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Hedge fund TCI will vote against Safran's revised offer for Zodiac Aerospace, even after a fierce battle against the deal which got the French company to lower its offer and make changes to its corporate governance. After Zodiac said this week it would revise down its offer, TCI declared its governance concerns about the deal had been addressed. This included the structure of the shareholder vote on the deal, alleged preferential treatment of Zodiac's biggest shareholders, and a lack of independent board directors. However, TCI still believes the deal is poor and will vote against it in June. It wants Safran's management to restructure the way they will be paid, if the deal succeeds, to better align their incentives with the integration of Zodiac being a long-term success. "We would look more favorably on the deal if a new management compensation plan is established that explicitly ties a large part of management's bonus to the achievement of Safran's own target for the deal," the hedge fund said. TCI added that the headline 15% reduction in Safran's offer for Zodiac's equity was in effect a 26% reduction, due to a change in the exchange ratio used to calculate how many shares in Safran each Zodiac investor would receive in the deal. TCI's act of defiance comes as the jump in Safran's value in recent months has awarded the $14 billion hedge fund a 19.4% gain net of fees this year, making it one of the best performing large funds in 2017.

In a potential setback to David Einhorn's campaign at General Motors (GM), independent proxy advisory firm Glass Lewis has recommended that shareholders vote against the investor's proposal to split the U.S. automaker's stock in two. Glass Lewis declared that the proposal from Einhorn's Greenlight Capital was "speculative in nature and that the potential costs may outweigh the potential benefits," according to its report. "Ultimately, we are not convinced that a more aggressive approach is warranted or in the best interests of shareholders given the cyclical nature of the industry and current headwinds and disruptions facing the industry," the report said. Einhorn proposed a plan in March to elect four new directors to GM's board and split the company's shares into two classes: one that would pay a hefty dividend and please income investors, and a second that would skip a payout in favor of making share buybacks. Einhorn said at the time that the plan could become a template for public companies looking to satisfy demands from a diverse range of investors. The announcement followed months of talks between the two sides. GM, however, rejected Einhorn's efforts. The company said on Friday it was urging its shareholders to vote for all its board nominees and against Greenlight's proposal at its upcoming annual meeting of shareholders on June 6. The Glass Lewis report also said GM had taken "generally reasonable steps" to evaluate the proposal.

On May 26, Glass Lewis & Co. LLC recommended that shareholders of Buffalo Wild Wings (BWLD) vote for the company's slate of directors. According to the proxy adviser, the hedge fund Marcato Capital has failed to make a compelling case for making changes to the board. This comes two days after Institutional Shareholder Services recommended voting for Marcato's nominees. Marcato, which owns a 6.1% stake in Buffalo Wild Wings, launched a proxy fight in February and nominated four directors for the nine-member board. Glass Lewis said in its report, "We believe the dissident's nominees, other than the one also nominated by the company, either have experience that would not be additive to the refreshed board or potential conflicts which weakens their candidacies."

Arconic Inc. (ARNC) shareholders elected three of Elliott Management Corp.'s nominees to its board of directors, according to a preliminary vote count after the company's annual meeting on Thursday.  Elliott reached a deal with Arconic on Monday, ending an extended battle for control of the board.  The New York hedge fund, which launched its public campaign in January, argued that the specialty metals producer needs new leadership and that its performance had missed targets and straggled peers.  Elliott's elected nominees are Christopher Ayers, former CEO of specialty steel wire ropes maker WireCo WorldGroup Inc.; Carlyle Group LP Operating Executive Elmer Doty; and Patrice Merrin, who currently serves on the board of commodities trading group Glencore Plc.  Arconic's nominees—David Hess, Arconic's interim CEO; and Ulrich Schmidt, former CFO of aircraft parts maker Spirit AeroSystems—were also elected, Arconic confirmed.  In addition, former Boeing Commercial Airplanes chief Jim Albaugh was appointed to fill a vacant director seat.

FrontFour Capital Group and its partner, Sandpiper Group, will nominate three directors to the board of Granite Real Estate Investment Trust after talks for change stalled earlier this month.  "Over the past five-year period, the current board has overseen and approved what we believe to be a culture of entitlement," FrontFour co-founder Zachary George and Sandpiper Group CEO Samir Manji wrote in a letter to unitholders filed with regulators on Friday morning.  "We have received significant unsolicited support from unitholders who are frustrated with Granite's failure to meet its own strategic objectives, the egregious board compensation, and the bloated cost structure."  Connecticut-based FrontFour and Vancouver-based Sandpiper collectively own 6.2% of Granite, Canada's largest industrial real estate landlord.  The investors said they would nominate Manji plus real estate veterans Al Mawani, former CEO of Calloway Real Estate Investment Trust, and Peter Aghar, former president of real estate private equity firm KingSett Capital, to Granite's board at its annual general meeting on June 15.  Their slate will compete against one put forth by Granite's board last week that includes two new members to fill vacancies.  FrontFour and Sandpiper also have proposed a plan that includes slashing the company's expenses by C$10 million by the end of 2017 and boosting its leverage to about 40% from 17% to help it pursue acquisitions.  They also want to improve the company's disclosure.

Ariadne Australia and Viburnum Funds have teamed up to bolster their case for a board shakeup at Ardent, the troubled entertainment group that has lost nearly $100 million in value. The pair hold a combined 9.86% of Ardent, making them the company's largest shareholders. Viburnum Executive Chairman Craig Coleman backs Ariadne's plan to install Gary Weiss and Kevin Seymour on the board. "We own shares in the company because we believe there is potential to improve all the operating businesses in the company, that is a shared view with Gary and Kevin," Coleman said. "The value and potential we see requires operational and capital decisions correctly made. The improvements required for all three Ardent businesses are not trivial decisions. In order to realize the value or potential of those operating businesses it requires focus, basically. Our belief in that potential is self-evident by our purchasing 10% of the company. In that same period I have not seen any director buy any shares ... the board members have not put any money down, not one cracker." Meanwhile, Wilson Asset Management is seeking answers about the company's direction. Chief Investment Officer Chris Stott said, "We're slightly confused as to what the strategic ­direction of the company is over the medium to longer term."

David Einhorn of Greenlight Capital, in a May 23 letter to fellow shareholders of General Motors Co. (GM), criticized the response of the board to various proposals, which include splitting the company's shares into two classes of stock. According to Greenlight, doing so could unlock upwards of $38 billion in shareholder value. However, the board believes the move would damage the company's credit rating, and Greenlight responded in the letter that the company's fixation with its credit rating is a "red herring" meant to distract shareholders. Furthermore, the hedge fund claims GM actively misrepresented its plan, which it contends is credit neutral, in its discussions with ratings agencies.

The U.S. District Court for the Eastern District of Michigan, Southern Division, has issued an order denying Rockwell Medical Inc.'s (RMTI) motion for preliminary injunction against Richmond Brothers Inc. and Mark H. Ravich, who together with their affiliates beneficially own nearly 11.7% of Rockwell's outstanding common stock, or nearly 6.1 million shares. Rockwell had sought the preliminary injunction to require Richmond and Ravich to amend their Schedule 13D filing and prohibit them from soliciting shareholder votes in the context of their proxy contest to elect Ravich to the board. Richmond Brothers Chairman David S. Richmond and Ravich said, "After Rockwell has repeatedly referenced the claims in this lawsuit to dissuade shareholders from supporting us, we are pleased to share the court's ruling with the Rockwell investment community. The ruling makes clear that shareholders will be afforded a full opportunity to cast their votes as they deem appropriate. We will continue to make our case for change at Rockwell as we approach the company's annual meeting."

Shareholders of KWV, renamed La Concorde, are challenging management just six months after the company's asset sale. Minority shareholders, led once again by Chris Logan, are becoming increasingly concerned about what top shareholder Niveus plans to do with the cash—as well as valuable property and art assets—from the sale to Vasari. Niveus owns 57% of La Concorde. Logan for years has held onto the stock because he believed that one day a management team would generate good returns from the attractive underlying assets. Now he simply wants Niveus to give shareholders some indication of what the plans are for La Concorde, as well as a special cash dividend. Logan believes it is crucial to understand La Concorde's current net asset value, especially for the valuable heritage property and the art. Because no up-to-date details were provided in the most recent annual financial statements, Logan decided last week to visit the company's head office in Paarl to inspect the register of land and buildings. Most companies make this information available to shareholders. But when Logan arrived in Paarl he was offered limited information and was told by La Concorde staff that was all he would be given. Niveus CEO André van der Veen refuses to engage with Logan on the issue and rejects his suggestion that the valuation is being hidden by the board in order for certain shareholders to benefit.

Gatemore has stepped up its campaign to halt DX Group's proposed merger with John Menzies.  The investor purchased another 10% of shares in DX Group, boosting its total holding in the embattled freight and courier company to 21%.  In addition to its hefty stake, Gatemore says it has the public backing of another 28% of shares in DX.  Since it anticipates that only 60% of all shareholders will vote on the deal, that combined 49% opposition would be enough to kill the proposal.  Gatemore has protested the proposed reverse takeover by DX of John Menzies' newspaper and magazine distribution arm, calling it "an ill-conceived deal which grossly undervalues the company."  DX shares have fallen almost 90% since November 2015—although they have been suspended since the end of March, when the company began talks with Menzies over a deal.

Daniel Loeb's Third Point revealed a new presentation on Wednesday that calls for Dow Chemical (DOW) and DuPont (DD)—the chemicals behemoths that are planning a $143 billion consolidation—to consider splitting into as many as six publicly traded companies.  The hedge fund argues that management's current plan, which would break the combined entity into three, fails to maximize shareholder value.  Dow and DuPont agreed to merge in late 2015 and announced a plan to split into three businesses: plastics and related materials, agricultural chemicals and seeds, and specialized chemicals.  Earlier this month, however, the companies' independent directors said they will review those plans once the merger is completed and that both boards had agreed to "conduct a comprehensive review of the business composition of each division."  Third Point claims that changing the structure of the spin-offs could secure as much as $20 billion in additional value.  Under its proposal, the specialty products company would have four separate business divisions that could each become public companies or be sold off.  "We believe this portfolio reshuffling will lead to a more appropriate fit between assets and will unlock significant value for shareholders," Third Point said.  The hedge fund also addressed issues of pay and stock buybacks, noting management teams need compensation that is not linked to the performance of the other businesses.  Additionally, it said the board should return roughly $40 billion of "excess capital" to shareholders within two years of closing the deal by further cutting costs.

The Hastor family of Bosnia has failed to place three representatives on Grammer's supervisory board.  The Hastors have an approximately 20% holding in the German vehicle components supplier.  At the company's annual general meeting on May 24, they criticized Grammer's management.  Meanwhile, a rival group with a 15.1% stake, led by China's Ningbo Jifeng Auto Parts Co., supported management's proposals. Shareholders representing 67.32% of Grammer's equity capital submitted their votes.

