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Featuring all breaking news and in depth articles and editorial press coverage pertaining to shareholder activism and corporate governance.

Q&A: Director and Shareholder Disagreements
New York Pension Fund Urges Votes Against Twitter and Meta Directors Over Shootings
Asset Value Investors Submits Shareholder Proposals to NS Solutions, a Subsidiary of Nippon Steel
Chairman Faces Off With CEO in Aerojet Court Fight
ESG Factors Increasingly Put Into Hedge Funds
Prominent Investor Demands Urgent Action on Climate Change
Toshiba to Nominate Elliott, Farallon Executives to Its Board
Kohl's Main Bidders Said to Be on Sidelines Due to Financing Concerns—Report (Update)
Taylor Wimpey Puts Former Mace Exec on Board
Vodafone Shareholder e& Will Consider Joint Investments
Under Pressure Vodafone Chief Given 'Breathing Space’ by New Investor
Kohl's Investor Rips 'Alarming' Behavior by Company
Both Leading Proxy Advisory Firms – ISS and Glass Lewis – Recommend American Vanguard Stockholders Vote For All Three of Cruiser Capital's Nominees
Zymeworks' Board of Directors Unanimously Rejects Unsolicited, Non-Binding Proposal
Leading Independent Proxy Advisory Firm Glass Lewis Recommends that MIMEDX Shareholders Vote 'FOR ALL' of the Company's Proposals
ICR's 'Taking Stock of Communications' Survey: Majority of Professional Investors Say Non-Financial Factors Play a Critical Role in Company Valuation
Kohl’s Sales Process Is a 'Disaster': Sources
Glass Lewis Recommends American Vanguard Stockholders Vote FOR All Three of Cruiser Capital’s Nominees on the BLUE Proxy Card
Shareholders Approve the Election of All Three Athira Director Nominees at 2022 Annual Meeting
BlackRock, JPMorgan, Others Tell Texas They Don't Boycott Energy Companies
Investors Expect Senior Management Pay to Be Linked to ESG
How Elon Musk and Jack Dorsey Aligned Behind Twitter Deal
Musk Lashes Out at ESG as the Brand Starts to Lose Its Luster
Even Among Corporate Raiders, Elon Musk Is a Pirate
Corporate Boards Rebuff Conservative Shareholder Activism
Should Mayonnaise, Shampoo, and Ice Cream Have a Mission?
America’s Political Right Has a New Enemy No. 1: ESG Investors

5/23/2022

New York Pension Fund Urges Votes Against Twitter and Meta Directors Over Shootings

Reuters (05/23/22) Kerber, Ross

New York State Comptroller Thomas DiNapoli is calling for votes against directors at Twitter (TWTR) and Meta (FB) at their May 25 annual meetings, accusing both companies of failing to enforce their standards against harmful content including from the May 14 mass shooting in Buffalo, N.Y. DiNapoli, who oversees New York's pension fund, sent letters to each company's boards, claiming that they did not delete video clips and screenshots of the shooter's livestream, and his alleged racist manifesto, from their platforms. He wrote that such lapses help radicalize individuals and lead to calls for further social media crackdowns. DiNapoli told both boards that until they can demonstrate an "ability to successfully oversee the company's content management policies, the Fund will continue voting against directors," and recommended other investors do the same. A Twitter representative said the company is taking steps, including "removing videos and media related to the incident, as well as Tweets that contain third-party links to manifesto and videos of the attack." Though Twitter is under agreement to be bought by Tesla (TSLA) CEO Elon Musk for $44 billion, Musk has tweeted the transaction is "temporarily on hold" and a long delay or cancellation could revitalize the importance of the annual meeting where two directors are up for election. "We cannot assume the transaction will close," a spokesman for DiNapoli declared. Meta said it quickly labeled the shooting a "terrorist attack" that prompted a process to remove the suspect's account and other content. "We have teams working around the clock across Meta to identify, remove, and block violating content related to the shooting," the company said via a representative.

