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Thyssenkrupp Chairman Lehner Quits, Following CEO
" Reuters (07/16/18) Busvine, Douglas"

Thyssenkrupp Chairman Ulrich Lehner informed the executive board on July 16 that he would resign, effective July 31, and withdraw from the supervisory board. The announcement follows the resignation of the German industrial group's CEO under shareholder pressure. A statement from Thyssenkrupp read, "The supervisory board will decide on the succession...shortly."

Premier Foods Vote Looms Amid Shareholder Split on Future of Top Boss
" City A.M. (07/15/18) McCarthy, Sebastian"

Premier Foods shareholders will decide the fate of CEO Gavin Darby this week. Nissin, the British food manufacturer's largest shareholder with a 20% stake in the company, is believed to be a supporter of Darby. However, hedge funds Oasis Management and Paulson & Co., Premier's second and third largest shareholders, respectively, have called on Darby to step down. Hong Kong-based Oasis has accused Darby of leading Premier into a "zombie-like state" and "persistent shareholder value destruction." Darby has overseen a 1 billion pounds refinancing of Premier, but shareholders became disappointed with his leadership when he rejected takeover offers from U.S. spice maker McCormick (MKC). Darby defended his decision by saying he could create better value. The re-election vote will take place Wednesday during the company's annual general meeting. Darby said in a recent media report that Oasis' plan to replace him with the company's finance director and sell its Batchelors brand was "flawed."

Delaware's Voluntary Sustainability Certification Law
" Harvard Law School Forum on Corporate Governance and Financial Regulation (07/15/18) Zeberkiewicz, John"

Delaware Gov. John Carney recently signed into law the Delaware Certification of Adoption of Transparency and Sustainability Standards Act, effective Oct. 1. The first-of-its-kind law will provide Delaware-governed entities with a platform for demonstrating their commitment to corporate and social responsibility and sustainability. The act, which is voluntary, applies only to entities seeking to become certified as reporting entities. The act stresses that sustainability practices should be addressed at the highest levels of the organization. To be certified as a "reporting entity," the "governing body," or board of directors, must adopt resolutions creating "standards" to assess and report the impact of its activities on society and the environment and "assessment measures" by which it gauges its performance in meeting its standards. Entities can select their own standards and tailor them to the specific needs of their industry or businesses. While the act is principally a disclosure regime requiring entities to provide reports with respect to their standards and metrics, entities are not required to include any privileged information, trade secrets, or competitively sensitive information in their reports.

Barclays Mulls U.S. Push as Investor Looms
" Wall Street Journal (07/16/18) Colchester, Max"

Barclays (DTYS) CEO Jes Staley reportedly is debating whether to scale up the company’s online U.S. retail bank amid pressure from shareholder Sherborne Investors. The British bank—which is seeking to boost its stagnant share price—could also consider rolling out its dominant U.K. payments platform stateside, and is putting more capital behind its U.S. credit card operations, according to a source. The lucrative U.S. market has long attracted European banks looking to expand out of saturated home economies, but some of the top lenders nearly collapsed from exposure to the U.S. housing market. The banks that stuck it out are trying to expand again to take advantage of robust U.S. growth and stay relevant on a global scale. Barclays executives are now debating whether more exposure to the U.S. retail market could both generate revenues and fund its U.S. operations more efficiently. Meanwhile, Sherborne—which owns a 5% stake in Barclays—wants to see capital moved away from its investment bank trading operations. Sherborne has not yet publicized its plan to shake up the bank. Barclays's management says it will generate returns equal to its cost of equity by 2020. The bank said it would undertake share buybacks at an unspecified time, so capital for any planned expansion is tight.

Premier and Oasis Line Up for a Food Fight
" Financial Times (07/15/18) Daneshkhu, Scheherazade; Weinland, Don"

At Premier Foods' annual meeting on Wednesday, CEO Gavin Darby faces a rebellion from two of the company’s largest shareholders, which plan to use their combined 23% stake to vote against his re-appointment.  The revolt is led by Hong Kong-based hedge fund Oasis Management and backed by U.S. hedge fund Paulson & Co.  Oasis, which upped its stake last week to 17.3%, accuses Darby of “persistent value destruction” during his five-year tenure.  The company is in a “zombie-like state” because he has failed to drive growth, it claims.  Paulson joined in last week, saying directors were enjoying “comfortable” positions at the expense of shareholders, and calling for new management.  Oasis founder Seth Fischer likens the situation at the U.K. company to its experience in Japan, where more than half of the hedge fund’s investments are focused.  “You have a shareholder base that has not been part of the conversation at Premier Foods,” he said.  “We have seen a lot of situations like this in Japan.”  Shareholders including Standard Life and Paulson have been upset with the board since it let a deal with U.S. spice maker McCormick (MKC) fall through in 2016.  The shares have been stuck around 40p ever since the approach, well below McCormick’s 60p bid.

Thyssen and Kone Owners Held Merger Talks on Elevator Ops: Paper
" Reuters (07/15/18)"

Top investors in Thyssenkrupp and Kone reportedly have held discussions about a possible combination of the companies' elevator units. German daily Handelsblatt reported on Sunday that the Alfried Krupp foundation, which owns 21% of Thyssen, and Kone's largest shareholder Antti Herlin have engaged in deal talks. The first conversations occurred as early as 2016, but the proposal was spurned by Thyssen's then-CEO Heinrich Hiesinger, the paper said. The foundation said it had informed Kone that questions regarding the elevator unit should be referred to Thyssenkrupp, and notified Thyssen's executive board about the talks, saying it was up to the company to make decisions or respond to queries. Earlier this month, the Alfried Krupp foundation, which has two seats on Thyssen's supervisory board, said that a break-up of the industrial conglomerate would not happen, echoing the company's chairman. Chairman Ulrich Lehner had said that there were no plans to divest the group's elevator unit, its prized possession, which some observers have said would rid Thyssenkrupp's share price of a large conglomerate discount. Meanwhile, Cevian—Thyssen's second-largest shareholder with a 18% stake—has been demanding a strategic review of all of Thyssenkrupp's business areas, saying each might perform better in a different set-up.

Britain Announces 'Short and Sharper' Code for Companies
" Reuters (07/16/18) Jones, Huw"

Britain has a new corporate code directing U.K. companies to rein in excessive executive pay, pay more attention to staff, and make boards more diverse. The Financial Reporting Council (FRC) updated its non-binding 26-year old code of corporate standards for publicly listed companies, which must comply with it or explain in annual reports to shareholders if they do not. “These changes will drive improvements in how boardrooms engage with employees, customers and suppliers as well as shareholders, delivering better business performance and public confidence in the way businesses are run,” said Greg Clark, Britain's business minister. Royal London Asset Management added that, “Ultimately though, tangible results will come from institutional investors who have the potential to drive change through their power as the ultimate owners of companies.” There is a new provision for greater board engagement with the workforce to understand their views, but stops short of calling for worker representation on boards. This, along with a requirement to have “whistleblowing” mechanisms that allow directors and staff to raise concerns for effective investigation, mark the biggest broadening of corporate standards in many years, the FRC said. The code also emphasizes the need for boards to refresh themselves, become diverse, and plan for replacing top executives. Furthermore, it introduces a requirement for companies to explain publicly if a board chair has remain unchanged for more than nine years. Company remuneration committees should also take into account workforce pay when setting director pay, and consider reputational and other risks from excessive awards.

Arjuna Capital: Facebook Is 10th Of 10 Tech Companies Urged by Shareholder Campaign To Disclose Gender Pay Gap
" PR Newswire (07/13/18)"

On July 12, Facebook (FB) became the 10th company to bow to pressure from Arjuna Capital to disclose its publish its annual diversity report, claiming full gender pay equity since 2014. The investor applauded the disclosure, and called for on-going engagement with the social media giant that will continue to seek greater transparency. Arjuna Capital's Natasha Lamb launched a successful shareholder campaign three years ago pressuring nine tech companies—Adobe (ADBE), Amazon (AMZN), Apple (AAPL), eBay (EBAY), Expedia (EXPE), Google (GOOGL), Intel (INTC), Microsoft (MSFT) and Texas Instruments (TXN)—to disclose wage data and close their gender pay gaps. Texas Instruments was added to the campaign in 2018, and on March 15, 2018 disclosed wage data and its intent to close its pay gap. "After 3 years of engagement with Arjuna Capital, Facebook has finally published quantitative data as it relates to gender pay equity," Lamb said. "We applaud the company, as it moves beyond lip service to a transparent accounting of how women are paid on an equal pay for equal work basis. There is still work to be done and the next step is for Facebook to publish the company's median gender pay and racial pay gaps. We look forward to a continued and more productive engagement going forward."

Xerox Explores Sale of Leasing Finance Unit: Sources
" Reuters (07/13/18) Roumeliotis, Greg; Baker, Liana B."

Xerox Corp. (XRX) reportedly is weighing the sale of a leasing unit that lends cash to customers to rent printers and equipment, in order to make itself more appealing to possible buyers following the cancellation of its $6.1 billion sale to Fujifilm Holdings Corp. Divesting the leasing unit would relieve Xerox of about $3.6 billion in debt, according to a source. Carl Icahn and Darwin Deason, who took control of Xerox earlier this year, are preparing to launch an auction for the company, which has a market capitalization of $6.4 billion and total debt as of the end of March of $5.5 billion. Xerox has not made a decision on selling the leasing finance unit, sources said this week. This May, Apollo Global Management reportedly approached the company to express its acquisition interest. Reducing Xerox's liabilities through the sale of the leasing finance unit would enable private equity firms to place more debt on the company to juice returns. Xerox has said it is exploring its strategic options after it ended its deal with Fujifilm, following pressure from Icahn and Deason, who together own 15% of Xerox.