Daniel Loeb's Third Point LLC said Dow Chemical (DOW) and DuPont (DD) could unlock $20 billion in additional value by adjusting their plan to split into three companies following their merger. Dow and DuPont plan to split into agriculture, specialty chemicals, and materials companies after their $130 billion merger closes in August, but the hedge fund, in a presentation posted on its website, questioned whether the three spinoffs were "appropriate or if the creation of additional companies or divestitures would further enhance shareholder value." Third Point—Dow's seventh-largest investor, with a 1.29% stake as of March 31—also called for a "slimmed down" Material Science Co., moving several businesses to Specialty Products. Furthermore, it indicated that the Specialty Products business could be split into as many as four public companies, and that reshuffling DowDuPont's portfolio could help save more than the $3 billion the companies are targeting.

On May 24, Institutional Shareholder Services (ISS) recommended that shareholders of Buffalo Wild Wings (BWLD) vote for board directors nominated by Marcato Capital Management at the company's June 2 annual meeting. The proxy adviser said in its research report, "The dissident has presented a compelling case that additional board change is warranted." The company's shares rose over 6% to $155.71 on news of the report. ISS is supporting Marcato nominees Mick McGuire, the hedge fund's founder, and Scott Bergren, former CEO of the Yum Brands' (YUM) restaurant chain Pizza Hut. However, ISS did not recommend that shareholders support Marcato nominee Lee Sanders, former chief development officer at TGI Fridays. It also supports board nominee Sam Rovit, CEO of CTI Foods and a former executive at Kraft Foods, who was originally nominated by Marcato, then later nominated by the company as well, and is running for a board seat uncontested.

Shares in aerospace groups Safran and Zodiac were suspended May 24 in the wake of criticism about Safran's planned $9 billion deal with Zodiac; in the afternoon Zodiac's board accepted a 15% reduction in Safran's takover offer. U.K. investor TCI Fund Management had called for Safran to scuttle the initial deal following a string of profit warnings from Zodiac. Safran reduced its offer from $9 billion to $7.7 billion to reflect the change in Zodiac's fortunes but said it was confident of resolving its problems after visiting its plants. Safran also revised its proposal to a traditional cash and stock offer, rather than the previously agreed to hybrid deal designed to protect tax breaks for core Zodiac shareholders. Safran is now offering 25 euros per Zodiac share in cash, down from 29.47 euros previously, and plans to give Zodiac shareholders an alternative of preferred shares up to a total of 31.4% of the new deal. Zodiac says its board and core shareholders representing 25% of its capital are in favor of the new plan. TCI preferred not to comment on the new offer.

The online lender OnDeck (ONDK) is facing pressure from investors as it seeks to cut costs in an effort to turn a profit by the end of the year. Since its initial public offering in December 2014, the New York-based company has made money in only two of 10 quarters, taking a hit from rising funding costs and bigger provisions for bad loans. Earlier this month, OnDeck said it would shift its focus from growth to profitability, reducing its staff by about a quarter, tightening underwriting standards, and holding more of its loans on its own balance sheet. Mario Cibelli, managing partner at Marathon Partners Equity Management, said, "Clearly the additional cuts are a step in the right direction ... but my instinct is that this is not enough. As we've pointed out, the level of overhead still seems unhinged from reality." Meanwhile, EJF Capital, which has built a 9% stake in the company, has said it may seek talks with management. OnDeck's stock has fallen 27% this year, and Cibelli, whose firm is its eight-largest shareholder with 2%, said he may add to his stake if the stock keeps falling. "I'd full well acknowledge it is a risky situation," Cibelli said. "I'm more interested in the company it could potentially become than the company it is."

Charles Schwab Corp. (SCHW) shareholders approved a non-binding proxy access proposal at the annual meeting May 16 that would allow shareholders to nominate company directors. The terms for proxy access were ownership of at least 3% of the company's outstanding stock, three consecutive years ownership, and the ability to nominate up to 25% of the company's board. The proposal was filed by the $320.7 billion California Public Employees' Retirement System, Sacramento, and the $170.6 billion New York City Retirement Systems. Several other pension plans and retirement systems also backed the proxy access proposal, according to their proxy-voting disclosures. In addition, two other lobbying and employment diversity-related proposals were rejected by shareholders at the meeting. The lobbying disclosure proposal called for a report on the company's lobbying disclosures and expenditures, and was only supported by 24% of shareholders. The employment diversity proposal, which was filed by New York City Comptroller Scott M. Stringer on behalf of the New York City Retirement Systems, called for the company to disclose annually its EEO-1 data—a map of its workforce by race and gender. Only 26% of shareholders voted to approve the employment diversity disclosure proposal. Charles Schwab had urged shareholders to vote against all the proposals.

A British judge has given Royal Bank of Scotland (RBS) until June 1 to negotiate a deal with investors who claim the bank misled them over its 2008 fundraising.  Judge Robert Hildyard warned this would be the final opportunity to reach an out-of-court settlement.  RBS, which denies any wrongdoing, has already offered almost £1 billion ($1.3 billion) to avoid a trial that would scrutinize its near collapse and state bailout.  Sources on Tuesday said numerous shareholders in the 9,000-strong group that is suing RBS remained set on rebuffing its offer and taking the case to trial.  RBS nearly doubled its out-of-court offer to investors on Sunday from about 43.1 pence to 82 pence per share, sources said.  The offer, which would cost RBS tens of millions of pounds, is below the 200 to 230 pence per share at which shareholders purchased RBS stock in 2008.  Investors representing 87% of the original £4 billion damages claim have already settled.  The remainder, including thousands of RBS employees who lost about 80% of their investments, allege former executives intentionally concealed the bank's financial issues before the government finally stepped in with a £45.8 billion bailout.

Vantage Asset Management Inc. has issued a letter urging all shareholders of Espial Group Inc. to vote for an improved and refreshed board of directors, given the company's sharp deterioration in value since its initial public offering in 2007.  Vantage recommended that shareholders vote for Ronan McGrath of Ronan McGrath & Associates; Christopher Mercer, a vice president at Rogers Communications; Donald Wright, president and CEO of The Winnington Capital Group Inc.; and three of management's nominees—Jason Dolvane, Michael Hayashi, and Aamir Hussain.  The vote will take place at the company's upcoming meeting of shareholders scheduled for June 13, 2017.

Honeywell International Inc. (HON) announced Tuesday that it will determine by fall whether to separate its aerospace division.  The company continues to work with advisers after Third Point LLC publicly called for a spinoff last month, claiming in a letter to investors that the business has lagged behind peers and that separating it "would result in a sustained increase in shareholder value in excess of $20 billion."  The letter was delivered just a few weeks after DariusAdamczyk took over as Honeywell CEO.  He said there would be one of three responses to the Third Point push: Do nothing, separate the division, or pursue something different.  Adamczyk added that he would be conducting a full review of Honeywell's operations even without the push from Third Point, and some buying and selling is likely over the next several years.

Arconic Inc. (ARNC) and Elliott Management Corp.'s agreement over board seats this week doesn't alter the fact that Arconic must meet aggressive sales and profit goals set by Elliott in a challenging environment for its key aerospace and automotive markets. Auto sales have flatlined and aircraft manufacturers are pressing suppliers for increasingly improved terms. "We believe this is an especially difficult time for suppliers to push back on [plane makers'] price pressure, particularly for Arconic, which is trying to take share," Seth Seifman at J.P. Morgan wrote to clients on May 23. Arconic, one of the biggest suppliers in the aerospace industry, is working to extract better profit margins from its businesses as it integrates a series of recent acquisitions. Elliott, which owns close to 12% of Arconic, has been calling on the company to boost its cost-cutting measures and eliminate what it considers a bulky management structure that discourages factory-level efficiency and production improvements. Elliott also wants Larry Lawson, a veteran industry executive, to become Arconic's new CEO.

PPG Industries Inc. (PPG) CEO Michael McGarry says the U.S. paint maker will challenge a June 1 deadline imposed by the Dutch regulator before which it has to make an offer for Akzo Nobel NV or walk away for six months. McGarry told reporters on May 23 that he is seeking to extend the deadline by two weeks, noting that in setting the date under the stock market rules, the clock should have started on March 22. "Right now we're challenging the Dutch regulator on whether the June 1 date is appropriate," he said. "We think the date should actually be either June 14 or June 15. We have asked them to substantiate their position." McGarry also ruled out raising its latest $29.5 billion offer, which was the third to be rejected by its Dutch rival. PPG has been considering whether to take its offer directly to shareholders. According to McGarry, PPG would consider adjusting the terms of the offer to address employment concerns, and all financing for the takeover is in place.

Glass Lewis is among the proxy advisory firms recommending that shareholders of Taubman Centers Inc. (TCO) vote for Land and Buildings Investment Management LLC's board nominees. The hedge fund, which owns about 1.2% percent of Taubman's shares, is seeking board seats for its founder, Jonathan Litt, and Charles Elson, a University of Delaware finance professor and corporate governance expert. Glass Lewis said on May 23, "Based upon our review and interactions, we view the Taubman board as an old-style board in need of further change and refreshment beyond the largely cosmetic and reactive changes it has made to date."

Institutional Shareholder Services (ISS) recommended May 23 that Taubman Centers (TCO) shareholders vote for two directors nominated by Land and Buildings.  One is Jonathan Litt, founder of Land and Buildings; and the other is Charles Elson, a University of Delaware finance professor and corporate governance expert.  ISS also advised stock owners to vote for company nominee Buckley Marakovits.

BHP (BBL) has retained Barclays (BCS) to divest its U.S. Fayetteville shale gas assets, sources said Tuesday.  The move comes after Elliott Advisors acquired a 4.1% stake in BHP's London-listed unit and called for changes to unlock shareholder value.  BHP announced last month that the gas-rich Fayetteville field in Arkansas was under review and that the company was "considering all options, including divestment."  It had attempted to sell the business more than two years ago but halted the efforts in February 2015, when it said it planned to "maximize value" of the assets.  The revived sale is expected to attract interest from smaller mining companies already operating in the region, the sources said.  Earlier this month, Elliott called for BHP to launch an independent review of its petroleum division, valued at more than $20 billion, after urging a spin off of the U.S. oil and gas assets.  BHP has rejected the call by Elliott, which was later joined by Australia-based Tribeca Partners.  The mining company denied any connection between shareholder pressure and prospects for Fayetteville including divestment, claiming the move was instead part of an ongoing review.

PPG Industries (PPG) head Michael McGarry said on Tuesday the U.S. company remains interested in working out a "consensual" deal with Akzo Nobel, even as the Dutch paintmaker resists its €26.3 billion ($29.5 billion) takeover offer.  McGarry, in the Netherlands for a shareholder lawsuit against Akzo on Monday, said he had never before witnessed such hostility between a company and its shareholders.  However, "PPG remains very interested in pursuing a privately negotiated, substantive deal with Akzo Nobel," he said.  On Monday, several top Akzo shareholders led by Elliott Advisors filed suit against the company over Akzo management's refusal to engage in talks.  PPG is in discussions with Dutch market regulator AFM about extending a June 1 deadline to submit a formal bid for Akzo while it awaits the court's decision, most likely on May 29.  Shares in Akzo traded 1% higher at €76.47 early Tuesday, far below PPG's €96.75-per-share bid proposal extended on April 20—indicating shareholders are doubtful a PPG offer will ultimately succeed.  Akzo's complaints about a PPG takeover include that it would be bad for employees, that it would face antitrust risks, and that Akzo should stay Dutch in the country's national interest.

