Activist Database

Activist Deadline Calendar & Standstill Database

Featuring standstill agreement and nomination deadline windows, provisions and timelines

Media Center

Featuring all breaking news and in depth articles and editorial press coverage pertaining to shareholder activism and corporate governance.
Goyder Calls for Changes to AGM Rules After Activists Dominate Woodside Meeting
Toshiba Shareholders May Finally Get Their Due
Elliott Entry at Glaxo Piles Pressure on CEO to Speed Turnaround
Legion Partners Files Definitive Proxy Statement and Issues Letter to OneSpan Shareholders
Influential Group Backs Boston Private Sale to Silicon Valley
Drug Royalty Ruling Leaves Scars on Biotech and Its Sibling Company
GameStop CEO Gives Up $98 Million in Stock After Missing Performance Targets
Woodside, Santos Investors Reject Oil, Gas Wind-Up Resolution
Shell Asks Investors to Vote Against Activist Climate Resolution
Elliott Management Builds Up Large Stake in GSK
Returning Toshiba CEO Faces Trial by Fire as CVC Buyout Offer Looms
Santos Won't Repeat Mistakes on CEO Bonus: Chairman
Exxon, Hedge Fund Spend Over $65 Million in Battle for Oil Giant's Future
Glencore Faces Shareholder Dissent on New Chief Gary Nagle's Pay
Big Companies Line Up to Crush Green Transparency Resolutions
GameStop Rises as Zero-Debt Plan Boosts Bets on Turnaround
Kohl's Settles With Investor Group, Adds Three New Directors
Legion Pushes Board Fight at OneSpan After Settlement Offer Rejected
Shareholder Continues Proxy Fight With Gene Therapy Company
Trillium Pushes Alphabet for Whistleblowing Review
Unlocking Diversity's Promise: Psychological Safety, Trust, and Inclusion
Petrus Starts Proxy Fight at German Bank Aareal
Legion Partners Looks to Take Over Genesco Board, Blasts Acquisition Strategy
Toshiba CEO Nobuaki Kurumatani Steps Down Under Pressure From Shareholders
Estate Agent Foxtons Under Fire Over CEO Bonus
Harmonic Gets Lift From Agreement With Big Shareholder
Japan to Promote ESG Disclosures and Diversity for Listed Companies
Boardroom Wars Rattle Dignity and Countryside
Ancora Comments on the Blucora Board's Decision to Continue Wasting Stockholders' Resources on a Low-Road Campaign
Legion Partners Nominates 7 Directors to Genesco Board
Boeing Shareholders Will Weigh Need for More Changes to Board
Toshiba Investor Oasis Unimpressed by CVC's $20 Billion Offer
GameStop Working to Replace CEO George Sherman
Forward Air Advances Final-Mile Strategy, Adds 11 Locations
Delek Issues Statement Regarding CVR Energy and Icahn Proxy Contest
Hedge Fund Titan Bill Ackman Backs ESG Investing
IsZo Capital Announces That ISS and Glass Lewis Recommend Nam Tai Shareholders Vote for Boardroom Change on its Green Proxy Card
Harley-Davidson Nominates Ford CEO Farley to Join Its Board
CEO Pay Surged in a Year of Upheaval and Leadership Challenges
Creval Investors Should Reject Board Delay, Says Glass Lewis
Investors Oppose Rio Tinto Pay Report Over Rock Shelter Outrage
ISS Backs One of Ancora's Board Nominees at Blucora
CVC in Talks With Japanese Investors for Toshiba Bid
Heineken Investors Urged to Revolt Over Former Chief's Payout
Box CEO Aaron Levie Steps Down as Chair After KKR Invests $500M
GameStop to Name Chewy Co-Founder as Chairman
Investment Giants Lobby to Avoid Antitrust Scrutiny
Toshiba Board Urges Caution Over CVC Offer, Sending Stock Lower
Icahn’s CVR Files Suit Over ‘Eye-Popping’ Delek CEO Pay
An Alphabet Shareholder Demanded Better Whistleblower Protections For Google Employees, Citing "Red Flags" Over Corporate Culture
Group of Danone Shareholders Wants Board to Clarify Strategy at AGM
CIB Marine Engaged by Hildene Capital
Boston Private, Investor Spar Over Pending SVB Merger
Analyst: With Settlement in Place, Kohl's Likely to Stick With Strategic Plan
Macellum Capital's Jonathan Duskin Talks Activism
Hedge Fund Adviser Sees 'Potential' for Exposing ESG Fakes
Editorial: Toshiba Takeover Tests Corporate Japan
Investors Criticised Over 'Action Gap' in Tackling Climate Change
Covid-19 Has Created a New Hunting Ground for Activists and Boards Need to Be Ready
'Deeds, Not Words': Mining Firms Reshape Boardrooms as Investors Demand Sustainability
Corp Fin Staff Updates Guidance Regarding Presentation of Shareholder Proposals in Light of Covid-19
Executive Pay and ESG Performance
Gender Diversity in the Silicon Valley
Cubic Bidding War Highlights the Value of Certainty Over Price
BlackRock CEO Larry Fink Shareholder Letter a Case Study in Corporate Communications
Will Nasdaq’s Diversity Rules Harm Investors?
2020 in Hindsight: Key Considerations for Directors in 2021

Voting Database

A new searchable database featuring the comprehensive voting records of all top institutional investors. This includes every proposal that was up for a vote and how the investor voted.

2021 Conference

13D Monitor | In The Media

4/16/2021

Goyder Calls for Changes to AGM Rules After Activists Dominate Woodside Meeting

Sydney Morning Herald (Australia) (04/16/21) Ingram, Tess

Woodside Petroleum (WOPEY) chairman Richard Goyder has called on the corporate regulator and federal treasurer Josh Frydenberg to consider reforming AGM rules to prevent activists overpowering "real shareholders." The gas producer’s annual meeting in Perth was dominated by questions from more than a dozen environmental activists holding proxies. Goyder said retail shareholders risked missing out on an opportunity to engage with the board and management of a company if single-interest groups were allowed to continue overshadowing proceedings. Goyder, who is also chairman of Qantas and the AFL Commission, said it was a matter that warranted review by ASIC, the federal Treasurer, and other parties. "You want to give shareholders a say but I think we want to give real shareholders a say," Goyder stated. "I do think that we need to look at how AGMs operate because unfortunately what will happen is the retail shareholders who want to come and see us here will just say, 'It’s not worth going.'" Activist groups are increasingly using these tactics to force votes on company policies over climate change and emissions. Goyder, one of the most senior figures in corporate Australia, said the rules that allowed shareholders to put resolutions forward should be strengthened, arguing responding to such resolutions required "a lot of work, time and effort. ... For a start, shareholder requisitions in my opinion should have probably a 5% of shareholding requirement which is still actually not that difficult," he added.

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4/16/2021

Toshiba Shareholders May Finally Get Their Due

Wall Street Journal (04/16/21) Wong, Jacky

Shares of Toshiba (TOSBF) are trading heavily on the prospect of a bidding war at the company, which has a large base of foreign investors. Overseas investors hold a combined 60% stake in Toshiba, and became more vocal as Japan overhauled its corporate governance standards. In March, Toshiba's largest shareholder, Effissimo Capital Management, secured investor backing for an independent investigation into voting fairness at last year's annual general meeting. Nobuaki Kurumatani was under pressure from shareholders when he decided to step down as CEO. CVC Capital Partners wants to buy out Toshiba, but investors had concerns about a potential conflict of interest because Kurumatani previously headed the private equity firm's Japanese operations. Toshiba may have other suitors, according to media reports.

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4/16/2021

Elliott Entry at Glaxo Piles Pressure on CEO to Speed Turnaround

Bloomberg (04/16/21) Ring, Suzi; Deveau, Scott; Nair, Dinesh

GlaxoSmithKline Plc (GSK) CEO Emma Walmsley is under even more pressure to speed up a turnaround now that Elliott Management Corp. has built a stake in the U.K. pharmaceutical giant. The hedge fund has yet to disclose its rationale for the purchase, but John Rountree at the London pharmaceutical consulting firm Novasecta Ltd. said its move "puts management under pressure to justify their story." Glaxo announced plans in 2018 to merge its consumer health unit with Pfizer Inc.'s (PFE) and split off the business into a separate, U.K.-listed company. However, that effort is not expected to be complete until 2022. Given Elliott's distaste for protracted corporate breakups, some analysts wonder whether a sale of the pharma business, or even the whole company, could now be a possibility. "It would make sense to us for Elliott to push for GSK to sell the pharma business to focus on vaccines or to sell itself entirely," said Naresh Chouhan at London-based health care researcher Intron Health. "This would allow a potential acquirer to extract synergies by curtailing GSK's R&D activities."

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4/15/2021

Legion Partners Files Definitive Proxy Statement and Issues Letter to OneSpan Shareholders

Business Wire (04/15/21)

Legion Partners Asset Management LLC, which, together with its affiliates beneficially owns 2,790,121 shares of common stock of OneSpan Inc. (OSPN), representing approximately 6.9% of the outstanding stock, has announced the filing of its definitive proxy statement and issued an open letter to stockholders in connection with its nomination of four independent directors for election to the company's board of directors at the company's 2021 annual meeting of stockholders: Sarika Garg, Sagar Gupta, Michael J. McConnell, and Rinki Sethi. The company has not set the date or time for the annual meeting. In the letter, Legion outlines its case for board refreshment at OneSpan. Legion is the second-largest institutional stockholder of OneSpan and has repeatedly attempted to engage constructively with the board and management team for years to help improve OneSpan's persistently low valuation. In the letter, Legion outlines its case for board refreshment at OneSpan. Of the four incumbent directors Legion is seeking to replace, three hold key leadership positions yet possess virtually no pertinent industry experience relevant to OneSpan's go-forward strategy of becoming a cloud-first recurring revenue software company. Legion believes its nominees, if elected, would bring unique and diverse perspectives to the board and seek to work collaboratively with the remaining directors to explore all opportunities to unlock value for stockholders. Legion also says that if the company were to monetize the declining hardware business and transform OneSpan into a pure play software company, its shares would likely rerate closer to peer levels, or roughly 70% higher than current levels.