Elliott Seeks $770 Million From South Korea in Samsung Fight
" Bloomberg (07/13/18) Deveau, Scott"

Elliott Management Corp. is seeking compensation for at least $770 million in damages from South Korea over how its former administration intervened in the merger of Samsung C&T Corp. and Cheil Industries Inc. in 2015. The hedge fund said Friday it had submitted the dispute for arbitration and urged the government to pay the damages in order to preserve its reputation with international investors. Elliott said the parties have so far been unable to resolve the matter on their own. “Like all prominent economies, Korea obviously has no interest in being viewed as hostile to foreign investors, particularly when other economies in the Asia-Pacific region are fast becoming potentially attractive alternatives," Elliott said. The hedge fund lost a proxy fight to oppose the combination of the Samsung units, solidifying the founding family's grip over the group. Elliott claims the government unfairly meddled in the deal—which led to a massive corruption scandal in the country—and says it caused the hedge fund significant damages. Elliott encouraged the South Korean government Friday to uphold its obligations toward foreign investors, including paying the damages, working to prevent future breaches, and taking steps to no longer protect the ruling families at the expense of shareholders. "Maintaining credibility internationally among investors is critical to attracting foreign investment and propelling Korea to even greater prosperity," Elliott said.

Thyssenkrupp Names Finance Chief Kerkhoff as Interim CEO
" Reuters (07/13/18)"

Thyssenkrupp CFO Guido Kerkhoff was named interim CEO on Friday and won the support of the German industrial group’s top shareholder. Former CEO Heinrich Hiesinger resigned last week after failing to win unanimous shareholder backing for a deal to create a steel venture with India's Tata Steel. Kerkhoff will oversee the company until the process of finding a Hiesinger's replacement is completed. Cevian Capital, which owns an 18% stake in Thyssenkrupp, and Elliott have requested a sweeping strategy review at the industrial conglomerate. They are at odds with the Alfried Krupp von Bohlen und Halbach Foundation, which owns a 21% stake and represent the legacy of the company's late owner, who desired that Thyssenkrupp remain whole. The Krupp foundation's board met on Friday following criticism from labor leaders that it had failed Hiesinger by not backing him in the disagreements over strategy that preceded his resignation. The task now ahead is to implement the steel venture with Tata and develop other areas of the business. The prime minister of North Rhine-Westphalia—the German state where Thyssenkrupp is based—and foundation board member Armin Laschet on Thursday backed Thyssenkrupp chairman Ulrich Lehner's calls for the company to stay whole.

Edgewell (EPC) Said to Face Shareholder Pressure to Oust CEO
" (07/12/18)"

Legion Partners is calling for Edgewell Personal Care Company (EPC) to remove its CEO David Hatfield and to undergo an extensive portfolio review, according to Bloomberg, citing a report from DealReporter. If the review discovers that selling non-core assets would make it more of a takeover target, that may be the best option, it states.

Canadian Utility Hydro One's Board, CEO Leave Under Agreement With Province of Ontario
" Wall Street Journal (07/11/18) Armental, Maria"

On July 11, Hydro One Ltd. CEO Mayo Schmidt retired and the company's directors agreed to resign under a deal with its biggest shareholder, the Province of Ontario. CFO Paul Dobson will serve as interim CEO. Under the Canadian utility's agreement with Ontario, the province will nominate four directors, and six others will come from a committee formed by representatives of Hydro One's other biggest shareholders. The new board should be in place by Aug. 15, and it will be tasked with appointing the new CEO, who will become the 11th member of the board. Hydro One also will consult with the province—which holds a 47% stake in the company—on executive compensation.

U.K.'s Mears Shoots Down Investor Call to Name Hogarth Chairman
" Reuters (07/12/18)"

Mears Group has spurned a request to put a shareholder's proposed candidate for chairman to a vote at its general meeting. A fund advised by Shareholder Value Management (SVM) had sought a non-binding vote to elect Andy Hogarth, the former CEO of Staffline Group, as head of the board. Mears said last week that Chairman Bob Holt would not stand for re-election at the company's 2019 annual general meeting after SVM demanded his exit, citing underperformance by the company. "The company has now refused to give the markets a voice showing, once again, a strong disregard for its shareholders," said Gianluca Ferrari, director at SVM. "The board is hiding behind procedural formalities to escape an uncomfortable truth, which is that change needs to happen." Frankfurt-based SVM is the company's fourth biggest shareholder with an 8.9% stake, according to Thomson Reuters data.

Comcast Raises Sky Offer After Fox Sweetened Its Bid
" Wall Street Journal (07/12/18) Hagey, Keach; Dummett, Ben"

Comcast Corp. (CMCSA) late on Wednesday upped its bid for European pay-TV giant Sky, shortly after 21st Century Fox (FOX) sweetened its own offer. Comcast increased its offer for Sky to £14.75 per share, valuing the company at $34 billion. That is a 5% premium to an offer Fox announced earlier Wednesday and 18% above Comcast's earlier bid. Comcast said its latest offer was recommended by Sky's independent directors. Fox already owns 39% of Sky and wants to consolidate ownership. The fight for Sky could affect the broader spat between Comcast and Walt Disney Co. (DIS) to acquire most of Fox’s entertainment assets. Depending on how the auction for Sky plays out, Comcast could choose to focus its efforts on the European operator and abandon its pursuit of Fox's assets, a source said. Meanwhile, the U.K. government announced Thursday it would not block Fox's pursuit of Sky, ending an extended regulatory review of the proposed deal. Although approval was expected, the review had remained as a potential barrier for Fox closing Sky. A number of hedge funds including Elliott Management Corp. have invested in Sky, and would likely oppose any bid they felt undervalued it.

Nestle Sells Small New Zealand Candy Brands in Latest Divestment
" Reuters (07/12/18)"

Nestle announced Thursday it is selling some small New Zealand candy brands to Australia's Quadrant Private Equity, the latest sign of the world's largest food company reorganizing its portfolio as Third Point pressures it for a faster overhaul aimed at boosting sales and profits. Nestle said it had reached a conditional agreement to sell brands including Mackintosh's toffees, Heards, and Black Knight licorice to the Australian group for an undisclosed price. The Swiss company, which is facing dwindling demand for packaged food, said up to 55 of more than 270 jobs would be lost at its Wiri factory that will reduce output to focus on culinary products. Nestle agreed to sell its U.S. confectionery business to Italy's Ferrero for $2.8 billion early this year, and is under shareholder pressure to divest more.

Elliott Plans to Hold Onto AC Milan, Plot Turnaround
" Bloomberg (07/11/18) Deveau, Scott; Lepido, Daniele"

Elliott Management Corp. announced Tuesday it had taken control of AC Milan after the club's Chinese owner defaulted on its debt obligations. The hedge fund plans to hold onto the Italian football club and run it alone, according to sources, at least until it is back on solid footing. Elliott said its goal was to "achieve long-term success for AC Milan by focusing on the fundamentals and ensuring the club is well-capitalized." The hedge fund will not consider selling the club or bringing in a partner in the near future while it works on stabilizing AC Milan's finances, the sources said. Elliott has said it plans to inject 50 million euros ($58.4 million) in equity to stabilize the club and will add further capital over time to fund the transformation. Officially Goes on the Sales Block
" New York Post (07/11/18) Kosman, Josh" (CARS) reportedly has initiated a sales process, several months after the company added two of Starboard Value's nominees to its board. The moves confirm an earlier report that had tapped JPMorgan to explore strategic options that could include a potential sale. CEO Alex Vetter has been looking for more time to improve the company's financials, but that time has now passed, a source said. Hearst Corp. reportedly is considering a bid, as are several private equity firms., which has a $2.13 billion market cap, says that it attracts 19.4 million unique visitors per month.

Murdoch's Fox Ups Sky Bid to $32.5 Billion, All Eyes on Comcast
" Reuters (07/11/18) Sandle, Paul; Holton, Kate; Martin, Ben"

21st Century Fox (FOXA) has increased its offer for Britain's Sky to $32.5 billion, with all eyes now turning to Comcast (CMCSA) to return with a higher offer. In February, Comcast gatecrashed Rupert Murdoch's attempt to acquire the 61% of Sky that Fox did not already own. Fox's new bid of 14 pounds per share is a 12% premium to Comcast's offer but below the 15.05 pounds per share at which Sky was trading on July 11. Meanwhile, Comcast and Walt Disney (DIS) are in a separate $70 billion-plus battle to acquire most of Fox's assets, which would include Sky, with Disney securing conditional U.S. approval last month. Elliott is among the hedge funds that have acquired stakes in Sky in recent months, and shareholders like Crispin Odey, a former son-in-law of Murdoch, have called on Sky's independent directors to secure a better deal. Meanwhile, Hargreaves Landsown equity analyst George Salmon says, "Fox coming back in for Sky isn't a surprise in itself, but the fact the offer is slightly behind what some had anticipated brings another twist."