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5/23/2022

Asset Value Investors Submits Shareholder Proposals to NS Solutions, a Subsidiary of Nippon Steel

Business Wire (05/23/22)

Asset Value Investors (AVI) rolled out a public campaign on the submission of its shareholder proposals to Nippon Steel Corporation (5401) subsidiary NS Solutions (NSSOL). AVI controls 1.2% of NS Solutions' voting rights, and reached the conclusion that continued private dialogue has no hope of success. AVI's presentation specifies that the standards of governance and treatment of minority shareholders expected of a Prime Market listed company have not been realized because of the parent-subsidiary listing relationship between NS Solutions and Nippon Steel. They also cited the appointment of two former Nippon Steel executives with no experience in the information technology services industry as internal directors of NS Solutions in the last two years. The group has deposited 90.2 billion yen of cash with Nippon Steel at an interest rate of about 0.2%, while NS Solutions owns 67.8 billion yen in shares of its clients, mainly Recruit HD. AVI also pointed to potential disregard for employee welfare, and noted Nippon Steel holds an excessively high 63.4% of shares, hindering NS Solutions from exercising share buybacks from general shareholders. "NS Solutions must take steps to achieve the highest standards of corporate governance and capital discipline that a Prime Market publicly traded company should uphold, and to address its undervaluation," advised AVI CEO Joe Bauernfreund. "As the controlling shareholder, Nippon Steel has an obligation to ensure that NS Solutions is managed for the benefit of all stakeholders. Nippon Steel has the power to hold NSSOL's board to account and call on NSSOL to address poor employee welfare and its discounted valuation." NS Solutions' board has disregarded AVI's recommendations and failed to propose remedies, in spite of regular private dialogue.

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5/23/2022

Chairman Faces Off With CEO in Aerojet Court Fight

Bloomberg (05/23/22) Feeley, Jef; Johnsson, Julie

The boardroom fight for control of Aerojet Rocketdyne Holdings Inc. (AJRD) is poised to move into the courtroom as Aerojet's chairman, Warren Lichtenstein, the founder of Steel Partners Holdings Inc. (SPLP), faces off with CEO Eileen Drake over the fate of the last U.S. rocket-engine maker. A trial that begins Monday in Delaware Chancery Court stems from a bitter fight between the two. Their fight over who should head the company has been simmering since February, when antitrust regulators moved to stymie the planned $4.4 billion sale of Aerojet to Lockheed Martin (LMT). Lichtenstein wants to replace Drake with a former deputy, while Drake's supporters say Lichtenstein overstepped by making overtures to potential CEO candidates without discussing matters with the board. "It's a mess," said Larry Hamermesh, a University of Pennsylvania law professor and expert on Delaware corporate cases. Rather than forging a path for Aerojet without Lockheed, board members are fighting each other, he said. "I've never seen this situation at a public company before." Drake and her supporters accuse Lichtenstein and his "collaborators" of undermining the scuttled merger then nominating a slate of directors when an internal investigation of his actions put his board seat in jeopardy, according to court filings. Lichtenstein says Drake is improperly using company resources to malign him and isn't up to the challenges of guiding Aerojet as a standalone entity, filings reveal. In February, Delaware Chancery Judge Lori Will ordered Drake not to use company money to support her board candidates. The judge must now decide whether Lichtenstein, Drake, and their board supporters acted properly in advance of the vote on proposed directors. Drake wants a June 21 vote, while Lichtenstein wants it held in conjunction with Aerojet's annual meeting in mid-July. Seth Seifman, an aerospace and defense analyst with JPMorgan Chase & Co. (JPM), says their strategic outlook is similar, as both seem willing to sell the company.

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5/21/2022

Kohl's Main Bidders Said to Be on Sidelines Due to Financing Concerns—Report (Update)

Seeking Alpha (05/21/22) Fineman, Joshua

The chief potential suitors for Kohl's (KSS) were reported by CNBC to be on the sidelines because they are having difficulty getting financing for an acquisition. CNBC's Sara Eisen cited a source who said the deal cannot obtain financing in the $60s/share, while lenders lack confidence in the retailer's numbers after it reported its first-quarter earnings. Although no one has abandoned the process at this point, the prominent bidders are on hold at this time, Eisen said. Kohl's shares plummeted 13%, while the CNBC report follows disclosure by the New York Post that the Q1 results may discourage potential suitors from making bids. One source familiar with the sales process told the Post that they were "shocked" by the Kohl's results, and doubted that any acceptable bids would be offered to the retailer. A lending source at an unnamed bank also said banks are not lining up to fund a major acquisition in the current market climate. The Post story follows a report from Women's Wear Daily that Kohl's may be leaning toward staying independent. Kohl's Chairman Peter Boneparth reportedly opposes selling the company. A source close to the Kohl's board said the board and its chairman are "100% focused on choosing the path that will maximize value" for shareholders. The reports come after Kohl's said earlier that it expects "fully-financed final bids to be submitted in the coming weeks." Macellum, which has been lobbying for Kohl's to sell itself, suffered a setback last week when shareholders rejected all 10 of its board nominees. Last month the NY Post said Kohl's received an offer from Simon Property (SPG) and Brookfield Asset Management (BAM) for $68/share, while other bidders reportedly pursuing the company in recent months include Hudson's Bay, Sycamore Partners, Acacia Research (ACTG), and Starboard Value, and possibly Leonard Green and Franchise Group (FRG).