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4/15/2021

Influential Group Backs Boston Private Sale to Silicon Valley

Boston Business Journal (04/15/21) Ryan, Greg

Institutional Shareholder Services (ISS) has given "cautionary support" for Boston Private Financial Holdings Inc.'s (BPFH) acquisition by Silicon Valley Bank's (SIVB) parent. This support comes less than two weeks before shareholders vote on whether to approve the deal, which is opposed by Holdco Asset Management LP, which owns slightly less than 5% of Boston Private's outstanding shares. The part-cash, part-stock deal was valued at $900 million when it was announced in early January, but Silicon Valley's stock price has since jumped more than 30%, and ISS said Silicon Valley likely could pay more for the bank. In addition, ISS said there are legitimate concerns that Silicon Valley's impressive valuation could decline, which is a risk for Boston Private investors that would receive the company's stock in the deal. However, ISS said the strategy behind the merger makes sense, and the premium offered to shareholders is now over 60%. HoldCo said in a statement, "HoldCo believes that shareholders who take the time to read the ISS report will invariably draw the conclusion that ISS's 'cautionary support' for the merger provides numerous, well-reasoned arguments for rejecting the deal. We believe (Boston Private) shareholders should do just that." The merger cannot proceed unless shareholders of at least 66.7% of outstanding shares in Boston Private common stock approve the deal.

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4/15/2021

Drug Royalty Ruling Leaves Scars on Biotech and Its Sibling Company

San Francisco Business Times (04/15/21) Leuty, Ron

A March 30 arbitrator's ruling will allow Innoviva Inc. (INVA) to turn millions of dollars in cash into strategic investments, ending part of a disagreement related to the former Theravance Inc.'s carveout seven years ago of Innoviva to bank royalties from drug giant GlaxoSmithKline's (GSK) sales of lung drugs Breo Ellipta and Anoro Ellipta. The goal was for Innoviva to distribute those royalties to shareholders, including GlaxoSmithKline, while a spinoff company, Theravance Biopharma Inc. (TBPH), would focus on drug development. However, the royalties from a third drug, Trelegy Ellipta, were not distributed to shareholders but deposited into a limited liability corporation, Theravance Respiratory Co. LLC (TRC), managed by Innoviva. The disagreement centered on the remaining 15% of TRC's income from Trelegy after the 85% cut to Theravance Biopharma, which initiated arbitration in October contending that TRC must distribute "substantially all" royalty proceeds. According to Innoviva, the arbitrator's ruling gives it the ability to use royalties from Trelegy's sales to make a wide range of investments, including a $300 million investment into a "long-only" health care, pharmaceutical, and biotech fund, Innoviva Strategic Partners LLC, that is advised by Sarissa Capital Management, which in 2018 pressured Innoviva's board to take on Sarissa-backed directors. "We would expect that all Innoviva stockholders should be pleased by our efforts to create potentially significant value-enhancing optionality for all members of TRC, including Innoviva," wrote Innoviva CEO Pavel Raifeld, a Sarissa investment team member who was named to the top post in May 2020, in an April 2 letter to shareholders accompanying materials for the company's May 14 annual meeting.

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4/15/2021

GameStop CEO Gives Up $98 Million in Stock After Missing Performance Targets

Dallas Morning News (04/15/21)

GameStop's (GME) failure to meet performance targets will cost CEO George Sherman $98 million in stock. The video-game retailer missed both sales and profit estimates in its most recently reported quarter. Sherman is on the hot seat now that investor Ryan Cohen has been named chairman of GameStop. Sherman is a brick-and-mortar veteran, but Cohen wants to transform GameStop into an e-commerce powerhouse. GameStop is said to be seeking a new chief executive and considering several candidates. Under an incentive package granted to Sherman in April 2019, he must forfeit 587,000 restricted shares of GameStop. The company has continued to struggle even though Reddit traders have helped push up its stock nearly 800% this year.

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4/15/2021

Woodside, Santos Investors Reject Oil, Gas Wind-Up Resolution

Reuters (04/15/21) Paul, Sonali

Investors in Australia's top two independent oil and gas producers, Woodside Petroleum (WOPEY) and Santos Ltd. (SSLZY), have rejected a shareholder group's campaign to get them to specify plans to wind down their operations to help curtail global warming. The resolutions were ultimately spurned because they required investors first to sanction amendments to the firms' constitutions, although their boards did report the proxy votes on the resolutions. Nearly one-fifth of votes cast prior to Woodside's annual meeting favored Market Forces' proposed resolution, while 13% of Santos shareholders supported the company eliminating its oil and gas business. Market Forces had hoped for more support, as the Australasian Center for Corporate Responsibility (ACCR) last year won strong backing for pushing companies to set targets for reducing their clients' carbon emissions. "What's disappointing is investors have missed that next step of understanding that reducing Scope 3 emissions means reducing coal, oil, and gas production," said Market Forces campaigner Will van de Pol. Following the Santos vote, however, van de Pol noted that "with today's vote almost doubling the previous record set for a fossil fuel wind-up resolution, all coal, oil, and gas producers must take note — investors are increasingly willing to demand drastic action to align with global climate goals." Both Woodside and Santos envision gas as a key fuel in the switch to cleaner energy, and as a source for hydrogen further along. Woodside said its net emissions have peaked and will fall, provided there are no major new acquisitions. Santos and Woodside also initially confronted climate resolutions from ACCR, working with U.K. hedge fund manager Chris Hohn's Say on Climate initiative. These were rescinded after both companies agreed to put their climate reporting to a vote at their annual meetings in 2022.

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4/15/2021

Shell Asks Investors to Vote Against Activist Climate Resolution

Bloomberg (04/15/21) Hurst, Laura

Royal Dutch Shell Plc’s (RDS.A) board has urged shareholders to reject a climate resolution filed by Dutch investor Follow This in favor of its own energy transition plan, which the company will put to a vote next month. The company said that the Follow This resolution, which asks Shell to set and publish targets consistent with the goals of the Paris climate agreement, is “redundant” given its own “more comprehensive strategy.” Shell increased its climate ambitions in February, saying that it would produce less oil, more gas and slash carbon emissions over the next three decades. The oil major has now presented those ambitions in an energy transition strategy for a non-binding vote by shareholders in May. The plan will be updated every three years, and investors will get an advisory vote every year on Shell’s progress toward the targets starting 2022. Shell’s goal is to become a “net-zero energy business by 2050” which is aligned with the Paris agreement and “in step with society,” the company said in a statement. However, the plans have failed to assure climate groups who say they don’t go far enough. “Shell’s ‘new’ strategy is part of a wider pattern among European oil majors,” Follow This founder Mark Van Baal said in a statement. The company promises net-zero emissions in “the distant future, but doesn’t decrease emissions enough in this decade to be Paris-aligned.” The Church of England Pensions Board, which engages with Shell on climate matters on behalf of the influential Climate Action 100+ investor group, also said it would vote against the Follow This resolution. But it added it expects to support the group’s resolutions “at other companies where progress is not so obvious,” Chief Responsible Investment Officer Adam Matthews said.

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4/15/2021

Elliott Management Builds Up Large Stake in GSK

Financial Times (04/15/21) Massoudi, Arash; Agnew, Harriet; Kuchler, Hannah

Activist hedge fund Elliott Management has built a multibillion-pound stake in UK drugmaker GlaxoSmithKline (GSK). The stake taken by Elliott was confirmed by people with knowledge of the investment and is a “significant” position, according to one of them. Elliott's investment comes as GSK shareholders have become increasingly disillusioned with the leadership of chief executive Emma Walmsley, who is breaking up the company by separating the consumer health business from its pharma and vaccine division. Shares in GSK, which has a portfolio ranging from toothpaste to cancer medicines, are down 14% since Walmsley took up the post in April 2017. Some leading shareholders have privately expressed concerns over the company's performance. They have pointed to disappointments in its drugs pipeline, raising questions about its allocation of research and development spending. Walmsley's lack of a scientific background increasingly troubles some investors, particularly when contrasted with Pascal Soriot's successful leadership of AstraZeneca (AZN). One person suggested that shareholders would prefer Walsmley to head the consumer health business, rather than her stated intention of running the demerged pharma business. However, a top 30 shareholder said the strategy to split the divisions “broadly makes sense”, as did addressing the “unsustainable dividend”, which would free up “capital for inorganic investment in the pipeline."

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4/15/2021

Returning Toshiba CEO Faces Trial by Fire as CVC Buyout Offer Looms

Nikkei Asia (04/15/21) Yao, Takayuki; Hiroi, Yoichiro

U.K.-based CVC Capital Partners' move to buy out Toshiba (TOSBF) is the most pressing issue for the Japanese industrial group, according to new CEO Satoshi Tsunakawa. Mending relations with shareholders also will be a priority. About 60 investors and overseas funds took a stake in Toshiba in 2017 and they now hold more than 20% of the company's shares. Tsunakawa is replacing Nobuaki Kurumatani, who clashed with investors on corporate governance and corporate spending. U.S.-based Farallon Capital Management opposes its new capital plan, calling it a departure from previous capital commitments. Toshiba's executive approval rating fell to 57% at last year's annual general meeting. The company's board chair said CVC's initial offer of 5,000 yen a share was not good enough, but it puts pressure on Toshiba to push its share price above that threshold.

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4/15/2021

Santos Won't Repeat Mistakes on CEO Bonus: Chairman

Australian Financial Review (04/15/21) Macdonald-Smith, Angela

Santos (STOSF) is tying its CEO's bonus to performance hurdles, according to Chairman Keith Spence. Announced three days before the company's annual shareholder meeting, the surprise bonus drew criticism from corporate governance experts who said it may not necessarily lead to a higher share price, or other increased value. Also at the meeting, an investor's proposal to wind up oil and gas operations received record level support. Approximately 13% of proxy votes supported Market Forces' resolution, which was also backed by proxy advisor CGI Glass Lewis. During the shareholder meeting, Spence said the board has been discussing the bonus with CEO Kevin Gallagher for six months to keep him properly incentivized. Santos' "growth projects incentive" led to speculation that rival Woodside Petroleum (WOPEY) was looking to hire Gallagher. The Australian Shareholders' Association said it would be scrutinizing the performance hurdles.

