Media Center

5/2/2042

ISS Says Unions and Pension Funds Should Back Ancora

CNBC (05/02/42) Goswami, Rohan

Norfolk Southern (NSC)-invested unions and pension funds should back Ancora’s full seven-director slate at the railroad’s shareholder meeting later this month, two different Institutional Shareholder Services proxy advisory services said. ISS’ Taft-Hartley Advisory Services and Social Advisory Services, which focus their recommendations on regulated unions and socially responsible investors, respectively said in their reports, that an Ancora majority would help address “negligence” by the current board and address its “serious concerns with accountability.” “The proxy contest is centered on a debate over which management team is best suited” to lead the company forward,” both reports said. “It is therefore important to provide the dissident with a voice that is loud enough to have its case for management change appropriately considered.” The recommendations also voiced their support for Ancora’s CEO pick Jim Barber as a “credible” director and chief executive, undercutting criticisms that his lack of railway experience was a liability. The former UPS executive appears “to be a capable candidate with experience and skills that should be transferable to the railroad industry,” the reports said. ISS’ main advisory arm and Glass Lewis, the two proxy giants, had already said that shareholders should support most of Ancora’s nominees at Norfolk Southern’s May 9 meeting. Glass Lewis endorsed six of Ancora’s director picks, including Barber. ISS earlier endorsed five of Ancora’s nominees, withholding support for Ancora’s proposed CEO Barber, but noting that he would likely be a capable executive as well. Thursday’s news “represents an important message to union retirement plans and firms prioritizing both socially responsible investments and enhanced value,” a statement from Ancora said. The statement added that Ancora’s three-year precision-scheduled railroading strategy “differs greatly from Norfolk Southern’s resilience railroading model and has worked well at the other four publicly traded Class I railroads." ISS’ two more tailored recommendations carry particular weight in light of the derailment in Ohio, which caused more than 100,000 gallons of toxic chemicals to be released into the environment. The recommendations also carry heft because of the outsize influence that unions have in the railroad industry. Union support has been divided between management and Ancora. Two different Teamsters unions are backing Ancora, around 42% of NSC’s unionized workforce. Another coalition of unions is backing management.

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5/7/2024

In a Surprise, Disney+ Becomes Profitable

New York Times (05/07/24) Barnes, Brooks

When Disney (DIS) reported robust earnings in February, the activist investors then engaging with the company essentially called it a stunt to fend them off and not, as CEO Robert Iger maintained, proof that a struggling Disney had finally “turned the corner.” Disney just blew past Wall Street’s expectations for a second consecutive quarter on Tuesday, in part because its flagship streaming service made money — a first. Disney+ had been expected to lose more than $100 million in the most recent quarter, widening losses since its 2019 arrival to roughly $12 billion. Instead, it swung to a $47 million profit. Disney’s per-share earnings for the most recent quarter rose 30% increase from a year ago. Revenue inched up 1%, to $22.1 billion. In the quarter, Disney+ added 6.3 million subscriptions worldwide (excluding India), bringing its total to 117.6 million. Average revenue per paid subscriber climbed 6%, to $7.28. Disney’s last reported earnings in February, pairing strong results with a blizzard of announcements about future entertainment offerings. At the time, multiple activist investors, including Nelson Peltz, were running proxy campaigns for board seats. While the activists had sharply different views on how Disney should be managed — one wanted “Netflix-like margins” of up to 20% in streaming, another floated splitting up the company — they expressed the same basic motivation: Disney’s stock price was not high enough. Disney shares have been trading at about $117, up from $85 six months ago. But the stock was priced at about $197 three years ago. Iger ultimately defeated them. But Peltz told CNBC that he would “watch and wait” to see if Disney delivers on growth and succession promises. If it doesn’t, he said: “You’ll see me again.”

