Whole Foods Market Inc.'s (WFM) annual shareholders meeting will convene Friday amid investor discontent about declines in sales growth and reductions in its share value. Some shareholders say the company needs to boost its performance in the increasingly competitive grocery industry, or potentially face a challenge to the board in about six months, according to sources. Protest votes against directors without a competing slate of nominees are unlikely to remove current board members but can encourage activists to try to campaign next year, especially if performance has not improved. Some shareholders believe the company has a long way to go to turn around its bottom line and expect pressure on leadership to grow. Neuberger Berman, a top-10 investor with a roughly 2.4% stake, has been privately pushing for faster change at the company, sources said. It reportedly believes Whole Foods resonates better with millennials and sells more prepared foods than rivals, but that management has not kept up with the chain's growth. Proxy advisers, meanwhile, are adding to the pressure with concerns about Whole Foods' board attendance, executive compensation, and the closeness of its board, reports Glass Lewis & Co.
Ashford Hospitality Prime Inc. (AHP) struck a settlement deal with Sessa Capital on Thursday, ending a nearly year-long feud. Last spring, Sessa launched a proxy fight at the real estate investment trust, nominating five directors to its board. A legal issue arose that caused Sessa to bring a lawsuit against the company, which it ultimately lost; as a result, the hedge fund was unable to put its directors up for a shareholder vote. Other Ashford Prime shareholders, however, demonstrated their frustration with the board. The company said after the annual meeting last June that "withheld" votes exceeded the "for" votes for each of its director nominees. Sessa reportedly prepared to launch another proxy contest this year, but the two sides began talks last month to avoid further infighting. According to the settlement, two of Sessa's previous director nominees will be appointed to Ashford Prime's board. The deal also allows the REIT and the hedge fund to jointly select an additional director. Two current directors will step down. The two sides have also come to a two-year truce, agreeing to dismiss all pending litigation and to various provisions until before its 2019 annual meeting.
Yum! Brands Inc. (YUM) said Thursday that Keith Meister, managing partner of Corvex Management LP, will be stepping down from his director post immediately. Meister joined the board after successfully campaigning for the Louisville, Kentucky-based fast-food giant to spin off its Chinese operations in mid-2015. He argued that the business would deliver greater value for shareholders as an independent entity. The plan materialized last October, when Yum China Holdings Inc. became a separate business. "With the China spinoff successfully executed, and Yum's capital structure, management team, and transformation plans in place, the company is set up for great success," Meister said in a statement Thursday. As of the end of 2016, Corvex owned a 5.7% stake in Yum and a 3.8% interest in Yum China, according to Bloomberg data.
Lion Point Capital, a small hedge fund founded by Didric Cederholm, a protégé of Elliott Management's Paul Singer, is encouraging one of Singer's targets to listen to him. Earlier this year, Elliott called for Arconic (ARNC) Chairman Klaus Kleinfeld to be replaced and to nominate five board members. Lion Point, which had a 0.22% stake in Arconic at the end of last year, is voicing support for Elliott's push. "Lion Point believes that the intrinsic value of Arconic materially exceeds the Company's current stock price, and we welcome and support Elliott Management Corporation's plan to unlock this value," Cederholm and head of research Jim Freeman wrote in a Feb. 15 letter to Arconic's board. They recommended that the Arconic board "promptly engage with Elliott in discussions to implement a plan to enhance shareholder value." Earlier this month, First Pacific Advisors, one of Arconic's largest shareholders, also announced its support for Elliott.
VenBio Select Advisor has filed an injunction to prevent Immunomedics (IMMU) from closing a deal that would give Seattle Genetics (SGEN) global rights to Immunomedics' cancer drug candidate IMMU-132. VenBio also wants to prevent further delays of an upcoming shareholder vote at the company's annual meeting. Immunomedics' largest shareholder is accusing the company's directors and management of undervaluing IMMU-132, which it calls the company's "crown jewel," in an attempt to retain shareholder support ahead of the upcoming vote. However, in a letter to shareholders, Immunomedics said, "This lawsuit appears to be a desperate act designed to prop up VenBio's attempt to take control of Immunomedics and implement its own self-serving agenda, at the expense of other stockholders." VenBio said that more than half of the 80% of Immunomedics outstanding shares already submitted for the vote are in favor of VenBio's board nominees, and with the vote now scheduled to take place after the deal with Seattle Genetics would close, any newly elected board nominees would not have a chance to review the terms of the deal. "We believe the deal Immunomedics' current Board and management announced only four business days before the Annual Meeting vote was motivated by a desire to entrench themselves and rush to announce an agreement before they lost the vote and their Board seats," said Behzad Aghazadeh, managing partner and portfolio manager at VenBio.