Institutional Shareholder Services (ISS) has recommended that CSX Corp. (CSX) shareholders approve an $84 million payment related to the appointment of CEO Hunter Harrison.  Mantle Ridge wants shareholders to agree to the payment, so the ISS recommendation is welcome news for it.  The investor provided upfront the $84 million payment to enable Harrison to exit early from his previous employer, Canadian Pacific Railway.  Harrison has threatened to resign from CSX if the reimbursement is not approved by shareholders.  "The company's failure to make the reimbursement will likely lead to Harrison's exit and the loss of the market value that accompanied his arrival," ISS said.  It did caution, however, that reimbursing Mantle Ridge is a decision that ultimately lies with the board.  "Shareholders should also consider the risks, including lingering questions about Harrison's health, and the lack of recoupment provisions in the event of his unexpected departure from service," ISS said.  The proxy advisor also recommended that shareholders vote against the election of Mantle Ridge founder Paul Hilal to the CSX board.

Engaged Capital LLC, which wants Rent-A-Center (RCII) to sell itself, on May 22 turned down two board seats offered by the company, according to the furniture retailer.  Rent-A-Center claimed in a filing that Engaged Capital has no interest in negotiating with the company's board to reach an "amiable" resolution.  In February, Engaged Capital, which has a 16.9% holding in Rent-A-Center, nominated five members to the company's board.  Rent-A-Center adopted a "poison pill" in response.

On May 22, Arconic Inc. (ARNC) and Elliott Management Corp. reached a deal to end a five-month proxy contest just days before a shareholder vote. Under the agreement, the hedge fund will receive board spots for three of its nominees, and Arconic will keep three of its own nominees, with one current director stepping down. Furthermore, the deal puts one of Elliott's nominees on the board committee searching for the company's new CEO, as longtime CEO Klaus Kleinfeld resigned in April. Elliott is not required under the deal to sign a peace agreement that would head off future fights, but observers say a future battle seems unlikely given that the hedge fund has chosen six of the company's 13 directors.

On May 22, shareholders angered by Akzo Nobel's rejection of a 26.3 billion euro ($29.5 billion) takeover offer from U.S. rival PPG Industries (PPG), led by Elliott Advisors, asked the Amsterdam Enterprise Chamber to order an investigation into possible mismanagement by Akzo's board and to force an extraordinary meeting of shareholders to vote on dismissing Chairman Antony Burgmans. The investors together represent 18% of the Dutch paint maker's shares. "A large group of shareholders has lost confidence in Mr. Burgmans and has asked to call him to account at an extraordinary shareholders meeting," said Jan Willem de Groot, representing Elliott. "That's a vote of no confidence by itself." In addition, PPG's lawyer told the court that the company remains willing to enter talks with Akzo, regardless of the composition of its management and supervisory boards. A ruling is expected within a week, which gives PPG enough time to decide whether it wants to submit a formal bid to Dutch regulators without the support of Akzo's board by a June 1 deadline or walk away for at least six months.

Thirty-two percent of votes at Johnston Press' annual general meeting were cast against the publisher's compensation policy, even though the company had tamed its executive pay proposals because of investor pressure. Crystal Amber, which owns a 20% stake in the company, cast many of those votes. Both Glass Lewis and Institutional Shareholder Services came out against the original remuneration policy but changed their recommendation after it was revised. "Bonuses should be based on success," stated Crystal Amber's Richard Bernstein.

On May 22, Depomed Inc. (DEPO) announced several corporate governance updates. The company has revised the charters of its audit, compensation, nominating, and corporate governance committees; revised its corporate governance guidelines to formally require the chairman of the board to be an independent director; and amended bylaws to reduce the time between the receipt by the company of a record date request from the shareholder requesting a special meeting and the date such meeting is held. The company also amended its bylaws to provide for a plurality voting standard for contested elections; revised its corporate governance guidelines to require an annual evaluation of the CEO to be conducted by independent directors, led by the chairman; and revised its corporate governance guidelines to adopt a director retirement age of 72.

HSS Hire announced on May 22 that Steve Ashmore would become its new CEO in June. He will succeed John Gill, who will formally step down on May 23 after holding the position for 19 months. Ashmore will become the London-listed tool hire group's second CEO in two years. Losses in the company's core businesses have pushed shares down by 75% since its 2015 listing and nearly 50% in the past 12 months. In April, HSS Chairman Alan Peterson said Gill had led the company "through a period of significant change as we implemented our new operating model," but a new CEO was needed as HSS shifts focus to expanding sales. HSS has significantly underperformed its rival Speedy Hire in the past 12 months. The two firms abandoned talks of a merger in late 2015, but some analysts hope the discussion is revived. "A gigantic gulf has opened between the two since Speedy's new chief executive joined" in mid-2015, said Beaufort Securities analyst Barry Gibb. "Speedy always said to us that the timing wasn't right [for a deal with HSS]. We have some hope they are still considering taking another pop at HSS." Toscafund, which holds a nearly 20% stake in Speedy, objected to the company's decision not to pursue a merger with HSS. At the time of the merger discussions, the investor held a 4% stake in HSS, which has grown to 26% since January 2016, making it HSS's largest shareholder other than former private equity owners Exponent.

Elliott Management Corp. petitioned a Dutch court on Monday to clear the way for a shareholder vote to remove Akzo Nobel NV Chairman Antony Burgmans.  The fund alleges that Burgmans failed shareholders by refusing talks and rejecting three takeover offers by rival PPG Industries Inc. (PPG), the latest worth about $29.5 billion.  The court case comes 10 days before PPG's offensive could take a hostile turn, with the U.S. company facing a June 1 deadline to submit an offer document to the Dutch market regulator.  If it is approved, PPG head Michael McGarry would have about a week to take the offer directly to shareholders or walk away for six months.  The hearing also follows weeks of campaigning by Elliott to push Akzo Nobel to enter talks with PPG, a move the Dutch company has rejected.  Elliott invested €1 billion ($1.1 billion) in Akzo Nobel, according to company attorney Jan Willem de Groot, who said there is a "crisis of confidence" among shareholders in the Dutch firm.  The lawyer is asking the court to reverse Akzo Nobel's rejection of a request by a group of shareholders for an extraordinary meeting to vote on ousting Burgmans.  At the end of Monday's hearing, the judge is expected to give a date for a ruling, which will likely be within days.  In a separate petition, Elliott asked the court to investigate Akzo Nobel's management policies.  Any probe could take more than six months and if the court found evidence of mismanagement, executives could be removed.

Richmond Brothers Inc., an investment advisor and wealth management firm that is the largest beneficial owner of Rockwell Medical Inc. (RMTI), along with Mark H. Ravich, has laid out the case for electing Ravich to the board at the annual meeting of shareholders next month.  The letter to Rockwell shareholders cites shortcomings at the company, including "the failure to monetize two approved and promising drugs, abysmal corporate governance practices, egregious executive compensation practices, a complete lack of regard for shareholder concerns, disinterest in communicating with shareholders and the market, and perhaps most importantly, a lack of independent oversight."  The letter insists that Ravich "has relevant investment and board experience, and is personally invested in the Company.  We believe his qualifications blow away those of David Domzalski, who in our view would be nothing more than another crony of Rockwell Chairman and CEO Rob Chioini." Ravich and Richmond Brothers, together with their affiliates, own 11.8% of Rockwell's outstanding common stock.

Jia Yueting, founder of Chinese technology and entertainment company LeEco Holdings, is exiting his role as CEO of the listed video business following shareholder demand for stronger corporate governance.  The billionaire will remain chairman of Leshi Internet Information & Technology Corp., according to a Shenzhen Stock Exchange filing.  The move comes after China Bridge Capital, which was Leshi's second-biggest investor last year, urged Jia to decelerate LeEco's expansion and let new management bring focus back to the company.  The investment firm sold more than 60 million shares in Leshi during the first quarter of this year, according to the company's latest earnings report.  LeEco has been dealing with a decline in funds and a share-trade halt that has forced it to reexamine its business.  The company started out as a video-streaming site and rapidly expanded in multiple directions.  LeEco last summer announced a deal to purchase U.S. company Vizio Inc. for $2 billion, but it pulled out of the deal in April.  Former Lenovo executive Liang Jun, who is currently president of Leshi, will step in as CEO.  Meanwhile, Jia will focus on corporate governance, strategic planning, and core production innovation, according to the filing, although it was unclear if there was any change in his position at LeEco.

Citi Trends, Inc. (CTRN) is pressing its shareholders to vote for the company's slate of director nominees at the annual stockholder meeting on May 24. Citi Trends notes this meeting is especially important considering the opposition of Macellum Advisors GP, LLC and affiliates. Macellum has nominated two individuals, including its portfolio manager Jonathan Duskin, in opposition to two of the company's three incumbent director nominees.

Land & Buildings Investment Management LLC announced that it has issued an open letter to shareholders of Taubman Centers Inc. (TCO) addressing what it calls misleading excuses made by CEO and Chairman Bobby Taubman for the company's poor performance. According to the letter, "We urge shareholders not to be misled and to help put the Company back on track towards profitability by electing Land and Buildings' highly-qualified nominees at the upcoming annual meeting." The letter specifically cited undisciplined capital allocation; poor operations; inferior total returns; abysmal corporate governance; and a staggered, clubby, and long-tenured board. "Taubman wants investors to believe that it has a longstanding commitment to enhancing corporate governance, yet under the supervision of Lead Director Myron Ullman the Company maintains a dual-class share structure, a staggered, long-tenured (16 years), interconnected Board and has repeatedly ignored shareholder concerns. Taubman has earned the worst corporate governance score in the REIT industry, according to leading independent real estate research firm Green Street Advisors, a true feat given the pervasive poor corporate governance in the REIT sector relative to the rest of Corporate America," said the letter. "Land and Buildings' nominees Charles Elson and Jonathan Litt have proven track records of bringing accountability to boardrooms in numerous situations resulting in strong shareholder returns. ... With a modernized governance structure, a focus on implementing best in class operating strategies and a rigorous capital allocation policy – along with a culture of accountability in all aspects of the Company – Taubman should be able to close the substantial gap to underlying asset value, which we estimate at $106 per share, meaning a 70% upside from current levels."

Needmor Fund is criticizing Cato Corp. (CATO) for its all white male board of directors. The Ohio-based shareholder issued a statement praising the seven-member board now in place for its competence and experience, but added: "Unfortunately, our board does not reflect a commitment to racial and gender diversity." Cato operates a chain of 1,300 stores in more than 30 states. It has been facing growing shareholder scrutiny for its board composition, however, with corporate governance experts contending that greater diversity enhances company performance. Cato CEO John Cato issued a response in which he said his company values inclusion, stating, "We have a strong board in place that will continue to serve, but we will make every effort to broaden the expertise and backgrounds of our board as openings arise."

Espial shareholders could benefit from a possible board overhaul, predicts PI analyst David Kwan.  Vantage Asset Management has notified the company that it may nominate four director candidates at the June 13 annual and special meeting of shareholders.  Kwan believes such a move could unlock value.  "Low insider ownership creates opportunity for change," he notes.  "Although execution has improved in recent quarters, the shares have remained range-bound since Q4 FY2015 ... which has likely frustrated certain shareholders and possibly helped lead to this vent.  Espial is attractively valued given a superior organic growth profile, pristine balance sheet, and discount valuation, with key near-term catalysts including Tier 1 customer wins and now shareholder activism potentially driving the stock out of its current [depressed] trading range."