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5/20/2022

Leading Independent Proxy Advisory Firm Glass Lewis Recommends that MIMEDX Shareholders Vote 'FOR ALL' of the Company's Proposals

Yahoo! Finance (05/20/22)

MiMedx Group Inc. (MDXG) announced that Glass Lewis & Co. has recommended that shareholders vote "FOR ALL" company proposals, including for board nominees James L. Bierman and Phyllis Gardner at its annual meeting on June 7. Glass Lewis also backed MiMedx's say-on-pay proposal, acknowledging "the Company's active engagement efforts and positive program changes" in response to 2021's say-on-pay vote. The proxy advisory firm determined that "in light of these considerations, as well as the adequate alignment between pay and performance, we believe that shareholders may reasonably support this proposal." Glass Lewis further stated that the company's executive compensation, including that of its CEO, is consistent with the median compensation for a group of its peers. The firm also advocated for the employee stock purchase programs as it "believe[s] they align the interests of employees and shareholders and encourage a sense of ownership at companies." "MIMEDX has the right Board and strategy to further enhance value for all shareholders and continues to implement programs and initiatives that align with shareholder interests," the company maintained. "MIMEDX is a stronger company today and has taken decisive action to successfully sustain, stabilize, and grow the Company over the last three years, and is poised for long-term success. The fundamentals of our growth strategy are driving strong performance, and the Company recently announced its third consecutive quarter of double-digit growth in its Advanced Wound Care & Surgical Recovery products, demonstrating strong execution. We have taken shareholder input into account every step of the way and maintain an open dialogue with our shareholders in pursuit of our strategic long-term objectives."

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5/19/2022

ICR's 'Taking Stock of Communications' Survey: Majority of Professional Investors Say Non-Financial Factors Play a Critical Role in Company Valuation

Business Wire (05/19/22)

Four in Five professional investors (80%) believe that at least 20% of a company’s valuation is impacted by non-financial factors, and more than half (57%) believe it’s at least 30%. These are among the findings of the 2022 Taking Stock of Communications survey, conducted by PRWeek on behalf of ICR, a strategic communications and advisory firm. The survey found that communications professionals (e.g. investor relations officers, corporate communications, and marketing executives), whose expertise it is to help clarify and amplify financial results, actually underestimate the value of non-financial factors by about 10%. When compared to the professional investors, seven in 10 communications professionals polled (71%) believe that at least 20% of a company’s valuation is impacted by non-financial factors, while less than half (45%) believe it’s at least 30%. Overall, when asked how much value specific non-financial factors impact investor perception of a company’s valuation, “perceived credibility of management team” ranked highest (84%), followed by a “clearly articulated strategy and business plan” (81%) and “quality of communication” (76%). It’s worth noting that “quantity of communication” was identified as the least important factor (20%). “The quality and presentation of a company’s narrative to complement the numbers is a critical driver of a company’s equity value,” said Tom Ryan, founder and CEO, ICR. “Creating context around the numbers can come in several ways, such as providing thoughtful quarterly commentary, delivering insightful answers to tough questions, and articulating the growth story through business and financial media.” Related to third-party sources of company news and information, business and financial media remains very influential on the decisions that investors make, with 85% of survey respondents identifying both Bloomberg News and The Wall Street Journal as the most relevant outlets. Beyond traditional media, more than half of respondents (54%) said social media is deemed to have a material impact on investment decisions, ranking Twitter (64%) and LinkedIn (59%) as the most effective to communicate with investors. Similar to viewpoints related to non-financial factors, a higher percentage of professional investors (66%) than communications professionals (49%) feel social media is impactful, suggesting the latter may not be giving it enough focus in this regard. In addition, the survey revealed large gaps between how communications professionals rate their investor-focused communications compared to how professional investors rate them. When asked to judge their effectiveness across seven criteria, communications professionals rated themselves either “excellent” or “good” between 25% and 44.9% higher than professional investors did. The important takeaway is that investors have a different perspective than most traditional audiences and it is critical to fully understand their perspective, the communication that resonates, and how best to deliver it.

