

Supervalu (SVU) has taken a step in the right direction by agreeing to sell 21 of its 38 Farm Fresh Food & Pharmacy stores for approximately $43 million, according to a statement from Blackwells Capital. However, it is unfortunate that it took substantial pressure from shareholders to motivate it to make changes at the company, adds the alternative investment management firm, which holds an approximately 4.1% stake in Supervalu. The sale represents about 10% of its retail locations, but Supervalu still owns nearly 200 retail locations that are depressing its valuation and being neglected by management. Jason Aintabi, managing partner at Blackwells, noted that Supervalu trumpeted the transaction as part of a two-year effort "to transform our business," but said "the fact that the share price has declined over 60% during this so-called transformation demonstrates once again a lack of urgency, imagination, and concern for shareholders. Our view remains that the divestiture of these assets must be a priority on the pathway towards a sustainable turnaround." Blackwells still plans to nominate a slate of experienced directors to the board for the 2018 annual meeting of shareholders.

Nestle Chairman Calls CEO 'Man of Action,' Praises His First Year
" Reuters (03/15/18) Bautzer, Tatiana"

Nestle Chairman Paul Bulcke expressed support for CEO Mark Schneider during an interview on the sidelines of the World Economic Forum in Sao Paulo on Wednesday. Schneider has sold Nestle's confectionery business in the United States, closed high-cost factories in Europe, and focused on expansion into consumer health and high growth businesses, with the acquisition of vitamin maker Atrium Innovations, since joining Nestle 14 months ago. "His first year was very good, he's a man of action, he sees the need of change," Bulcke said. Nestle is struggling to recover from a sixth year of slowing growth. Third Point, Daniel Loeb's hedge fund, made a $3.5 billion investment in the world's biggest packaged food company last June. It has demanded that Nestle overhaul its strategy and sell assets like L'Oreal more quickly. Bulcke declined to comment on meetings with Loeb, saying that Nestle "respects investors' opinions," and that Loeb "has strong opinions, but many of his suggestions are already in our program anyway."

Elliott Urges Change at Telecom Italia in Fight With Vivendi
" Bloomberg (03/16/18) Deveau, Scott"

Elliott Management Corp. escalated its fight for a board shakeup at Telecom Italia SpA with a letter to the company's largest shareholder, Vivendi SA, on Thursday. The hedge fund—which owns a more than 5% stake in the Italian telecommunications provider—accused Vivendi of running the company in a way that is harmful to other shareholders' interests. "Poor stewardship under the Vivendi-controlled board has resulted in deeply troubling corporate governance issues, a valuation discount, and no clear strategic path forward," Elliott wrote. "We strongly believe that there could be material upside for shareholders if an independent board were to take steps to improve strategic direction and governance." Elliott said Telecom Italia should explore an initial public offering for its landline business, which the company has said will be spun off as a separate unit. The hedge fund is also blasting numerous decisions by the company, including a joint venture with Vivendi's Canal Plus that has upset Italian regulators. Vivendi said it will consider Elliott's comments but that it is not sure the plan to "dismantle" Telecom Italia will create value. The fight will come to a head at Telecom Italia's annual meeting in Milan on April 24, when shareholders will vote on the hedge fund's proposal to oust Chairman Arnaud de Puyfontaine and five other Vivendi-backed board members. It may be a struggle for Elliott since Vivendi owns 24% of the company.

GKN Top 30 Shareholder Plans to Reject Melrose Bid
" Reuters (03/16/18) Young, Sarah"

A shareholder in British engineering company GKN intends to vote against a hostile takeover bid from industrial turnaround specialist Melrose.  Jupiter Asset Management's Steve Davies said he preferred the plan for adding value proposed by GKN's management.  "I don't see the need to dilute this value creation by accepting the Melrose proposal, which also brings with it pension risk, balance sheet concerns, and potential issues with how GKN's customers might react to the change of ownership," Davies said Friday.  Jupiter is a top 30 shareholder in GKN with a nearly 1% stake, according to Reuters data.  GKN's campaign to thwart the bid, currently worth about 7.8 billion pounds ($10.89 billion), received another win on Thursday when top customer Airbus said it could not guarantee new work to a new owner with a short-term perspective.  Melrose is considered by some to be a short-termist owner as its model is to break up companies once it has improved them, although it says it takes a long-term view on investment.  GKN shareholders must accept Melrose's offer by March 29.

State Street's Kumar Wants Answers on Shareholder Rights
" Reuters (03/16/18) Kerber, Ross"

State Street Corp. indicated it will be pushing for answers from companies that lack such things as independent board leaders or equal voting rights for shareholders. "We're going to be asking companies to explain either their compliance or exceptions" from the new principles, said Rakhi Kumar, head of asset stewardship for State Street's asset-management arm, in an interview on Thursday. Companies that cannot sufficiently explain their structures can expect votes against management's recommendations, according to a recent State Street memo sent to corporate directors. State Street and other top fund firms last year adopted a set of good-corporate-governance principles meant to improve oversight at companies whose shares they hold. Critics have said the asset managers could do more to enforce their governance concerns, such as refusing to buy the shares. Kumar said that is not always possible for State Street's index funds, but the burden will be on company leaders. "We want to make sure that you're shareholder friendly and you're putting thought into governance," she said. Despite its efforts to promote gender diversity last year, filings later showed State Street funds abstained on some shareholder resolutions focused on boardroom diversity. Kumar said State Street may cast "abstain" proxy votes more often this year to signal its unhappiness with management. Such votes will give State Street a way to convey nuance, she said, whereas before it might have backed management but "with a heavy heart."

Elliott Reserves Right to Request Further Additions to Telecom Italia's AGM Agenda
" Reuters (03/15/18)"

Elliott Advisors has reserved the right to call for further additions to the agenda for Telecom Italia's shareholder meeting on April 24, according to a source. Telecom Italia (TIM), whose top shareholder is French media group Vivendi, already got a letter from Elliott and other investors, in which they requested to include a motion to replace six board members, including the company's chairman, in the agenda, Telecom Italia said March 15. Other sources previously said that Elliott would like to call for the conversion of TIM's saving shares into ordinary ones and for the spin-off of its soon-to-be-developed network company.

Aegean Marine to Contest Court Ruling Blocking HEC Deal
" Financial Times (03/15/18) Hope, Kerin"

Aegean Marine Petroleum Network is challenging a U.S. court order that blocked its $367 million acquisition of a related firm on grounds of an unfair valuation. A group of shareholders in the Greek company, which supplies fuel to the global shipping industry, obtained the order from a New York court arguing the deal would significantly dilute their stakes in the company. The contested arrangement would have seen the company buy 100% of HEC Europe, a marine waste management company owned by Dimitris Melissanidis, the founder and former controlling shareholder of Aegean Marine. The court ruling declared that the acquisition is "value destroying" because it would pay the Melissanidis family "three to six times more than the fair value of the acquired company." The deal was arranged after the shareholder group, which owns roughly 12.5% of the company, nominated a slate of directors from U.S. and European companies to oversee management with the goal of improving corporate governance. The nominations would be considered at the company's annual shareholder meeting later this year. Shareholders were not consulted on the acquisition, which would return control of Aegean Marine to Melissanidis with a 33% stake. The court reportedly will hold further hearings on whether a shareholder vote on the transaction should be forced.

FSC to Toughen Governance Rules for Financial Firms
" Korea Herald (South Korea) (03/15/18) Ji-hyoung, Son"

South Korea's Financial Services Commission has announced an initiative to boost corporate governance rules for financial firms, primarily to address a lack of transparency in the nomination processes for chiefs at local banking companies. The initiative to shore up the Act on Corporate Governance of Financial Companies, to be proposed by June, are geared at prohibiting the incumbent chief of a financial company from joining an internal committee to nominate outside directors. It would also oblige outside directors to comprise more that two-thirds of the committee. If an outside director of a financial company serves more than two terms, the company will be required to carry out an external screening for the person's eligibility. A financial company will also be required to reveal to the public a set of requirements for its new CEO prior to the nomination of a new CEO. The right to engage in a nomination process for external directors or CEO will also be given to minor shareholders who hold shares with face value of at least 100 million won ($93,800) as of the prior quarter. Currently, the rights are recognized only for those with at least a 0.1% share. "The incumbent executives' influence in the nomination process of the CEOs and outside directors (of a financial company) is at an extraordinarily high level," Choi Jong-ku, chairman of the FSC, said March 15. "Independence has not been secured in nominating outside directors, and the directors fell short of playing a proper role in placing checks and balances in executives' actions." Apart from changes revolving around nomination committees, the FSC made other recommendations to boost the corporate governance of financial companies. Controlling shareholders of financial companies will be subject to tighter rules, while a more expansive coterie of "major shareholders" will be brought under eligibility screening by the watchdog to ensure transparency of the companies. The current law delineates that the biggest shareholder is the only one subject to the screening.