Bill Ackman said on Thursday he is ready for a comeback after a disastrous investment forced his hedge fund firm to return to basics.  "I'm incredibly focused.  I've got something to prove," he told hedge fund managers and investors at the annual SkyBridge Capital industry conference, known as SALT, in Las Vegas.  Ackman's bet on Valeant Pharmaceuticals International Inc. (VRX), which he divested from in March, played a significant role in two years of double-digit portfolio losses for his Pershing Square Capital Management.  Ackman's portfolio is posting gains this year, and he said he probably will add at least two new market bets that are similar to the firm's early winners.  "The next investment you will hear from us isn't going to be some successful company trading near its highs," he vowed.  "It's going to be a huge opportunity for efficiency, better deployment of capital, a change in strategy, some management changes needed, but the business quality is going to be extremely high."  Ackman was open about the lessons learned from Valeant, which he bought into in early 2015 before walking away with a multibillion-dollar loss 18 months later.  He admitted that he had not expected Valeant's business to be so unstable and that he relied too much on management, but he said the mistake has enabled Pershing to return to a real focus on its core.

Deutsche Bank's management won big at the annual general meeting on Thursday, with shareholders voting to support re-election of supervisory board chairman Paul Achleitner and approving the management and supervisory boards' actions of 2016.  Management also was awarded free reign over possible future capital increases, despite resistance from some top investors, like Union Investment, that had urged shareholders to vote against permitting management to write what they dubbed another blank check after large capital hikes in recent years. Shareholders did reject a proposal for an independent audit to investigate management's role handling recent scandals, including manipulation of Libor and Russian trades.

Elliott Advisors has asked an Amsterdam court to order an investigation into the performance of Akzo Nobel's board and to call an extraordinary shareholders' meeting. A court statement reveals that six investors—Templeton Investment, Tweedy Brown, the Universities Superannuation Scheme, Dodge & Cox, Intrinsic Value Investors, and York Capital Management—in the company have filed to participate or speak in the case against the board, which is being heard next week. At the proposed meeting, Elliott wants to vote on dismissing Akzo Nobel Chairman Antony Burgmans after the company rejected a 26.3 billion euro ($29.23 billion) takeover proposal from U.S. rival PPG Industries (PPG). No major Akzo shareholder has come forward to support management's position since PPG began pursuing Akzo in March.

Liquor Stores N.A. Ltd., North America's largest publicly traded liquor retailer, has responded to the analysis and strategy of PointNorth Capital, emphasizing what it says are a number of serious flaws. PointNorth recently acquired a 9.7% stake in the company and has launched a proxy battle for control of the board. This comes just weeks after the investor rejected an offer from Liquor Stores for two board seats. According to Liquor Stores Chairman Jim Dinning, "Over the past six months, we repeatedly asked PointNorth to share its advice and constructive criticisms so we could either use its insights to improve our operations or help it to better understand our business. PointNorth consistently declined to share its thinking. Now we know why: PointNorth's analysis is riddled with flaws. The biggest flaw is its assumption that what might have worked in government-controlled provincial monopolies, that by definition have no competitors, would work in our six highly competitive markets. Government monopolies control both wholesale and retail operations, set prices, and adjust margins at will without having to compete with discounters—or anyone, for that matter." The company argues that applying a monopoly business strategy would erode gross margin. Dinning added, "Shareholders only have to look at the track records of PointNorth's principals to see the value destruction that occurs from a defective strategy. We urge Liquor Stores shareholders to bear that in mind as they evaluate PointNorth's faulty analysis, misleading claims, and wishful thinking. ... The question is whether PointNorth truly doesn't understand our business, or is trying to mislead shareholders into giving up control by electing their majority slate."

Elliott Management revealed a 9.2% interest in Athenahealth Inc. (ATHN) on Thursday, according to a regulatory filing.  The investor, which has initiated more activist campaigns than any other hedge fund in recent years, indicated that it would seek to engage the board regarding opportunities to enhance shareholder value. Shares in the healthcare software provider hiked 15.7% to $123 in trading before the bell.

The Council of Institutional Investors (CII) sent a letter to every member of the House of Representatives on Wednesday urging them to oppose the Financial Choice Act, arguing it will harm shareholder rights.  The letter was signed by 53 pensions, unions, and other institutional investors that collectively hold more than $4 trillion in assets.  "The Choice Act threatens fundamental investor protections that keep U.S. markets safe, fair, and vibrant," said Amy Borus, deputy director at CII.  The bill, which passed a House committee vote May 4, aims to roll back provisions of the 2002 Sarbanes-Oxley corporate governance law and 2010 Dodd-Frank financial overhaul law that some GOP lawmakers say hinder economic growth.  CII's letter outlines five ways the bill would do damage, such as by hiking the cost of shareholder proposals.  "This raises the bar for entry to ordinary investors and would make shareholder proposals a billionaire investor's privilege, when it should be a right for all investors," said Anne Simpson of Calpers, the biggest U.S. public pension fund.  "Many issues raised by small investors have become mainstream good practice," she said.  "If this channel is closed off, investors will have to exercise their votes in other ways."  The letter claims the bill also would reduce limits on inappropriate executive pay practices, constrain shareholder rights in board elections, and inflate the cost of proxy advisers.  It would also hinder the Securities and Exchange Commission's oversight of financial markets by requiring "excessive" cost-benefit analysis, the letter added.

Elliott Management met with BHP Billiton leadership in Barcelona on Wednesday, a day after the New York-based fund ramped up its push for strategic changes including an independent review of BHP's petroleum division.  Elliott spokesman Michael O'Looney said the private meeting with Andrew Mackenzie, the mining giant's CEO, was "constructive," although he declined to elaborate.  It was the first time BHP had met with Elliott since the fund publicized a $46 billion overhaul proposal on April 10.  Elliott owns 4.1% of the miner's London-listed shares.  Ross Barker, managing director of the Australian Foundation Investment Company—a top 10 holder of BHP's Australian shares—said it was good that the company was meeting with Elliott to show it was listening to shareholder concerns.  However, he expressed uncertainty about Elliott's argument that now is the right time for BHP to divest petroleum assets, saying that might only be the best course if there was clearly a buyer willing to pay much more than the value BHP believes it can extract.

Hunter Harrison came to CSX Corp. (CSX) amid much fanfare, but an undisclosed medical condition has forced him to work from home many days and he sometimes uses an oxygen machine to help him breathe. Harrison's health has become an issue with a June 5 vote scheduled for shareholders to sign off on an $84 million payment for the 72-year-old. The total compensates Harrison for money he left behind when he quit his job at a competing railroad to lead CSX back in March. Despite having a four-year contract with CSX, he has threatened to quit if his pay package is rejected. Corporate directors are sometimes tasked with balancing an executive's right to medical privacy against investors' right to information potentially affecting share price.  Board members have decided Harrison's medical condition is not sufficiently material to CSX's performance to disclose.

CtW Investment Group sent a public letter Wednesday asking shareholders of Caterpillar Inc. (CAT) to vote against three board members on the audit committee, arguing they kept a poor watch over Caterpillar's offshore tax strategy and outside auditor PricewaterhouseCoopers LLP (PwC). The machinery giant has faced years of scrutiny over a strategy that shifted much of the profit from its lucrative replacement-parts business to a Swiss subsidiary. The strategy has also led to an employee lawsuit, a U.S. Senate investigation, and a federal criminal investigation. Protest votes against directors without a competing slate of nominees are not usually successful, but they can lead to pressure for change if they attract enough support. CtW said the unions it represents collectively own 0.3% of Caterpillar stock. "Given their long tenure and the audit committee's lack of response, we question these directors' ability to provide adequate oversight of the continuing federal investigation of the offshore tax structure and outside auditors," Dieter Waizenegger, CtW's executive director, wrote in the letter. CtW's letter says the audit committee has failed to address PwC's conflict of interest in the Swiss tax strategy, and also urges shareholders to back its proposed changes to the company's "clawback policy" for recouping executive pay in case of incidents that may damage Caterpillar's reputation. Shareholders are slated to meet June 14.

Investors want Royal Dutch Shell (RDS.A) to explain the finer details of its plan to link executives' bonus pay to lowering carbon emissions. Shell's policy to tie 10% of executives' bonuses to cutting greenhouse gas emissions will be voted on at its May 23 annual general meeting. After examining the small print, some investors want Shell to show how it will calculate the targets for lowering emissions in the new bonus scheme rather than provide the information retrospectively in its annual report. "This is a good move by the company but we would like to see more," said Bruce Duguid, director in the stewardship team at Hermes Investment Management. "We would prefer to see public, pre-set greenhouse gas reduction targets using a methodology appropriate to the type of an emission. It could be an intensity target rather than an absolute emissions number but ideally set over a long period of time that is part of a long-term efficiency and carbon reduction plan." Investors also urged Shell to include 100% of emissions from its operations in its remuneration policy. They note that the calculation does not include emissions from oil and gas production and only factors in polluting gases from refineries, chemical plants, and gas flaring, accounting for about 60% of total emissions. According to a Shell spokeswoman, the company is "working hard on reducing carbon intensity" and plans to disclose emission reduction targets retrospectively at the end of each year, the same as with annual bonuses.

On May 17, Jonathan Litt's Land & Buildings Investment Management LLC filed suit against Taubman Centers Inc. (TCO) in U.S. District Court for the Eastern District of Ann Arbor, challenging the Taubman family's control of the board. The suit is part of an ongoing proxy fight at the mall operator and marks the latest attempt by Land & Buildings to shake up Taubman's board. The investor alleges that the family's ownership of the company's preferred shares, or voting shares, violates the ownership guidelines set in the company's charter and that the company's proxy materials contain materially false and misleading statements about the ownership and voting power of the Taubmans. According to the suit, the family owns 29.3% of voting shares, while the charter restricts ownership to 8.23%. The suit seeks to limit the Taubman family's role in the company, blaming its "poor performance" on the family's dominance of the board. Litt started a proxy battle in April to oust Chairman, CEO, and President Robert Taubman and Myron Ullman III from the board. Both are up for re-election during the June 1 annual shareholder meeting. Litt seeks board seats for himself and Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware.

David L. Richter has stepped down as CEO of Hill International Inc. (HIL), where he worked for 22 years. He has served as CEO of the Philadelphia-based construction consultant since 2014. He left the company to assume the role of chairman and CEO of the new asset management fund Richter Capital LLC. Paul Evans will serve as interim CEO. He joined Hill's board last August as one of three new members nominated by Bulldog Investors LLC, which used its 7% stake in the company to lead a proxy dispute last year. The Richter family holds a 21% stake in the company, which now seeks a permanent CEO. Hill also reported that Chairman Craig L. Martin has become executive chairman with creation of a new Office of the Chairman, which also includes President and COO Raouf S. Ghali and Executive Vice President and general counsel William H. Dengler Jr. Richter, who will receive $3.3 million in severance over two years, said, "We ran the firm keeping clients number one and professionals number two. Now the board has focused on shareholders number one."