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5/19/2022

Kohl’s Sales Process Is a 'Disaster': Sources

New York Post (05/19/22) Fickenscher, Lisa; Kosman, Josh

Lackluster financial results at Kohl’s (KSS) have raised concerns that the company’s effort to sell itself will fail, even as management continues to tout the strong interest by potential suitors. The bids are due in “the coming weeks,” Kohl’s affirmed on Thursday after delivering its first quarter results, in which it slashed its profit and sales outlook for the year and said that consumers are pulling back on their spending, resulting in a 5.2% comparable sales drop compared to a year ago. Analysts had expected a 0.5% increase in sales, and so did potential bidders. Earlier this year, Kohl’s rejected a $9 billion offer from Starboard Value LP, which wanted to buy the company for $64 a share, or a 37% premium. Kohl’s said that was too low, and adopted a poison pill to prevent investors from acquiring more than 10% of its shares. On Thursday, shares of Kohl’s closed at $45.04. Now, enthusiasm for the deal has likely been extinguished, sources said, in part because of a lack of transparency from Kohl’s. Last week, Kohl’s won a proxy fight to replace 10 of its directors. But they might not have affirmed the board had they known about the company’s most recent performance, the sources said. The company has said that there have been at least 25 interested parties. Kohl’s chief executive, Michelle Gass said on Thursday that the company is “pleased with the number of parties who recognize the value of our business and plan.” The retail chain only reluctantly agreed to initiate a sales process after Macellum Advisors first pushed the company to do so in January. But sources said the Wisconsin-based company may be privately rooting for an outcome in which bidders fade away – despite the public image management has put forward.

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5/21/2022

How Elon Musk and Jack Dorsey Aligned Behind Twitter Deal

Financial Times (05/21/22) Murphy, Hannah; Criddle, Cristina

The close relationship between Twitter (TWTR) co-founder Jack Dorsey and Elon Musk, who has made an offer to take Twitter private, has shaken up the future of the social media company. The pair’s alliance has fueled speculation about whether Dorsey might play a key role in the company if a deal closes. Regulatory filings from last week revealed that after Musk was first invited to join Twitter’s board in early April as a major shareholder, Dorsey “shared his personal view that Twitter would be better able to focus on execution as a private company." Dorsey quit as Twitter’s chief executive last November but still remains on the board. According to insiders, the advice stemmed in part from growing tensions between Dorsey and fellow Twitter board members over how the company should be run and issues including content moderation. In the past, he had clashed in particular with Elliott Management, which previously held a seat on Twitter’s board. Dorsey saw the fund as too commercial and focused on the short term, according to several people. Some board members, meanwhile, grew increasingly frustrated by what they perceived as Dorsey’s lack of engagement. Just a week after Dorsey said Twitter would be better off if taken private, Musk announced his plans to do just that. Upon the board agreeing to the takeover, Dorsey tweeted: “Elon is the singular solution I trust. I trust his mission to extend the light of consciousness.” Dorsey felt personally challenged by Elliott, which took a board seat at Twitter after investing in the company in early 2020, according to several people familiar with the meetings. Elliott was concerned at the time that Dorsey was distracted by his second chief executive role at payments company Square (SQ), now called Block, and demanded a faster pace of product innovation. Dorsey rejected Elliott as too capitalistic. After the board called on Dorsey to devote his efforts full-time to leading Twitter in the wake of the January 6 assault on the U.S. Capitol last year, he declined and eventually resigned from his position as chief executive. While Dorsey recently said he would never return to the company as chief executive, he has discussed with Musk whether he may continue to “hold equity of the surviving corporation or one or more of its affiliates following the merger," according to Twitter’s regulatory filings.

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5/21/2022

Musk Lashes Out at ESG as the Brand Starts to Lose Its Luster

Forbes (05/21/22) Blackmon, David

After S&P removed Tesla (TSLA) from its S&P 500 ESG Index, Tesla CEO Elon Musk tweeted, “Exxon (XOM) is rated top ten best in world for environment, social, and governance (ESG) by S&P 500, while Tesla didn’t make the list! ESG is a scam. It has been weaponized by phony social justice warriors.” Some other investors seemed to agree. “Ridiculous. Not worthy of any other response,” ARK Invest Founder and CEO Cathie Wood tweeted Wednesday in response to an article detailing the change. Meanwhile, BlackRock (BLK), a vocal embracer of ESG investing, emphasized its apparently revised prioritization of ESG in a letter this month to Texas Comptroller Glenn Hegar. The company was responding to a new Texas law that would require the comptroller to deny any firm that unfairly discriminates against the Texas oil and gas industry the ability to manage positions in Texas pension funds. In a May 13 letter signed by its head of external affairs, Dalia Blass, BlackRock told Hegar that its “investment decisions are governed strictly by our fiduciary duty to clients, and that duty requires us to prioritize our clients’ financial interests above any commitments or pledges not required by law." The reality here, writes Forbes senior contributor David Blackmon, "seems to be that ESG is a classic luxury item, an expensive virtue signal in the corporate world. In that sense, it is little different than Tesla’s pricey cars, in fact. When times are good, it’s easy to focus on luxury items as status symbols, like paying a small army of consultants seven-figure fees to generate you a glossy annual sustainability report, or allocating a larger portion of the funds you manage to investments in companies who sport such reports. But when times get tough and look to likely be getting tougher down the road, the intrinsic value of the luxury item and the opportunity for virtue signaling it represents diminishes and can even become a target for criticism. The events of the past few weeks indicate that this is where the ESG brand is headed for the time being."