BT Faces Shareholder Revolt Over Executive Pay
" Financial Times (07/11/18) Fildes, Nic"

One-third of BT (BT) shareholders opposed the company's executive pay plan at its annual meeting, ahead of which Institutional Shareholder Services recommended rejecting the remuneration report due to concerns about outgoing CEO Gavin Patterson's bonus. Patterson was given a 2.5% pay raise this year, pushing his basic salary above £1 million, and his bonus could amount to 130% of his basic salary. The increase in his salary was announced just weeks after the company announced a plan to cut 13,000 jobs. BT Chairman Jan du Plessis said the company was "naturally disappointed" by dissent at the vote. Meanwhile, just 3.4% of board members opposed the re-election of board members Patterson; Nick Rose, senior independent director; and Tom Hoettges, CEO of Deutsche Telekom.

Thyssenkrupp Chairman Rules Out Breakup in Blow to Investors
" Reuters (07/11/18) Steitz, Christoph"

Thyssenkrupp’s supervisory board chairman has blasted two of the company's largest shareholders and said in an interview that a breakup of the conglomerate was out of the question.  He added that there were no plans to divest the group's elevator unit, its most profitable business, following the resignation of CEO Heinrich Hiesinger last week. “Crown jewels ... are only sold in times of need. There is no need (at Thyssenkrupp).”  His comments are aimed at Cevian and Elliott, which have criticized the company's performance under Hiesinger.  The CEO's resignation, which came just days after he reached a steel joint venture deal with Tata Steel, followed months of growing shareholder pressure over the company's strategy.  “Much has been done in the public sphere to destabilize the company and him as a person,” the chairman said, adding some shareholders were behaving in a way that could be described as “psychological terror.”  He said that included publicly spreading false statements and making unfair demands for management to step down.

U.S. Regulator Shelves Reform on Voting in Board Fights: Sources
" Reuters (07/11/18) Baker, Liana B.; Price, Michelle"

The Securities and Exchange Commission (SEC) has suspended a proposed Obama-era reform that would have changed how shareholders vote during contested board elections, according to sources. SEC officials have said in recent months that the proposed rule-change remains a priority, raising hopes for investors who have sought the changes—including Pershing Square's William Ackman—that the SEC will finalize and implement the rule soon. However, sources said the Commission’s new boss Jay Clayton has in fact shelved the proposal, in what will be a blow for many investors who believe the current system favors company management in board fights. Currently, shareholders voting remotely have to choose from a full slate of board directors nominated by management or a competing set of nominees provided by a dissident investor. They cannot mix and match from these competing lists unless they send a representative to vote in person at the annual meeting. According to the SEC, most votes in the U.S. are cast remotely, so such constraints can influence who ultimately ends up controlling the board and company strategy. Investors say this system works against them because shareholders are more likely to play it safe and vote for the management list, even if they like some of the dissident's candidates. Under the current administration, sources said, the “universal proxy” proposal is dead for the foreseeable future.

Under Pressure From Shareholders, BioCryst Drops Plan to Merge With Idera
" Endpoints News (07/10/18) Meiling, Brittany"

Durham, North Carolina-based BioCryst (BCRX) announced Tuesday that it is canceling its proposed merger agreement with Idera (DRA) following pressure from shareholders.  The firms announced the deal this spring in a bid to rebrand and focus on their combined rare disease programs. However, RA Capital Management—which owns a 7% stake in BioCryst—dubbed the deal “unnecessary and unjustified” in a letter in April and pledged to vote against it. The protest followed another objection letter from Great Point Partners in February. While the Idera management team’s expertise meant they could offer good advice to BioCryst, the fund wrote, the proposed merger wouldn’t help BioCryst’s ongoing Phase III trial for its lead product candidate BCX-7353, meant to treat hereditary angioedema. Nor would the merger lessen future financing burdens, they said.  In their view, the merger was unfair to all BioCryst shareholders but one: Baker Bros, the largest shareholder, which would see its 14% stake boosted to 16% in the new company.  At a special meeting of shareholders Tuesday, the merger was voted down.

Detour Gold CEO Clashes With Discordant Shareholder Paulson & Co.
" Globe and Mail (07/10/18) McGee, Niall"

The interim CEO of Detour Gold Corp. has blasted shareholder Paulson & Co. and declared that remaining as a standalone, and not selling the company, is in the best interests of shareholders. "[A sale] may benefit Mr. Paulson, but the shareholders I talked to aren't interested," Michael Kenyon said in an interview. Kenyon said he's spoken to most of the company's top shareholders and the "vast majority" are supportive of the plan to move forward with a costly expansion of its flagship mine in Northern Ontario. Last month, Paulson & Co., which owns 5.5% of the shares, urged Detour to sell itself after years of underperformance. Marcelo Kim, partner with Paulson & Co., said that a failure to initiate an official sales process is an indication of an "entrenched board looking out for its own interests, and not those of its shareholders." Kenyon denied suggestions that directors were entrenched, added that the board is open to selling the company; however, he warned that the company's share price could suffer long term damage if a sales process is a failure. Last month, Kim said that Paulson & Co. was considering calling for a shareholder vote to try to oust the board and nominate directors of its choosing, who would then push for a sale of the company. "We are continuing to consider all of our options to replace the board with one that is shareholder friendly and will drive real value for all stakeholders," Kim said on Tuesday.

Investor Seeks Vote to Appoint New Mears Chairman
" Reuters (05/10/18) Pratap, Bhanu"

Frankfurt-based Shareholder Value Management (SVM) has requested a shareholder vote to install Andy Hogarth as Chairman of Mears Group. The fund had previously sought to appoint ex-Staffline CEO Hogarth as an independent director at the British social housing and care company. Mears said last week that Chairman Bob Holt would resign next year after SVM demanded his exit, citing the company's underperformance.

N.Y. Bank Faces Threat From a Former Executive
" American Banker (07/10/18) Reosti, John"

Paul Hagan, the former CFO of Hanover Bancorp, is pushing the company to split the roles of chairman and CEO. In a June 29 letter, the investor argued that conflicts of interest prevent Michael Puorro, who is also president, from taking the necessary steps as chairman to boost shareholder value. “A primary responsibility of the chairman is to represent the interest of the shareholders, something that Mr. Puorro has not done since he is conflicted with protecting his job in management and not exploring opportunities in the capital markets to maximize shareholder value and enhance liquidity in Hanover’s stock,” he wrote. Hagan, who said he owns 3% of Hanover’s outstanding shares, urged the company to create a “liquidity event” by listing its shares on a stock exchange, conducting an initial public offering, or selling itself. Hagan said that Hanover’s market value of $55 million is significantly undervalued—by as much as $45 million—compared to similar sized community banks. He also objected strongly to issuing new shares. Puorro “is diluting existing shareholders by continuing to issue new stock at levels way below the peer group community bank market levels,” Hagan said. While he agrees about the need for a liquidity event, Puorro—who said he owns about 6% of the company's stock—said he disagrees with Hagan over the timing.

Stability Needed After CEO Exit, Say Thyssenkrupp Workers, Foundation
" Reuters (07/10/18) Steitz, Christoph; Inverardi, Matthias"

Thyssenkrupp's top shareholder, the Alfried Krupp von Bohlen und Halbach Foundation, which owns a 21% stake, said it and the company's workers will serve as an anchor of stability following the resignation of CEO Heinrich Hiesinger. The company's second-largest shareholder with an 18% stake, Cevian, has demanded that the company be simplified, grant more independence to its business units, and explore strategic options for them. However, Ursula Gather, head of the foundation, and Markus Grolms, trade union secretary at the IG Metall union and vice chairman of Thyssenkrupp's supervisory board, do not believe radical change is the answer. "The foundation and labor representatives have always stood up for the stability of the company. That will not change in the future," they said. The foundation and labor representatives together hold 12 of the 20 seats on the company's supervisory board, giving them a clear majority to block key strategic decisions. Both voted in favor of a merger with Tata Steel.

BlackRock, Other Big Investors Have Misgivings About Dell Offer
" Wall Street Journal (07/10/18) Lombardo, Cara"

Shareholders owning at least 10% of Dell Technologies Inc. (DVMT) shares—which track Dell’s controlling stake in VMware Inc. (VMW)—are disappointed with terms of the deal announced last week to buy them out, believing it undervalues the tracking stock, according to sources. The shareholders include several teams at BlackRock Inc. (BLK), as well as Farallon Capital Management LLC and Canyon Capital Advisors LLC. BlackRock is DVMT's third-largest shareholder with a 4.8% stake, while Farallon and Canyon own about 3.5% and 1.5%, respectively, according to FactSet. DVMT stockholders are being offered roughly $109 a share, about a 29% premium over the price before the deal was announced. DVMT shares have been trading at a significant discount to the VMware shares they are meant to track and several of the shareholders believe the offer should go further toward closing it. A deal at about $120 a share would still represent a roughly 20% discount. Elliott Management Corp., the fourth-largest DVMT investor with a roughly 4% stake, is still reviewing the deal and hasn't decided whether to support it, sources said. Opposition from as little as 30% of shares could jeopardize the deal at a vote in October. Dell is meeting with shareholders now to try to gain their support, sources said. Carl Icahn, who built undisclosed stakes in both DVMT and VMware in recent months, reportedly is unlikely to push Dell to sweeten the deal, but had not completely ruled out opposing it.