No Hurry to Unwind BHP Billiton Dual-Listing: UBS
" Australian Business Review (03/16/18) Chambers, Matt"

The BHP Billiton (BBL) dual-listed company structure under pressure from Elliott Management is unlikely to be unwound any time soon, according to UBS analysts, whose latest analysis shows little compelling reason to pursue unification. The UBS report comes after BHP last month released more information on the value of keeping the dual-listed-company (DLC) structure, in response to Elliott-funded analysis that found dissolving the DLC under an Australian primary listing could reap $US22 billion worth of value. "While we see a collapse likely at some point, we believe BHP might be better off focusing on its priorities of driving productivity, selling shale, restoring its balance sheet, and rethinking potash," UBS says in a note to clients. It added: "There appears to be little compelling story to collapse in the next three years. Post three years, after tax credits have been exhausted, then possibly." The DLC was formed in 2001, when BHP merged with London-listed Billiton, leaving about 60% of the company's shares listed in Australia and the rest in London. Since then, the Australian shares have traded at an average premium of about 15%, UBS says. Elliott, which owns 5% of BHP's London-listed shares, last year called for the structure to be unified under a primary British listing, but later switched positions.

Icahn Taps Tech Executive to Prepare for Proxy Fight With Xerox
" Wall Street Journal (03/14/18) Al-Muslim, Aisha"

Carl Icahn has enlisted the assistance of former technology executive John Visentin to help prepare for a proxy contest with Xerox Corp. (XRX) and to explore strategic alternatives for the printer and copier maker. Icahn approached Visentin as part of his resistance to a recent deal Xerox reached with Fujifilm Holdings Corp. that would merge Xerox with a Fuji-Xerox joint venture and give the Japanese company control of the new entity. In an open letter from Icahn to Xerox shareholders published March 14, Icahn described Visentin as an "operating executive with a superb track record, specifically when it comes to revamping complex operations with prior managerial shortcomings in the IT services industry." Icahn believes Xerox could benefit from new management. Icahn and fellow billionaire Darwin Deason, who together own roughly 15% of Xerox stock, are working together to stop the deal with Fujifilm. They both have said they plan to vote against the deal, that they would wage a proxy battle against Xerox, and that they have asked the company to consider a sale.

Icahn Representative to AIG Board Will Not Seek Another Term: Filing
" Reuters (03/14/18) Barlyn, Suzanne"

American International Group Inc. (AIG) said Wednesday that Samuel Merksamer, who represents Carl Icahn on the insurer's board, will not seek re-election at the annual meeting in May. Merksamer, who has served as a director on behalf of Icahn since 2016, will continue his work on AIG's board until that time, the company said. Merksamer was a managing director at Icahn Capital, a unit of Icahn Enterprises LP, since 2008 until leaving last year. Icahn is AIG's third-biggest shareholder with a 4.76% stake as of late 2017. Icahn has shaken up management teams and business strategies at various companies, using deputies like Merksamer to implement changes he believes necessary. When Icahn first began amassing his stake in 2015, he called for AIG to separate into three parts. Instead, the insurer initiated a two-year turnaround plan developed by former CEO Peter Hancock, which sought to return $25 billion to shareholders. AIG announced Hancock's resignation in March 2017. CEO Brian Duperreault took over the insurance giant in May, saying that he wanted to expand the company. In January, AIG announced it would buy reinsurer Validus Holdings Ltd. (VR) for $5.56 billion in cash, its biggest acquisition since the global financial crisis.

Elliott Looks to Remove Telecom Italia's Executive Chairman
" Financial Times (03/15/18) Fildes, Nic"

Elliott announced it will seek to oust Telecom Italia's (TI) executive chairman, Arnaud de Puyfontaine, plus five other directors at the extraordinary general meeting next month. The fund recently revealed a stake in the Italian company, which is controlled by top shareholder Vivendi, and declared it would call for governance improvements. Elliott has now informed Telecom Italia that it wants a vote to fire five directors who are linked to Vivendi—including de Puyfontaine, who is Vivendi's CEO—as well as Giuseppe Recchi, the former executive chairman of Telecom Italia. The fund has not leveled its pressure at Telecom Italia CEO Amos Genish, who was appointed to the position last year and is a confidante of Vincent Bolloré, the billionaire who controls Vivendi. Elliott has nominated Fulvio Conti, Massimo Ferrari, Paolo Giannotti De Ponti, Dante Roscini, Rocco Sabelli, and Luigi Gubitosi—a former CEO of Fiat and Wind who was tapped to lead Alitalia as it collapsed last year—as replacements.

Noble Group 'Arrogance' Attacked as Shareholder Revolt Looms
" Bloomberg (03/14/18) Farchy, Jack; Blas, Javier; Ng, Jasmine"

A shareholder rebellion at Noble Group Ltd. threatens to derail the trading house's $3.5 billion restructuring deal agreed with senior creditors. If shareholders vote against the deal, the company will seek to implement the restructuring as a prepackaged administration in the U.K., an action that would effectively concede the company's insolvent, Noble said on Wednesday. Noble's fifth-largest shareholder, Goldilocks Investment Co., attacked the plan on Thursday, saying it is "astounded" that the company has ignored calls to make the deal more equitable for minority investors, and blasted the trader for trying to "bulldoze its way through" by attempting to shift its main interests to the U.K. Several of the top shareholders held talks with the company's advisers last week and expressed their concerns with the deal, according to sources. The biggest shareholder is Richard Elman, the company's founder, who still sits on its board. The next four largest shareholders, which include Goldilocks, collectively own 38.4% of the company. The deal will require the approval of at least half of shareholders' support at a meeting this spring. In a nod to the shareholders' importance to the restructuring, Noble has slightly improved the deal for them from an original plan in January. However, Goldilocks is unimpressed. "Management will ultimately continue to be handsomely rewarded" and the revised deal is "nothing more than window-dressing," Goldilocks said. "We caution that Goldilocks does not take kindly to Noble's arrogance. This matter will escalate and we reserve all our rights," it said.

City of London Issues Letter to China Fund Stockholders
" PR Newswire (03/14/18)"

City of London Investment Management Co. Ltd. has sent a public letter to fellow shareholders of The China Fund, Inc. (CHN) seeking their support for the election of two independent director nominees. The investor, which owns roughly 27.2% of the company, is also calling for the company to fire the Fund's investment advisor, Allianz, and urges this move will not liquidate the Fund. Furthermore, City of London argues that under current leadership—with Joe Rogers having served as a director for 26 years—the board has abandoned the stock buyback, allowed the discount to widen, and attempted to install a Manager with a previously SEC-sanctioned Principal. City of London states that its director nominees are independent and experienced and will work to maximize shareholder value. The investor also says the board is preventing it from contacting stockholders, and urges them to vote ahead of the meeting on March 27.

Adar Macro Fund Requests Appointment of Two Board Members in Neinor
" Reuters (03/15/18)"

Neinor Homes SA said March 14 that shareholder Adar Macro Fund has requested a vote that would set the number of board members at nine. Adar also asked for a vote on the appointment of Jorge Pepa and Francis Btesh to the board. The votes have been scheduled for April 17.

Shareholder 'Skeptical' About Cincinnati Bell Expansion to Hawaii
" (OH) (03/14/18) Monk, Dan"

In a March 9 preliminary proxy statement to shareholders of Cincinnati Bell Inc. (CBB), GAMCO Asset Management Inc.'s Mario Gabelli said he is seeking three board seats because of his doubts about the company's $650 million acquisition of Hawaiian Telecom Inc. (HCOM), which is expected to close in the second half of 2018. Cincinnati Bell says Gabelli's opposition will not impact that timeline. GAMCO—which owns about 11% of Cincinnati Bell shares—has nominated James Chadwick, Matthew Goldfarb, and Justyn Putnam as directors. According to Gabelli's filing, "GAMCO is skeptical about the potential synergies and/or benefits that come from a telecommunications company in Hawaii, particularly in light of opportunities in other locations where returns and investment opportunities are more favorable. In addition, GAMCO believes that the Company suppressed the voice of its shareholders by structuring the transaction in such a way that the shares issued as part of the transaction did not exceed 20% of the voting power outstanding, which would have triggered the shareholder approval requirements of NYSE Rule 312.03(c)."

Reuters: Vivendi Ready to Support Other Investor-Backed Strategy at Telecom Italia to Boost Share Price
" Reuters (03/14/18) Jewkes, Stephen"

Telecom Italia's (TI) top shareholder, Vivendi, believes in the company's new strategic plan, but is also prepared to consider any move backed by shareholders to improve its share price, a spokesman said Wednesday. Last week, Elliott Advisors revealed a stake in Telecom Italia and said it was ready to replace board members in an effort to boost strategy, value, and governance. The spokesman said Vivendi CEO and Telecom Italia Chairman Arnaud De Puyfontaine was ready to consider suspending his executive functions at the company during the period dedicated to this strategic debate. "Elliott Management repeatedly attacks States and companies... and is known for its financial approach focused on short term gains, most probably leading in this case to dismantling [Telecom Italia]," the spokesman said. Vivendi owns roughly 24% of the company.

Oil Majors Give in to Investors With Share Buyback Spree
" Reuters (03/14/18) Bhattacharjee, Nivedita; Paul, Anirban"

U.S. oil producers are announcing share buybacks after nearly three barren years for investors. Since the beginning of the year, 11 companies have promised buybacks, including Devon Energy (DVN), Hess Corp. (HES), and Noble Energy Inc. (NBL), committing to buy back about $3.6 billion worth of shares. Meanwhile, Chevron Corp. (CVX) hinted that it would start buying back shares if it produced stronger cash flow this year. The payouts can be attributed to a combination of higher and more stable oil prices and pressure from investors. Hess, for instance, announced its plan to avoid a battle with Elliott Management—which owns more than 6% of the company—ahead of nominations for its board. Analysts have indicated that companies can afford to continue their focus on shareholder returns so long as oil holds to current prices.