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5/7/2024

Bloomin' Brands CEO Dave Deno Is Retiring

Restaurant Business (05/07/24) Guszkowski, Joe

Bloomin' Brands (BLMN) CEO Dave Deno is retiring after 12 years with the Outback Steakhouse parent, the company announced Tuesday. He'll remain in the position while Bloomin's board of directors searches for his replacement. Since 2018, Outback's U.S. sales have risen 8.4%, according to Technomic data. But growth has slowed more recently. In the first quarter of this year, same-store sales fell 1.2% at Outback, Bloomin' reported Tuesday, and 1.6% across the company's four brands. Bloomin' is facing pressure from Starboard Value to make changes at its restaurants. “David has strengthened the financial foundation at Bloomin’ Brands through better profitability and a stronger balance sheet, which is especially impressive given nearly half of his CEO tenure was during COVID,” said Bloomin' Chair Michael Mohan in a statement. “He is also credited with optimizing our international presence, especially in Brazil.” Mohan added that conversations about the transition began last year "as a normal course of succession planning."

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5/7/2024

Kimmeridge Calls SilverBow ‘Worst-in-Class’ as Proxy Fight Heats

Bloomberg (05/07/24) Elkin, Elizabeth

Kimmeridge Energy Management Co. said shale driller SilverBow Resources Inc.’s (SBOW) board prioritizes itself over investors as the proxy battle comes to a head. “The Board’s worst-in-class corporate governance that prioritizes itself and management over shareholder returns appears to have permeated throughout the entire organization in a cyclical, self-serving manner,” Kimmeridge wrote in a presentation Tuesday. This is the latest in an increasingly bitter tit-for-tat dispute in advance of a shareholder vote later this month on the makeup of the board. Kimmeridge put forward three candidates after a failed attempt at combining its Texas natural gas assets with SilverBow in March. SilverBow said in a letter to shareholders on Monday that Kimmeridge’s nominees are “self-interested and conflicted, with close ties to or history with Kimmeridge, and lack the blue-chip industry experience of SilverBow’s nominees.” The driller’s first-quarter results provided “strong evidence to support its case that it does not need major board changes,” Tim Rezvan and Jonathan Mardini of KeyBanc Capital Markets wrote in a report on May 1.

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5/7/2024

Kimmeridge Releases Presentation on SilverBow's Unabashed Worst-in-Class Governance

PRNewswire (05/07/24)

Kimmeridge, the largest shareholder of SilverBow Resources (SBOW), holding 12.9% of outstanding shares, today released an investor presentation detailing SilverBow's consistent track record of worst-in-class governance. The presentation highlights a Board of Directors that: Prioritizes itself and management over shareholder returns, with a mindset that has permeated throughout the entire organization: resulting in worst-in-class governance, misaligned incentives, compensation that pays despite performance, and value-destructive M&A. The Board has also built a fortress of entrenchment to avoid shareholder accountability: a classified Board, a never-ending poison pill, no ability to call a special meeting, deliberately defensive refreshment of the Board, dual CFO/GC role (the only such instance among 2,272 listed companies on the NYSE), super-majority, and plurality vote standards. The Board also does not have successful transaction expertise. Indeed, while the Board touts its incumbent directors' deep M&A experience, it fails to inform shareholders that nearly $100 billion of transaction value was executed prior to those companies filing for bankruptcy. The quality of transaction experience matters. In contrast to SilverBow's incumbent directors, Kimmeridge's nominees are E&P industry leaders who have the necessary skills — including transaction expertise, track records of effective capital allocation and M&A, and a proven commitment to best-in-class corporate governance — to address the long-standing historical challenges that have constrained SilverBow's performance. These nominees will undertake a fresh, deeply thoughtful, and independent assessment of SilverBow's strategy and governance — to ensure a sustainable future for the Company and drive value for all shareholders. Kimmeridge urges all SilverBow shareholders to vote "FOR" all of Kimmeridge's nominees — Carrie Fox, Douglas Brooks, and Katherine Minyard — and "WITHHOLD" on all of SilverBow's directors up for election — Gabriel Ellisor, Kathleen McAllister, and Charles Wampler — on the GOLD proxy card.