Hammerson Under Pressure as Elliott Increases Stake
" Financial Times (07/10/18) Evans, Judith"

Elliott has upped its stake in U.K. shopping center landlord Hammerson to 5.3%, becoming its fifth-largest shareholder. The move comes as the company prepares to present a new strategy to shareholders on July 24. Hammerson has had a difficult year, launching and then withdrawing from a proposed £3.4 billion takeover of smaller rival Intu (INTU), while rebuffing approaches from France’s Klépierre. Hammerson in April spurned a cash-and-shares offer from Klépierre worth 635p a share, saying it undervalued the company. But Hammerson’s share price has since fallen to 542p, while Klépierre’s has risen. Elliott first disclosed a stake of 1.5% in April, held through derivatives known as contracts for difference (CFDs). It seeks to put pressure on Hammerson to show how it can create more value for shareholders ahead of Oct. 13, when Klépierre could renew its bid under takeover rules. As the retail industry experiences structural upheaval amid online competition, a number of U.K. retailers have shuttered stores and reduced rents in “company voluntary arrangements” this year as they seek to avoid bankruptcy. However, Hammerson could consider strategies including share buybacks funded by disposals of indemand assets, said a source. It could also reportedly reconsider a planned extension that is set to double the size of the Brent Cross shopping center.

Germany Blames the Locusts Again
" Bloomberg (07/10/18) Bryant, Chris"

Observers note that following Heinrich Hiesinger's resignation as CEO of ThyssenKrupp AG last week under pressure from investors, there was talk of "locusts," which in Germany refers to the evils of Anglo-Saxon capitalism. ThyssenKrupp's chief labor representative warned that a "locust-style" breakup must be resisted, likely referring to Cevian Capital and Elliott Management Corp.'s pressure on the company to change. However, observers say it is misguided to blame the hedge funds for unraveling the industrial conglomerate. "If a business cannot consistently generate a return in excess of its cost of capital, it might as well pack up and go home. ThyssenKrupp has been failing to do that for years," writes Bloomberg columnist Chris Bryant. "Similarly, it's reasonable to ask whether a company that spans submarines, industrial plants, and auto parts has become too complex to manage." He says Hiesinger resisted a full-scale breakup, which looks more likely now that he is gone. Bryant noted that "activist funds can be useful stakeholders too. The more patient investment approach of Sweden's Cevian is hardly in the locust category, and all companies that want to be around for the long run need to earn their keep and take their shareholders seriously...Germany should recognize that not all activists are out to wreck its industrial base."

21st Century Fox Set to Increase Bid for Sky
" Australian Business Review (07/10/18) Duke, Simon"

21st Century Fox (FOXA) is preparing to bid £25 billion ($44.3 billion) for Sky, of which it already owns 39%, in an attempt to edge out Comcast (CMCSA) in the battle for the British broadcaster. The company is expected to bid more than £12.50 a share for the 61% of Sky that it does not already own, topping Comcast's offer. Sources said Comcast also is likely to publish its formal offer for Sky in the coming days. Several hedge funds, including Elliott and Odey Asset Management, have amassed sizeable holdings in Sky. Observers say 21st Century Fox's enhanced bid will significantly raise the stakes in the fight between two of America's biggest media conglomerates. Both Disney (DIS)—which last month secured a takeover of the bulk of 21st Century Fox's empire for US$71.3 billion—and Comcast are vying for a control of the majority of 21st Century Fox's entertainment assets. If 21st Century Fox succeeds in buying all of Sky, Disney would end up owning the pay-TV giant, so long as Comcast does not edge ahead in the battle over Sky. Analysts believe Disney, via 21st Century Fox, and Comcast will end up paying far more than Sky's present share price of £14.685.

Lowe's Cuts COO Job in Management Overhaul
" Financial Times (07/09/18) Yuk, Pan Kwan"

Lowe's (LOW) has announced that it is overhauling its management structure. Investors have been calling on the home improvement retailer to take steps to improve its performance. Pershing Square revealed that it took a $1 billion stake in Lowe's just days after the company named Marvin Ellison as its new chief executive officer in May. Ellison replaced Robert Niblock, who was also chairman of Lowe's. Niblock announced in March that he would retire after 25 years at Lowe's, including 13 as head of the company. Lowe's also bent to investor pressure in January when it agreed to add three new directors to the board following "constructive discussions" with DE Shaw. Lowe's is eliminating the positions of chief operating officer, chief customer officer, corporate administration executive, and chief development officer. Other senior executives who report directly to Ellison will assume the responsibilities of the eliminated positions.

Premier Foods Investors Square Up in CEO Re-Election Battle
" Reuters (07/10/18) S, Sangameswaran"

Oasis Management has nearly doubled its stake in Premier Foods in a bid to vote out CEO Gavin Darby at the British food company’s annual meeting next week. However, Nissin Foods Holdings—Premier Foods’ top shareholder with a 19.75% stake—intends to vote in favor of Darby, Premier’s spokesman said. Premier’s statement came after second-largest shareholder Oasis upped its stake to 17.3% from 9.09% and said it was confident that Darby would not be CEO after the meeting on July 18. The investor said it will vote all of its shares against Darby’s re-election. U.S. hedge fund Paulson & Co., which owns a 6% stake in Premier, on Monday joined calls for Darby to step down, saying that the company is in desperate need of new management. Meanwhile, shareholder advisory firms ISS, Glass Lewis, and Pensions & Investment Research Consultants have advised shareholders to re-appoint Darby. Oasis has more work to do to win further shareholder support, said Investec analyst Nicola Mallard, adding that the combined 23% stake held by Oasis and Paulson is not enough to remove Darby. Last week Oasis also called for Premier to sell its well-known Batchelors soup brand to improve its financial outlook and create funds for investment. Premier spurned the call, saying it would not sell one of its “jewels.” Premier has a partnership with Nissin for its Batchelors noodles products, sales of which are growing by 11% a year.

Banca Carige Investor Asks for Shareholder Meeting to Remove Board
" Reuters (07/10/18) Landini, Francesca; Flak, Agnieszka"

Raffaele Mincione, an investor in Italian lender Banca Carige, has requested a shareholder meeting this fall to vote on replacing the board.  The move comes after three board members resigned in recent weeks over disagreements about how the Genoa-based bank is run. Carige has long suffered corporate governance issues, and investment bankers say concerns about possible shareholder battles complicate its search for a merger partner. Mincione became one of Carige's top shareholders with a 5.4% stake this year, but failed to win a board seat. He argued that Carige's governance had “suddenly deteriorated,” jeopardizing the implementation of restructuring measures approved by the European Central Bank. The bank said that Mincione's requests would be discussed at a board meeting on Tuesday. Carige struggled to pull through a cash call requested by regulators at the end of last year. Under CEO Paolo Fiorentino, the bank is working to reduce the burden of bad debts. The CEO clashed with former Chairman Giuseppe Tesauro, who claimed that Fiorentino was acting too independently and wanted to turn Carige into a public company where “he alone has a say.” Investment bankers have also voiced concerns about the influence of top shareholder Vittorio Malacalza, who owns 20.6% of Carige and played a role in the exits of the last two CEOs.

Deutsche Bank Hires Investor Cerberus for Paid Advisory Work
" Wall Street Journal (07/10/18) Strasburg, Jenny"

Deutsche Bank DB has retained Cerberus Capital Management LP—a private-equity firm with a roughly 3% stake in the embattled lender—as a paid adviser to help it address rampant costs and improve slumping profits. Cerberus’s appointment comes as CEO Christian Sewing works to resuscitate the German bank’s fortunes after three straight full-year losses, market-share drops, and strategic upheaval. Cerberus President Matt Zames, the former COO of JPMorgan Chase & Co., is leading the advisory team working with Deutsche Bank, a Cerberus spokesman said. As a private-equity investor, Cerberus often gives advice for a fee to its portfolio companies. The newly revealed arrangement with publicly traded Deutsche Bank makes Cerberus its only shareholder in a paid advisory role, formally bringing a firm with a stake inside the bank’s operations, according to sources. Cerberus is expected to be restricted from exchanging Deutsche Bank shares while it is advising the bank, in keeping with securities laws. The firm has not engaged as an activist investor with its Deutsche Bank stake, sources say, and will not be able to do so for a year after its consulting role ends. Cerberus plans to remain a long-term Deutsche Bank shareholder and has said privately it supports Sewing and his management team, according to sources. Last year, Cerberus became a roughly 5% shareholder in rival German lender Commerzbank AG, sparking speculation that the two banks might eventually merge—though sources say this is not something they’re actively planning for.

Supervalu and Blackwells Solicit Shareholders as Feud Escalates
" Minneapolis/St. Paul Business Journal (07/09/18) Rehkamp, Patrick"

Supervalu Inc. (SVU) and Blackwells Capital are lobbying shareholder groups for support ahead of a meeting next month that will decide the fate of the board. Blackwells, which owns a roughly 7.3% stake in company and is seeking six seats on the nine-member board, released a filing Monday promoting its slate of board nominees. "The professionals we have nominated have studied Supervalu's businesses carefully and have specific suggestions and initiatives to discuss with shareholders and management," Blackwells said. "The current board has, in our view, continued to prove itself to be unimaginative, intractable and lackadaisical stewards of the company, to the great detriment of Supervalu's shareholders." Blackwells also suggested that if its board members are elected, a sale of the company is possible. One of the priorities the investor proposed is "carefully reviewing, and objectively assessing, all avenues of value creation, including those that involve strategic transactions." Supervalu responded with a filing of its own, arguing that its current board and management have already made major changes—such as selling off discount grocery chain Save-A-Lot and various real estate holdings—and claimed Blackwells was trying to seize control without paying a premium to all stockholders. The battle will come to a head at the shareholder's meeting on Aug. 16.