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4/15/2021

Exxon, Hedge Fund Spend Over $65 Million in Battle for Oil Giant's Future

Reuters (04/15/21) Hiller, Jennifer; Herbst-Bayliss, Svea

Exxon Mobil Corp. (XOM) and hedge fund Engine No. 1 have spent over $65 million in a proxy fight over board seats, with the oil giant planning to defeat the fund's four nominees at its May 26 shareholder meeting. Engine No. 1 has committed $30 million to the battle, while Exxon expects to spend about $35 million above its usual proxy solicitation costs. Exxon's campaign, which some proxy experts suggest could cost $100 million, includes more than 130 filings through April 14, about four times as many as Engine No. 1, along with a website, Twitter posts, blogs, and employee forums. The hedge fund challenged Exxon last year over "significant underperformance," criticizing its lagging approach to cleaner fuels. Engine No. 1 said Exxon's $22.4 billion loss last year, three debt downgrades in two years, and continued dependence on fossil fuels for future results has led to "the staggering decline of a once-iconic American company." The fund told shareholders that "Exxon Mobil's scaremongering and efforts to obfuscate the facts are beneath it, and we welcome a substantive debate as to the directors best suited to position the company for long-term success in a changing industry and world." Exxon aims to block Engine No. 1's nominees by enlarging its board and adding director Jeff Ubben, who operated a sustainable investing fund. The company also has vowed to boost low-carbon efforts and reduce the intensity of its oilfield greenhouse gas emissions. Sources say the rivals have been meeting and taking calls with institutional investors to press their arguments. Engine No. 1 has pushed the credentials of its board nominees, including the former executive vice chairman of Marathon Petroleum Corp. (MPC) and the renewable fuels chief at Neste Oyj (NTOIY). The fund's backers include the California State Teachers' Retirement System (CalSTRS), while hedge fund D.E. Shaw plans to vote with the company. Mark Stoeckle at Exxon shareholder Adams Funds (ADX) said although the company's poor performance merits criticism, replacing a large segment of its board seems an "overreach." In view of Exxon's 2.8 million investors and 45% of its stock held by individual holders, the fight could become one of the biggest proxy battles in history, according an executive at a proxy solicitation firm. Columbia Business School professor Wei Jiang said activists usually struggle to find support among shareholders, but CalSTRS and Engine No. 1 is an "uncommon" alliance between a traditional investor and activist fund.

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4/14/2021

Glencore Faces Shareholder Dissent on New Chief Gary Nagle's Pay

Financial Times (04/14/21) Mooney, Attracta; Hume, Neil

Glencore (GLNCY) is facing the threat of investor dissent after Glass Lewis urged shareholders to reject new chief executive Gary Nagle’s incentive scheme and abstain from a climate change resolution. Glass Lewis called on investors to oppose the miner’s pay policy and its plans to introduce a restricted share plan at the group’s annual meeting this month. In a report for clients it cited reservations “regarding the maximum opportunity available under the plan when considered in the context of the newly appointed CEO’s base salary level and annual bonus opportunity” as the reason for its recommendation. Glencore has only had three CEOs since it was founded in 1974, and Nagle will be the first subject to a conventional pay arrangement. “We consider a base salary of $1.8m in conjunction with a short-term incentive opportunity of 250% of salary and an RSP opportunity of 225% of salary, to be excessive for a newly appointed CEO with no previous experience of running a publicly listed company,” Glass Lewis said. One top 30 shareholder said he had concerns about the potential size of the pay package, although he had not yet voted.  The Investment Association is understood to have issued a red top, the highest level of warning given by its Ivis voting service, over Glencore's pay policy.  At the AGM on April 29 Glencore is also seeking shareholder approval of its climate strategy.  By 2050 the company, the world's biggest exporter of thermal coal, is aiming to be carbon neutral — including the carbon dioxide generated when customers burn or process its raw materials. While supportive of “comprehensive reporting” on climate strategies, Glass Lewis said it was not in the best interests of shareholders to support the climate resolution at the AGM.

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4/14/2021

Big Companies Line Up to Crush Green Transparency Resolutions

Bloomberg (04/14/21) Quinson, Tim

With the annual proxy season about to kick off, some major companies are planning to fight investor proposals about their environmental policies. Investors will be voting on at least 20 separate resolutions that are calling for more transparent climate disclosures at companies. But back in the C-suite, the lateness of the hour when it comes to accelerating global warming and its consequences for humanity may have yet to resonate. Last week, Chevron (CVX) said in its proxy statement that it will face three climate-related votes, including a call to reduce its Scope 3, or customer emissions, and one about disclosing more information about its lobbying efforts. The oil company told investors to vote no on all of them. Chris Hohn's Children’s Investment Fund Foundation (CIFF), which started the “Say on Climate” campaign last year, has been influential in helping push for many of these resolutions. CIFF wants companies to establish concrete five- to 10-year business strategies to reduce their greenhouse-gas emissions. Yet as recently as 2019, the three largest fund companies voted with management on 82% of U.S.-based shareholder resolutions. Individual investors, who control 26% of the average U.S. company, only cast 32% of their proxy votes. Hohn has filed climate-related shareholder resolutions with companies including Union Pacific (UNP) and Charter Communications. The Securities and Exchange Commission rejected Union Pacific’s attempt to exclude Hohn’s resolution. Charter Communications also wants shareholders to vote against Hohn’s resolution, which is similar to what’s filed with Union Pacific.

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4/14/2021

GameStop Rises as Zero-Debt Plan Boosts Bets on Turnaround

Bloomberg (04/14/21) Lipschultz, Bailey

GameStop (GME) plans to redeem $216.4 million of senior notes after moving to retire $73.2 million in debt last month. The video-game retailer made the announcement late Tuesday. Shareholder Ryan Cohen is trying to transform GameStop from a brick-and-mortar player into an e-commerce marketplace that will be able to take on big names like Amazon (AMZN). GameStop in early April also said it plans to offer $1 billion in additional shares. The extra cash cushioning, combined with fewer debt obligations, may enable GameStop to secure more favorable terms in dealings with suppliers and partners. "Debt retirement is what they should have focused on in the first place," Wedbush analyst Michael Pachter said in an email.

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4/14/2021

Kohl's Settles With Investor Group, Adds Three New Directors

Reuters (04/14/21) Sampath, Uday; Herbst-Bayliss, Svea

Kohl's Corp. (KSS) has settled with a group of investors to avoid a proxy fight, agreeing to add two of its nominees to its board as independent directors. Kohl's also will add an independent director and has expanded its share buyback plan to $2 billion. The investor group, with a cumulative 9.3% stake in Kohl's, includes Macellum Advisors GP LLC, Ancora Holdings Inc., Legion Partners Asset Management, and 4010 Capital LLC. They first tried to take control of the 12-member board by nominating nine directors, but reduced that number to five candidates. Kohl's share price rose 1.85% to $62.02 in early trading and has appreciated more than 50% since the start of January. The investors originally wanted Kohl's to add board members with retail experience and move more forcefully, while the company claimed its new strategy, unveiled late last year, was already addressing ways to increase sales and profits. The shareholder group's candidates include Margaret Jenkins, former chief marketing officer at Denny's Corp. (DENN), and former Burlington Stores (BURL) CEO Thomas Kingsbury. Former Lululemon Athletica (LULU) CEO Christine Day will join the board as well.

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4/14/2021

Legion Pushes Board Fight at OneSpan After Settlement Offer Rejected

Reuters (04/14/21) Herbst-Bayliss, Svea

Legion Partners Asset Management announced it is moving forward with a proxy contest to install four directors onto OneSpan's (OSPN) board after the company spurned a proposed settlement. Legion added that it now owns 6.91% of OneSpan stock, up from 6.8% in February. Legion wants the company to undertake a strategic review and consider divesting its hardware business, its eSignature business, or even the entire company. Legion also has criticized OneSpan for its incremental action to remedy underperformance. Legion noted in a regulatory filing that it had emailed the board a high-level proposal to avoid a proxy contest, proposing the immediate addition of three Legion nominees and moving forward with the strategic review. The board unanimously expressed the desire to "not proceed in discussing a settlement agreement based on the proposed terms." Legion originally advised shareholders that the time has come to elect "strong technology leaders to the Board who will seek to begin a comprehensive strategic review of the Company to determine the best path forward for the Company and all its stakeholders." The firm criticized OneSpan for not adequately correcting its low share price and having made only incremental board revisions. Earlier this month OneSpan appointed Garry Capers, a cloud solutions executive at Deluxe Corp. (DLX), to its board. The company is currently valued at approximately $1 billion and has seen its share price rise 30% since January. OneSpan was trading at $26.86 on Wednesday.

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4/14/2021

Shareholder Continues Proxy Fight With Gene Therapy Company

San Francisco Business Journal (04/14/21) Leuty, Ron

Sonic Fund II LP is directly appealing to shareholders of Adverum Biotechnologies Inc. (ADVM) to select its slate of five board candidates over the company-backed slate of three. After opening a laundry list of complaints last month about the management of the Redwood City, Calif.-based gene therapy firm, Sonic asked Adverum shareholders to reject the company's slate of directors because of poor oversight, "abysmal" returns, and an alleged failure to respond to concerns about a side effect in trials, according to a Securities and Exchange Commission filing Tuesday. "The company has indicated that it intends to shrink the size of the board and that it has received resignations from two of its directors," Sonic said in the filing. "Because those resignations are ineffective until a further date, and the decision to shrink the size of the board is not currently effective, we believe that the board is currently composed of 11 directors, five of whom have terms expiring at the annual meeting." Sonic warned that "any attempt to increase or decrease the size of the current board of the number of directors up for election at the annual meeting would constitute an improper manipulation of the company's corporate machinery." Sonic, which owns 6.7% of Adverum stock, said in the filing that it was led to believe that Adverum would nominate two directors for election to a board that currently consists of 11 directors. But in addition to nominating current directors Dawn Svoronos and Dr. Reed Tuckson, Adverum also wants to return longtime Versant Ventures partner Tom Woiwode.

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4/13/2021

Trillium Pushes Alphabet for Whistleblowing Review

Wall Street Journal (04/13/21) Sun, Mengqi

Trillium Asset Management LLC for the second year in a row submitted a shareholder proposal to Alphabet (GOOGL) asking the tech giant's board to oversee a third-party review of the effectiveness of the company’s whistleblower policies in protecting human rights, saying recent incidents suggest the company may have internal cultural or ethics problems. The proposal, which was submitted in December, could be voted on during Alphabet's shareholder meeting this year. In the proposal, Trillium identified several examples of alleged retaliation against workers and expressed concern about the internal culture that facilitated the incidents. A spokeswoman for Alphabet declined to comment. The company has yet to set a date for its annual meeting. As of Dec. 31, Trillium held about 63,078 shares of Alphabet, a position worth about $141.6 million based on Monday's closing price.

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4/13/2021

Unlocking Diversity's Promise: Psychological Safety, Trust, and Inclusion

Reuters (04/13/21) Scott, Stephen; Edmondson, Amy

Norges Bank, the world's largest sovereign fund, has urged companies to pursue 30% female board membership. "What we want to see is better representation of women on the boards," said the fund's chief governance and compliance officer, adding that 17% of companies worldwide lack such representation. Norges has interests in 9,200 companies, representing some 1.5% of all traded stocks worldwide. NASDAQ (NDAQ) CEO Adena Friedman's priority to require NASDAQ-domiciled firms have at least one woman and one person identifying as an underrepresented minority on their boards is likely to align with the Biden administration's agenda. The approval of the Equality Act by the U.S. House of Representatives has boosted her cause as well. Those prioritizing shareholder returns are often motivated by the claim that diversity ultimately improves firm performance. While others may be less concerned with the bottom line, many now argue that more widespread diversity also can reduce conduct risk. Backing this contention are studies that claim to show a correlation between diversity and these superior financial results and risk-related outcomes. Other analyses determine that such firms overtake less diverse peers in terms of enhanced profitability, and are more adept at drawing and retaining more highly productive staff. Yet evidence that diversity generates higher returns is inconsistent, with some studies suggesting forced diversity leads to less social solidarity, trust, and shared purpose. In situations where diversity is high but inclusion is low, firms may unintentionally balkanize staff and erode cohesion. Although pursuing a more diverse "internal marketplace for ideas" may present a broader range of alternatives within a collaborative group, it is no guarantee that the group will embrace superior ideas. There is consistent evidence that psychological safety is a crucial, often core, element in the success of organizations and teams wherever people with diverse skills and backgrounds must cooperate to meet challenges.