On May 17, BHP Billiton Ltd. (BBL) CEO Andrew Mackenzie met with representatives from Elliott Management Corp. at a mining-and-metals conference in Barcelona. The talks occurred a day after Mackenzie told an audience that BHP was confident a strategy of cutting costs and unlocking latent production capacity could increase the value of the company by as much as 50%. Elliott has been pushing for the company to shed at least some of its oil and gas assets and boost shareholder returns. Over the past two days, the New York hedge fund has revised its attack on BHP, giving up on a demand that it abandon its dual U.K.-Australia structure. However, Elliott still considers BHP to be a chronic underperformer and urges it to spin off its U.S. oil business and adopt a consistent plan of buying back shares. The hedge fund indicated on May 16 that there was broad support among investors for a restructuring of BHP's petroleum business and general agreement that there should be a renewed focus on capital returns. BHP said it would review the plans and respond.

UNITE HERE reports that Hospitality Properties Trust (HPT) abruptly changed its decision to begin annual directors elections for its entire board, reverting back to multi-year, staggered terms.  The move is a blow to shareholders who voted for five years in support of annual director elections, then voted for three years to protect this right from a Maryland state law loophole.  Investors have shown overwhelming support for annual director elections at HPT: large majorities of voting shareholders (75-91% of votes cast) backed a CalPERS proposal to declassify HPT's board every year between 2009 and 2013.  HPT's board did not initiate declassification of its board until 2014.  UNITE HERE then submitted a shareholder proposal recommending the board opt out of Maryland's Unsolicited Takeovers Act (MUTA), which allows a board to reclassify without shareholder approval, among other takeover defenses.  HPT shareholders also supported these proposals with large majorities (77%-97% of votes cast) every year between 2014 and 2016.  Shareholders are set to vote on the same proposal in 2017.  UNITE HERE also points out that no incumbent HPT director nominee over the past two years has won the support of a voting majority of shareholders, but all were reappointed.  UNITE HERE urges shareholders to support its proposal to opt out of MUTA, to back its proposal to adopt proxy access, and to vote against all director nominees who just removed shareholders' right to elect directors annually.

Granite Real Estate Investment Trust plans to nominate two new board members amid a push for change by FrontFour Capital Group and Vancouver-based Sandpiper Group.  Canada's largest industrial real estate landlord cast the changes as part of a board renewal process that started in 2016.  Granite is urging its investors to vote against a slate backed by the dissident shareholders.  Granite said it would nominate Remco Daal, president of Canadian real estate at QuadReal Property Group, and Kelly Marshall, managing partner of corporate finance at Brookfield Asset Management Inc. (BAM).   FrontFour and Sandpiper, which together own more than 6% of Granite, plan to propose their own independent directors at the annual general meeting on June 15.

Private-equity firms rarely engage in hostile takeovers and other acts of aggression, but lately they have been taking notes from shareholder activists.  Late Monday, buyout giant TPG turned heads by announcing a 4.3% stake in Etsy Inc. (ETSY) and said it had contacted the struggling company "to offer to engage in discussions regarding strategic alternatives"—language reminiscent of activist investors, which typically purchase small stakes in public companies and push for changes.  Similarly, KKR & Co. approached EMC Corp. in late 2015 and revealed it had bought $250 million of the data-storage company's stock and offered ideas on how to improve the business.  EMC agreed to sell itself to Dell Inc. shortly after.  The year before, private-equity firm Golden Gate Capital acquired a 9.5% stake in Ann Inc. and said it would seek talks with management about ideas to boost the stock.  The following year, Ann was sold to Ascena Retail Group Inc.  Such moves fall short of the full takeovers traditionally associated with private-equity firms, which have shunned hostile bids to avoid estranging corporate executives they would rather have as partners.  But with attractively priced buyouts more elusive, firms are being forced to get more creative–and in some cases more aggressive–in seeking out deals.  TPG and its partner Dragoneer Investment Group's emergence at Etsy followed a management shakeup earlier this month, just hours after Black-and-White Capital LP, which owns about 2% of Etsy, released a letter criticizing the company.

The entire board of Praemium was voted out by shareholders at the company's general meeting on May 12. In a May 15 statement to the ASX, Praemium announced the re-appointment of former CEO Michael Ohanessian under an interim agreement. Ohanessian, who was terminated by Praemium's former board in February, successfully convinced shareholders at the general meeting to remove the company's directors and appoint a new board. Shareholders passed eight resolutions that effectively removed the entire board of directors and elected Barry Lewin, Stuart Robertson, and Daniel Lipshut as new directors, effective immediately. Praemium Chairman Barry Lewin said, "The board has moved quickly to reappoint Mr. Ohanessian under an interim agreement with the objective of re-establishing momentum to Praemium and its strategy. The market will be kept updated on longer term arrangements, but right now the focus is on Praemium's hard-working team and valued client base."

BHP Billiton Ltd. (BBL) CEO Andrew Mackenzie intends to meet with Elliott Management Corp. representatives on Wednesday as the hedge fund continues to push for the sale of the company's U.S. petroleum business, according to sources. The meeting will be the first time that Mackenzie has met with Elliott since the fund went public with a set of demands last month, the sources said. Elliott has criticized BHP for adopting a "do nothing" approach to its three-part proposal. The hedge fund increased the pressure on BHP management on Tuesday, delivering a letter to the board calling for it to conduct an independent review of its oil unit. Elliott has held talks in the past month with shareholders owning tens of billions of dollars of BHP shares and believes there is "extremely broad and deep-rooted shareholder support" for an assessment of the petroleum division, the fund said Tuesday in a statement.

ValueAct Capital Management LP's Jeffrey Ubben is turning over his $16 billion portfolio to the firm's president, Mason Morfit. Ubben has tapped Morfit to serve as ValueAct's chief investment officer, giving him the final say on what and when the fund buys and sells. Ubben will remain CEO. The transition marks a significant rite of passage, because few activist investors have structured their firms to allow a new generation of leaders to take control. Young partners frequently leave large, established firms to start their own funds. However, Ubben, age 55, is stepping back well before many of his peers; for instance, Carl Icahn is 81, and Stephen Schwarzman, founder of Blackstone Group LP, recently turned 70. Ubben indicated in an interview that he did not want ValueAct to suffer the fate of his father's investment firm, which collapsed when its founders left. "This is not something you can do at the end of your term. This is something you have to do well in advance," he said. "When I'm sitting on a talent like Mason, I'm just not going to let him go, and Mason is going to want to evolve." Furthermore, Ubben said he wants activism to mature into an asset class, like private equity, providing long-term value to companies rather than a quick profit for activists.

Etsy's (ETSY) stock surged over 19% on May 16 after two private equity firms disclosed ownership in the online crafts site and urged it to consider strategic alternatives. In separate filings with the Securities and Exchange Commission on May 15, TPG Group Holdings and Dragoneer Investment Group disclosed stakes of 4.3% and 3.7%, respectively. Etsy Chairman Fred Wilson responded by stating that the company's board will "carefully consider all options to enhance shareholder value." Furthermore, Etsy CEO Josh Silverman said, "We are now reviewing our strategic and operational plans to ensure Etsy is focused on the most value-enhancing near- and long-term opportunities. We will prudently invest in areas that will deliver the greatest returns. At the same time, we see significant opportunities to scale our marketplace business model and drive efficiencies. ... We look forward to providing additional details when our review is completed."

On May 16, Elliott Management increased pressure on BHP Billiton (BBL) to enact strategic changes, calling for an independent review of the mining giant's petroleum business. Elliott, which has a 4.1% stake in the company's London-listed arm, said in a letter to management, "There is extremely broad and deep-rooted support for pro-active steps to be taken by management to achieve an optimal value outcome for BHP's petroleum business following a formal open review." Elliott has been pushing for BHP to collapse its dual-listed structure, spin off its U.S. oil and gas assets, and boost returns to shareholders—moves which BHP has rejected. Speaking at a Bank of America Merrill Lynch mining conference in Barcelona, BHP CEO Andrew Mackenzie would not say whether shale oil and gas would stay in the portfolio. "If there is a natural owner out there who believes more upside can be achieved within this shale business than we do, then we will be more than happy to talk to them," he said. However, BHP is divesting non-core parts of its U.S. shale assets. Meanwhile, Elliott backtracked on its proposal for BHP to have its main listing in London, saying it could remain incorporated in Australia and stay an Australian tax resident, retaining full listings on the Australian and London bourses. BHP has said the costs of scrapping its dual-listed structure significantly outweigh the benefits.

Elliott Management Corp. is calling for an independent review of BHP Billiton Ltd.'s petroleum business and proposing that the company retain a main stock listing in Australia.  The revised proposals have shifted slightly since Elliott publicly released its plans for BHP last month, based on input from other shareholders collected over the past few weeks.  The changes appear to address opposition by the Australian government to having BHP trade around a primary listing in London.  In a letter to BHP's directors, Elliott said its talks with investors found wide support for restructuring the petroleum business; consensus on the benefits to unifying the dual-listed structure; and agreement that there should be a renewed focus on capital returns.  However, Elliott said it had been questioned by shareholders on its proposal to unify the dual-stock structure and conceded that there are regulatory issues.  Elliott's plans now call for BHP to remain incorporated in Australia and to retain full Sydney and London listings, as well as Australian headquarters and a full Australian tax residence.  It instead said BHP's management should prioritize finding a fix to the legacy structure, which it said is obsolete and creates a discrepancy between the two shares.  In its letter, Elliott also shifted a push for BHP to spin off its U.S. oil and gas assets, noting there are a number of options that would unlock value.  Its preference would be a full or partial demerger of the business, but it said BHP should first launch an in-depth independent review of the petroleum operations and to report its findings.

Jeff Ubben is stepping down from daily oversight of ValueAct's portfolio and passing on leadership to his long-time partner Mason Morfit.  Ubben will stay CEO but specialize in finding new investments and serving on boards, according to a letter to investors on Monday.  Morfit, who has been a partner since he was 27 and is now president of the firm, will become chief investment officer in July.  Ubben told the Financial Times he handpicked Morfit as his replacement years ago.  "Why is it happening now?  It's because 10 years ago I told Mason, you're going to be the portfolio manager, and when the clock struck midnight, he looked at me and pointed to his watch," Ubben said.  "If you keep a jump ball in place on succession, it's not a very fun environment.  It was better for investment performance because you don't have politics."  As the hedge fund industry ages, many founders are struggling with who will succeed them, a transition that has only been handled smoothly by a handful of funds.  ValueAct, which was founded in 2000, tends to avoid public battles in preference of securing board representation and advocating internally for a turnaround, as it has at current holdings including Microsoft and Rolls-Royce.  Morfit served on his first corporate board for ValueAct at age 29 and is on the board of Microsoft, where ValueAct's pressure led to the removal of Steve Ballmer as CEO.

PointNorth Capital Inc. sent a letter to Liquor Stores N.A. Ltd. shareholders on Tuesday calling for six new independent board members.  It said the proposed nominees are not affiliated with PointNorth in any way and argued that new directors are needed to effect tangible change.  PointNorth also outlined a new strategy that addresses excessive operating costs and spells out specific measures to streamline the company's inventory management practices.  Other aspects of the new strategy include a commitment to reassess the U.S. diversification strategy that management admits is facing growing competitive pressure, and a proposal to better align management pay with the company's financial and stock performance.  The investor notes that since 2010, under the current board's leadership, Liquor Stores' revenues increased by 41% while operating profit has declined.  PointNorth is the largest shareholder in Liquor Stores, with a roughly 10% stake.