Solomon Lew's Premier Has Lost $63M on Myer Stake: Analyst
" The Australian (03/14/18) Greenblat, Eli"

Solomon Lew's Premier Investments has lost $63 million on its stake in struggling department store Myer, representing a 40% drag on its share price, according to a new report from Citi analyst Bryan Raymond. Premier spent $101 million on Myer shares last March and now has a 10.8% stake, making it the company's biggest shareholder. Myer shares have collapsed under the weight of three profit downgrades and the ouster of chief executive Richard Umbers. Lew expressed his displeasure with the sharemarket rout in Myer stock at Premier's full-year results presentation in September, savaging management and the chain, saying its stock is old and "that inventory belongs in the Salvation Army." With losses having more than doubled since late last year, Lew is expected to repeat his blistering attack and ratchet up his campaign to oust the board ahead of Premier's release of its first-half financial results on Friday. Meanwhile, Premier shareholders are expected to question Lew's game plan for Myer. In a note to Citi clients, Raymond wrote that Premier is not interested in acquiring Myer in the near term.

Starboard Nominees to Purchase $25 Million of Newell Stock If it Successfully Replaces the Board
" (03/14/18)"

Starboard Value LP announced Tuesday that three of its directors nominees have pledged to buy a combined $25 million of Newell Brands Inc. (NWL) if the hedge fund successfully replaces the board at the annual meeting. Starboard owns a roughly 4.5% stake in Newell. If elected, the director nominees—Ian G.H. Ashken, Martin E. Franklin, and James E. Lillie—also agree not to sell any of those shares for the extent of their directorships at the company, unless Newell's share price exceeds the company's share price on April 15, 2016, which is the day Newell closed its acquisition of Jarden Corp. Franklin stated, "Newell is a great company, with great people and fantastic brands. Over the past two years, we, along with many shareholders, have suffered significant value destruction under the current leadership team. We are committed to helping put the Company back on the path to success. Ian, Jim and my commitment to purchase stock, along with our current substantial holdings, is an indication of how strongly we believe in the value creation opportunity at Newell and how important it is for the Board to have interests that are strongly aligned with shareholders through meaningful equity ownership."

Investor Sees Diebold Nixdorf Shares Doubling With New CEO
" Reuters (03/13/18) Herbst-Bayliss, Svea"

Atlantic Investment Management's Alexander Roepers boosted the firm's stake in Diebold Nixdorf Inc. (DBD) from 5.1% to 8%, according to recent regulatory filings. He began working with management behind the scenes last year when the company's stock dipped, and he now believes its share price could double from its current level of about $17 within 18 months under new CEO Gerrard Schmid. The manufacturer of automated teller machines (ATMs) could benefit from U.S. tax reform, with banks earmarking some of the windfall for capital investments, such as new ATMs.

Ingles Adds Investor Nominee to Board Slate
" Supermarket News (03/13/18) Hamstra, Mark"

Ingles Markets (IMKTA) has reached an agreement with longtime investor Gamco Investors to appoint one of its nominees to its board, according to its proxy filing with the Securities and Exchange Commission. The supermarket chain said it is recommending shareholders vote for John R. "Jack" Lowden as a new director at the annual meeting on April 24. Lowden, president and CIO of NewCastle Partners, was one of two director nominees proposed last October by the investor. Gamco founder Mario Gabelli said his firm has been pushing to improve Ingles' transparency and communications with analysts and investors. Ingles has not held conference calls to discuss its earnings results in recent quarters. "We were a little frustrated that our analysts were not able to get fundamental information that all companies are willing to share," Gabelli said. However, he said he is supportive of the company's direction and its management. "I told [Ingles Chairman Robert P. Ingle II], 'We're not looking to have you do anything differently, but just realize that you have institutional shareholders who are responsible as fiduciaries to their clients,'" he said. In a filing last year, Gamco—which at the time owned 16.5% of Ingles Class A shares—argued Ingles' board lacked independence from the family that controls the company. Only three of the eight board members are independent, according to Gamco.

Concerned Shareholder of Viridium Announces Requisition to Change the Board of Directors
" Canada Newswire (03/13/18)"

E & R Holdings Ltd. has delivered a requisition to Viridium Pacific Group Ltd. seeking a shareholder meeting with the aim of removing one director from the board, fixing the number of directors to six, and electing two new directors. The shareholder owns more than 5% of the company's shares. It is concerned about the company's current direction and believes a change to the board is necessary for the company's future growth. It believes its nominees, Sean MacNeil and Dan Echino, will bring relevant experience to the board. MacNeil has more than 25 years of experience in commercial construction and project management, and launched Experion Biotechnologies Inc. in 2013, which was acquired by Viridum in 2017. He owns roughly 7.8% of the company's shares. Echino, a Canadian entrepreneur with more than 40 years of oil industry experience, is the President of Calroc Industries. He owns less than 1% of the company's shares.

Credit Suisse CEO 'Here to Stay': FUW Newspaper
" Reuters (03/13/18) Koltrowitz, Silke"

According to a March 13 interview with Swiss newspaper Finanz und Wirtschaft, Credit Suisse (CS) CEO Tidjane Thiam has no plans to step down. The bank is upbeat on its prospects for the year as it enters the last phase of Thiam's three-year overhaul, despite posting its third consecutive annual loss last month. Credit Suisse has drawn criticism from investor Rudolf Bohli.

Corporate Japan Urged to Further Diversify Boardrooms
" Nikkei Asian Review (03/14/18)"

Japanese corporations on Tuesday were given a sneak peek at an updated set of government guidelines aimed at discouraging the insular business practices long excoriated by international investors.  Boards of directors will be required to operate with more transparency, according to the draft of the revamped Corporate Governance Code released by the Financial Services Agency (FSA). For instance, the code will instruct boards to be involved in forming CEO succession plans, as well as supervise the grooming of candidates.  The new code would also obligate boards to create a process for hiring and firing executives that is grounded in both transparency and objectivity. Finally, it calls for an expanded role for outside directors. The code is not legally binding, but companies are required to provide an explanation if they run afoul of the guidelines.

SEC Chairman Non-Committal on Dual-Class, Cybersecurity, Fiduciary Rulemaking
" Pensions & Investments (03/13/18) Kilroy, Meaghan"

Securities and Exchange Commission (SEC) Chairman Jay Clayton discussed dual-class share structures, proxy-voting procedures, cybersecurity disclosures, and broker-dealers and advisers at the Council of Institutional Investors' conference in Washington on Monday. Asked whether he thought the SEC would address dual-class structures formally or informally, Clayton said he was not placing it at the "front of the agenda for something (the SEC) should weigh in on." He added that he's "not persuaded by absolutists on either end" of the dual-share class issue and that "governance by indexation" or barring companies from indexes because of their voting share structures is not something he approves of at the moment. In addition, when asked if there should be "federal regulation or greater oversight of proxy-advisory firms," Clayton said that he has "not formed a definitive view of whether we should have SEC regulation of proxy-advisory firms." On the issue of cybersecurity, Clayton did not say whether there would be rule-making on how companies should respond to cybersecurity incidents, but he did note that staff would be focusing on how public companies disclose cybersecurity risks and breaches. Finally, when asked to explain more about the SEC's initiative to address the different standards of conduct for investment advisers and broker-dealers, Clayton said it has become "increasingly apparent" to him that more needs to be done to bring "consistency or harmony." Clayton said he hopes the SEC is able to present a proposal on this, but declined to provide a timeline.

Ex-Newell Director Conroy Backs Starboard, Says Change 'Needed'
" Bloomberg (03/12/18) Mittelman, Melissa; Deveau, Scott"

Former Newell Brands Inc. (NWL) director Kevin Conroy, who resigned from the board last week after seven years, said he backs Starboard Value's efforts to turn around the company. Conroy said his decision to leave the board was a personal choice, and although he departed on amicable terms, he wants "to set the record straight" on the reasons for his exit. "I resigned because I do not believe that the current course is the optimal path forward for the company," he said. "I am not comfortable with recent events and have come to believe that change is needed." Conroy was the fifth director to resign from Newell as the company faces a proxy fight from Starboard. The fund is teaming up with former executives of Jarden Corp.—which was purchased by Newell two years ago—in its campaign to overhaul Newell's entire board. "Kevin's public statement of support for our efforts is much appreciated and even further validation, we believe, that our director candidates are the right ones to deliver the material change required for the benefit of the company and its shareholders," Starboard's Jeff Smith said Monday. Newell's shares, which increased 6.1% to $28.99 on Monday, are down 40% over the past year.