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4/13/2021

Petrus Starts Proxy Fight at German Bank Aareal

Financial Times (04/13/21) Fletcher, Laurence

U.K. hedge fund Petrus Advisers has launched a proxy fight at Germany's Aareal Bank (AAALF) by nominating three executives to its supervisory board. Petrus owns just under 10% of Aareal and has taken aim at the bank's "excessive and unethical" levels of pay and its return on equity. It has nominated Heinz Laber, Marion Khüny, and Thomas Hürlimann to replace three members of the supervisory board. "Immediate, joint, and prudent strategic action is necessary to ensure the sustainable success of the group for the future," Petrus argues in a letter to Aareal's management board. "The management board and the supervisory board, in particular the chair of the supervisory board Ms. [Marija] Korsch, have failed in this regard." Aareal's investors include Switzerland's Teleios Capital, which holds a more than 5% interest. The bank, with a market capitalization of about €1.4 billion, lends to investors like institutions and private equity firms purchasing commercial property, including offices, hotels, and shopping malls. Aareal posted a €75 million operating loss last year during the coronavirus crisis, having made a €248 million profit in 2019. The bank said it expected profits "in a triple-digit million-euro range" this year. Petrus has urged Aareal to spin off its 70% stake in consultancy and IT subsidiary Aareon to shareholders by year's end, and open up new revenue channels. The fund in February took issue with Aareal's "palatial headquarters and pensions" and little clarity over its future leadership after the bank announced the temporary resignation of CEO Hermann Merkens due to illness. Petrus told Aareal's supervisory board that the bank's management "is neither willing to nor capable of designing and implementing urgently needed strategic measures," and lobbied its chair and two other members to stand down in favor of its own candidates. Aareal has spurned Petrus's move, claiming it was "without any substance" and adding that the bank had already revised the supervisory board ahead of last year's annual general meeting. The bank's share price has fallen from around €40 million to less than €25 million in the past three years.

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4/13/2021

Legion Partners Looks to Take Over Genesco Board, Blasts Acquisition Strategy

Retail Dive (04/13/21) Unglesbee, Ben

Citing "chronic underperformance," Legion Partners is seeking to replace the majority of Genesco's (GCO) board with seven directors of its choosing. Legion Partners owns a 5.6% stake in Genesco. In an 18-page letter, leaders of Legion Partners called into question the company's conglomerate structure, which they charge has resulted in "a string of poor acquisition decisions that has led to an increasingly bloated cost structure and corporate overhead." In a response statement, Genesco said it would review the seven directors nominated by Legion Partners, but added that it disagreed with many of Legion's assertions and praised its "highly engaged" board.

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4/13/2021

Toshiba CEO Nobuaki Kurumatani Steps Down Under Pressure From Shareholders

Wall Street Journal (04/13/21) Narioka, Kosaku

Toshiba Corp. (TOSYY) CEO Nobuaki Kurumatani has resigned under pressure from investors, a week after the company announced an acquisition offer from CVC Capital Partners. Toshiba said Satoshi Tsunakawa will replace the outgoing CEO, while any acquisition deal would likely value the company at more than $20 billion. Toshiba's market capitalization as of Wednesday morning was slightly above that sum. Board chairman Osamu Nagayama last week noted several obstacles to a deal, including the need for government approvals and CVC's pursuit of outside financing. He added that the financing process is likely to be long and daunting. Several investors have publicly questioned Toshiba's capital allocation and corporate governance in recent months, and their ouster of Kurumatani emphasizes the expanding role that foreign shareholders have played at some distressed Japanese businesses. At a special meeting in March, shareholders approved a proposal by Effissimo Capital Management Pte. to appoint investigators to scrutinize whether voting at a shareholders meeting in July was conducted fairly. Kurumatani's approval rating slipped 57% at the July meeting from 99% a year earlier. Toshiba at the time was roiled by the March 2017 bankruptcy of its U.S. nuclear subsidiary, Westinghouse Electric Co. During Kurumatani's tenure, Toshiba has slashed costs and focused on industrial areas like energy and infrastructure, while exiting most consumer businesses such as laptop computers.

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4/13/2021

Estate Agent Foxtons Under Fire Over CEO Bonus

Financial Times (04/13/21) Mooney, Attracta; Hammond, George

Foxtons is facing criticism from investors and shareholder groups over its decision to award its chief executive almost £1 million in bonuses for a year in which it took government support and raised cash to see it through the pandemic. Institutional Shareholder Services and Glass Lewis have both condemned the estate agent’s plan to pay Nicholas Budden a short-term bonus of £389,300. Their concern is that Foxtons is paying out bonuses to executives despite a sharp fall in its share price and after it benefited from almost £7 million of government Covid-19 support. The agent furloughed the majority of its staff for several months last year and used schemes including business rates relief. It turned to shareholders to raise emergency cash last April to shore up its balance sheet. Glass Lewis said that “given the shareholder and wider workforce experience over the period,” it had concerns about any payouts. ISS argued there was a “material disconnect between bonus outcomes and company performance for the year.” ISS and Glass Lewis have recommended that shareholders vote against Foxtons’ pay plan at its annual meeting on April 22.

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4/13/2021

Harmonic Gets Lift From Agreement With Big Shareholder

Light Reading (04/13/21) Baumgartner, Jeff

Harmonic (HLIT) shares jumped 9% the day after the video and cable tech company inked a cooperation agreement with a big shareholder that left some industry watchers scratching their heads about what it all means. Scopia Capital Management, which holds a stake of 9.8% in the supplier, now has the right to appoint two directors to Harmonic's board of directors during the next year. Scopia has also pledged to support Harmonic's slate of nominees at the upcoming 2021 annual meeting "and abide by customary standstill and other provisions." According to an April 12 Securities and Exchange Commission filing, Jerome Lande, partner and head of special situations for Scopia, has been identified as the first of two Scopia appointees. The cooperation agreement led to some speculation that it could mean Harmonic is under pressure to sell part or all of its video segment business so it can put more focus on cable. However, a statement from Harmonic CEO Patrick Harshman about the agreement with Scopia indicates that he likes Harmonic's current trajectory.

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4/13/2021

Japan to Promote ESG Disclosures and Diversity for Listed Companies

Lexology (04/13/21) Uhrynuk, Mark; Burdulia, Alexander W.

The Council of Experts Concerning the Follow-up of Japan’s Stewardship Code and Japan’s Corporate Governance Code on April 6 published a consultation on proposed revisions to Japan’s Corporate Governance Code and Guidelines for Investor and Company Engagement intended to boost attention to sustainability and environmental, social, and governance (ESG) matters and foster diversity among Japan’s listed companies. Japan's Governance Code was released in 2015 and takes a principles-based approach to corporate governance. The Governance Code complements Japan’s Stewardship Code, which was released in 2014 and promotes responsible investment activities among institutional investors. The Guidelines supplement both the Governance Code and the Stewardship Code by setting out specific engagement topics for investors and companies to consider.

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4/13/2021

Boardroom Wars Rattle Dignity and Countryside

Evening Standard (U.K.) (04/13/21) Evans, Graeme

Shareholders pushing for change at homebuilder Countryside Properties (CSP) and funeral operator Dignity (DTY) have seen developments in their campaigns today. Countryside has announced a new chairman to replace David Howell, who revealed plans to step down last year amid pressure from investor Browning West. Countryside said former Ferguson (FERG) boss John Martin will take on the role, a move that is reported to have the blessing of Browning West after the shareholder had earlier called for a breakup of the business and a role for its founder Usman Nabi. Countryside still remains under pressure, however, after it emerged yesterday that U.S. investor David Capital had increased its own stake in support of Browning's ongoing campaign for change. Meanwhile, Dignity has released a statement defending itself against attempts by Phoenix Asset Management to remove Chive Whiley as chairman. Proxy voting firms including ISS and Glass Lewis have backed Dignity by recommending shareholders vote next week against resolutions including the attempt to install Phoenix's own founder and chief investment officer Gary Channon as executive director. Dignity said today it was in the best interests of all shareholders to allow the current management team to finish its work in devising a new strategy for the group.

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4/12/2021

Ancora Comments on the Blucora Board's Decision to Continue Wasting Stockholders' Resources on a Low-Road Campaign

Business Wire (04/12/21)

In a statement, Ancora Holdings said it was disappointed with the attempts by Blucora's (BCOR) board to divert attention away from the issues that should define its board election contest. The statement comes after Blucora said it was retaining a former government official to provide an opinion on antitrust matters and its other recent claims. Ancora and its affiliates own approximately 3.4% of the outstanding common stock of Blucora. The investment firm also said it was disappointed with the board's decision to continue attacking its board nominee Frederick DiSanto. In addition to DiSanto, Ancora is seeking to elect Cindy Schulze Flynn, Robert MacKinlay, and Kimberly Smith Spacek to Blucora's 10-member board at the company's annual meeting on April 21. Ancora said the board was trying to mislead institutions on the heels of Institutional Shareholder Services recommending on Ancora's proxy card and for the election of DiSanto. The investor called on stockholders to focus on bringing in directors with wealth management and tax services experience who can help create enduring value for Blucora and its stakeholders.