The board of Liquor Stores N.A. Ltd. is gearing up for a showdown with PointNorth Capital Inc. in a battle that is expected to determine control of North America's largest publicly traded liquor retailer. A recent letter to shareholders from Edmonton-based Liquor Stores warned that the fund founded by Toronto-based entrepreneur John Bitove plans to launch a proxy battle for control of the company. The public campaign comes after seven months of private negotiations failed to produce an agreement on leadership and strategy at the 252-store chain. The board asked shareholders to support its slate of eight directors at the company's June 20 annual meeting. PointNorth has been successful in past campaigns for changes in leadership and improved financial performance, last year resulting in a board restructuring at Extendicare Inc. When PointNorth disclosed a 10% stake in Liquor Stores last November, the fund said it planned to discuss "operational performance and corporate strategy with the board of directors and management." In a recent regulatory filing, Liquor Stores said it offered two seats on its eight member board to PointNorth nominees "in an effort to avoid a costly and distracting proxy fight." However, in the shareholder letter, the company said, "PointNorth has told us it wants control, but not why change is warranted, or what it would do with that control. Ultimately, PointNorth wants control of your company without offering to pay shareholders a premium."

Brian Duperreault, who became CEO of American International Group Inc. (AIG) on Monday, said he is not planning to break up the company as some investors have called for. "I didn't come here to break the company up. I came here to grow it," he said at AIG's consumer-insurance investor day, adding that the company's multiline structure is beneficial. "Capital will also be deployed to expand and grow our businesses with the goal of building long-term shareholder value." AIG named Duperreault its seventh CEO since 2005 as it struggles with higher-than-expected claims costs. Duperreault, who spent more than two decades at AIG earlier in his career, succeeds Peter Hancock, who announced in March he was leaving due to a lack of support from investors including Carl Icahn. Icahn acquired a stake in AIG in 2015, urging the company to split into three firms: one offering property-casualty coverage, another selling life insurance, and a third guaranteeing mortgages. AIG eventually sold its mortgage-insurance company, United Guaranty Corp. Icahn congratulated AIG in a Twitter post Monday for making some "much-needed" changes. "It is extremely gratifying that the activist strategy continues to create value for all shareholders," he said.

Greenlight Capital Inc. and its affiliates, which own 3.6% of the common stock of General Motors Co. (GM), is mailing a letter today to GM shareholders highlighting the gap between GM's stagnant share price and its intrinsic value. Notably, GM completed its IPO at $33 per share in 2010, and today its shares trade at about $34. Meanwhile, the S&P 500 has more than doubled during that time. Greenlight urges all GM shareholders to vote the green proxy card in favor of its plan to split GM's common stock into two classes of common equity, potentially unlocking billions of dollars in shareholder value, and to support Greenlight's three director nominees, Leo Hindery Jr., Vinit Sethi, and William N. Thorndike Jr.

Johnston Press has responded to shareholder anger by scrapping planned increases to the maximum possible payouts this year to CEO Ashley Highfield and CFO David King.  Under a new three-year remuneration policy, Highfield's bonus will remain capped at 120% of his £430,000 salary; the publisher had planned to boost the top payout to 180%, or £774,000.  Meanwhile, King's maximum bonus will stay at 100%, rather than the proposed 165%.  They did not receive bonuses last year after Johnston Press missed all its performance targets, and the company intended to pay any bonuses this year entirely in cash, arguing that its depressed share price means shareholders would be significantly diluted.  However, investors spoke out against the plan after the company's cash reserves were eroded from more than £40 million to £16 million last year.  Other than in unspecified "exceptional circumstances," it now plans to pay a third of any bonuses awarded to senior executives in shares, deferred for three years. Johnston Press Chairman Camilla Rhodes said the remuneration committee had "engaged with leading shareholders over the last few months" and received "helpful comments and feedback," and she said the amended policy was "fair" and "necessary for retaining the right talent in order to achieve successful outcomes to the challenges facing the business."

Institutional Shareholder Services Inc. (ISS) on Monday advised shareholders of Arconic Inc. (ARNC) to vote for two of Elliott's four board director nominees. The recommendation is a blow to Arconic, the $10 billion specialty metals company that split from aluminum maker Alcoa Corp. last year and has since been fighting Elliott's efforts to overhaul the company's strategy and leadership. Arconic failed to get ISS's recommendation for any one of four director positions being contested by Elliott. Elliott supports Ulrich Schmidt, one of five directors up for election at this year's shareholders meeting. Talks between Elliott and Arconic to avoid a proxy contest failed shortly after the resignation last month of Arconic CEO Klaus Kleinfeld. His exit followed a letter he sent to Elliott founder Paul Singer that was deemed inappropriate. "As the dissident has already achieved its explicitly stated primary goal (of removing Klaus from Arconic), the need to support all four dissident nominees seems less urgent," ISS said in its recommendation. ISS suggested that the two Elliott nominees Arconic shareholders should support are Chris Ayers and Elmer Doty. Many funds follow the recommendation of ISS, making Arconic's ability to defeat Elliott now even more difficult. Proxy advisor Glass Lewis recommended previously that shareholders vote for all of Elliott's board candidates. The shareholder vote on Arconic's board is slated for May 25.

SNC-Lavalin said on May 15 that it will not increase its offer for WS Atkins unless it faces a rival bid for the British engineering and construction firm. SNC-Lavalin, a Canadian construction and engineering group, last month agreed to buy WS Atkins in an all-cash $3.6 billion deal, amounting to 2,080 pence per share. A day after the terms of the deal were announced, Elliott Capital Advisors acquired a 6.8% stake in the British firm. According to SNC-Lavalin, the offer will be raised only if a third party announces a possible or firm offer for WS Atkins.

Carl Icahn reportedly backs Brian Duperreault as the next CEO of American International Group (AIG).  Sources said Icahn has had Duperreault in mind for more than a year and proposed him as a replacement for outgoing CEO Peter Hancock to members of the board.  AIG has had a rough six months as it struggles to match earnings projections, demonstrated by its lackluster fourth-quarter results.  In response to the board's dissatisfaction with the company's performance, Hancock was forced to resign after three years at the helm.  Icahn, who owns a 4% stake in the company, was known to oppose Hancock as CEO.  His support of Duperreault also comes as some analysts say the board brought him in to take an aggressive stance against activist investors.  Duperreault is the expected choice to lead the firm, after several decades working at AIG and a stint as CEO at Marsh & McLennan, where he resolved shareholder frustration with the firm's performance and calls for it to be broken up by slashing costs, strengthening the management team, and acquiring smaller firms to improve growth, among other strategies.  If Duperreault gets the job at AIG, he will face an uphill battle, as the insurer's profit margins have notably underperformed peers since its near-collapse during the financial crisis.

Shareholders of Occidental Petroleum Corp. (OXY) voted Friday to ask that the company study the long-term impacts of climate change on its business.  It was a first at a major U.S. oil and gas company and also marked the first time that BlackRock Inc.—the world's biggest asset manager—voted for a shareholder proposal on climate risk that company management opposed.  BlackRock's support for the resolution suggests that financial management firms are starting to think differently about their energy investments.  Occidental opposed the proposal, which calls for an annual report starting next year that includes environment-related scenario planning.  The company has not yet revealed what percentage of votes the nonbinding climate resolution received but did acknowledge the shareholder support for it.  Occidental is one of numerous U.S. oil and gas producers under growing pressure from shareholders to address climate change and other environmental risks to their businesses.  The Nathan Cummings Foundation, which led the proposal along with Wespath Investment Management, said Friday's vote alerts the oil and gas industry that investors are looking more seriously at climate issues.  "It's hugely significant," remarked Laura S. Campos, director of corporate and political accountability at the foundation.  "It's the first, but it's not going to be the last."  Such proposals initially received little support from shareholders.  A database of shareholder resolutions kept by Ceres, a Boston-based nonprofit group, shows that in 2011 a proposal to add an independent environmental expert to Occidental's board got only 5.3% approval from investors; but one last year asking Occidental to report on carbon asset risk scenarios just barely failed with 49% of the vote.

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RELEVANT ARTICLES

Exclusive: Fidelity May Back Climate Resolutions, a Milestone for Investors
" Reuters (05/26/17) Kerber, Ross"

In a major shift, Fidelity Investments may support shareholder proxy proposals calling on companies to report on sustainability matters this year. According to a new section of Fidelity's proxy voting guidelines, the Boston-based asset manager said it will generally vote as company managers recommend on environmental or social issues, but it "may support shareholder proposals calling for reports on sustainability, renewable energy, and environmental impact issues." The guidelines were put in place in January for this Spring's annual meeting season, and Fidelity spokeswoman Nicole Goodnow said the new policy comes as client interest grows in how companies approach environmental, social, and governance issues. Shareholders recently passed such resolutions at Occidental Petroleum Corp. (OXY) and at PPL Corp. (PPL), and a high-profile test will occur at Exxon's (XOM) May 31 annual meeting. During the last two proxy seasons, Fidelity funds opposed or abstained on every one of 30 shareholder proposals related to climate questions at U.S. companies, according to Proxy Insight. "Fidelity doesn't want to be sidelined from some of the most consequential decisions being made on climate risk," said Ceres director Shanna Cleveland.

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Elliott's Pressure Builds on BHP Over Energy
" Wall Street Journal (05/25/17) Patterson, Scott; Stewart, Robb M."

The months-long battle between BHP Billiton Ltd. (BBL) and Elliott Management Corp. is coming down to a single issue: whether BHP should remain in the oil and gas business.  Elliott recently urged the firm to initiate an independent review of its entire petroleum division, after calling for a broad restructuring of BHP last month that would include a spinoff of its U.S. petroleum business.  It argues that BHP's cash would be best spent on its mining assets.  BHP counters that its knowledge of geology makes it better suited to explore shale drilling than big oil companies, sources said.  BHP head Andrew Mackenzie also insists that the oil and gas operations align with the company's strategy and that the petroleum business is central to BHP's growth plans.  Elliott, which said it owns a 4.1% stake in BHP's London shares, possibly could go directly to BHP investors at the next shareholder meeting in October if management is not responsive, a source said.  However, some investors are growing impatient—including Australian fund manager Tribeca Investment Partners, which recently met with Elliot and earlier this month called for BHP to divest its U.S. onshore oil and gas assets, a move it figures would bring in about $10 billion.