Investor 'Disappointed' With Brookdale Board
" Nashville Business Journal (07/09/18) Stinnett, Joel"

Land and Buildings Investment Management LLC has been criticizing the management of Brookdale Senior Living Inc. (BKD) for months, and now it is taking aim at Brookdale's board of directors. In a letter to shareholders issued July 9, Land & Buildings CIO Jonathan Litt outlined seven steps the board should take to maximize shareholder value. Land & Buildings previously made the recommendations in private but Litt said he was "disappointed with the lack of urgency" on the part of the board to implement them. Land & Buildings began its public calls for structural change at the company in 2016, repeatedly urging Brookdale to sell off its real estate holdings following financial struggles and dropping share prices as the result of a merger with Seattle-based Emeritus Corp. In February, following a strategic review, Brookdale CEO Andy Smith stepped down and was replaced by CFO Cindy Baier. Land & Buildings has since praised that move as well as Baier's performance. However, Litt said July 9 that "substantial work needs to be done to modernize the company's corporate governance." He called for the board to ask two long-standing board members to resign and be replaced with individuals with relevant healthcare experience. He also called for the appointment of a finance-oriented board member to its investment committee, and said the committee should weigh ways to maximize the value of the company's real estate, including joint ventures, sales, or splitting up the company.

Whispers Get Louder Over BHP's US Shale Sale—But One Group Is Strangely Quiet
" Sydney Morning Herald (Australia) (07/09/18) Knight, Elizabeth"

Bids for BHP's (BBL) U.S. onshore shale assets close at the end of the month. BP (BP) reportedly has the biggest offer on the table at more than US$10 billion, and Chevron (CVX) and Shell (RDS.A) reportedly are still in the race. Meanwhile, Elliott Management, which owns 5% of BHP, is remaining silent on the issue as it has a lot riding on the success of the shale auction. Elliott appears to have amassed its stake in BHP when the stock was trading closer to $20, and today the share price sits at around $33.80. The hedge fund successfully pushed to get the sale on the company's agenda, and now it will focus on unifying BHP's current dual-listed structure. Elliott has argued that the valuation lift from unification would be as high as US$22 billion, but BHP disputes the size of the benefit and contends that the costs would outweigh the benefits.

The Stilwell Group Sends Second Letter to Shareholders of Wheeler Real Estate Investment Trust
" Markets Insider (07/09/18)"

One of the largest shareholders of Wheeler Real Estate Investment Trust Inc. (WHLR), the Stilwell Group, sent an open letter to the company's shareholders on July 9, stating that it will run for three of six board seats held by legacy directors at the upcoming annual meeting. The letter cites the destruction of value that has occurred at the company. "In January, WHLR issued 1.4 million shares of Series D, $25 Convertible Preferred Stock at an $8.50 discount to face value, something I've never seen occur at even a reasonably healthy company in my 35 years of working on Wall Street. This resulted in an immediate destruction of more than $12 million dollars for the common shareholders, and it has exposed WHLR common holders to potentially even worse consequences in the future. The transaction this financed was completely voluntary; hence, it appears to have been completely foolhardy," wrote the Stilwell Group's Joseph Stilwell. "While Jon Wheeler has since been fired, six legacy directors remain on the Board: Stewart Brown (placed on the Board by Westport Capital Partners LLC), David Kelly, John McAuliffe, Carl McGowan Jr., John Sweet, and Jeffrey Zwerdling. We're going to attempt to retire at least half of them."

Mears Chairman Bob Holt to Step Down Following Shareholder Pressure
" Reuters (07/06/18) Awasthi, Shashwat"

Mears Group announced Friday that Chairman Bob Holt will not stand for re-election at the company’s annual general meeting in 2019. The move comes two days after Shareholder Value Management (SVM) called for Holt's ouster due to the company's underperformance. The Frankfurt-based investor owns 8.93% of Mears. The company said it had received a notice to requisition a general meeting with proposals to fire Holt from its board and install an alternative candidate as non-executive director. “We are determined that all Board appointments should follow a proper due process and not be imposed on us by a single shareholder,” said CEO David Miles.

Investor Snobr Sees CEZ Upside as Nuclear Risk Spooks Market
" Bloomberg (07/08/18) Chamonikolas, Krystof"

A shareholder group believes Czech power company CEZ AS is undervalued and that the state-controlled power generator will thwart government pressure to fund nuclear expansion on its own. Michal Snobr—who has long been critical of CEZ’s management and represents four shareholders together owning more than 1% in CEZ—says the company could benefit from burgeoning electricity prices more than competitors once worries about political risks disappear from investors' assessments of the stock. “I believe this discount will evaporate once politicians realize it’s practically and legally impossible to somehow force CEZ to make self-destructive investments in new reactors,” Snobr said. “The Czech legal framework is robust enough to protect minority owners’ rights.” Snobr says the company should either split its assets to let the state move forward with the nuclear projects, or remain in one piece and extend the life of existing reactors, build gas-fueled power stations, and invest more in renewables. This marks the latest example of investors across Europe pressuring power companies for shakeups as governments act on pollution and as ever-cheaper renewables change the traditional business model. Meanwhile, the Czech government this year rejected an assets split proposed by CEZ, one of the reasons for a negative view of the stock among some investors.

Shareholders Back Calls for Premier Foods Chief to Go
" The Telegraph (United Kingdom) (07/07/18) Marlow, Ben"

Several of Premier Foods’ top shareholders are seeking the removal of CEO Gavin Darby ahead of the annual general meeting on July 18. Oasis Management, which owns a 9.3% stake, has led the campaign to oust Darby, blasting him for “years of persistent shareholder value destruction and poor financial performance.” It has also attacked Darby’s pay, and last week urged the company to spin off its Batchelors soup and noodle brand to raise cash to pay down debt. Paulson & Co., which owns a 6.2% stake in the company, backed the campaign to remove Darby, saying he had failed to deliver on a promise to create shareholder value after spurning a takeover bid from U.S. spice maker McCormick (MKC) in 2016 and selling a large stake to Japan's Nissin instead. “Today, the stock languishes at 40p while the management and the board keep their comfortable jobs,” said Orkun Kilic, a portfolio manager at Paulson. “The company desperately needs new management who are willing to put stakeholders' benefits first and we hope this upcoming AGM will be a reflection point.” Another top-10 shareholder said, “We plan to vote against Gavin Darby's re-election. After the failed McCormick bid, we don't think he can be trusted. He failed to engage with shareholders over the offer and instead agreed a deal with Nissin that benefited one shareholder but penalised the rest. He then put out targets which have not been met.”

Paulson Takes Bigger Slice of Britain's Premier Foods
" Reuters (07/09/18) S, Sangameswaran"

Paulson & Co. has tripled its stake in Britain’s Premier Foods Plc, making it the third-largest shareholder ahead of an annual meeting next week that could decide the fate of CEO Gavin Darby. The hedge fund said it owned 6.08% of Premier Foods as of July 6, up from 1.99% disclosed earlier. Darby has been asked to resign by the company’s second-largest shareholder, Oasis Management, which has urged shareholders to oppose his re-election at the annual meeting. Meanwhile, shareholder advisory firms Institutional Shareholder Services, Glass Lewis, and Pensions & Investment Research Consultants have backed Darby. Premier Foods has been under shareholder pressure since it spurned a 65 pence per share takeover offer from U.S. food-maker McCormick (MKC) in 2016. Its shares traded around 40 pence on Monday. Japan’s Nissin Foods is the company's top shareholder with a 19.5% stake.

Stobart Board Blocks Re-Entry of Ex-Boss as Chairman Survives Shareholder Vote
" Belfast Telegraph (Ireland) (07/09/18)"

Stobart Chairman Iain Ferguson barely kept his board seat at the annual general meeting on Friday, with nearly 49% of shareholders voting against his reappointment—just missing the threshold needed to oust him. Shareholders also backed a resolution to appoint former CEO Andrew Tinkler as a director, after he was fired as CEO last month. However, the board blocked Tinkler's appointment, saying it was not in the company's best interests for him to become a director. Tinkler was fired for leading an effort to oust Ferguson and replace him with retail boss Philip Day. Tinkler was then hit with a legal battle for breach of contract and breach of fiduciary duty. Warwick Brady, Stobart's new CEO, said Tinkler had threatened to “destabilize the company.” On Monday, Ferguson said the company will now work to unite its shareholders. “Andrew Tinkler will not be part of this process—the board has taken the decision again to dismiss him, following the passing of his resolution to be elected as a director of the company,” he said, citing his “breach of fiduciary duty and the impending court cases against him.”