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4/12/2021

Legion Partners Nominates 7 Directors to Genesco Board

Reuters (04/12/21) Herbst-Bayliss, Svea

Legion Partners Asset Management LLC has nominated seven directors to sit on Genesco Inc.'s (GCO) board, according to a letter publicized in a filing on Monday. Legion is pushing Genesco to consider divesting non-core assets and repurchase shares. The investor owns a 5.6% interest in the retailer, which has a market capitalization of $727.8 million. Genesco's stock price increased 1.3% to $49.29. "We will review the letter from Legion, along with their proposed director candidates, and respond in due course," stated Genesco. Legion managing directors Christopher Kiper and Ted White wrote in a letter to other shareholders that with Legion's board nominees, "Genesco will be able to produce $7.50 in earnings per share ("EPS") by fiscal 2023 and see its stock double from current levels." They expressed a desire to retain Genesco CEO Mimi Vaughn, saying their nominees want to partner with her and "draw on her institutional knowledge to implement a strategic plan." Legion blamed Genesco's "poor performance" on its intention to operate as "a retail conglomerate holding company and think of itself as a private equity investment platform," referring to its entry into the hat business, its acquiring a European footwear retailer, and investing $34 million in a licensing business. Legion has previously launched campaigns at other merchants like Bed Bath & Beyond Inc. (BBBY), and this year it partnered with other shareholders to take control of Kohl's (KSS) board. This is the second time Legion has approached Genesco. The hedge fund's board nominees include Marjorie Bowen, who was an independent director from 2018 to 2019. Genesco said it does not agree with many of Legion's points, and is surprised at the nomination move after "not responding to our repeated requests for their input and ideas or sharing their proposed candidates in advance."

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4/12/2021

Boeing Shareholders Will Weigh Need for More Changes to Board

Wall Street Journal (04/12/21) Tangel, Andrew; Glazer, Emily

Since a second 737 MAX crashed two years ago, Boeing Co. (BA) has made several changes to its board of directors' membership and structure. It will soon be up to investors to determine if the company has done enough. Shareholders, prior to the company's April 20 annual meeting, are weighing whether to re-elect the company's slate of 10 board members or follow a proxy advisory firm's recommendation to vote against longtime directors Chairman Larry Kellner and Edmund Giambastiani. The vote comes as Boeing faces such major challenges as restoring confidence in the 737 MAX and navigating the pandemic's negative impact on air travel. Since the second MAX jet crashed, seven board members have either left or will soon exit. The board has four new members and is looking to diversify. Institutional Shareholder Services Inc. recommends investors re-elect the company's directors, but Glass Lewis recommends shareholders vote against the re-election of Kellner and Giambastiani, who heads the board's safety panel. Both men previously served on the board's audit committee, which oversees significant risks facing Boeing.

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4/12/2021

Toshiba Investor Oasis Unimpressed by CVC's $20 Billion Offer

Reuters (04/12/21) Fujita, Junko

Hong Kong-based fund Oasis Management said CVC Capital's $20 billion proposal to take Toshiba Corp. (TOSYY) private is "far below fair value" and has urged solicitation of other offers. Oasis said a price of more than 6,200 yen ($56.54) per share for Toshiba would be more appropriate than CVC's reported offer of 5,000 yen per share. "If the company is open to bids, we believe there would be other bidders interested in acquiring Toshiba," wrote the investor in a letter to Toshiba board chairman Osamu Nagayama. Farallon Capital Management has also asked Toshiba to solicit multiple offers, but Oasis is the first to present what it deems a fair price. Toshiba shares have been coasting well below CVC's likely offer price following a four-peak high last week. Oasis does not report its stake in Toshiba, while Farallon is Toshiba's third-largest shareholder with an interest of about 6%, according to one source. Oasis recently helped propel the sale of baseball arena owner Tokyo Dome Corp. to developer Mitsui Fudosan (MTSFF) in a $1.2 billion deal. Oasis' letter to Toshiba also suggested that the company create a special committee to discuss the CVC offer as soon as possible, adding that CEO Nobuaki Kurumatani, a former senior CVC executive, should be excluded. Separately, the Tokyo Stock Exchange said there had been block trades of 72 billion yen of Toshiba shares on April 9, constituting about 3.4% of the company's market value.

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4/12/2021

GameStop Working to Replace CEO George Sherman

Wall Street Journal (04/12/21) Needleman, Sarah E.; Gottfried, Miriam

GameStop Corp. (GME) is looking to replace CEO George Sherman, sources say, the latest in a series of changes to the retailer's leadership team. The effort to replace Sherman is being led by Chewy (CHWY) co-founder Ryan Cohen, who joined the company's board in January. The company is focusing its search on candidates with a background in technology or the video game industry. At least three of Sherman's top lieutenants have left the company or announced plans to depart within the past few months. GameStop has nominated Cohen to become chairman after its annual meeting this coming June, a move that would cement the former e-commerce executive's influence on its strategic direction. That strategy has led to a near complete turnover in GameStop's C-suite, bringing new faces to the board. A replacement for Sherman would be the sixth person to hold the role since late 2017.

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4/12/2021

Forward Air Advances Final-Mile Strategy, Adds 11 Locations

FreightWaves (04/12/21) Maiden, Todd

Forward Air (FWRD) announced that it added 11 final-mile terminal locations during the first quarter of 2021. The trucking and logistics company has been engaged in a growth strategy aimed at building out its service offering at existing terminals as well as acquiring final-mile and intermodal transportation providers. Last summer, the company accelerated its growth plans as volumes within its core airport-to-airport LTL service networks suffered from Covid-19-related shutdowns. Forward has made several final-mile acquisitions in recent years, acquiring competitor Towne Air Freight in 2015, FSA Logistix and Linn Star Holdings in 2019, and CLW Delivery in 2020. At the end of 2020 an investor group including former Forward executives announced plans to refresh the board, redirect capital allocation, and possibly divest noncore assets. The group claimed that it was the expansion of the product offering beyond the legacy LTL operation that was responsible for driving lower margins and returns. The two parties reached an agreement in March, drawing a quick conclusion to the proxy battle. The investor group now has influence over five board seats, two of which they control outright. The new directors have already joined the board and will stand for election at the May 19 annual meeting. A final direction for long-term capital allocation at Forward has yet to be communicated by the new board, but it appears that the investor group is on board with Forward's expansion in final mile.

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4/12/2021

Delek Issues Statement Regarding CVR Energy and Icahn Proxy Contest

PRNewswire (04/12/21)

Delek US Holdings Inc. (DK) has issued a statement regarding the proxy contest launched by CVR Energy Inc. (CVR). CVR acquired a 15% stake in Delek last year, initially stating that it wanted to acquire Delek, and the Carl Icahn-controlled company recently launched a proxy contest to replace three Delek directors. Delek accuses CVR of using Icahn's "decades-old playbook of nominating friends and colleagues" and "making a range of misleading statements and half-truths as it seeks to get its nominees elected." CVR wants Delek to buy back a significant portion of its stake and change its business operations in a way that Delek believes would mainly benefit CVR.

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4/12/2021

Hedge Fund Titan Bill Ackman Backs ESG Investing

Nasdaq (04/12/21)

Bill Ackman spoke highly of environmental, social, and governance (ESG) investing in a recent Pershing Square Holdings (PSHZF) 2020 report. The founder and CEO of Pershing Square Capital Management said capitalism has tremendous potential to address society's biggest challenges, but it is not perfect. "We believe that good ESG practices are fundamentally aligned with running a successful business," the report said. Ackman said consumers and other corporate customers who are knowledgeable on ESG matters are looking to do more business with companies that have sustainable and responsible policies. Investors that are concerned with ESG risk have started to act in a similar manner, the report said. "These investors avoid investing in companies which do not meet high ESG standards, reducing the valuations and investment returns of these businesses, negatively impacting their cost of capital," according to Ackman.

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4/11/2021

IsZo Capital Announces That ISS and Glass Lewis Recommend Nam Tai Shareholders Vote for Boardroom Change on its Green Proxy Card

Business Wire (04/11/21)

Institutional Shareholder Services (ISS) and Glass Lewis have recommended that Nam Tai Property (NTP) shareholders vote for boardroom change on IsZo Capital Management's green proxy card. IsZo and its affiliates own about 13% of the outstanding shares of Nam Tai. In its report, ISS said there was a lack of independence on Nam Tai's board, with four out of six incumbent directors having breached their fiduciary duty in an improper private placement that strengthened minority shareholder Kaisa. Glass Lewis said IsZo has provided sufficient evidence to substantiate its claims of poor performance and corporate governance. Brian Sheehy, founder of IsZo, said the reports made "it abundantly clear that the incumbents have presided over appalling corporate governance that cannot be allowed to continue." Shareholders should go a step further than ISS and Glass Lewis by voting to elect the full six-member slate during a court-ordered meeting scheduled for later this month, according to Sheehy.

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4/11/2021

Harley-Davidson Nominates Ford CEO Farley to Join Its Board

Bloomberg (04/11/21) Brown, Kristen V.; Coppola, Gabrielle

Harley-Davidson Inc. (HOG) has nominated Ford Motor Co. (F) CEO Jim Farley to its board. Farley's nomination was disclosed in an April 9 letter to shareholders and included in a filing ahead of a May 20 annual shareholders meeting. Farley, who owns multiple classic Harley-Davidsons, is the only new board nominee. Both Farley and Harley-Davidson CEO Jochen Zeitz are seeking to transform their century-old companies by embracing electrification. Zeitz hired Harley's first "chief electric vehicle officer" last month and was a champion of the brand's first electric motorcycle, the LiveWire, when he served as a Harley board member. Under Farley, Ford has nearly doubled its spending to $22 billion to electrify its lineup. Zeitz plans to invest more in Harley's core heavyweight-bike segment and set up a standalone electric-motorcycle division. The company sold 103,650 bikes in its home market last year, a 22% drop and the lowest level in at least a decade. Harley-Davidson said last year it would add an independent director to its board as part of an agreement with investor Impala Asset Management LLC.

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4/11/2021

CEO Pay Surged in a Year of Upheaval and Leadership Challenges

Wall Street Journal (04/11/21) Francis, Theo; Broughton, Kristin

A Wall Street Journal analysis shows that median pay for the CEOs of more than 300 of the largest U.S. public companies topped $13.7 million in 2020—an increase from $12.8 million for the same companies a year prior. Pay kept climbing last year as some firms either modified pay structures or moved performance targets in response to the pandemic and accompanying economic distress. Salary reductions CEOs took at the depths of the crisis had little impact. The stock market's rebound raised what top executives took home because much of their remuneration comes in the form of equity. In some instances, investors have responded by withholding support for company compensation practices in annual advisory votes, increasing pressure on corporate boards.

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4/9/2021

Creval Investors Should Reject Board Delay, Says Glass Lewis

Reuters (04/09/21) Za, Valentina; Mandala, Andrea

Creval (CVAL) shareholders should vote against Credit Agricole Italia's proposal to delay naming new directors at a general meeting this month because it is not in the best interest of investors, according to Glass Lewis. Shareholders are set to vote on a list of nominees put forward by DGFD and another list of nominees filed by institutional investors. The list of DGFD, which has a 6% stake in Creval, includes the current chairman and chief executive of the Italian bank. Glass Lewis, along with Institutional Shareholder Services, backs the institutional investors' list. Credit Agricole Italia wants to delay board appointments pending the outcome of its bid to take over Creval. DGFD is the investment vehicle of French businessman Denis Dumont. Following a new share issue in 2018 that reshaped the shareholder base of Creval, Dumont pushed for a management overhaul and a bank merger.