Gamco Investors Inc. (GBL) is the latest investor to oppose French dairy giant Lactalis Group's bid to purchase Italy's Parmalat SpA. Lactalis launched its initial takeover offer for the whole company six years ago, causing turbulence in Europe as Italy sought to prevent the loss of a national champion to foreign buyers. Since then, Lactalis has increased its 83.3% stake to 87.7%. Gamco argues that the current offer to buy out remaining minority shareholders is too low, echoing concerns from Amber Capital LLP, the most vocal critic of the offer. In December, Lactalis announced a voluntary tender offer to buy out minority shareholders for €636.7 million, or €2.80 a share. Yet Parmalat's stock was at €2.98 on the Milan Stock Exchange on Wednesday morning, signaling Lactalis' bid could fail unless it is raised. The tender offer expires March 10. "We're 99% sure we are not tendering our shares" held in the firm's merger arbitrage mutual funds, said Gian Maria Magrini, who helps oversee the holding at Gamco. The U.S. money manager owns roughly 1% of total Parmalat shares outstanding, making Gamco the second-largest minority shareholder after Amber Capital. "We would like to see the tender offer increased substantially," added Arturo Albano, a corporate governance specialist at Amber Capital. The London-based money manager owns more than 3% of Parmalat stock, Albano said.
Trian Fund Management LP on Tuesday disclosed a $3.5 billion stake in Procter & Gamble Co. (PG), taking aim at the maker of Pampers diapers, Tide detergent, and Gillette razors as it moves to shed unprofitable brands and bolster sales. This marks the investor's biggest ever ownership interest in a company. It also comes at a time when P&G's efforts to slim down have struggled to boost its stock much beyond where it traded in early 2015. Moving to focus more on core products, the Ohio-based company sold more than 40 of its brands last year. However, given its market value of $225 billion, P&G remains an industry giant that Trian will likely want to shrink even further. "[Trian] could argue that the brand sales ... did not go far enough to create a faster growing company," says CLSA analyst Caroline Levy, noting that the company's beauty operation could perform better as a standalone company. "Continued share losses in many categories, especially skin care, point to a need for faster change." Pershing Square Capital Management purchased a stake in P&G in 2012, calling for the firing of its then CEO, Robert McDonald. A new CEO was hired a year later, and in May 2014, Pershing sold its stake.
Scott Ferguson, head of Sachem Head Capital Management, intends to leave the board of Autodesk (ADSK) as soon as a new CEO is found. He told his investors in a letter Tuesday that Sachem Head returned 4.6% in January, exceeding the S&P 500's 1.9% gain. Its investment in Autodesk had almost doubled. Ferguson has been a director on the board for nearly a year, after the company settled with Sachem Head and Ricky Sandler's Eminence Capital. The investors had been demanding cost cuts, and Autodesk agreed to buy back $2 billion worth of shares. Last week, Autodesk announced that longtime CEO Carl Bass was stepping down; and the company is looking at internal and external candidates to replace him. Ferguson told his investors that the Autodesk bet has gained more than 90% since the fund acquired its first shares in October 2015. "We believe the stock continues to offer an attractive return, particularly in light of recent events," the letter noted. Ferguson, like other hedge fund managers, is optimistic for 2017, citing expected tax reform, the potential for a regulatory rollback, and higher interest rates.
Shareholder pressure has prompted Thomas Cook to reduce the maximum payout for its CEO under a new long-term bonus plan. The plan to pay CEO Peter Fankhauser a long-term bonus of up to 225% of his base salary of £703,000, worth about £1.6 million a year, was opposed by 32.7% of the travel company's shareholders, amounting to its biggest revolt. In response, Thomas Cook cut the maximum potential payout to 200% under the strategic share incentive plan (SSIP) but said it would not use it this year. If used, it would replace the current performance share plan (PSP), which can pay out 200% in exceptional circumstances. This year, under the PSP, Fankhauser has been awarded a long-term bonus of 165% of his base salary, which would pay out in three years if the company's targets are achieved. Thomas Cook also said it would consult major shareholders before the SSIP is used and on its performance targets. Meanwhile, almost 22% of shareholders voted against the company's future remuneration policy, and 22.5% opposed the remuneration report. Standard Life, the second-biggest shareholder with 13% of the shares, said, "We disagreed with the introduction of a potential payment to executives above the remuneration policy's normal upper limit. In addition, we opposed the introduction of new elements to the remuneration plan as we strongly believe these should be dealt with in the existing policy."