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5/6/2024

Xperi Director Who Served with Dissident Nominee Tom Lacey Encourages Stockholders to Vote for All of the Board’s Candidates at the 2024 Annual Meeting

Business Wire (05/06/24)

The entertainment technology company Xperi Inc. (XPER) on Monday publicized a letter written by one of its directors who is not being engaged by stockholder Rubric Capital, Christopher Seams. Seams served on the board of one of Xperi’s predecessors while one of Rubric’s nominees, Thomas Lacey, was CEO of that predecessor company. In the letter, Seams expresses his support for the directors who have been challenged, highlights their contributions to Xperi’s multi-year transformation, and contrasts their expertise in software development, technology, audio-visual technologies and content monetization with Rubric’s nominees’ alleged lack of experience in these critical areas. "At our upcoming annual meeting, one of Xperi’s shareholders, Rubric Capital Master Fund LP is opposing the re-election of two of my fellow directors, Darcy Antonellis and David Habiger, and has nominated in their stead two people unfamiliar with our current business and who are longstanding friends," said Seams. "I think Rubric is wrong to oppose the re-election of Darcy and Dave. The election of Rubric’s substitute candidates (one of whom, Tom Lacey, I know reasonably well) would be a mistake." He notes that "we have focused Xperi now around four key business areas, all with entertainment and “experiences” at their core. We initiated a formal process to evaluate strategic alternatives for our remaining non-core business, our edge artificial intelligence business, to ensure we remain tightly focused on our main businesses. Importantly, we have worked for years to put ourselves in the position where we focus exclusively on what we do best, providing leading software and technology that enable immersive experiences. We believe we are turning the corner on our transformation. Our Board is comprised of people, including Darcy and Dave, who can help. Darcy is an award-winning technologist with expertise (and several patents) in digital media and monetization of media content. She was the Chief Technology Officer for Warner Bros. Entertainment and the CEO of Vubiquity, where she focused on digital delivery and monetization of media content. Dave has served as CEO of several public technology companies and on the boards of more than a dozen public and private technology leaders, including in the entertainment technology and automotive technology subsectors. He is the Chair of our Board and also the Chair of Reddit’s Board. He has served on the compensation committees of nine public companies. Tom and his fellow nominee and longstanding colleague, Deborah Conrad, are no substitute for these two. Tom’s expertise is primarily in semiconductors and IP licensing; Deborah’s expertise is in brand marketing and public relations. ... Our task at Xperi is to focus on our existing technologies in highly competitive markets and execute. Darcy and Dave, both of whom ran media-related businesses and understand the landscape and technologies, are best suited to provide effective guidance and oversight." Seams concludes by "strongly encouraging (shareholders) to vote for Darcy Antonellis, David Habiger, and all of Xperi’s director nominees using the instructions on the BLUE proxy card."

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5/6/2024

BP Shareholders Expect It to Scale Back Climate Target

Financial Times (05/06/24) Agnew, Harriet; Wilson, Tom; Moore, Malcolm

Shareholders in BP Plc (BP) are preparing for the company to scale back its climate targets further after a shift in tone from the oil major’s new chief executive. BP is alone among its peers in committing to cut oil and gas production, setting a target in 2023 of producing 2 million barrels of oil equivalent by the end of the decade, a 25% reduction from 2019 levels. The target has already been pared back once, from a 40% cut announced in 2020, but the company’s shareholders believe that Murray Auchincloss, who took over from Bernard Looney as chief executive in January, is prepared to be more flexible as demand for oil and gas continues to grow. Meanwhile Bluebell Capital Partners wrote to BP’s board last month, alleging that its management had suggested to “multiple shareholders” that it might pump more oil and gas than planned. “If, as we understand correctly from our conversations with fellow shareholders, BP’s management is hinting to shareholders during meetings that they might increase their oil and gas production above the 2mn barrels of oil equivalent a day targeted by 2030, then this should be reflected in BP’s official communication and targets,” Bluebell wrote in a March letter. The letter did not identify which shareholders BP had allegedly briefed. BP disputed Bluebell’s account, saying it had “engaged extensively” with its shareholders and received “clear and widespread support” for its strategy. “Based on these engagements, we neither recognize Bluebell’s assertions nor have we heard support for their proposals,” it said. Last year, Bluebell called on BP to increase its production target to 2.5mn b/d of oil equivalent by 2030, arguing that it was destroying shareholder value by moving away from hydrocarbons faster than society. The top-10 investor said that while so far the market has not rewarded BP for its energy transition strategy, ultimately BP’s approach would lead to better financial results and be reflected in its share price.