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4/9/2021

Investors Oppose Rio Tinto Pay Report Over Rock Shelter Outrage

Reuters (04/09/21) Denina, Clara; Shabalala, Zandi

Rio Tinto (RIO) shareholders voted against the company's remuneration report at its London annual meeting. Norges Bank and the Local Authority Pension Fund Forum were among the investors that opposed the pay report due to the destruction of ancient rock shelters during an iron ore exploration project that caused a public outcry. Proxy advisors Institutional Shareholder Services and Glass Lewis recommended shareholders vote against the report. Former chief executive Jean-Sebastien Jacques, who was dismissed in September, is also subject to a payout when future incentives vest. Calling 2020 a "year of extremes," Chief Executive Jakob Stausholm apologized for the incident. Chairman Simon Thompson, who accepted accountability for his role in the Juukan Gorge's explosion, will step down next year.

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4/9/2021

ISS Backs One of Ancora's Board Nominees at Blucora

Reuters (04/09/21) Herbst-Bayliss, Svea

Institutional Shareholder Services (ISS) on Friday said Blucora Inc. shareholders should vote for one of Ancora Holdings Inc.’s four nominees for the Blucora board after the investor urged the company to explore strategic alternatives for the tax services business. “The merits of the issues raised by the dissident lead to a conclusion that change is warranted, specifically in the form of direct shareholder representation in the boardroom,” ISS analysts wrote. ISS urged shareholders to vote for Frederick DiSanto, who is chairman and CEO of Ancora, arguing he is the only one of Ancora’s four proposed candidates who has experience serving on a public board. Ancora owns a 3% stake in Blucora and has urged the company to consider alternatives for its tax services business, including a sale.

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4/8/2021

CVC in Talks With Japanese Investors for Toshiba Bid

Bloomberg (04/08/21) Tse, Crystal; Kirchfeld, Aaron; Baigorri, Manuel

CVC Capital Partners is reportedly in talks with local investors in Japan to join its $21 billion buyout bid for Toshiba Corp. (TOSBF). The private equity firm has reached out to Japanese institutions to gauge their interest, said people familiar with the matter. The participation of local investors could help win regulatory approval for the deal in Japan, the people said. CVC is also considering bringing on another buyout firm as a partner for the Toshiba deal, one of the people said. Separately, CVC is in discussions with banks for financing of its Toshiba offer, another person said. Talks are ongoing and no final decisions have been made on the investor lineup nor the financing, the people said. Toshiba confirmed on Wednesday that it had received a preliminary bid from CVC. An executive at the Japanese conglomerate, who declined to be named, later said the private equity firm has offered about 5,000 yen per share, which would value it at about 2.28 trillion yen ($20.8 billion).

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4/8/2021

Heineken Investors Urged to Revolt Over Former Chief's Payout

Financial Times (04/08/21) Evans, Judith

Shareholders in Heineken (HEINY) have been urged to rebel at the company’s annual general meeting on April 22. Glass Lewis has recommended that shareholders oppose Heineken’s remuneration report and two other proposals after a payout to former CEO Jean-François van Boxmeer was announced close to the news of 8,000 job cuts at the company. Van Boxmeer, who left in June 2020, received a €5.5 million payment that brought his total remuneration for 2020 to almost €8 million, according to Heineken’s annual report.  Share awards under his long-term incentive plans will continue even though he has left his roles as chief executive and chair. The company also set aside €7 million for an expected penalty payment to Dutch authorities because the payout to van Boxmeer contravenes the corporate governance code in the Netherlands, which limits such payouts to one year of salary. Glass Lewis called the payout “egregious” and its overall cost to the company “excessive”.  It said Amsterdam-listed Heineken “had ample opportunity to review the former CEO's severance package, as its terms are decidedly out of line with Dutch market practice, and have been for years”. Glass Lewis also recommended that investors oppose another proposal to approve the supervisory board's actions over the past year, as well as the re-election of remuneration committee chair Maarten Das to the company's board. However, Institutional Shareholder Services has recommended that shareholders vote in favor of the remuneration report, despite flagging concerns about the payment to van Boxmeer. This limits the potential for a big shareholder rebellion, although Vereniging van Effectenbezitters, a Dutch group for retail investors, has reportedly also opposed the payout.

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4/8/2021

Box CEO Aaron Levie Steps Down as Chair After KKR Invests $500M

Silicon Valley Business Journal (04/08/21) Schubarth, Cromwell

Box Inc. (BOX) co-founder Aaron Levie is stepping down as chair but remaining CEO as the company gets a $500 million infusion from private equity firm KKR & Co. The moves by the cloud services company come after it was reportedly being pressured by Starboard Value LP, its biggest outside shareholder. Box shares are up by about 24% so far this year but dropped by about 7% at the start of trading on Thursday. KKR is getting preferred convertible stock in Box as a result of the transaction, along with a seat on the board. John Park, who heads Americas technology private equity at the firm, will be that director as the board expands to 10. “The investment from KKR is a strong vote of confidence in our vision, strategy, and continued efforts to increase growth and profitability,” Levie said in the deal announcement. He will remain on the board. Bethany Mayer, who joined the board last year as part of a settlement with Starboard, will take over as chair.

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4/8/2021

GameStop to Name Chewy Co-Founder as Chairman

Wall Street Journal (04/08/21) Sebastian, Dave

GameStop (GME) plans to nominate Chewy (CHWY) co-founder Ryan Cohen as chairman at its annual meeting in June. Cohen joined GameStop's board earlier this year and has been pushing the video game retailer to become an e-commerce business. He now heads a committee that is focused on transforming GameStop. Through his investment vehicle RC Ventures, Cohen has a 12.9% stake in the company. GameStop is in the process of overhauling its board, with most of its directors having informed the company that they will step down this year. New board nominees include Larry Cheng, co-founder and managing partner of Volition Capital and the first investor in Chewy. GameStop also plans to nominate current board member and former Chewy executive Alan Attal, and its current CEO George Sherman. The company is lowering director compensation by about 28% this year.

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4/8/2021

Investment Giants Lobby to Avoid Antitrust Scrutiny

Wall Street Journal (04/08/21) Lim, Dawn

Asset managers oppose a proposed rule from U.S. antitrust authorities to tighten scrutiny over how they influence the way businesses operate. Last month the asset-management sector pushed back on the measure from the Federal Trade Commission (FTC), which would require investment firms to file for antitrust review whenever a manager's collective funds exceed certain thresholds, which in some cases means holdings of more than 10% of a company. Investment firms currently only have to notify regulators when a single fund takes a large-enough corporate interest. Although many fund managers are pressured by shareholders to make companies more proactive on numerous issues, if they are too prescriptive regulators could view them as too influential. In the run-up to releasing the proposed rule, FTC officials discussed how antitrust law should factor into shareholder outreach. Some supported providing guidance to reassure firms that engagement with companies on governance and social matters would not elevate the threat of antitrust review, while others demurred. When issuing the draft rules late last year, the FTC asked firms to specify typical shareholder dialogues with companies to help it decide what interactions constituted dictating corporate business plans, and if that should subject firms to tougher antitrust scrutiny. "Shareholder engagement can have a pro-competitive effect," stated FTC Commissioner Noah Phillips. "We need to keep that in mind when structuring antitrust rules." Asset managers downplayed their clout as shareholders in letters to the FTC, arguing that they were simply making businesses attentive to shareholder risks. Vanguard claimed that its investor interactions "do not seek to set or alter company strategy."

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4/8/2021

Toshiba Board Urges Caution Over CVC Offer, Sending Stock Lower

Bloomberg (04/08/21) Furakawa, Yuki; Mochizuki, Takashi

Toshiba Corp.’s (TOSYY) board issued a statement Friday cautioning that CVC's offer to take the company private is preliminary and may not lead to a transaction.  CVC’s offer is not legally binding and many details still need to be worked out, said Osamu Nagayama, chairperson of the board.  Any deal also requires extensive regulatory reviews and CVC would have to organize a consortium to line up financing. The board also said the CVC proposal was “completely unsolicited and not initiated by Toshiba.” Given the sensitivity around Toshiba's business, government approval would be required for the deal, said Chief Cabinet Secretary Katsunobu Kato. Separately, Toshiba this week reappointed Satoshi Tsunakawa, currently chairman of the company, as an executive officer to have him deal with its largest shareholder Effissimo Capital Management. The board approved the decision during a meeting on Wednesday, said the people, asking not to be identified because the matter is private.  The move will give Tsunakawa a more central role as the tech icon navigates the flurry of deal negotiations. Effissimo has been increasing its pressure on Toshiba in recent months, including forcing the company to hold an extraordinary general meeting of shareholders in March. At that event, Toshiba shareholders approved the firm's request for an independent investigation into director appointments at the annual shareholders' meeting last year. That vote was considered a blow to Kurumatani. Effissimo has hired lawyers to investigate those appointments.

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4/8/2021

Icahn’s CVR Files Suit Over ‘Eye-Popping’ Delek CEO Pay

Bloomberg (04/08/21) Deveau, Scott

Carl Icahn’s CVR Energy Inc. (CVR) has filed a lawsuit against Delek US Holdings Inc. seeking documents it believes will detail how CEO Ezra Uzi Yemin received an estimated $81 million in total compensation over the past eight years, some of which wasn’t disclosed in proxy statements. CVR Energy alleges in the suit that Yemin received the “eye-popping” compensation from both Delek and its publicly-traded logistics subsidiary, Delek Logistics Partners. Roughly $53 million came in the form of compensation between 2013 and 2020 as chairman, president and CEO of Delek. The remainder is derived from a 5% interest in the general partner of the logistics subsidiary that he was given for unknown reasons and was bought back last year for $21.4 million.  That portion wasn't disclosed in proxy statements, the suit said. CVR Energy alleges that Delek dropped significant assets into the logistics arm at what appears to be “excessively low multiples” that padded the payments to Yemin. Icahn's CVR Energy is in the midst of a proxy contest at Delek, in which it is seeking three seats on the company's board. CVR Energy, which owns a 15% stake in Delek, reiterated it isn't seeking control of the refiner but believes that a truly independent board that takes back control of Delek from “Yemin's current 'iron fist' style of rule” could greatly enhance value at the company.