Yakira Capital Management Sends Letter to Board of Safeguard Scientifics (SFE)
" (03/12/18)"

Yakira Capital Management, Inc., which owns roughly 2.5% of Safeguard Scientifics Inc. (SFE), sent a public letter on Monday to the board of directors. The investor said it was "appalled" to learn that the board is in the process of finalizing new employment contracts with Safeguard's senior management, and urged it to postpone any such discussions about management's pay packages until after the annual shareholders' meeting in May. "We believe it is highly inappropriate, and a breach of proper corporate governance, for any Board that is in the midst of a proxy fight—particularly a contest with the high likelihood of a dramatically altered Board composition—to sign off on material compensation packages for the current management team," the letter stated. Yakira said it was also "extremely dismayed" by the company's move to institute a poison pill designed to prevent eight of the top ten shareholders from purchasing more shares. It noted that two other investors have also voiced displeasure that the board undertook such an anti-shareholder action, and called it "a flagrant act of entrenchment." Yakira said it believes that Safeguard needs senior management that can successfully execute on the following three areas: first, to assess when, and if, to add follow-on capital to existing portfolio companies; second, to achieve the best possible exits for existing portfolio companies; and third, to return capital in the most beneficial way to shareholders.

U.S. Shareholders Look to 'Bust Some Heads' at Aimia Meeting
" Financial Post (03/12/18) Critchley, Barry"

A U.S.-based investment manager has upped its stake in Montreal-based Aimia Inc. for the third time in six months and indicated it may push for changes at the annual meeting on April 27. The stock has been falling for nearly four years and is down about 80% since last May. Last September, Mittleman filed an early warning report noting it had purchased enough shares to put it over the 10% limit. In February, it made another filing disclosing a 10.6% stake, and earlier this month, Mittleman revealed it had upped its position to a nearly 15% stake. In that March 2 filing, Mittleman used some new language suggesting it may become active. In the filing's purpose of the transaction section, Mittleman said "it may in future, seek to effect material changes in the issuer's business or corporate structure." Specifically it could seek changes to the board or management, or "the sale or transfer or material assets." Or it could call a shareholder meeting "and the solicitation of proxies from the Issuer's security holders in manner permitted by law." Such wording was absent in Mittleman's September filing. One prominent Canadian money manager noted that originally Mittleman made a 13G filing with the Securities and Exchange Commission, indicating a passive investment; recently that was upgraded to a 13D filing, indicating it expects to influence the company.

Lattice Semiconductor CEO to Retire This Week
" Portland Business Journal (OR) (03/12/18) Spencer, Malia"

Lattice Semiconductor (LSCC) CEO Darin Billerbeck is retiring, effective March 16, but he will stay with the company until May 31 to ensure a smooth transition, the company stated.  The announcement comes just five days after the company expanded its board from eight to 11 directors.  The board added three directors in an agreement with Lion Point Capital, which owns a 7.6% stake in the company.  Lion Point has said Lattice is undervalued and that change is needed at the board level.  However, Lattice says the timing of the board expansion, Billerbeck's retirement, and Lion Point's involvement in the company are separate events.

Spurned Babcock & Wilcox Suitor Becomes its Largest Shareholder
" Charlotte Business Journal (03/12/18) Downey, John"

A spurned suitor of Babcock & Wilcox Enterprises Inc. (BW) is now the company's top shareholder, according to filings with the U.S. Securities & Exchange Commission (SEC). Steel Partners Holdings now owns a 15.5% stake in the company, surpassing the 14.9% position held by Brian Kahn's Vintage Capital Markets, which is about to take control of B&W's nine-member board. Warren Lichtenstein, founder of Steel Partners, made a bid Dec. 15 to buy B&W for $6 per share. In a Feb. 15 SEC filing, Lichtenstein declared B&W "has been unwilling to engage in any meaningful discussions ... regarding this proposal." The filing said the group would consider making proposals to change "the operations, management ... board composition, ownership, capital or corporate structure, capital allocation, dividend policy, strategy and ... potential strategic transactions" involving B&W and its assets. Meanwhile, in a Dec. 12 SEC filing, Vintage said it was interested in changes to B&W's "business strategy or prospects" or "the sale or merger" of the company. In January, B&W expanded its board and placed Kahn and two allies on it in exchange for Kahn's agreement not to make any proposals at the shareholder meeting or lead any efforts against board members. B&W later agreed to give the fund essentially five seats on the board. Meanwhile, the embattled company also faces a shareholder suit over whether it misled investors about the problems in the waste-to-energy operations before announcing the steep losses for 2016.

UK Fund Demands Tokyo Broadcaster Sells Crossholdings
" Nikkei Asian Review (03/12/18) Yuda, Masayuki; Fukui, Tamaki"

Asset Value Investors wants Tokyo Broadcasting System Holdings (TBS) to sell down crossholdings and return the cash to shareholders. The London-based fund plans to issue an official proposal at the June annual meeting of Japan's key TV broadcaster, if the fund's current informal pitch is rejected. According to Asset Value Investors CEO Joe Bauernfreund, TBS has behaved more like an amateur fund with a small broadcasting business, given that about 40% of its more than 700 billion yen ($6.6 billion) of net asset value comes from its stock holdings. Another 40% comes from real estate, and operating businesses generate only slightly more than 10% of its entire net asset value. He added that TBS "has no fundamental business relationship" with 72% of its securities portfolio and that there was "no rational reason" to have those stakes on the balance sheet. The fund, which owns 1.7% of TBS, has sent four letters to the broadcaster since it bought into the company in January 2017, receiving two replies that Bauernfreund called "benign" but "superficial." He said the fund's most recent meeting with the company on March 7 indicates that "TBS is taking our suggestions seriously, but at the same time they do not appear to be willing to sell down the securities portfolio."

Starboard Responds to Mellanox's Proposed Extraordinary General Meeting in Open Letter to Mellanox Shareholders
" PRNewswire (03/12/18)"

Starboard Value LP has sent an open letter to the shareholders of Mellanox Technologies Ltd. (MLNX), in which it is the largest shareholder with an ownership interest of approximately 10.6% of the company's outstanding shares. According to the letter, "Mellanox is looking to wrongfully delay the 2018 annual meeting of shareholders by three months. This is a transparent attempt to delay the right of shareholders to vote on the election of directors. Instead of holding the 2018 Annual Meeting in a timely manner, the Company is instead proposing to hold an unnecessary extraordinary general meeting of shareholders (EGM) in May 2018 to vote on two corporate governance changes—(i) the implementation of plurality voting in contested elections, and (ii) the use of a universal proxy card in contested elections. Although neither of these proposals is specifically problematic, there is absolutely no need to delay the 2018 Annual Meeting by three months to accomplish the Company's goal of implementing these changes. Under separate cover, Starboard will be delivering to Mellanox and its advisors today a proposal that would allow both of these governance reforms to be implemented with our support and without the unnecessary three-month delay."

Jericho Capital Sends Letter to Independent Directors of VMware
" Business Wire (03/12/18)"

Jericho Capital Asset Management LP sent a public letter to the independent board members of VMware Inc. (VMW) on Monday urging the company to cancel its proposed reverse merger with Dell Technologies Inc. (DVMT). Jericho, which owns about 1.8% of VMware, worries the potential transaction would "lead to a significant destruction of shareholder value" and calls it "a terrible deal for VMW shareholders." Jericho believes VMware would be "hampered by dead weight of slower growth, heavily debt-laden Dell." It also urges the company to consider "vastly superior" strategic alternatives, such as possible acquisition targets including Red Hat Inc. (RHT) or Palo Alto Networks Inc. (PANW) that it believes would better serve VMware's strategic objectives. Furthermore, Jericho cites unanimous sell-side opposition to a reverse merger with Dell.

Elliott to Request Resignation of Up to 7 TIM Directors – Report
" Telecompaper (03/12/2018)"

Elliott Management plans to call for the resignation of up to seven of Telecom Italia's (TIM) board members—including Chairman Arnaud de Puyfontaine and CEO Amos Genish—and replace them with Italian directors, according to Il Sole 24 Ore, an Italian national daily business newspaper.  The fund may have already upped its stake in the company to just over 5% in its bid to counter how top shareholder Vivendi is running the company, reported the paper, adding that an ordinary shareholders' meeting is slated for April 24.  Italian daily La Repubblica also reported that Elliot has invested roughly 800 million euros to acquire 4.9% of TIM's ordinary shares and 3% of its savings shares and that it has already met with Genish in London to address figures included in the company's new business plan.  French media giant Vivendi, TIM's largest shareholder with a 24% stake, is currently fighting against the Italian government's decision to activate the "golden power" rule of 2012 that allows the state to intervene in strategically important companies.

Exclusive: GE Explores Divesting Electrical Engineering Business - Sources
" Reuters (03/09/18) Brumpton, Harry; Roumeliotis, Greg"

General Electric Co. (GE) is considering a sale of its electrical engineering business, according to sources.  The divestiture would be the latest in a string of asset sales the U.S. industrial conglomerate is exploring as its stock has lost half its value in the last 12 months.  GE CEO John Flannery is also under pressure from investors, including Trian Fund Management LP which sits on its board of directors, to revitalize the business.  Flannery hinted earlier this year that he was open to breaking up the company, and said that a spinoff of any of its units, which include power, healthcare, and aviation, was possible.  GE acquired Converteam, an electrical engineering company, for $3.2 billion in 2011 to increase its presence in that sector.  At the time, energy was GE's most profitable business, accounting for one-fourth of the company's revenue.  Since then demand for its products has declined, and profit at the division plunged 45% last year.  Converteam, which in 2012 was rebranded GE Power Conversion, is now expected to fetch less than what GE paid for it, the sources said.  GE is considering ways to shed the unit before launching a sale process, said the sources.  Flannery said in October that GE would sell at least $20 billion in operations to stabilize its financial performance.