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5/20/2022

Even Among Corporate Raiders, Elon Musk Is a Pirate

New York Times (05/20/22) Hirsch, Lauren

In the weeks since Elon Musk struck a $44 billion agreement to buy Twitter (TWTR), he has upended the deals landscape. Musk waived due diligence to get the deal done, according to legal filings. Since then, he has publicly criticized Twitter’s service, attacked some of its top executives, and unleashed tweets taunting the company’s board. He has also appeared to try to renegotiate the deal’s price downward, citing the accuracy of the company's own research on bots. In essence, Musk has turned what was largely a friendly deal into a hostile takeover after the fact, making "past corporate raiders look positively quaint by comparison," writes New York Times columnist Lauren Hirsch. On Thursday, Twitter executives said at a company meeting that Musk’s purchase was moving forward and that they would not renegotiate, according to two attendees. Earlier this week, the company’s board also declared, “We intend to close the transaction and enforce the merger agreement.” Twitter’s board has contended that it has the legal upper hand with the deal. In addition to a $1 billion breakup fee, the agreement with Musk includes a “specific performance clause,” which gives Twitter the right to sue him and force him to complete or pay for the deal, so long as the debt financing he has corralled remains intact. Musk has already pushed some legal boundaries. The U.S. Federal Trade Commission is looking into whether he violated disclosure requirements by failing to notify the agency that he had amassed a sizable stake in Twitter earlier this year, said an insider. "Musk seems free to do as he pleases with deals partly because of his extraordinary personal wealth, with a net worth that stands at around $210 billion and that lets him ignore a deal’s economics," says Hirsch. "And unlike a private equity firm, he does not buy multiple public companies a year, making it less important to present himself as a consistent closer."

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5/20/2022

Corporate Boards Rebuff Conservative Shareholder Activism

Washington Times (05/20/22) Salai, Sean

The boards of several top U.S. companies rebuffed efforts by conservative shareholders to separate them from woke politics. Investors at AT&T (T), JPMorgan Chase & Co. (JPM), Home Depot (HD), and Mondelez International (MDLZ) opposed conservative-led measures at their annual meetings this week on the recommendations of their boards. Activists from the National Center for Public Policy Research, which acquires stock in U.S. companies through its Free Enterprise Project (FEP), presented proposals at AT&T and JPMorgan Chase this week. One item in the AT&T proxy statement urged having "an independent and unbiased third party" conducting a nondiscrimination audit of the company's Senior Executive Diversity Council and identity-based Employee Groups, which conservatives claim cultivate bias against whites. Investors followed an AT&T board recommendation in the proxy statement to vote against this proposal. "Our philosophy of diversity, equality, and inclusion, and the programs that emanate from that philosophy, encompasses all segments of society, including those who do not identify as racially diverse," says the board recommendation. A proposal in the JPMorgan Chase proxy statement calls for changes in the board of directors' selection process to include members with diverse perspectives. Shareholders defeated the proposal following the board's declaration in its proxy statement that JPMorgan Chase already has "a robust director recruitment process," and that "the Board's recruitment process has resulted in the election of three women directors in the past four years, one of whom is a person of color." Shareholders also repudiated a request from the American Civil Rights Project for managers to retract "up to 10 illegal, racially discriminatory policies adopted by JPMorgan Chase & Co.'s officers and directors" that favor people of color. Meanwhile, the National Legal and Policy Center (NLPC) proposed resolutions that Home Depot and Mondelez require that each CEO be "an independent member of the board" to certify transparency with shareholders about their political activities. "For example, Home Depot will not, as its website claims, have electricity at all its facilities that will be generated 100% by renewables by 2030," said the NLPC's Paul Chesser. Shareholders at both companies rejected the resolutions after their boards dismissed them as unnecessary. Among those concerned about the embrace of progressive agendas at companies is Brad Anderson, co-chair of the conservative Job Creators Network's Boardroom Initiative. "This is a problem that isn't going to end until we can reign corporate boardrooms back in line and make sure they're held to the fiduciary duty they were hired to uphold," he said.

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