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4/7/2021

An Alphabet Shareholder Demanded Better Whistleblower Protections For Google Employees, Citing "Red Flags" Over Corporate Culture

Business Insider (04/07/21) Coulter, Martin

Trillium Asset Management has filed a shareholder resolution calling on Alphabet (GOOGL) to better protect workers that speak out against their managers.  The resolution calls on Alphabet's board of directors to consider a third-party review of its current measures. "For years, Alphabet has faced controversies about retaliating against workers," it read, noting the presence of a range of "red flags suggest the potential for culture, ethics, and/or human rights problems internally." In December, lead AI ethicist Timnit Gebru said she was fired over an email she sent to an internal company group, and a dispute over an academic paper she was working on. Later that month, diversity recruiter April Christina Curley claimed she had been sacked following a series of disputes with her managers. Another researcher on the team, Margaret Mitchell, was subsequently fired for what Google described as "multiple violations" of its rules.  On Tuesday, Samy Bengio, an AI research manager at the company and a world-leading academic in his field, quit the company. Current and former Googlers have previously spoken out against allegations of sexual misconduct by executives; a censored search engine in China; and its proposed work with the U.S. military.

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4/7/2021

Group of Danone Shareholders Wants Board to Clarify Strategy at AGM

Reuters (04/07/21)

A group of Danone (DANOY) shareholders wants each member of the board of directors to present his strategic vision for the French food group at the April 29 annual shareholders meeting. The request, made by a group of shareholders representing 0.7% of Danone’s capital, was contained in an addendum to the notice of the shareholders meeting published on Wednesday. It comes after Danone’s former boss Emmanuel Faber was abruptly ousted as chairman and CEO last month, following clashes with some board members over strategy and calls from activist funds for him to resign over the group’s lackluster returns compared with some rivals. “The recent governance crisis at Danone has highlighted both the dysfunctions in terms of form and the disagreements in terms of substance that exist within the company’s board of directors,” said the group of shareholders comprising asset managers Phitrust, Ircantec, CAVP, OFI Asset Management, and Mirova. They want each Danone board member to present “his or her strategic vision for the group, in particular covering his or her personal contribution in terms of environmental issues and his or her approach to the organization of balanced governance.” In a preliminary comment, the board of Danone said the principle of collegiality in principle prevents the directors from taking individual positions in public and that they are “naturally supportive of all the decisions taken by the board." The board, however, said it will answer this item and that Danone will continue to engage in dialogue with shareholders. The board also said the separation of the CEO and Chairman roles was the most suitable governance mode for the company.

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4/7/2021

CIB Marine Engaged by Hildene Capital

Banking Exchange (04/07/21)

Hildene Capital is calling for big changes at CIB Marine Bancshares (CIBH), saying the company is underperforming. Hildene has also nominated two people it wants elected to CIB Marine's board at the April 29 annual shareholders' meeting. Funds managed by Hildene own 36% of each of CIB Marine's series A and series B preferred stock, plus 0.1% of the company's common stock. In a letter addressing CIB shareholders, Hildene noted it had "witnessed firsthand" the "decade-long mismanagement of the company marred by underperformance and unfulfilled promises." Hildene said that, with the proper leadership and capital structure, CIB Marine could reach its full potential and create major value for all shareholders. In November, Hildene approached CIB privately with a plan geared to optimize its capital structure, but CIB "quickly dismissed" the proposals, according to Hildene. The hedge fund's nominees, John Scannell and Raymond Tellini, are "well-respected executives who have significant experience overseeing financial controls, systems, and operations at financial institutions." The duo would "work to ensure that CIB Marine operates with a long overdue shareholder-first mentality to maximize value for all shareholders." For its part, CIB said it is proposing a share buyback plan "that is accretive to value as an alternative to Hildene's self-enriching repurchase plan."

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4/7/2021

Boston Private, Investor Spar Over Pending SVB Merger

American Banker (04/07/21) Dobbs, Jim

Boston Private Financial Holdings (BPFH) and HoldCo Asset Management lobbied shareholders ahead of an April 27 meeting to vote on the company's pending acquisition by SVB Financial Group (SIVB). HoldCo, which controls 4.9% of the $9.7 billion-asset Boston Private's stock, wants shareholders to spurn the $900 million merger at the meeting, arguing that the price is too low. HoldCo claimed Boston Private did not give due consideration to other potential buyers, and said the board should have conducted an auction. The firm added that rejecting the merger would "pave the way for a competitive and comprehensive sales process supervised by a stronger, independent board." HoldCo aims to replace three directors with its own nominees. In a proxy statement, Boston Private said while there was no auction, no other company interested in a merger submitted an offer that topped SVB's offered price, which represented a 120% premium to Boston Private's tangible book value when the deal was declared on Jan. 4. Data compiled by Keefe, Bruyette & Woods indicates that the premium was among the lowest for a seller with $5 billion to $15 billion of assets in the past two years. "Having no on-the-ground experience with bank M&A processes, HoldCo subscribes to a black-and-white, purely theoretical philosophy by which auctions must automatically lead to the best outcome for shareholders," stated Boston Private's board in a press release. The board added that growth in SVB's stock price since Jan. 4 has elevated the implied value for Boston Private investors by 20%.

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4/16/2021

Analyst: With Settlement in Place, Kohl's Likely to Stick With Strategic Plan

Milwaukee Business Journal (04/16/21) Lesk, Sari

In a settlement with a coalition of investors, Kohl's Corp. (KSS) is adding three members to the board, two from the investors' proposed slate and one chosen by Kohl's and endorsed by the investors. Morningstar Research Services equity analyst David Swartz believes the changes, combined with the upcoming retirements of two other board members, will benefit the retailer. He believes the settlement means Kohl's likely will stay the course on its strategy for merchandising, marketing, loyalty, and ecommerce, even with the new board members. "However, given the intensifying competition, we remain skeptical that the firm can reach the 7%-8% operating margins that it has targeted," Swartz said. In addition, he believes the aggressive share repurchase program included in the settlement with the investors could reduce shareholder value.

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4/15/2021

Macellum Capital's Jonathan Duskin Talks Activism

WWD.com (04/15/21) Moin, David

Macellum Capital Management was one of a group of activist investors that successfully pressured Kohl's (KSS) to remake its board, and CEO Jonathan Duskin says, "we almost don't think of ourselves as activists. We identify companies that stubbed their toe and could use some help." According to Duskin, Macellum "first works more constructively with the board," and "our brand of activism is more like private equity in the public markets." He said his firm looks for companies with "self-inflicted problems we think we can fix and where we think we can put people on the board to help fix it." Duskin adds that the question becomes, "Are shareholders going to join us in this endeavor or say go play in another sandbox?" Macellum invests in undervalued companies with potentially higher values through revisions to corporate strategy or governance, improvements in operations, and capital apportionment. "I can't believe more companies don't invite activists to speak to their boards, but once the campaign starts, the defense—the bankers and counsel—everyone, they are generally open to listen. They want to hear your perspective," Duskin explains. He says many board members fight to hold onto their seats out of a sense of entitlement, but "the easiest thing a board can do is refresh themselves. Bed Bath & Beyond [BBBY] did it. Kohl's just did it. They can adopt a lot of the initiatives you are focused on. Cost-cutting is a freebie. We [Macellum] are not short-termers. I don't try to nominate myself to go on boards." Meanwhile, Adam Rifkin at Guggenheim Securities recommends that boards review strategic and financial options every six to 12 months. He echoes Duskin's observation that "in many situations, boards take a long-term approach to everything they are doing and many activists take a short-term perspective." Rifkin also notes many retail boards follow "insular behavior continuing to do things the way they have always done things and failing to transition their business, from a strategic standpoint or reallocating assets or restructuring their balance sheets. Generally, retailers and consumer companies that continue to reinvent themselves, moving their businesses forward, are the ones that don't run into problems with activists."

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4/15/2021

Hedge Fund Adviser Sees 'Potential' for Exposing ESG Fakes

Bloomberg Green (04/15/21) Liman, Love

NorthPeak Advisory CEO Petra Dismorr expects hedge fund managers will play a crucial role in gauging companies failing in their duty to meet environmental, social, and governance (ESG) promises. "It is hugely underestimated, the active role that hedge fund managers in particular can take," she says. According to her, the "day-to-day interaction" that portfolio managers and analysts working for hedge funds have with the companies in which they invest offers "great potential" in terms of weeding out frauds. Investors are increasingly concerned with knowing whether an investment is as sustainable as it claims to be. In the Nordic region, cash-rich shareholders are increasingly worried at the prospect of purchasing fraudulent ESG products, and Dismorr says lessons learned in that region will guide others. Meanwhile, Goldman Sachs Group Inc. (GS) officials anticipate that growing demand for sustainable assets will induce a greater need for active management, which means more oversight of portfolios. The firm is adding 40% more people to its Nordic staff to service the region's asset management sector. The speed in which financial products are being labeled as ESG is often overtaking investors' ability to perform due diligence before committing funds. The U.S. Securities and Exchange Commission recently warned that some money managers are promoting non-sustainable funds as sustainable, potentially exposing them to legal risks. Regulators in Europe are attempting to enforce a more unified taxonomy, but there remains little clarity among investors about assessing securities' sustainability. Concurrently, acceptance is gaining that investors who ignore the value of ESG will lose money. "The big challenge is the fact that there are a lot of so-called ESG experts coming to market, a lot of miss-selling of products that aren't ESG," says Dismorr. She adds that the hedge-fund industry has an advantage when it comes to pressuring corporations. Dismorr mentions that many asset managers "are choosing to create their own bespoke ESG data monitoring filters. A lot of the quant houses have been very much at the forefront of that."

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4/15/2021

Editorial: Toshiba Takeover Tests Corporate Japan

Financial Times (04/15/21)

The Financial Times editorial board says the onus is on both the board of directors at Toshiba (TOSYY) and the Japanese government to handle competing bids from CVC, KKR, and Brookfield in a way that is both transparent and fair to shareholders. Before the recent resignation of Toshiba CEO Nobuaki Kurumatani, some feared a CVC purchase would be a management stitch up because of his close ties to the private equity house, and now his departure is seen as part of an “old guard” boardroom coup to block a sale to CVC. The editorial notes the Japanese establishment also has a long record of thwarting outside efforts to gain control of companies, as when a government backed fund blocked a takeover of lossmaking chip group Renesas by KKR in 2021. "Toshiba should conduct an open process, allowing various buyers to explain how the company can reform and succeed," the editorial concludes. "The board should then pick the best option. That would benefit Toshiba and demonstrate that Japanese corporate governance really has changed. If a back room deal allows incumbent management to escape from shareholder pressure, rather than address its problems, then it would do the reverse."