Newell Starts Sale Process for Goody Brand
" Wall Street Journal (03/09/18) Kang, Jaewon"

Newell Brands Inc. (NWL), which is under pressure from Starboard Value LP, launched a sale process for hair accessories brand Goody Products Inc., according to sources.  Goody has been part of the consumer products company since 1993, and is among the first Newell brands to be sold as part of the conglomerate's transformation plan to unload noncore businesses.  Newell said in January it plans to sell other assets, including baseball equipment brand Rawlings Sportings Goods Co., container brand The Waddington Group, and U.S. Playing Cards.  On a conference call to discuss financial results, the company said it anticipates generating roughly $6 billion in net proceeds after taxes from its divestitures.  Although Newell has said it expects the broad divestiture of noncore brands to command purchase price multiples of about 12-times EBITDA, the businesses are of "mixed quality," noted Jefferies LLC analyst Kevin Grundy.  There is a concern about how realistic that goal is given that the stock is trading below the 12-times range, he added.  Starboard Value launched a campaign last month to replace the entire company's board, and also urged Newell to postpone major divestiture decisions until its annual shareholder meeting in May.  The Goody auction will test private equity's interest in investments in brands with big names but slow growth.

Fotios Buy Raises the Stakes in Auris Fight
" West Australian (03/09/18) McKinnon, Stuart"

Michael Fotios has upped his stake in Australian explorer Auris Minerals and launched a rearguard action against efforts to fire his partner and appointee Bronwyn Barnes from the board. Parties associated with Fotios have lodged a removal notice against Auris board member Rob Martin, who has sided with a group of frustrated shareholders seeking to remove Barnes and another board member, Susan Vearncombe. The move comes after it was revealed that Fotios had spent more than $500,000 over the past two weeks purchasing more Auris shares to lift his stake in the explorer from 9.7% to 12.3%. The notice against Barnes and Vearncombe and the rival notice against Martin are expected to be voted on at a shareholders' meeting next month. The disgruntled shareholder group—which owns at least 5.7% of the company's issued capital—reportedly moved against Barnes and Vearncombe last month after becoming frustrated by a lack of progress by the company. It was also said to be disappointed with a $1.2 million farm-in deal Auris announced with Sandfire Resources over the Morck's Well East and Doolgunna projects late last month. The group is led by wealthy Sydney-based investor and chairman of Westgold and Metals X Peter "Talky" Newton.

Mellanox Sends Letter to Shareholders
" Business Wire (03/12/18)"

Mellanox Technologies, Ltd. (MLNX) announced Monday its board is sending a letter to shareholders emphasizing the importance of the company's extraordinary general meeting.  It noted that Starboard Value on Jan. 17 nominated a full slate of directors with the goal of overhauling Mellanox's entire board.  In light of this, it is "updating Mellanox's proxy voting mechanics to better align them with best practice in a contested election," adding this needs to be addressed before the 2018 AGM.  Mellanox notes the company's governance proposals—regarding plurality voting and universal proxy cards—reflect the board's commitment to best-in-class governance.  It also emphasizes the "successful execution of long-term growth strategy and focus on operating margin improvement," says it is "strongly positioned to continue realizing the benefits of our prior investments," and that it is executing a campaign to "dramatically drive operating margin improvements."

Japan FSA Urges Corporate Pension Funds to Fulfill Better Corporate Governance: Source
" Reuters (03/12/18) Wada, Takahiko; Kajimoto, Tetsushi"

The Financial Services Agency (FSA) is expected to update a 2015 corporate governance code pertaining to corporate pension funds, according to a Japanese government source. The recommendation is geared toward reaching higher levels of pension investment and toward fostering communication between pension funds and companies they invest in, the source said. The FSA will put forward its proposal at a panel meeting on the stewardship code and corporate governance on Tuesday. Prime Minister Shinzo Abe has been advocating greater corporate governance and transparency since he took office in 2012. He wants companies to adopt measures such as increasing the number of outside directors. The FSA plans to encourage listed companies to have their pension funds enhance expertise in investment, and to appoint the right people in order to fully demonstrate their function as "asset owner." Analysts have long indicated that Japan's corporate pension funds lack sufficient functions to check investments, because some of them put inexperienced people in investment roles and others pass on the entire investment to third parties.

Elliott Denies Reports It Is Pushing for Telecom Italia-Oi Merger
" Financial Times (03/09/18)"

Elliott Management says it has no intention of trying to compel Telecom Italia to merge its Brazilian operations with competitor Oi. Elliott has built a stake in Telecom Italia which is controlled by France's Vivendi. The hedge fund has stated it could seek representation on TI's board, and reports in the Italian press have hinted it could seek to compel a Brazilian deal or to speed up a float of TI's network assets. Amos Genish, chief executive of TI, says any move to compel a Brazilian merger would be "extremely irresponsible" and would not serve TI's shareholders. Elliott says such a move is not its intention. "Elliott does not have an investment in Oi and therefore the premise that it would look to merge Oi with TIM Brasil has no basis," a spokesperson stated.

U.S. Hedge Funds File Lawsuit Over Marine Fuel Firm's Deal
" Wall Street Journal (03/09/18) Fletcher, Laurence"

A shareholder group has filed a lawsuit against Aegean Marine Petroleum Network Inc. (ANW), the world's biggest independent supplier of physical marine fuel, accusing it of trying to conduct "a corrupt corporate acquisition." The lawsuit filed on Thursday is seeking a temporary restraining order in an effort to block Athens-headquartered, U.S.-listed Aegean's $367 million purchase of H.E.C. Europe Ltd. The group—led by Sentinel Rock Capital's Tyler Baron—owns roughly 12% of Aegean Marine. They claim its purchase of H.E.C. will "line the pockets" of its founder and is designed to block their own recent efforts to appoint new board members at Aegean Marine by diluting their shareholdings. H.E.C. is owned by Dimitris Melissanidis, who is also the founder of Aegean Marine, along with family members and the Agiostratitis family. Melissanidis pared his stake in Aegean Marine to zero in 2016, according to the company, but the investors say his control over the company has remained unchanged. As part of the deal, Melissanidis and the other sellers will receive 20 million shares, giving them control of around one-third of Aegean Marine. The shareholder lawsuit describes the price of the deal as "a massive overpayment" and says the board's decision-making on the deal is "highly suspect," adding it is a "transparent effort to entrench current directors."

Starboard Issues Letter to Newell Shareholders
" PRNewswire (03/09/18)"

Starboard Value LP, a significant shareholder of Newell Brands Inc. (NWL), which together with the other participants in its solicitation beneficially owns approximately 4% of the company's outstanding shares, today announced that it has issued a public letter to the company's shareholders.  In the letter, Starboard commented on yesterday's announcement by Newell that a fifth director had abruptly resigned from Newell's board of directors.  The letter says: "Yesterday, just one week after the announced resignation of  Ros L'Esperance, Newell  announced  that  another  long-tenured  director,  Kevin Conroy, had resigned from the Board.  In our opinion, there is no reasonable explanation for this mass  exodus  other  than  directors  desiring  to  cease their  association  with  such  poor  corporate governance and dismal operational performance."  Starboard's letter noted that significant change at Newell is warranted, given a lack of leadership and deteriorating performance.

'More Cash to You': BHP Mounts Shareholder Charm Offensive
" Sydney Morning Herald (Australia) (03/10/18) Knight, Elizabeth"

On March 9, BHP (BBL) used a webcast to communicate with retail shareholders, who account for one-third of the Australian company's register, to read their pulse on changes proposed by bigger shareholders to end the company's dual market listing. Elliott Management is leading the push to consolidate BHP plc and BHP Ltd. into one stock, arguing that doing so could create $14 billion in shareholder value. While some view the webcast as a BHP charm offense, observers indicate that most retail investors are more interested in dividends and share buybacks than issues of corporate structure. BHP has claimed it has the support of most big shareholders to retain its current share structure, but Elliott also claims to have significant support to dismantle the dual listing. BHP CFO Peter Beaven told shareholders that the board will revisit Elliott's proposal, but he stressed that it currently was not on the company's agenda.

Shell, Blackstone Eye $10 Bln Bid for BHP U.S. Shale Assets - Sky News
" Reuters (03/08/18) S, Sangameswaran; Resnick-Ault, Jessica"

Royal Dutch Shell (RDS.A) and U.S. private equity firm Blackstone Group (BX) are pursuing a joint $10 billion bid for the U.S. shale assets of BHP Billiton (BHP), Sky News reported Thursday, citing banking sources.  Pressure from Sydney-based Tribeca Investment Partners to sell the shale oil and gas assets prompted the world's largest miner to announce last year that it would exit its underperforming U.S. business.  Hedge fund Elliott Management has also called for BHP's exit from shale to free up capital.  BHP is likely to receive other credible proposals for its U.S. shale operations.  Private equity companies have been active buyers of U.S. shale producing assets in recent years.  BHP's acreage is located adjacent to assets controlled by Shell and Anadarko Petroleum (APC) in west Texas and New Mexico.  BHP is considering swapping certain onshore oil and gas assets with competitors' offshore assets as part of its effort to exit U.S. shale operations.  The company expects to receive initial bids for the operations in the June quarter.