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5/6/2024

Blackwell Engages with Ashford Hospitality CEO Monty Bennett

The Real Deal (05/06/24) Lovinger, Joe

Blackwells Capital is waging a proxy battle to oust Monty Bennett from the boards of two of his real estate firms. Blackwells alleges that shares of Ashford Hospitality Trust (AHT) and Braemar Hotels and Resorts (BHR) are performing poorly as a result of a “self-dealing external advisory agreement that makes Montgomery Bennett rich at the expense of stockholders.” Blackwells is asking shareholders of both Ashford Hospitality Trust and Braemar not to re-elect Bennett and the rest of the board later this month. The relationship between Ashford, Braemar, and Bennett is convoluted but central to Blackwells’ complaint. Braemar is a publicly traded investor in luxury hotels and resorts. As part of an agreement with Ashford Hospitality Advisors, Ashford advises Braemar for an annual fee. Last year, Braemar paid Ashford $48.9 million for its services, according to the trust’s most recent annual filing. Bennett is the chairman of both companies’ boards, and the CEO and Chairman of Ashford Inc, which advises both. Blackwells holds a little over 10,000 shares of Braemar and 1,000 shares of Ashford Hospitality Trust, less than $30,000 in present value. But Blackwells argues that Ashford’s fees to Braemar have risen 575% since 2013, while its share price has fallen by about 91%. Ashford recently delisted its stock, sold off several properties to pay down debts, and faced foreclosure at others. But the firm has its own side of the story, as it laid out in a lawsuit against Blackwells. Bennett’s firm argues that Blackwells violated company bylaws by failing to disclose that it had tried to buy Braemar before launching the campaign and offering its own nominees for the board. In March, it filed a lawsuit seeking to block Blackwells’ slate of board nominees and prevent the company from nominating any others. The conflict began in October, when Blackwells wrote a letter to Braemar alleging breaches of fiduciary duty. At the time, Blackwells owned 100 shares in Braemar. The board established a review committee of two independent directors, according to the suit, but the committee recommended not taking action. The next month, an article ran on Bennett’s news site, the Dallas Express, titled “Vinson & Elkins Helps New York Activist Investor Invade Texas.” The article attacks Blackwell’s takeover bid and Vinson & Elkins, the law firm hired by Blackwells. “[Blackwells’ founder Jason] Aintabi operates with family money almost exclusively. He hopes that by harassing other firms he can prove that he’s worthy of managing his parents’ money,” Bennett says in the article. “The risky move by V&E to represent Blackwells Capital in its activist strategy could raise serious questions from its Texas client base as to whether the firm, which posted revenue of nearly $1 billion in 2022, remains committed to the Texas corporate community that has sustained it since its founding in Houston in 1917.” Aintabi later sued Bennett over his use of the outlet, saying he used it to influence shareholders.

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5/6/2024

Nilesh Undavia Calls Out GrafTech Board for Continuing to Distort the Record and Mislead Shareholders

Globe Newswire (05/06/24)

Nilesh Undavia, one of the largest shareholders of GrafTech International Ltd. (EAF), on Monday issued an open letter to shareholders of the company in connection with the election of directors for the company’s board of directors to be held on May 9. The letter states that "For several months, I attempted to engage with GrafTech, seeking to add shareholder representation to a Board that has displayed an unwillingness to acknowledge egregious management mistakes or present a credible plan to turn around the Company.... The Board's abysmal track record of shareholder value destruction should seriously impugn its credibility and qualifications." Undavia asserts "the Board cannot be trusted because: It was not forthcoming about the true cause of the shutdown at Monterrey, a concern also echoed by Glass Lewis; It has not been forthcoming about market share losses since 2021 and it has failed to create a credible strategy to turnaround the business; and It is misrepresenting qualifications of incumbent nominees." He also says the Company is misrepresenting his engagement with it, as well as misleading investors about a credible strategy to help turnaround the business. "I believe that GrafTech's fortunes will only turn when the Company is able to regain market share. Over the last six months the Company's guidance of volumes in 2024 has not changed. As volumes and market share are not improving, it appears that the new CEO (who has been in the role for six-months as the interim-CEO) and the Board are unable or unwilling to improve performance. GrafTech's failure to send a single representative to the all-important American Iron and Steel Institute conference on electric arc furnace steel-making in February is incomprehensible and alarming." Undavia concludes by calling on shareholders "to vote the BLUE universal proxy card TODAY to elect me, Nilesh Undavia, to the Board."

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