RPM International Streamlines Senior Executives as Chief Operating Officer Retires
" Akron Beacon Journal (OH) (07/06/18)"

RPM International Inc. (RPM) President and COO Ronald Rice is retiring as the company streamlines its leadership structure. Effective immediately, all group presidents will report directly to Chairman and CEO Frank Sullivan. The move is one of the initiatives geared "to drive greater operating efficiency across the organization," the company said. Elliott Management Corp. has been working with RPM to review and improve the company's operations and drive up its stock price. RPM on June 28 said it agreed to grow its board of directors to 14 by adding two Elliott-backed representatives.

Thyssenkrupp Board to Seek New CEO After Hiesinger Quits
" Reuters (07/06/18) Käckenhoff, Tom; Sheahan, Maria; Steitz, Christoph"

Thyssenkrupp said it will take its time to replace CEO Heinrich Hiesinger, who resigned less than a week after forging a landmark joint venture with India's Tata Steel following two years of negotiations. Shareholders Cevian and Elliott—which hold around 18% and less than 3% of shares, respectively—had criticized the company's performance under Hiesinger, as shares have fallen 28% since he took the helm in January 2011. Rather than appoint an interim CEO, Thyssenkrupp has asked its remaining executives—Guido Kerkhoff, Oliver Burkhard, and Donatus Kaufmann—to lead the company for now. Chairman Ulrich Lehner said, "In this difficult situation it is most important now for the company to remain on course." Meanwhile, a company statement said, "The succession to Dr. Heinrich Hiesinger as Chief Executive will follow in a structured process."

Red Oak Partners Sends Letter to Board of Educational Development Corporation
" PR Newswire (07/06/18)"

Red Oak Partners, LLC has sent a letter to the board of Educational Development Corp. (EDUC) expressing serious concerns with its “troubling” corporate governance practices, board makeup, and misaligned management incentive plan proposal. It plans to oppose the election of the Class II directors and the proposed management equity incentive plan at the upcoming annual meeting slated for July 24. Red Oak is the company’s biggest outside director with a 7.7% stake. Among its concerns with the company’s corporate governance practices, Red Oak pointed out the lack of term or age limits on the board, the combined Chairman and CEO role, and the lack of board oversight in recent years. While Red Oak is not seeking control of EDUC at this time, if the board fails to meaningfully engage with it about its concerns, the investor will have little choice but to propose its own slate of nominees at the 2019 annual meeting.

Hudson's Bay Confirms Talks Over European Joint Venture
" Retail Dive (07/06/18) Unglesbee, Ben"

On July 6, Hudson's Bay Co. (HBC) confirmed that it is exploring a possible joint venture with Signa Holding, which operates one of the company's biggest European competitors and last year offered to buy HBC's German unit. In a statement to investors, HBC said it had "signed a non-binding letter of intent with respect to the exploration of a potential joint venture" with Signa. However, any potential deal is contingent on many factors and the approval of the board. Land & Buildings had called on HBC to "seriously consider" Signa's acquisition offer, which HBC ultimately found too low.

Thyssenkrupp CEO Resigns Under Growing Shareholder Backlash
" Bloomberg (07/05/18) Wilkes, William; Henning, Eyk"

Thyssenkrupp AG’s CEO Heinrich Hiesinger stepped down after seven years, following shareholder pressure over the company’s waning revenue and share price. Elliott Management Corp. and Cevian Capital, which control roughly 20% of the company, approve of Hiesinger's decision to resign and favor bringing in a new CEO who could enact more sweeping changes at the German industrial giant, according to sources. News of his departure came days after Thyssenkrupp and Tata Steel Ltd. finalized a deal to set up a European steel colossus, an arrangement that faced increasing opposition from investors and labor unions and put Hiesinger at odds with Thyssenkrupp's board. Hiesinger faced criticism from investors including Cevian for not working fast enough to simplify Thyssenkrupp's complicated structure, which runs from submarines and elevators to food packaging and steel. Shareholder dissatisfaction intensified this year after Elliott took a stake in the company and pushed for more radical changes, while opposing Hiesinger's leadership. “We view Hiesinger's departure as a sign of a growing divergence in vision between management and an increasingly disenchanted supervisory board spurred on by two activist investors, Cevian and Elliott,” wrote Jefferies analysts including Seth Rosenfeld. Hiesinger's exit will drive speculation that bigger changes will follow, including the possibility of a broader break up or spin off of the highly profitable elevator division, according to Jefferies.

Oasis Management Responds To ISS Report On Premier Foods
" Business Wire (07/05/18)"

Oasis Management acknowledged the report by proxy advisory firm Institutional Shareholder Services (ISS) about Premier Foods plc and its "qualified support" for CEO Gavin Darby. The investor encourages all shareholders to read the full 34-page report, believing its conclusions do not reflect its content. "Although we respectfully disagree with ISS’ ultimate conclusions in this case, for proper context, we understand that ISS has never supported a requisitioned resolution to remove a UK Executive Director brought by an active shareholder, and we do acknowledge that a report as critical as this about Premier Foods and in particular CEO Gavin Darby is fairly exceptional in and of itself." Oasis agrees with several points in ISS's analysis, including that executive pay is excessive and that "the merits of the company's current strategy are debatable." Oasis also notes that ISS expresses unenthusiastic support for Darby, with its report stating that "the Company's performance record under Darby's leadership is not particularly compelling," that "Premier Foods has generally underperformed peers over the five years of CEO Gavin Darby's tenure," and that the company has "exhibited minimally acceptable operating performance" under his leadership. Oasis said it is confident that other independent shareholders share its concerns and that there is wide-ranging support for the ouster of Darby as CEO. "Although the Premier Food Board continues to stand by Darby despite the failures under his leadership, we urge you to exercise your rights as shareholders to change the direction away from this zombie company to a healthy, growing business that will benefit all shareholders."

Mears to Call Investor Meeting After Move to Oust Chairman
" Independent (Ireland) (07/05/18) Williams, Holly"

Mears Group confirmed it received a request on July 4 from Frankfurt-based Shareholder Value Management (SVM) to remove Chairman Bob Holt amid concerns over the underperformance of its share price, and said it would call a meeting with shareholders within 21 days of the request and hold the meeting within 28 days. The company advised shareholders to "take no action at this time." SVM, which owns an 8.9% stake in Mears, wants to replace Hold with former Staffline CEO Andy Hogarth. The investor believes Holt is "unable to devote sufficient time" to Mears as he holds 10 board seats and six chairmanships. Further, SVM says his lack of independence, given his 21 years at the company, has "led to sub-optimal decision-making at the board level" and is behind the share price underperformance. Mears has seen its shares fall 25% in the past year, and an SVM spokesman noted that "it has become clear that the current chairman lacks the will to enact much needed change that only a new independent chairman can bring."


The Scourge of Japan's Boardrooms Turns Peacemaker With Big Win
" Bloomberg (07/16/18) Redmond, Tom; Sano, Nao"

After years of waging activist campaigns in Japan’s boardrooms, Yoshiaki Murakami is being hailed by executives as a peacemaker. Murakami—a champion of shareholder rights before his conviction for insider trading—played a key role in the merger of refiners Idemitsu Kosan Co. and Showa Shell Sekiyu K.K. He served as a consultant to Idemitsu's founding family, whose spat with executives obstructed the deal’s progress, and convinced them to accept the integration with concessions for shareholders. So important was his intervention that Idemitsu Chairman Takashi Tsukioka publicly praised Murakami at a press conference in Tokyo last week. “I think it’s a good thing, I really do,” Murakami said of the resolution, speaking in a rare interview after years of avoiding the media. “This merger contributes to Japan’s energy security.” Idemitsu and Showa Shell shares have jumped since reports last month that the merger, first terminated nearly four years ago, was back in play. The two companies will now combine in 2019. Murakami is also likely to see a solid return on his investment in Idemitsu, though he says he only purchased stock so he could enter the talks as a fellow shareholder. Idemitsu's founding family was always looking out for the company's interests, according to Murakami, and its position was never that far from the oil refiner's. He says the firm's executives should have explained the situation better. “There was a slight misunderstanding between the company and the founding family,” he said. “I realized there was no big gap after I talked to management.”

At Last, Japan Starts Snipping Its Dead Wood
" Financial Times (07/15/18) Mooney, Attracta"

In the six years since Japan's prime minister, Shinzo Abe, put corporate governance at the center of his plan to reform the economy, observers say companies and investors have been slow to address such issues as conflicts of interest, underperforming CEOs, and a lack of diversity. "Corporate Japan is changing, there is no question about it. But if you look at it from the governance lens, and ask if those changes are fast enough, [they] have not taken place to anywhere near the degree as if it were an American or European business," said an international investor, which also takes activist positions. "It is still very difficult to remove anyone on a board or a CEO. As long as that is true it is going to be a frustrating situation for shareholders who want change." According to a report on Japan's top 500 businesses by CLSA Securities, every underperforming CEO—defined as a return on equity of less than 5% over five years—kept their jobs this year as shareholders failed to vote against management. "People just don't want to rock the boat," says CLSA Japan strategist Nicholas Smith. Meanwhile, the report found that nearly every shareholder proposal this year was rejected. However, Ryohei Yanagi, CFO at Eisai, noted that "rejection is on the rise. Investors are more willing than ever to vote against CEOs that are value destroyers."