Breitburn Energy Bankruptcy Plan Denied in Blow to Elliott, WL Ross
" Reuters (03/09/18) Rucinski, Tracy; Hals, Tom"

A U.S. judge ruled against Breitburn Energy Partners LP's (BBEPQ) bankruptcy exit plan on Friday, dealing a setback to an effort by investors led by Elliott Management Corp. and WL Ross & Co. to acquire choice oil and gas reserves in West Texas. The parties must now renegotiate a deal that would transfer Breitburn's Permian reserves to investors including Elliott and WL Ross through their participation in a $775 million rights offering. U.S. Bankruptcy Judge Stuart Bernstein in New York ruled the plan, which aimed to reduce Breitburn's $3 billion in debt, discriminated against retail bondholders. The judge rejected the plan because institutional bondholders were recovering more than twice the amount offered to individuals holding the same bonds, who were getting 4.5 cents on the dollar. Retail investors only hold about $45 million in bonds, so Breitburn could double their recovery for a few million dollars. Judges rarely spurn big corporate Chapter 11 plans, in part because the parties typically reach a broad consensus before seeking court approval. Breitburn filed for Chapter 11 bankruptcy in 2016 after a lingering slump in commodity prices. As commodity prices have recovered from lows, the plan's opponents said Breitburn's reserves had increased in value and justified a greater recovery for creditors and equity holders. Equity holders had argued the company's valuation was twice the $1.8 billion estimated by Breitburn's investment banker, but Bernstein countered that they were hopelessly "out of the money." The Breitburn bankruptcy is especially painful for equity investors because the company is structured as a master limited partnership, which treats canceled debt as taxable income—meaning shareholders could be hit with a tax charge.

Telecom Italia Would Reject Any Move to Merge Brazil Unit With Oi: CEO to FT
" Reuters (03/09/18) Flak, Agnieszka"

Telecom Italia (TIM) CEO Amos Genish said the company will spurn any effort by Elliott Advisors to merge its Brazilian business with rival Oi. He dubbed such a move "extremely irresponsible," given that Oi is going through heavy debt restructuring after filing for bankruptcy protection in 2016. Genish—who will meet with Elliott on Friday as part of a roadshow with investors—said any tie-up with Oi would only benefit Oi's owners and would jeopardize TIM's pledge to continue paying dividends in 2019 and 2020. Elliott disclosed a stake in TIM on Tuesday and said it was prepared to replace some board members and push to improve strategy, value, and governance at Italy's biggest phone group. This was widely viewed as a move to try and agitate top shareholder Vivendi's control of the company. Analysts have speculated about a potential marriage of TIM's Brazilian unit, TIM Participacoes, and Oi for years, and financial markets are now speculating that Elliott may push for this. The fund has yet to disclose what specific changes it wants. TIM presented its strategy to 2020 on Wednesday, when Genish said he did not rule out consolidation in the Brazilian market but added it was premature to discuss any potential tie-up with Oi. He added the Brazilian unit had significant growth potential on its own and no possible merger should put that at risk.

Showdown of Investors Looms Over Troubled Babcock & Wilcox
" Charlotte Business Journal (03/08/18) Downey, John"

Two shareholders are contending for control of Babcock & Wilcox Enterprises Inc. (BW), which could result in a possible showdown at the upcoming shareholder meeting. Warren Lichtenstein's Steel Partners Holdings spent nearly $2.8 million this week buying more shares of the embattled power engineering and manufacturing company. It now owns 14.4% of B&W. Lichtenstein has been upping his stake since he proposed purchasing the company for $6 a share in December. He said in filings last month that B&W was "unwilling to engage in any meaningful discussions ... regarding this proposal." He added that in acquiring shares, Steel Partners is considering its options and may push for anything from asset sales to restructuring to the sale of the company. Meanwhile, another investor, Vintage Capital Management is also strengthening its hold on the company. Vintage is B&W's largest shareholder with 14.9% of the outstanding stock, and it will soon have five seats on B&W's nine-member board of directors. Last week, four directors stepped down, clearing the way for Vintage to nominate two new board members. Vintage managing partner Brian Kahn and two allies are already on the board, placed there by the company as part of an agreement not to push for changes at the annual shareholder meeting this May. B&W's board aligned with Kahn, making two deals with Vintage in 2018, but Lichtenstein appears to be gathering enough shares to mount a challenge to that.


These 12 Fortune 500 Companies Don't Have a Single Female Board Member
" CNBC (03/21/18) Picker, Leslie"

Twelve of the biggest companies in the U.S.—including Icahn Enterprises, the holding company run by Carl Icahn—still lack female representation in the boardroom, according to an analysis by executive compensation research firm Equilar and CNBC. The report comes as companies increasingly respond to pressure from big investors to have more diversity in the boardroom. On Wednesday, the New York State Common Retirement Fund declared it would vote against all board directors standing for re-election at companies that have no women on their boards. It also plans to vote against members of the governance committee at companies with just one woman on the board. The fund currently owns shares in more than 400 public companies that have no female directors and 700 companies that have just one woman director. The twelve companies in the analysis are Builders FirstSource, Inc. (BLDR); CHS, Inc. (CHSCP); Delek US Holdings, Inc. (DK); Energy Transfer Equity, L.P. (ETE); HRG Group, Inc. (HRG); Icahn Enterprises L.P. (IEP); INTL FCStone Inc. (INTL); Navistar International Corporation (NAV); Plains GP Holdings, L.P. (PAGP); Seaboard Corporation (SEB); Sonic Automotive, Inc. (SAH); and World Fuel Services Corporation (INT).

The Activists Are Relentless: Start of Annual Meeting Season Puts Activism Front-and-Center
" Financial Post (03/20/18) Critchley, Barry"

Corporate Canada's upcoming annual meeting season has been pushed to the forefront given a relentless wave of shareholder activism. According to a webinar held by the Toronto law firm Norton Rose Fulbright, activists had higher success rates when they made "modest" demands on Canadian issuers. For instance, they were 100% successful when seeking a short slate of directors, compared with a success rate of 73% when they demanded a majority. "The market is far more amenable to that sort of ask than to a majority ask," said Walied Soliman, co-chair of the firm's special situations team. "While it may seem elementary, it's taken time." The webinar offered one piece of advice in response: move early on getting hard lock-ups, in which a bidder obtains the support of a group of shareholders who are absolutely committed. Soliman indicated that "it is, without any question," having an impact on the auction process. Issuers also should pay attention to new rules on "zombie directors"—in which a director remains on the board after receiving less than 50% support from shareholders—under the Canada Business Corporations Act. "This practice happens way more than anybody would think...and shareholders are thwarted," said Orestes Pasparakis, co-chair of Norton Rose's special situations team. The major themes of this annual meeting season, according to Wildeboer Dellelce LLP, include gender diversity; proxy access; advance notice; pay for performance; majority voting; board responsiveness; director commitments; director and committee independence; virtual shareholder meetings; and environmental, social and governance disclosure.

Most Companies Recognize Climate Risk, Few Act
" Business Insurance (03/20/18) Gonzalez, Gloria"

According to a new study released March 19 by CDP and the Climate Disclosures Standards Board, 83 percent of surveyed companies acknowledge the physical risks of climate change, and 88 percent identify policy changes or new regulations as the main risks of transitioning to a low-carbon economy. The study also indicates that while 82 percent of companies have board-level oversight of climate-related risks and opportunities, only 12 percent provide monetary and non-monetary incentives to board members for the management of climate change matters. European companies show significantly higher levels of board oversight than their counterparts in the United States. According to Jane Stevensen, CDP's London-based task force engagement director, "Key drivers are investor action, company reputation, and consumer reaction to climate risk. What we are not seeing is increased governance translating into climate change mitigation. 2018 is the year when companies need to step up climate action as we approach a tipping point. Fundamental to this is driving board level engagement with climate risk throughout the organization."

Activist Funds Bring Retail Investors Into Boardroom Battles
" Financial Times (03/18/18) Thompson, Jennifer"

Retail investors can play a part in the campaigns of the world's biggest activist investors by putting money into funds that track their investments. The funds systematically review where big activist investors are investing and then hold the stock of target companies in their own portfolios. Skagen Funds, a Norwegian investment manager with around $30 million in assets under management, and 13D Activist Fund in the United States, with $375 million in assets under management, are among the funds that are taking their cues from activist investors. "I wanted to give retail investors access to it, and a liquid option for institutional investors," says Ken Squire, 13D's portfolio manager and chief investment strategist who founded the fund. Shareholder activism may seem like a straightforward concept, but investors face challenges in that they are calculating the investment case for an underperforming company as well as the effectiveness of a particular activist. A couple of funds deploying the activist tracker concept have closed in recent years after attracting only small pools of funds. However, rewards may be worth it for retail investors willing to be patient, as investors in 13D at the beginning of 2017 would have seen a net return of 23.8% by the end of the year, compared to 21.8% for the S&P 500 index. "These are multiyear processes," says Tomas Johansson, portfolio manager at Skagen Funds. "It takes a lot of time to change companies."

