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.
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.
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.
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."
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.
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.
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.
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."
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.”
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.”
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."
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."