Bill Ackman's Comeback: How to Ride His Revival
" Barron's (07/13/18) Bary, Andrew"

Bill Ackman could be making a comeback after big public losses and an exodus of investors in recent years. Ackman's publicly traded investment vehicle, Pershing Square Holdings, has risen more than 20% from a March low, based on its asset value, and through July 10 is up 10.4% on the year—about double the return on the S&P 500 index. The depressed shares of the closed-end fund offer an affordable way to ride what appears to be Ackman's revival. The shares go for about $15 on the Euronext Amsterdam exchange, a 22% discount from their underlying net value exceeding $19. Pershing Square Holdings was battered by its long position in Valeant Pharmaceuticals International (VRX) and short bet against Herbalife Nutrition (HLF). The fund lost 20.5% in 2015, 13.5% in 2016, and 4% last year, but Ackman is betting on the closed-end fund. Ackman has purchased $292 million of its shares since early May to give him a 13% stake, and he has taken other steps to narrow the discount on the stock. The purchases reflect the view that the fund "is substantially undervalued," the firm said in a statement.

Opinion: Activists Can Keep Check While CEOs Build Sandcastles
" Financial Times (07/13/18) Braithwaite, Tom"

Young entrepreneurs in the tech industry are reading "Extreme Ownership: How U.S. Navy Seals Lead and Win." Authors Jocko Willink and Leif Babin define "extreme ownership" as taking charge and holding yourself accountable. Managers at more established U.S. companies often practice extreme ownership, but they also come under fire from corporate governance experts over the role of the chief executive officer. According to a new report from Equilar, 38 of the top 500 U.S. public companies last year had proposals to install an independent chairman, and all failed. Most shareholders are content to give the CEO a sandbox if he builds a nice enough castle, writes Tom Braithwaite. In the U.K., independence is deemed essential by the corporate governance code, but this does not seem to help performance, considering the top four companies in the S&P 500 are worth more than the entire FTSE 100. Still, activists can provide a more important check than a chairman, as a new report from Lazard shows they spent $40 billion targeting 136 large companies last year. That is the most since Lazard starting tracking the amount in 2013 and is likely the most ever.

Progress on Gender Diversity Stalls at U.K.'s Biggest Companies
" Financial Times (07/16/18) Murphy, Hannah"

New research from the Pipeline, which trains women for senior roles, found women accounted for only 16% of executive committees at FTSE 350 companies at mid-April this year, unchanged since 2016. The report also found that only 5% of U.K. executives with "profit-and-loss responsibilities"—upper-level executives who manage the company's budget—were women in 2018, down from 6% the previous year. The results leave many wondering whether government-backed gender diversity targets, which include women making up one-third of boards and executive committees of FTSE 350 companies, can be met by the 2020 deadline. Last month, a review found that U.K. companies would need to appoint women to 40% of their board positions over the next two years to meet the target.

Activist Investors Turn Up Heat in Drive for Returns
" Wall Street Journal (07/12/18) Lombardo, Cara"

Activist investors are launching campaigns at a record pace, according to a new study by Lazard. Activists spent $40 billion engaging 136 companies with market values of more than $500 million in the first half, the most since the investment bank started collecting the data in 2013. Only 94 companies faced new activist pushes by this time in 2017. In addition, activists won a record 119 directorships in the first half—a 75% hike from a year earlier—and they are increasingly looking for control of boards, the data show. As the investors become more mainstream, big asset managers like T. Rowe Price Group Inc. are more open to supporting them, and directors are more open to dialogue as well. “Boards are feeling more pressure because actively managed funds are increasingly supportive of activist campaigns,” said William Anderson, an investment banker at Evercore Inc. As a result, companies and activists more often reach deals to avoid proxy fights. Activists won 85% of their board seats this year through settlements, according to Lazard. These successes have encouraged more investors to experiment with activism: nearly 20% of new campaigns this year have been launched by first-time activists. As active stock pickers fall behind passive investors, the appeal of activist investors and their ability to effect stock-enhancing change has grown, said Greg Taxin of Spotlight Advisors LLC, who recently worked with Blackwells Capital LLC in its campaign at Supervalu Inc. (SVU). “Activism has proven over a long stretch of time to be an effective way to generate alpha,” said Taxin. “In a world where active stock picking is viewed skeptically by many, this strategy has an understandable explanation for why it ought to outperform.”

Investors Want to Change Corporate Governance Rules for Tech Powerhouses
" Variety (07/11/18) Spangler, Todd"

Tech companies like Facebook (FB), Google parent Alphabet (GOOGL), and Snap (SNAP) have similar multi-class stock structures that give their founders full control over their businesses, and Netflix's (NFLX) company bylaws require supermajority votes by owners of all outstanding shares to make any changes in corporate governance. With the Facebook scandal involving Cambridge Analytica, investors are turning their attention to the issue of corporate governance and taking aim at structures that give company heads much of the power. According to investor and shareholder advocate James McRitchie, "I think Facebook wouldn't have been so insular, and might have paid more attention [to the Cambridge Analytica issue], if the board were more independent." Facebook Chairman and CEO Mark Zuckerberg controls 60% of the voting power. "There never is really a situation where this makes sense. You could make excuses, but what it does is eliminate accountability," says Charles Elson, professor of finance at the University of Delaware. Meanwhile, at Netflix, investors have voiced frustration that the board is not receptive to their concerns and that there is a lack of racial diversity among directors. However, Lawrence Cunningham, corporate governance professor at George Washington University, indicates that as long as Netflix continues to deliver strong results, "a lot of shareholders will say, 'Well, it's not the best board in the world, but I can live with it.'"

NYSE Opposition to Trading-Fee Review Puts Companies and Some Shareholders at Odds
" Wall Street Journal (07/11/18) Morgenson, Gretchen"

Stock exchanges are creating tension between big listed companies and their top shareholders over regulators’ efforts to examine the controversial practice of assigning fees and rebates to stock trades. At issue is a Securities and Exchange Commission (SEC) proposal to study the system known as “maker taker,” in which exchanges charge fees for some trades and pay rebates on others. Both the New York Stock Exchange (NYSE) and Nasdaq Inc. (NDAQ) oppose the proposal, saying it is flawed and doesn’t accurately assess costs. In a June email, the NYSE told its listed companies the proposal “could impact trading in your stock” and urged them to write letters arguing against it if they were concerned. By early July, over 24 companies had penned letters to the SEC criticizing the pilot or asking to have their stocks excluded from it. But many of these same companies' biggest investors disagree. More than three-quarters of companies opposing the pilot program have at least one of their five top institutional investors supporting it, regulatory filings show. These include large investors of Apache Corp. (APA), Halliburton Co. (HAL), Home Depot Inc. (HD), and Mastercard Inc. (MA). Apache submitted a letter to the SEC on June 7 urging it to withdraw the proposal, after four of its five top shareholders had expressed support for the program. Those investors—BlackRock Inc., Davis Selected Advisers, State Street Corp., and Vanguard Group—together own almost 25% of Apache's shares. At Halliburton, its five largest investors, owning roughly 27% of its shares, wrote letters backing the pilot. Home Depot's top three shareholders holding nearly 19% of its shares said they favor the pilot as well.

If Supervalu's Investor Wins, Big Changes Will Likely Follow
" Minneapolis/St. Paul Business Journal (07/11/18) Rehkamp, Patrick"

A proxy fight at Supervalu could determine the future size of the Fortune 500 company. Blackwells Capital, which says it owns roughly 7% of the company, has been urging Supervalu to divest its retail divisions, which includes more than 110 stores and recognizable businesses such as Cub Foods. Last year, Supervalu reported revenue of slightly more than $14 billion, with its retail segments contributing nearly $3 billion. The rest of the company's business is grocery wholesale, which Blackwells says should be its sole focus. If Supervalu spun off the retail segment, it wouldn't be enough to remove the company from Fortune's 500 list, but the company would go from being Minnesota's ninth-largest public company to roughly 13th. Blackwells is also weighing an outright sale of the rest of the company. One of its proposals includes a "sale or merger of Supervalu's strategically attractive wholesale business to or with one of multiple potential competitors," according a website the investor created. "I don't think [Blackwells] been shy in terms of looking at opportunities to unlock value for shareholders," said Blackwells spokesman Dan Gagnier. He said that Blackwells wants to take control of the board because the company has not heeded its advice and some of the current board directors are responsible for Supervalu's financial missteps. One thing to watch for if Blackwells succeeds in scrapping retail at the company's Aug. 16 annual meeting is how it would recommend reinvesting any potential proceeds in the sale back into the company, which would indicate whether it's interested in the company's long-term success.

Shareholders Find Their Voice at Japan's Annual Meetings
" Nikkei Asian Review (07/12/18) Yuda, Masayuki"

At annual shareholder meetings in Japan, both management and investors are slowly embracing dialogue, with both sides exchanging ideas on how best to create long-term value. This year, shareholders filed resolutions at 42 listed companies, a record high and a 68% jump compared with five years earlier. While that is just about 2% of all listed companies ending their fiscal years in March, the steady growth shows that change is happening. Attitudes began changing in Japan after Prime Minister Shinzo Abe introduced two new sets of guidelines, a corporate governance code and a stewardship code. This year's resolutions ranged from appointing outside board members to opposing a large acquisition. Last year, investors were most interested in dismantling companies' takeover defenses and terminating the practice of offering advisory positions to retiring executives. In 2018, they turned their attention to boosting returns. According to Goldman Sachs, proposals to unwind cross-shareholding arrangements between companies more than doubled. There was also a significant increase in demands for higher dividends and share buybacks. "A high approval rate for cross-shareholding-related proposals could be a catalyst for future changes in corporate behavior," said Christopher Vilburn, a Goldman analyst in Japan.