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Companies, Activists Mired in Ongoing Proxy Battles
" Bloomberg BNA (05/25/17) Greene, Michael"

Many activist campaigns are stretching over years, indicating that corporate boards may be hesitating when it comes to quick settlements. Of 205 campaigns launched since the beginning of 2015 tracked by Bloomberg Law, just 69 have concluded. More than half of the campaigns initiated in 2015 alone are still ongoing—57 out of 110. In one long-running fight, hedge fund Third Point LLC suggested on May 24 that Dow Chemical Co. (DOW) and DuPont Co. (DD) create six focused companies after their planned merger. Third Point founder Dan Loeb's campaign at Dow started in 2014. While many companies are still settling with activists, there has been more pushback from boards than in years past, according to Eleazer Klein, a New York-based partner at Schulte Roth & Zabel LLP. "Settlements aren't as automatic or quick as they were," says Klein, who co-chairs his firm's global shareholder activism group. He adds that more companies are looking to litigation or other defensive measures to fend off activists. Meanwhile, many larger activist firms are demanding management and operational changes, which can result in longer engagements with boards, say lawyers who represent companies. Data tracked by Bloomberg Law reveals that Elliott Associates LP, Trian Fund Management LP, and JANA Partners LLC were the top firms from the beginning of 2015 to 2017 in terms of the market cap of the companies they targeted.

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BlackRock, Vanguard Mull Pressuring Exxon to Disclose Climate Risks
" Wall Street Journal (05/25/17) Olson, Bradley; Krouse, Sarah; Kent, Sarah"

BlackRock Inc. and Vanguard Group reportedly are considering pushing Exxon Mobil Corp. (XOM) on climate change at the company's upcoming annual meeting.  The two asset managers may vote in favor of a shareholder proposal that would seek to pressure the oil giant to conduct a climate "stress test" to measure how regulations to reduce greenhouse gases and new energy technologies could impact the value of its oil assets, sources said.  Exxon has asked investors to vote against the resolution.  If the proposal passes at the May 31 annual meeting, experts say it would be the strongest signal yet that investors want greater disclosure of the threats of climate change to businesses.  Passage would also emphasize the growing power of such money managers and their willingness to flex it.  BlackRock backed Exxon at last year's meeting by voting against a similar proposal but was met with backlash from investors and environmental activists.  This year, it said disclosure of climate risks would be among its top engagement priorities with senior management.  About two weeks ago, BlackRock supported a similar proposal at the annual meeting of Occidental Petroleum Corp. (OXY), as did Vanguard, a person familiar with the vote said.  Following the Occidental vote, Exxon ramped up its outreach to big shareholders.

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Companies Engaged by Investors Are Facing More Pressure
" New York Post (05/24/17) English, Carleton"

Companies engaged by activist hedge funds will be going into their shareholder meetings in the coming days with fewer allies than anticipated. On May 24, proxy advisory firm Institutional Shareholder Services (ISS) urged Buffalo Wild Wings' (BWLD) shareholders to vote in favor of two of Mick McGuire of Marcato Capital's four nominees to the restaurant chain's board of directors. McGuire said he was "pleased" with the recommendation, but added that shareholders should still vote for all four of his nominees. Buffalo Wild Wings, for its part, was unhappy with the recommendation, noting that if voters follow ISS, only one board member will have served longer than eight months. Earlier, Jonathan Litt of Land and Buildings got a boost when both ISS and Glass Lewis endorsed Litt's picks to Taubman Centers' (TCO) board. In doing so, Glass Lewis said the mall operator's board had one of the "worst structures" in its experience.

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Lots of Industrial Breakup Talk, Little Action
" Bloomberg (05/24/17) Sutherland, Brooke"

Top executives from the biggest U.S. manufacturers are in Florida for their annual spring confab, and the main message that has emerged after two days of presentations and Q&A is that those running conglomerates must have a good reason for maintaining them. Activist investors have set their sights on U.S. industrial companies, with data from S&P indicating that the number of campaigns in the sector has more than doubled since 2015. Observers attribute the increased interest to the fact that many of these companies are sitting on a kaleidoscope of businesses and are subsequently being punished in their valuations. Honeywell International Inc. (HON) is one of the biggest targets so far, with Third Point LLC calling for a spinoff of its business that makes airplane engines and cockpit systems. CEO Darius Adamczyk called the idea an "intriguing concept" that he will consider as part of a comprehensive review of how the company fits together. However, observers note that his peers at other companies do not appear to be similarly on board with the idea that simpler and smaller can be better. Johnson Controls' (JCI) Alex Molinaroli said about the breakup talk, "We're not deaf, that's for sure."

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CEO Pay Raises Increase in the U.S.
" Associated Press (05/23/17)"

CEO pay raise jumped last year, but vocal shareholders played a role in moderating executive pay at their companies, according to a study by executive data firm Equilar for The Associated Press.  The average CEO at the biggest U.S. companies received an 8.5% raise in 2016, earning $11.5 million in salary, stock, and other compensation.  That is the biggest hike since 2013.  Researchers say the uptick reflects how well stocks have done under these CEOs' watch.  Boards of directors are increasingly pushing CEOs to push up their stock price in order to collect their maximum possible payout; and in 2016, the Standard & Poor's 500 index returned 12%.  But CEO pay did fall for one group of companies last year: those where investors complained the loudest about executive pay.  Indeed, executive compensation decreased for nine of the 10 companies scoring the lowest on "Say on Pay" votes.

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Expect More Shareholder Activism: Credit Suisse
" Australian Financial Review (05/22/17) Shapiro, Jonathan"

Credit Suisse investment banker Chris Young is in Australia to talk to companies and boards about dealing with shareholder activism—a timely visit that comes as Australian miner BHP faces pressure from New York hedge fund Elliott.  Young says he believes it was just a matter of time before the big-name funds launched a campaign against an Australian company.  Given that one of the biggest activist funds, Elliott, is taking on one of Australia's largest companies in BHP, the outcome of that battle could set the stage for others to follow.  Young notes that nearly all U.S. investors own a stock that has risen since the arrival of an activist, so they can cite examples of where they have benefited.  "If that hasn't happened in Australia then it's harder to see it spreading.  Once there is one victory, where all shareholders experience an improvement in returns, then the second and the third can happen," he explains.  To engage with activists, the first step is to make sure current shareholders are on a company's side and not to ignore activists or else they will probably become even louder.  "Defense is about attracting and retaining true-believer shareholders," he says.  "If you have that core group of supportive shareholders—outside investors—that are true believers in the company, that is the strongest defense."

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Ahead of Exxon's Annual Meeting, Climate Activists Gain Ground
" Reuters (05/22/17) Kerber, Ross"

Shareholder activists concerned about climate issues are finding momentum in their move to have big energy companies and utilities take account of the effect rising global temperatures could have on their operations. New York and California state pension funds and Wespath Investment Management of Illinois have notched several wins this month, including a resolution at PPL Corp. (PPL) approved by 57% of votes cast calling for the utility holding company to publicly disclose how it could be impacted by policies and technologies aimed at limiting global warning. There was also a recent vote at Occidental Petroleum Corp. (OXY) on a similar resolution, supported by two-thirds of votes cast. Meanwhile, leading proxy advisers are recommending votes in favor of a similar resolution at Exxon Mobil Corp.'s (XOM) annual meeting on May 31. Activists have long sought the support of big institutional investors such as BlackRock Inc. (BLK), and this year they received it. The asset manager switched sides in the vote at Occidental, noting concerns about the company's pace of disclosures to date.

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Arconic Board Vote to Test Power of Activist Investors
" Wall Street Journal (05/21/17) Benoit, David"

Arconic Inc.'s (ARNC) battle with Elliott Management Corp. comes to a head this week, and the result could radically change the company's trajectory for years to come.  In addition, it could signal how much power shareholders are willing to hand activist investors, who have become increasingly aggressive in pursuing higher returns.  At a shareholder meeting this Thursday, Arconic shareholders will vote to fill five seats on the company's 13-member board.  They will select among candidates offered by the company and by Elliott, which is pushing to overhaul the $12 billion maker of parts for automobiles and airplanes.  Thus far, Elliott has secured approximately 20% of the vote.  Elliott has an 11.6% stake, making it Arconic's biggest shareholder, and has public backing from First Pacific Advisors LLC and Orbis Investment Management Ltd. Meanwhile, Institutional Shareholder Services Inc. (ISS) is backing two of Elliott's nominees, and Glass Lewis & Co. supports all four Elliott nominees.

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Outside Voices: Why Boards Need to Hire More Marketing Experts
" Wall Street Journal (05/19/17) Millard, Wenda Harris"

MediaLink's Wenda Harris Millard argues more Chief Marketing Officers are needed as board directors. Such leadership positions at Fortune 500 and many other companies remain largely homogeneous, even though the benefits of diversity have long been proven. "As digital disruption reshapes the consumer landscape, I believe marketing is an under-utilized pool of potential director candidates well equipped to master 21st century business challenges," Millard writes. "The marketing profession has produced executives who have spent the past two decades mastering new technologies and have their fingers on the pulse of their customers and competitors." Although boards admit they struggle with marketing challenges, less than 1% of the 9,800 Fortune 1000 board positions are held by marketing leaders. The need for marketing representation on boards increasingly matters as consumer demographics are changing and the spending power of women and ethnic minorities continues to rise. Businesses that fail to meet the challenges of changing demographics will find themselves struggling, Millard writes. In addition, the proliferation of technology has resulted in major upheaval for companies, with a constant stream of data. "That means contemporary companies need to decipher increasingly nuanced signals to build closer connections to the people who buy their goods and services," Millard says. Because marketers have experience mastering these trends and the explosion of data, they are "uniquely positioned to serve on a board to help companies thrive in the midst of chaos."

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Spinoffs Deliver Less Bang: Citi Analysis
" Wall Street Journal (05/18/17) Monga, Vipal"

Despite pressure from activist investors, it is becoming more difficult for companies to extract value by spinning off units, according to data from Citi's (C) investment banking group.  Between 2011 and 2015, spinoffs underperformed their industry sectors by an average of 5%, down from an average over-performance of 30% between 2001 and 2005.  The decline can be attributed to companies being less diverse, says Ajay Khorana, global head of Citi's corporate finance advisory group.  Businesses spun off from diverse conglomerates tend to do better, because they get the attention they lacked while wedged inside a larger company, Khorana argues.  However, inefficiencies are less likely in more homogeneous companies.  Still, spinoffs continue to be popular.  In 2016, companies finalized $121.5 billion of spinoffs globally, according to Dealogic.  And this year through May 17, companies have announced $34.9 billion in spinoffs, up 27% from the same time last year.  Activist investors are calling for much of the spinoff activity; but they may have to wait longer to see results because companies are more carefully scrutinizing the arguments in favor of spinoffs, thereby delaying the process.  The average time from announcement to completion has risen by almost a third, to an average 185 days between 2011 and 2015.

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Elliott Is Half Way to Success by Forcing BHP on the Defensive
" Reuters (05/18/17) Russell, Clyde"

Elliott Management is likely nearing its goal of extracting better returns from BHP, writes Clyde Russell in an opinion piece.  What matters, he suggests, is not the details of how it thinks BHP should ditch its petroleum business and consolidate its dual-listed structure but the fact that Elliott has managed to put pressure on BHP's management and board to improve shareholder value since it went public with its proposals on April 10.  It was always likely that BHP's leaders would reject Elliott's plan, Russell writes, but "BHP has been forced into the somewhat uncomfortable position of having to explain its plans and set forth a vision of how the company will lift its returns to its owners."  CEO Andrew Mackenzie's comments to an audience of bankers and investors in Barcelona this week might have sounded a bit defensive, Russell notes.  BHP is doing well at the moment.  The sustained efforts to slash costs at its major iron ore and coal operations have paid dividends, making BHP a more streamlined operator.  And it is generating strong cash flows of about $30 from each tonne of iron ore—a sum that could mean billions of dollars considering the company aims to produce as much as 272 million tonnes this financial year.  "It's this sort of cash that Elliott is likely after, either through share buybacks or increased dividends, both of which may also serve to boost the share price," Russell writes.  He adds that there is certainly a case for a mining company such as BHP to be more generous to shareholders, especially since the benefits of the boom in commodity prices following the 2008 global recession were mostly spent on expanding production rather than paying investors.