Bronte Capital's John Hempton Blasts 'Incestuous' Small Pool of Directors
" Australian Business Review (03/19/18) Roddan, Michael"

During a panel discussion on shareholder activism at the Australian Securities & Investments Commission's annual forum, Bronte Capital founder John Hempton said the country's "incestuous" community of directors prevents boards from making difficult decisions about the future, and shareholder activists are being prevented from asserting their rights by defamation laws. Meanwhile, Jeremy Leibler, a partner at Arnold Bloch Leibler, said companies engage with shareholder activists too often, attributing this in part to "the limited pool of non-executive directors in this country." He noted, "Everyone is interconnected. Everyone knows everyone. The result is that people's reputations are extremely important to them to operate as a non-executive director. They don't want to be targeted by activists. They don't want to get a first or second strike. People say second strikes don't matter, let me tell you directors worry a lot." Liebler also argued for more regulation of the proxy adviser sector. He said, "Some institutions will vote blindly with the accordance of proxy advisers. In many cases they are in breach of their fiduciary duties because they follow their proxy advisers blindly; it's definitely improved over the last two years, but you can pick up these proxy adviser reports and you can find fundamental mistakes. I just want there to be a certain standard upheld."

Dealpolitik: Broad Governance Shadow Cast by Qualcomm Deal Blockage
"Wall Street Journal (03/17/18) Barusch, Ronald"

The halting of Broadcom's (AVGO) hostile pursuit of Qualcomm (QCOM) was another step in the increasing assertiveness of the Committee of Foreign Investment in the United States (CFIUS). In the long run, though, the biggest shadow cast by the failed bid may be in the corporate governance area as the CFIUS order effectively stopped shareholders from exercising their voting rights. Before the CFIUS action, government regulators generally had not interfered with the director-election process. The change presents risk to more than three decades of a carefully balanced governance system. Of course, not every deal that raises national-security concerns will trigger intervention in the future. But M&A lawyers could seek CFIUS and other regulatory intervention that undermines the director-election escape valve, leaving it to the Delaware courts or activist shareholders to rebalance the field of hostile deal tactics.

Paul Singer Takes On Europe Inc.
" Wall Street Journal (03/16/18) Sylvers, Eric; Dummett, Ben"

Following a string of major investments in Europe over the past two years, Elliott Management Corp. this week launched a proxy battle at Telecom Italia (TI). Elliott has disclosed a 3% stake in the telecommunications giant and nominated a slate of directors to replace six board members, including the chairman. Elliott has also stepped into the chess match between 21st Century Fox Inc. (FOXA), Walt Disney Co. (DIS), and Comcast Corp. (CMCSA) over British TV giant Sky PLC. Fox is trying to consolidate ownership of Sky, while Disney has separately agreed to buy a big chunk of Fox assets. Comcast entered the scene in February, promising a higher price for Sky in its preliminary offer. Amid all that dealmaking, Elliott quietly purchased a roughly 2.5% stake in Sky, indicating it might push for a higher price from suitors. In the Netherlands, Elliott has built a position in paint giant Akzo Nobel NV, pushing it in 2017 to consider merging with U.S. rival PPG Industries Inc. Akzo ultimately resisted the effort, but agreed to a number of Elliott demands in the process—including shedding its specialty chemicals business and appointing two Elliott-backed board members. Elliott is also urging mining giant BHP Billiton Ltd. (BBL), listed in both London and Australia, to shed assets and restructure. BHP agreed to sell its U.S. shale business and more recently signaled its willingness to consider changes to the company's structure that Elliott has demanded. Elliott won two board seats at British investment manager Alliance Trust PLC in 2015, and also secured three board seats at Ansaldo STS, an Italian maker of railway signaling equipment.

In Canada, Women Making Slow Progress Reaching the C-Suite
" Hunt Scanlon Media (03/15/18)"

Each year, the "Rosenzweig Report on Women at the Top Levels of Corporate Canada" tracks the number of women who hold the highest executive positions at Canada's 100 biggest publicly traded companies. These C-suite leaders are critical when it comes to changing corporate culture and enhancing diversity. Currently, 51 women hold the highest executive positions at Canada's 100 biggest publicly traded companies, up from 48 a year earlier and more than double the 23 women with those jobs in the first Rosenzweig Report in 2006. However, women now hold just 9.4% of these jobs, compared to 9% a year ago, and 4.6% in 2006. Still, of the 100 largest companies in Canada, 40 have at least one woman in a top leadership role, up one from the previous year.

Shareholder Support for Climate-Change Proposals Grows in the Second Half of 2017
" Pensions & Investments (03/14/18) Kilroy, Meaghan"

Shareholder support for climate-change proposals accelerated in the second half of 2017, according to a joint report from PricewaterhouseCoopers and Broadridge Financial Solutions. The report analyzed votes at 1,040 annual meetings between July 1 and the end of the year. Researchers found that average shareholder support for climate-change proposals increased to 30% in the third and fourth quarters, an increase from 27% during the same six-month period the year before. PwC and Broadridge said that several climate-change proposals received majority support for the first time in 2017, with big investors like BlackRock (BLK) and Vanguard Group supporting two or more proposals. The companies forecast that environmental shareholder proposals will gain even more support in 2018.

Exploring the G in ESG: Governance in Greater Detail—Part I
" Seeking Alpha (03/15/18) Tang, Kelly"

When considering the link between ESG and financial outperformance, there is already sufficient empirical evidence to suggest that the governance aspect of ESG yields better corporate returns. Unlike environmental or social data, governance data has been compiled for a longer period of time, and there is more acceptance for the criteria that comprises good governance. The economic dimension score (EDS), for instance, evaluates the corporate governance performance of companies, with additional key measurements that evaluate the quality of a company's management systems and its ability to manage long-term risks and opportunities. There are eight specific EDS criteria: corporate governance; codes of business conduct; risk and crisis management; supply chain management; tax strategy criterion; materiality score; policy influence criterion; and impact measurement and valuation.

Letter to the Editor: All Share Owners Should Vote Their Stocks
" Wall Street Journal (03/13/18) Edkins, Michelle; Vota, Max"

In a letter to the editors of the Wall Street Journal, BlackRock's Michelle Edkins responds to a recent op-ed titled "Passive Investors, Don't Vote." Edkins disagrees with the piece's claims that "passive-fund managers like BlackRock lack a strong incentive to cast informed votes" and "it matters little to them whether individual companies perform well or badly." Edkins contends that BlackRock has a fiduciary duty to its clients, which it performs partially by directly engaging the companies they are invested in—whether through active or index-based strategies. "The suggestion that companies should allow themselves to 'disregard or discount the votes of passive investors' ignores the rights of our clients," she argues. Edkins says that in BlackRock's investment stewardship practice, there is particular emphasis on governance matters for the reason that good governance adds value. "Our engagement and voting on governance matters not only drives value at a specific company but also raises the bar for corporate governance—and effective capital allocation—across public companies more broadly," she states. BlackRock's investment stewardship team considers various inputs to inform proxy voting decisions, including the insights of its own active-fund portfolio managers, Edkins adds. "BlackRock has a demonstrated track record in effecting positive change for shareholders through our investment stewardship activities," Edkins concludes. BlackRock's Max Vota adds that only allowing active managers to vote on corporate governance would not only put outsize influence into the hands of a minority of wealthy asset managers, but it would effectively erode the rights of one group of shareholders for the benefit of another.

Viewpoints: Fujifilm Should Beware the Xerox Trap
" Nikkei Asian Review (03/13/18) Givens, Stephen"

Fujifilm's deal for Xerox (XRX) raises concerns that the price is too high and that the Japanese company does not have the capacity to manage the foreign company, writes corporate lawyer Stephen Givens. There are also concerns that Fujifilm may be miscalculating the pitfalls of the ownership structure in an unfamiliar legal environment outside Japan. Fujifilm has agreed to buy bare majority 50.1% control of Xerox, and the remaining 49.9% would be left in the hands of public shareholders, including investor Carl Icahn and some hedge funds. Fujifilm would acquire the controlling stake by folding Fuji Xerox, a long-established joint venture between the two companies, into Xerox. One listed company owning another is widespread and uncontroversial in Japan, but it is almost unheard of in the United States, where corporate law and corporate governance principles are very sensitive to the conflicts of interest that arise between a controlling majority shareholder and minority shareholders. Unlike in Japan, in a U.S. court the majority shareholder will carry the burden of proving that each transaction with the controlled entity is scrupulously fair and at arm's length. Icahn has already painted a post-acquisition picture of "big brother" Fujifilm abusing its position. His endgame is to assert his minority rights as leverage to get Fujifilm to buy the rest of Xerox at a higher price, Givens argues.

The Nelson Peltz Era Has Begun at P&G: Five Things to Watch
" Cincinnati Enquirer (03/13/18) Coolidge, Alexander"

Hedge fund investor Nelson Peltz has joined the board of Procter & Gamble (PG), and while observers expected that he would need months to lobby fellow directors, the company's sliding stock price has strengthened his hand even prior to his attendance at the first board meeting next month. Last year, Peltz campaigned for his seat while criticizing P&G's bureaucracy and advocating for cutting management layers and paring P&G's five global business units down to three. P&G's shares are down 13% this year, and observers say that if it fails to post solid progress by the end of the fiscal year on June 30 and a stronger 2019 outlook, Peltz could make a convincing case in the coming months for job cuts or further divestitures. Peltz's Trian Fund Management has lost $150 million so far on its more than $3 billion investment in P&G.