Proxy Voting Is Broken and Needs to Change
" Financial News (07/11/18) Racanelli, Vito J."

Proxy voting professionals and practitioners consider the current proxy system a failed process that is unresponsive to shareholders and increasingly at risk of producing a wrong result in a close vote. They consider a proxy battle last year between Procter & Gamble (PG) and Trian Fund Management just the latest failure: the fight descended to the “snake pit” where printed proxy cards representing most of the roughly two billion votes cast were reviewed for three weeks before the two sides reached a deal. Many are counting on the Securities and Exchange Commission to offer new rules and legal guidance and for participants to push technological solutions. The proxy voting system remains “noisy, imprecise, and disturbingly opaque,” says Edward Rock, a law professor and director of the Institute for Corporate Governance and Finance at New York University School of Law. “In a corporate vote where the margin is close, I am skeptical whether we have a way that we can defend as to who won,” he warns. The unusually high-profile nature of the P&G vote highlighted the inconsistencies of the system. Proxy cards representing millions of votes from each side weren't counted. P&G and Trian said through spokespeople that the proxy voting system seems overly complicated, making an accurate vote counting very difficult in a close election, and that the voting process should be updated to the modern era to meet the needs of shareholders and issuers.

Prepare for Impact: The Rise of Shareholder Activism
" Economia (07/11/18) Videira, Rui"

Rui Videira, an account director at Instinctif Partners, says shareholder activism is on the rise in Europe, with the United Kingdom the country with the most engagement. Companies like Whitbread, Hammerson, Barclays (DTYS), Sky, GKN (GKNLY), and Micro Focus (MFGP) are among those contending activist campaigns or seeing activists build a stake in their businesses. Much of this activism is being driven by Elliott Management, Sherborne Investors, and Cevian Capital, but U.K. firms like The Children's Investment Fund also are helping shape the landscape. "Above all, companies should have a comprehensive understanding of their shareholder base and a tailored engagement plan that shows management and the board are aligned in their commitment to delivering shareholder value," says Videira.

Private Companies May Be a Gateway to Getting More Women on Boards
" Pittsburgh Post-Gazette (07/09/18) Gannon, Joyce"

One way to increase the number of women on public company boards may be through appointments to the boards of private companies.  Because they do not have federal securities reporting requirements, private firms don't have to divulge who sits on their boards or the gender mix of board members. "They tend to fill more seats through their own network of family and friends," observes Kristen Hemmings of Coghill Investment Strategies.  Urging private companies to appoint more female directors makes sense, according to Chuck Cohen, a veteran director on Eat'n Park Hospitality Group's board.  He reasons, "One of the barriers to bringing people on to boards of public companies is that they're not really qualified for board service and have no experience. But how do they get experience if they're not appointed to a board? The answer is experience in a private company environment that has at least some of the characteristics of a public board."

Investors Pose Rare Challenge to UK Directors
" Financial Times (07/08/18) Burgess, Kate"

Investors are challenging institutional shareholders on their longstanding support for directors in the United Kingdom. Shareholder Value Management recently called on investors in Mears, the social housing and homecare provider, to oust Chairman Bob Holt, who has been in charge of the company's board since 1996, when he brought the group to the market. Shareholder Value Management, advising a Frankfurt fund that owns 9% of Mears, said Holt, who controls 10 board positions, has failed "to challenge the status quo despite deteriorating results and a stagnant share price. At Mears' annual meeting in June, just half of the company's shareholders voted for Holt's re-election, with the rest either voting no or abstaining. On Friday, Mears said Holt does not plan to seek re-election again. Mears has scheduled a vote on Shareholder Value Management's proposals, which include an alternative candidate, for August. Meanwhile, Hong Kong's Oasis Management, which holds a 9% stake in Premier Foods, faces more on an obstacle in its battle against Gavin Darby, the company's chief executive. Mears' shareholders already had doubts about Holt, but Premier's board has been rallying key allies in British industry.

Proxy Voting Is Broken and Needs to Change
" Barron's (07/06/18) Racanelli, Vito J."

The vote count in the proxy battle between Procter & Gamble (PG) and Trian Fund Management late last year is the latest failure of the proxy system, according to dozens of proxy voting professionals and practitioners interviewed by Barron's. They say the proxy system is unresponsive to institutional and retail investors, adding that there is greater risk that it will produce an erroneous result in a close vote. The sheer volume of materials, number of intermediaries, and tight windows to meet corporate deadlines lead to frequent miscommunications and untallied votes. In the P&G vote, proxy cards representing millions of votes from each side weren't counted; some were disallowed on technical grounds, and others were ruled out because signatures didn't match or ballots were inadvertently separated from proxies. In many cases, voters weren't informed that their votes weren't counted because such disclosure isn't mandated. Proxy voting professionals and practitioners are looking for the Securities and Exchange Commission to provide new rules and legal guidance and for participants to push technological solutions as activist campaigns become more common. The Depository Trust & Clearing Corp. says it supports any industry effort to improve the proxy voting process. Many governance practitioners are optimistic that blockchain technology might help to set up an "end to end" audit trail so that beneficial shareholders can be certain their votes were cast properly and counted.

Cultural Mix a Hidden Weapon in Nestle CEO's Activist Defense
" Reuters (07/06/18) Geller, Martinne; Herbst-Bayliss, Svea; Koltrowitz, Silke"

Nestle (NSRGY) CEO Mark Schneider's abilities are being tested by Daniel Loeb's Third Point, which is pressuring the company to boost margins and double earnings per share by 2022. According to analysts, Schneider has the experience to balance the measured European shareholder approach and American-style activism, thanks to his dual German-U.S. citizenship, a Harvard MBA, a PhD from the Swiss university of St. Gallen, and 13 years as CEO of a German firm. "Schneider can hopefully bring both of those things to his role," says Kepler Cheuvreux analyst Jon Cox. However, Cox notes that if Schneider fails to deliver on his strategy, Nestle could face calls for a break-up. Among other things, Third Point is calling for Nestle to sell its stake in L'Oreal (LRLCY) and reorganize into three business units. The hedge fund has become one of the company's top 10 shareholders, owning about 1% of Nestle's shares. Meanwhile, Third Point has identified the continuing influence of Chairman Paul Bulcke as a potential problem, indicating that the former CEO "presided over a long period of underperformance, seems too comfortable with the status quo and may be holding up the pace and magnitude of change."

Investors Make Their Voices Heard by Food Brands
" The Food Institute (07/05/18) Rowan, Jennette"

Observers say investors have been active recently in terms of seeking out food companies to sell or restructure their businesses. Dan Loeb's Third Point has sent a letter to Nestle (NSRGY), in which it holds a 1.25% stake, calling on the company to, among other things, break its business into three units—beverage, nutrition, and grocery—each with their own CEO, regional structure, and marketing function. Third Point also reportedly is in talks with Campbell's (CPB) owners and investors about exploring a sale, calling the company undervalued. Meanwhile, Oasis Management has called on Premier Foods to sell its Batchelors Soup brand to improve its financial outlook and create funds for investment.

SEC Chills Shareholder Bids to Pressure Companies on Climate Change
" Politico Pro (07/05/18) Temple-West, Patrick"

The Shareholder Rights Group, which represents investors with at least $25 billion of assets under management, says JPMorgan (JPM), Apple (AAPL), Verizon (VZ), and other major companies have won SEC approval to block stockholder efforts to make eco-friendly changes in their policies. The companies successfully argued that the shareholders were "micromanaging" business operations and could not seek votes on issues ranging from methane gas emissions to financing tar sands deals, the group said. The issues include corporate risk management, financial matters, and environmental, social, and governance (ESG) concerns.  ESG investments are booming, but they are being attacked by pro-business groups. The National Association of Manufacturers is co-funding an effort to raise doubts about the value of such investing. Apple and Verizon used the micromanagement argument to block proposals asking the companies how they could achieve "net-zero" emissions of greenhouse gases. JPMorgan blocked a proposal to evaluate the company's risks associated with its lending to tar sands production and transportation.

Are Institutional Investors Becoming Universal Activists?
" IR Magazine (07/06/18) Schutzmann, Oliver"

Shareholder activism today is a popular and powerful investment strategy, with activists bringing new thinking to corporate strategy and acting as the voice of the shareholder in the boardroom. As shareholder activism grows, there is a more recent trend in the institutional investment world which is making activism far more widespread. This "universal activism" is driven by the rise of ESG investment, the demand for diversity and equality, the appearance of climate risk on companies' risk statements, and the rise of ethical investing. Ethical investing is not new and some sectors have been in the sights of ethical activists for years. But if one lesson can be learned from these battles, it is that the firms that listen, understand, and adapt to shareholder concerns have survived. Those that have tried to fight the advance of the activists have gradually disappeared. For organizations and leaders in the Gulf Cooperation Council (GCC), the arrival of activists on the shareholder register is a given. Companies that acknowledge this fact and take steps to cohabit with the universal activists have a far better outlook than those that ignore the trend.

Abstract News © Copyright 2016 INFORMATION, INC.


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