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Elliott Brings a 'Prosecutorial' Approach to Activist Investing
" Financial Times (05/17/17) Fortado, Lindsay"

Elliott Management is unique among activist hedge funds both for its willingness to engage in protracted battles and for the broad legal resources it uses to win them.  But the hedge fund's aggressive legal tactics and combative public language in fact mask a careful strategizing that reflects founder Paul Singer's early career as a lawyer.  One peer has dubbed it a "prosecutorial" approach, while Singer himself has likened it to "using every tool in the tool chest."  Another distinguishing trait of Elliott is the shareholder enthusiasm to pay it the full rate, at a time when other big-name activists stumble and the sector faces criticism for flocking into the same trades.  When Elliott briefly opened its main fund to new capital earlier in May, it raised $5 billion in 24 hours.  This loyalty that can be explained by the consistency of the returns.  In an interview, Elliott co-CEO Jon Pollock resisted the accusation of short-termism that is sometimes leveled at activists.  Elliott will often be invested in a trade for five years, and it never seeks unnecessary public battles, according to him.  "We have no interest in having our interactions with a company become public just for the sake of it," Pollock said. "It usually becomes public after a series of conversations."  Even so, Elliott has been criticized by some companies for engaging in "vulture" capital and corporate "bullying."

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The Downside of Independent Boards
" Wall Street Journal (05/16/17) Combs, Jim; Ketchen, Dave"

Jim Combs and Dave Ketchen argue that the downside of corporate boards is that they are too independent. "According to our research," they wrote, a board that's too independent "can lead to lower profits, excessive CEO pay, and more financial fraud." Today, the CEO is the lone board insider at over 50% of S&P 1500 firms.  Combs and Ketchen state, "Removing all insiders except the CEO takes independence to an extreme that wasn't dictated by exchange rules or by good corporate governance." Having additional inside directors provides two important benefits. One, inside directors are immersed in a company's day-to-day operations and directly observe the CEO. Two, inside executives on the board reduce the risks associated with CEO turnover. Combs is the Dr. Phillips Chair in American free enterprise at the University of Central Florida, while Ketchen is a Lowder eminent scholar at Auburn University.

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Asian Firms Failing to Get Women on Boards
" IR Magazine (05/16/17)"

Women make up just 12.4% of board seats across Asia's largest firms, according to research from Corporate Women Directors International (CWDI).  The study indicates that Asia-Pacific lags behind Europe—where women hold 30% of board seats at the top 500 companies—and North America, where just over 20% of board members at the 500 largest public companies are female.  "While there is global momentum—largely driven by Europe—to increase the presence of women board directors globally, Asia-Pacific companies are being left behind in moving women into corporate leadership roles," says Irene Natividad, CWDI chair.  "The irony is that this region has a wealth of highly educated women, many with strong business experience, who were equal contributors to the region's explosive economic growth."  The paper also notes that of the 20 Asian countries in the survey, only eight have existing strategies to boost the number of female directors.  The report was released at the 2017 Global Summit of Women in Tokyo on Friday, where Japanese Prime Minister Shinzo Abe was recognized for his effort to shift more women into leadership roles to boost the country's economy.

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Activist Investors Have a New Bloodlust: CEOs
" Wall Street Journal (05/16/17) Benoit, David"

Activist investors are increasingly engaging CEOs at the beginning of campaigns, no longer satisfied with board seats and buybacks. So far in 2017, activists have launched nine campaigns targeting top management, the fastest pace on record, according to FactSet. The shift has been years in the making. After the financial crisis, activists regularly won board seats and successfully pushed for moves that can produce quick returns; but many activists and analysts now question whether the easy pickings are gone. The answer for some is to seek changes in operations, which can be more of an effort and require new management. "The activists are finding that just settling for board seats is not all that productive," said Peter Michelsen, president of CamberView Partners LLC, which advises some of the largest U.S. companies on how to deal with activists. "They are having to get more involved, including pushing for changes in management and operations." Since January, activist investors have helped oust the heads of three high-profile S&P 500 companies: insurance giant American International Group Inc. (AIG), railroad CSX Corp. (CSX), and aerospace-parts maker Arconic Inc. (ARNC). They are aiming at the CEOs at other companies including Buffalo Wild Wings Inc. (BWLD) and Avon Products Inc. (AVP). "CEOs do not hold the job by right," Elliott Management Corp. wrote earlier this year in a letter to Arconic, where it was seeking the ouster of CEO Klaus Kleinfeld. "The Board must continually evaluate who should be running the company."

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Survey: Women Frustrated but Not Deterred by Challenges of Securing Seats on Corporate Boards
" Business Record (05/15/17)"

Women in the Boardroom (WIB) has released the results of a study showing that 70% of females surveyed consider board service a top career priority and 62% feel confident they will get a board seat and are prepared to serve. In addition, 86% of respondents feel that many women qualified for directorships do not realize that board service is an option. Just 34% of respondents said that women advocate for other women to find corporate board seats. Networking is generally regarded as the key to a boardroom seat. However, 90% of females believe male networks still dominate corporate board searches, while 60% concur that male networks function more effectively than female networks. For the results, WIB polled over 500 women who identified themselves as interested in board service or who are already serving as corporate directors.

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Institutional Investors Fill Activism Gap in Europe
" Pensions & Investments (05/15/17) Baker, Sophie"

Activism for long-term change is on the rise among institutional investors in the United Kingdom and continental Europe, with corporate governance and other concerns becoming higher priorities on their agendas. "We have seen some of the major groups taking more action in (the long-term activism) space, and it's the major groups that have the power and ability to do things—they could be large asset owners or asset managers," said Stephen Miles, global head of equities at Willis Towers Watson PLC. "These universal owners control a large number of assets in the system, and there is a greater recognition among those groups that it is worth investing that time and energy to be an active owner and to engage with corporates. They are upping their game." Specifically, he has seen money managers "hiring and beefing up internal corporate governance teams, in response to the recognition that this is important to asset owners." Institutional investors are entering the breach left open by hedge funds, which have taken on fewer campaigns since the financial crisis. Nelson Seraci, associate director of special situations research at Institutional Shareholder Services, noted that "traditional investors have taken responsibility for engagement with companies, not needing in many cases an activist hedge fund to be the catalyst for change." At least three U.K. companies since the beginning of the year have been forced to withdraw new remuneration policies before an annual general meeting as a result of shareholder opposition, and at least five U.K. issuers have received more than 40% of votes against their remuneration proposals, according to Reza Eftekhari, U.K. director at global consulting firm Morrow Sodali.

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New Rules, Regulations Pave Path for Further European Shareholder Activism
" Pensions & Investments (05/15/17) Baker, Sophie"

Shareholder activism in Europe has taken on greater urgency due to heightened awareness of the impact of climate change on companies and the European Union's formal adoption last month of the Shareholder Rights Directive, which encourages long-term stockholder engagement.  "Investors and regulators have taken the view that more oversight of companies on the part of investors can help to mitigate financial, environmental, and societal risks," says Stuart Dalheim, vice president, shareholder advocacy manager for Calvert Investments in Bethesda, Md.  "The regulatory system is evolving in the EU to encourage investor engagement."  A record date mechanism, which identifies shareholders eligible to vote, "has facilitated the participation of foreign institutional investors" at annual general meetings, notes Joseph Oughourlian, CEO of hedge fund Amber Capital LP.  The move, he adds, has also increased the pressure and "moral suasion of EU and local authorities on institutional investors to duly exercise their fiduciary duties—and therefore attend and vote their shares at the shareholders meeting."

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Akzo's Rebuff of PPG Pushes Bid Battle Into Uncharted Territory
" Reuters (05/12/17) Sterling, Toby"

As PPG Industries (PPG) considers whether to keep engaging Dutch peer Akzo Nobel after being rejected three times, lawyers and M&A advisors say an outright hostile takeover remains unlikely, but point to other potential outcomes. While PPG is still seeking a takeover deal with support from a large proportion of Akzo's own shareholders, Akzo's boards are determined to remain independent and plan to issue extra dividends and sell a chemicals division to keep investors happy and suitors at bay. Important upcoming moments include: On May 22, Amsterdam's Enterprise Chamber, the Netherlands' top business court, will hear a petition by Elliott Advisors calling for the court to appoint an investigator to examine possible mismanagement by the Akzo boards. Elliott will also request permission to call an extraordinary meeting (EGM) of shareholders to vote on removing Akzo Chairman Antony Burgmans. The court is likely to act quickly and make its decision before the end of the month. In addition, PPG must file papers detailing its intent to bid for Akzo to the Dutch Financial Markets Authority (AFM) by June 1, or agree to walk away for at least six months. If the court rejects Elliott's request before June 1, that would improve the case of Akzo's management and supervisory boards, and PPG may decide walking away without filing is the best course of action. But if the court has not ruled by June 1 or rules in Elliott's favor, PPG may file with conditions for its offer, including a 95% threshold of shareholder approval. Meanwhile, a hostile bid is still possible. Hostile takeovers of Dutch companies by foreign buyers are very rare, but in this case shareholder support for PPG's approach is unusually strong. Eight of Akzo's top 20 investors have come out in favor of talks, and none has publicly opposed them. In all, 93% of Akzo's shareholders are foreign.

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Whole Foods Faces Specter of Long Investor Fight
" Wall Street Journal (05/12/17) Haddon, Heather; Benoit, David"

Whole Foods Market Inc. (WFM) may square off in coming months with investors who remain unconvinced that a board overhaul will create the change they seek.  The company, struggling under a record sales slump and decline in its stock, said a slate of new board members with significant experience in retail or finance will be installed next Wednesday.  Jana Partners, Whole Foods' second-largest shareholder, and mutual-fund giant Neuberger, which owns 2.7% of its stock, are eyeing the changes cautiously.  The investors have been urging the company to consider a sale and add directors with experience in retail operations, technology, finance, and real estate.  One of Whole Foods' incoming board members, Panera CEO Ron Shaich, has recent experience with shareholders who protested the company's technology investments.  When an activist came along, Shaich quickly agreed to slash costs and take on debt to buy back more shares but did not back down from his tech upgrades.  The company and investors agree that his quick action helped to avoid a proxy fight.  Another incoming director is Joe Mansueto, the billionaire founder of Morningstar Inc., who is expected to bring acquisition expertise to the board.  However, some shareholders want to know why no grocery experience is being added, sources said.  Jana raised the possibility of seeking a shareholder vote on more board changes as early as this summer.  Investors will be looking for the company's performance to improve, said Jefferies analyst Chris Mandeville.  "If they don't make progress in the coming quarters, investors will grow concerned and they could shift their interests to Jana," Mandeville said.  Whole Foods officials said its talks with Jana are ongoing and that it anticipates its sales to turn positive next year.

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