All's Fair in Love and Proxy Fights?
" FT Alphaville (03/09/2018) Scaggs, Alexandra"

Starboard Value wants to replace the board of Newell Brands (NWL) ahead of the company's annual shareholder meeting, which is expected to take place in early May. In its latest 10-K, Newell has cited a new and notable risk factor for substantial board turnover, according to a recent note from Alexander Diaz-Matos, an analyst with independent credit research firm Covenant Review. Newell said "certain outstanding series of our debt may require that we make a change of control offer at 101% of the principal amount thereof plus accrued interest if the change of control is accompanied by a rating event, which generally would require, among other things, a downgrade of our debt rating below investment grade by two of the three rating agencies within specified time periods." That makes it sound like it would be bad for shareholders, but the risk is much smaller than the filing implies, according to Covenant Review. Credit ratings aside, recent rulings in lawsuits have made it much more difficult to trigger such a payout just because of board turnover. Precedent set in a court battle between SandRidge Energy (SD) and TPG-Axon Capital (among others) means that the threat is minimal, writes Diaz-Matos. SandRidge management provided a similar warning to shareholders, but the court ruled that the board was "breaching its fiduciary duties by failing to approve the TPG slate." With regard to the statement, Covenant Review ultimately believes "the Risk Factors with respect to a Change of Control under its indentures should not have been included, and can be considered potentially wrong, misleading, or incomplete," according to Diaz-Matos.

Activist Investors Winning Showdowns, in Sophisticated Ways
" Toronto Globe and Mail (03/09/18) Willis, Andrew"

The amount of money committed by activist funds to their campaigns in 2017 rose to US$62 billion, double the total in 2016, according to a global survey by investment bank Lazard. However, the number of activist campaigns that actually played out in the form of traditional proxy contests has declined steadily over the past five years in Canada. Activist activity peaked at 27 public battles for control of boards in 2012. Last year, there were only eight campaigns, the same number as in 2016, according to a report from law firm Fasken Martineau DuMoulin. The trends suggest that both corporate boards and activists have become more sophisticated when it comes to proxy fights, and that support is steadily increasing for managers who are willing to fight for what they perceive as a better way of doing business. "Given the potential tremendous costs and lost management time associated with a formal proxy contest, we think both management and activists have incentive to reach a settlement as early in the process as possible," says Toronto-based Fasken partner Aaron Atkinson. Vanguard Group, BlackRock (BLK), and State Street (STT) have showed they are willing to back activists, notes Lazard managing director Jim Rossman, who runs the New York-based investment bank's shareholder advisory team. Last year, activists augmented their traditional dissident campaigns by targeted mergers and acquisitions with the hope of either scuttling deals that were poorly received by investors, or sweetening the terms of the transactions, adds Rossman.

Hedge Funds Amass Big Bets Against World's Leading Advertisers
" Financial Times (03/12/18) Johnson, Miles"

Hedge funds have made bearish bets of more than $3 billion against the world's biggest advertising companies as the industry experiences disruption and stagnant growth. Funds including the U.K.'s Marshall Wace and U.S.-based Lone Pine and Maverick Capital have amassed short sales of shares worth a combined €280 million against France's Publicis, according to regulatory filings, as the company's stock has maintained its value while rivals' have plummeted. Meanwhile, shares in WPP fell to a three-year low last week. Hedge funds that have borrowed shares worth £920 million in order to short sell them have realized significant gains, according to data from Markit. In addition, big consumer goods companies—which are major clients for the advertising industry—are under growing pressure to increase their profit margins by activist investors at a time when many are experiencing slow revenues and challenges from start-up brands. Earlier this month, the chief brand officer at Procter & Gamble (PG), the world's largest advertiser, said the company would "take back control" of its marketing by moving more of it in-house. Trian Fund Management last year won a board seat at P&G following a bitter proxy battle. Sir Martin Sorrell, chief executive of WPP, criticized activist hedge funds last year for pressuring his clients into "drive-down investment in marketing at a time when they should be investing more," and argued this was driving the decline in sales across the industry. Meanwhile, other investors have made big bets in the other direction that the concerns over the agency model will prove less severe than expected.

Opinion: Passive Investors, Don't Vote
" Wall Street Journal (03/08/18) Weil, Dick"

Large passive investors increasingly are crowding out the influence of smaller peers that have more at stake in each company's performance. Until recently, asset managers in the United States that lacked a well-informed view of the companies in which they invested often abstained from shareholder votes, writes Dick Weil, a co-CEO of London-based Janus Henderson Investors. But in the 1990s, the Securities and Exchange Commission (SEC) began suggesting that routine abstention could be viewed as a failure to carry out one's fiduciary duty. Although nearly all asset managers vote today, passive investors dedicate no more effort to the process than is required to appease the SEC—or perhaps to satisfy their own conscience and boost their firm's image. Passive-fund managers like BlackRock (BLK) lack a strong incentive to cast informed votes. Index funds retain shares of each company they hold at a rate determined by the company's market value benchmarked to a certain index, so they are concerned with the performance of the fund overall, rather than how well or badly individual companies perform. The SEC should acknowledge the diluting effects of these votes and issue new guidance asking passive investors to abstain from shareholder votes, according to Weil.

Equilar Reports on Advances in Board Gender Diversity
" Cooley PubCo (03/08/18) Posner, Cydney"

The latest Equilar Gender Diversity Index (GDI) reveals that at the current rate of growth, board gender parity for companies in the Russell 3000 likely will be achieved by 2048, an improvement from 2055 in the inaugural 2017 GDI. At the end of 2017, women held 16.5% of board seats in the Russell 3000, up from 15.1% the previous year. Over the same period, the number of boards with no women directors fell from 25% to 20.8%, and at the end of 2017, there were 32 boards with women directors at the 50% level. However, among the Fortune 500, the percentage of women directors at that time was just 22.5%. Equilar suggests that the new voting guidelines from Glass Lewis and ISS, as well as the emphasis placed on board gender diversity by institutional investors such as BlackRock (BLK), State Street (STT), and Vanguard, may be having some impact.

Why Women Must Wait a Century for Equal Pay
" Bloomberg (03/08/18) Green, Jeff"

The World Economic Forum says global pay parity likely is 100 years away, an increase from about 80 years in 2016—in part because the road for women to the most highly paid jobs is less apparent than it once was. Executive teams across the world declined to being just 24% female from 25% in the most recent year, according to Grant Thornton. And among new CEO hires across the world, less than 4% went to women in 2016, states PwC. In the United States and United Kingdom, there are additional poor prospects. The number of women CEOs at the biggest U.S. companies will fall to 24 from 27, according to Catalyst, which tracks diversity in companies. Among the 92 biggest companies in the United Kingdom, 6.5% had women CEOs, a drop from 7.8% in 2016, according to executive recruiter Egon Zehnder. On a more positive note, equality in the boardroom might be possible by 2048 in the United States, according to researcher Equilar. The number of new directors being appointed to boards who are women might reach 50% by 2032, states executive recruiter Heidrick & Struggles. But even a less ambitious goal of 30% females on boards of a select group of bigger companies isn't likely before 2028, according to researcher MSCI.

Telecom Italia and the Battle of the Billionaires
" Wall Street Journal (03/07/18) Wilmot, Stephen"

Elliott Management stepping into a political power struggle in Italy. The hedge fund is building a stake in Telecom Italia (TI), declaring that its "governance, valuation, strategic direction and relationships with Italian authorities would be improved by replacing certain members of the board."  French media group Vivendi sparked a political outcry last year when it took over Telecom Italia's board and management team.  Vivendi owns 23.9% of the company's ordinary shares, and also has a roughly 29% stake in Mediaset, the TV empire controlled by former prime minister Silvio Berlusconi.  A government minister threatened to intervene in the company's strategy last year.  In an attempt to diffuse the controversy, CEO Amos Genish, Telecom Italia's third boss in two years and a former board member of Vivendi, is creating a separate legal entity for the network.  Just hours after Elliott confirmed its investment, Telecom Italia late Tuesday published details, alongside annual results and a plan to revive the group's fortunes.  Elliott may be eyeing one-third of seats allocated to minority shareholders, since Telecom Italia's anchor shareholder—currently Vivendi—can usually appoint two-thirds of board members.

Tax Reform, Cybersecurity, Board Refreshment, and Executive Misconduct Among Top Issues at 2018 Shareholder Meetings, According to BDO USA
" Business Wire (03/07/18)"

Accounting and advisory firm BDO USA, LLP has compiled a list of topics that corporate boards of directors should be prepared to address at their upcoming annual shareholder meetings. Among them is limits on board seats. Public company directors spend an average of 245 hours a year on their board duties and responsibilities—a time commitment that continues to grow. "Given this trend," BDO states, "companies should consider limiting the number of boards on which their directors may serve." Other topics that will likely be on the front burner include CEO/median employee pay ratio, board refreshment and diversity, executive misconduct, and cybersecurity.

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