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4/15/2021

Investors Criticised Over 'Action Gap' in Tackling Climate Change

Institutional Asset Manager (04/15/21) Taylor, Madeleine

A new poll by PGIM and Greenwich Associates found a wide gap between investors' beliefs and actions in terms of climate change risks. Some 89% of global investors deemed climate change an important issue for their organization, while just 58% have acted to formally incorporate it into investment processes. About 85% of EU investors called climate change a critical factor in asset allocation decision-making, versus 57% in Asia-Pacific and 25% in the United States. The survey indicates that investors are being held back by a lack of confidence in the analytical models used to gauge the impact of climate change on portfolios. "This may be an area where better understanding and deployment of existing data and analytics may encourage more investors to incorporate climate change into their portfolios," suggested Greenwich Associates' Davis Walmsley.

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4/14/2021

Covid-19 Has Created a New Hunting Ground for Activists and Boards Need to Be Ready

Nasdaq (04/14/21) Elbaum, Lawrence

The financial impact of the Covid-19 pandemic is likely to create a trail of damaged companies for activist investors. The financial crisis led to a golden age of shareholder engagement, and activists are now evolving their playbooks for engagement in order to take advantage of new investment opportunities. As a result, companies will need to rethink their response to engagement or they will remain sluggish and vulnerable to activism. Boards will need to be willing to publicly reject baseless accusations of corporate wrongdoing. They will need to articulate credible strategies for value creation and make reasonable settlement offers if they want to retain control of the board. Moreover, boards will need to establish processes to rebuff demands to sell now or may lose board seats. Rapid response, short-term sacrifice, and robust mergers and acquisition exploratory processes will be key to staying ahead of activists.

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4/13/2021

'Deeds, Not Words': Mining Firms Reshape Boardrooms as Investors Demand Sustainability

Reuters (04/13/21) Reid, Helen

Mining companies are revamping the structure and skillset of their boards in response to calls for change from shareholders. More than half of Vale's (VALE) board now has extensive experience in environmental, social, and governance (ESG) matters and sustainability-related issues, while a new non-executive director at AngloGold Ashanti (AU) is a mining governance adviser to the United Nations Economic Commission for Africa. A recent appointment at Barrick Gold (GOLD) is a World Bank executive director who has ESG credentials, and Rio Tinto (RIO) is now tying 15% of executives' annual bonuses to ESG metrics. Investors and governance experts say change is needed because the business is inherently hazardous. "The level of understanding and capability at board level is insufficient at the moment in the mining sector, and it doesn't yet in our view support the transition of these companies to best practice," says Andy Jones, metals and mining lead at investment manager Federated Hermes. Governance experts say they want mining companies to improve internal reporting and create a culture of openness.

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4/12/2021

Corp Fin Staff Updates Guidance Regarding Presentation of Shareholder Proposals in Light of Covid-19

Cooley PubCo (04/12/21) Posner, Cydney

The staff of the Securities and Exchange Commission's Division of Corporation Finance has updated its Guidance for Conducting Shareholder Meetings in Light of Covid-19 Concerns, which was originally published on March 13, 2020. Staff members have made some changes related to presentation of shareholder proposals, extending its application to the 2021 proxy season. Issuers are encouraged to provide shareholder proponents or their representatives with the ability to present their proposals through alternative means, such as by phone, during the 2020 and 2021 proxy seasons. And when shareholder proponents or their representatives are not able to attend the annual meeting and present the proposal due to Covid-19, "the staff would consider this to be 'good cause' under Rule 14a-8(h) should issuers assert Rule 14a-8(h)(3) as a basis to exclude a proposal submitted by the shareholder proponent for any meetings held in the following two calendar years," says the guidance.

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4/12/2021

Executive Pay and ESG Performance

Harvard Law School Forum on Corporate Governance (04/12/21) Gosling, Tom; O’Connor, Phillippa

Nearly half of all FTSE 100 companies (45%) now have an environmental, social, and governance (ESG) metric in their bonus or long-term incentive plan, according to a new report from The Center for Corporate Governance at London Business School and PricewaterhouseCoopers. About one-third (37%) use ESG targets in the annual bonus. Issuers are facing pressure to include ESG targets in pay from special interest groups, customers, and employees, and now increasingly from regulators and investors. Cevian Capital has said it plans to push all investee companies to set out ESG strategies and link them to pay by 2022. However, linking ESG and pay is not easy, and investors still are not in agreement on what good ESG performance looks like. Boards seeking to incorporate ESG into executive pay should focus on longer term pay with less reliance on short-term financial targets. Companies should focus on financially material ESG issues if the rationale for including ESG metrics is to create a path toward long-term shareholder value.

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4/11/2021

Gender Diversity in the Silicon Valley

Harvard Law School Forum on Corporate Governance (04/11/21) Bell, David A.; Belt, Dawn; Llewellyn, Ron C.

Female representation on boards continued to increase between 2018 and 2020 in the U.S. and at rates higher than in years past, according to an update of the Fenwick Gender Diversity Survey. The average percentage of women directors increased 8 percentage points in the Silicon Valley 150 Index to 25.7% in 2020 and in the S&P 100 rose 4 percentage points to 28.7% (with the SV Top 15 increasing 4.5 percentage points to 30.3%). Larger companies by revenue and market capitalization continue to have larger boards, which tend to be more diverse. Women were more likely than men to serve on primary board committees (audit, compensation, nominating) for S&P 100, SV 150, and SV Top 15 companies last year. Most companies in the SV 150 met California's initial 2019 standard mandating inclusion of women on boards, but 57% will need to add women to meet the state's increased standard for this year. Most companies in the S&P 100 would meet the 2021 standard. Survey results and the latest data from the California Secretary of State suggest that at least 98% of SV 150 companies met the requirements in 2020.

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4/9/2021

Cubic Bidding War Highlights the Value of Certainty Over Price

Washington Technology (04/09/21) Wilkers, Ross

The bidding war for Cubic Corp. (CUB) offers insights on how deal structure and certainty can be a deciding factor. The manner in which both bidders raised their offers at almost each turn in the contest was beneficial to Cubic. Veritas Capital and Elliott Management beat Singapore Technologies Engineering (SGGKF), yet new regulatory filings from Cubic indicate that the competition raised the pressure on them as well. ST Engineering's public statements revealed that the bidder was mainly focused on Cubic's transportation business, and planned to sell the defense product segment to another investment group. Blackstone (BX) also was exposed as ST Engineering's partner. However, the latest filing more fully detailed how Veritas and Elliott responded to ST Engineering's bids. On March 22, ST Engineering bid $2.41 billion in cash, or $76 per share, for the company. Five days later Veritas and Elliott upped their offer from a $2.21 billion cash price to $2.28 billion, for an increase of $70 to $72 per share. That bid came with a condition requiring Cubic's acceptance by 10:30 p.m. Eastern time on March 29, or face the offer's rescission. A second bid from Veritas raising the offer to $2.34 billion, or $74 per share, reminded Cubic of that deadline, specified in the filing as an "automatic termination." Coinciding with the reminder were discussions between Cubic and ST Engineering that included exchanges of draft language in the proposed transaction agreement both sides felt they should have. Cubic demanded certainty that ST Engineering could get through the regulatory approval process without any major complications, while ST Engineering wanted more flexibility to not pay certain termination and other fees to Cubic if those obstacles proved insurmountable. Higher bids by ST Engineering also ensued, including a final bid of $2.47 billion in cash at $78 per share. Cubic's board met on March 29 to discuss its options and told CEO Brad Feldmann to lobby both bidders for raised offers, and require ST Engineering to improve its approach on the timely closing of a transaction and add more certainty into how such a deal would close. Veritas and Elliott made an offer of $2.38 billion at $75 per share, and refused a request to consider a bid of $2.41 billion at $76 per share but let Cubic's board discuss that offer on March 30. ST Engineering likewise rejected solicitation for a higher price while conceding some of the other items on regulatory mitigation strategies. The company rejected a proposal to agree on a broad termination fee if regulatory approvals were not secured within nine months of agreement on a transaction with Cubic. That refusal was a key deal-breaker in ST Engineering's bid. Veritas and Elliott ultimately won the bid by giving Cubic greater certainty.

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4/8/2021

BlackRock CEO Larry Fink Shareholder Letter a Case Study in Corporate Communications

Business Insider (04/08/21) Cheong, Weng

Shareholder letters provide an opportunity for CEOs to communicate their broader vision and strategy at a time when companies are being asked to play a larger role in society, according to investor relations, communications, and public relations experts. However, only a few, such as Berkshire Hathaway's (BRK.A) Warren Buffett and JPMorgan's (JPM) Jamie Dimon, manage to write insightful shareholder letters. BlackRock (BLK) CEO Larry Fink sent out his annual letter to shareholders on Wednesday, and experts said it was effective because it revealed that the company was progressing on achieving its long-term goals. BlackRock has been consistent in its call for retirement savings and sustainable business operations, and announced further commitments in these areas. BlackRock is holding itself accountable for lapses on diversity and inclusion by hiring an external law firm to review recent reports of harassment and discrimination by former employees. Still, experts said more detailed information about BlackRock's reopening plans and a timeline for diversity, equity, and inclusion strategies would have made the letter stronger.

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4/8/2021

Will Nasdaq’s Diversity Rules Harm Investors?

Harvard Law School Forum on Corporate Governance (04/08/21) Fried, Jesse M.

In December 2020, Nasdaq asked the Securities and Exchange Commission (SEC) to approve new diversity rules. The aim is for Nasdaq-listed firms to have at least one director self-identifying as female and another self-identifying as an underrepresented minority or LGBTQ+. In a recent paper, the author argues that the empirical evidence provides little support for the notion that gender or ethnic diversity in the boardroom increases shareholder value. The paper begins by examining Nasdaq’s evidence of the purported link between diverse boards and stock returns.  On the link between diversity and shareholder value, Nasdaq cites only three studies that go beyond mere correlation, and none are strong or straightforward enough to support the conclusion. Nasdaq cannot cite any high-quality study showing that board gender or ethnic diversity boosts returns, because there has been none.  In fact, there is a sizeable body of academic work reporting the opposite result: diversifying boards can harm financial performance, and Nasdaq fails to engage this evidence. For example, Nasdaq cites a 2009 study that found boards with female directors have more CEO oversight and better attendance records, but Nasdaq ignores the paper's ultimate conclusion: “the average effect of gender diversity on firm performance is negative," apparently because it leads to excessive monitoring of executives. Nasdaq also fails to note several studies demonstrating that stock returns suffer when firms are pressured to hire new directors for diversity reasons.

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4/7/2021

2020 in Hindsight: Key Considerations for Directors in 2021

Harvard Law School Forum on Corporate Governance (04/07/21) Johnson, Teresa L.; Fackler, Ben

Corporate boards should be actively engaged in environmental, social, and governance (ESG) considerations in the current business environment. Shareholders are aligning with institutional investors and others for ESG-focused campaigns, shareholder support for environmental and social proposals rose to an all-time highs in 2020, investment managers like Engine No. 1 and Inclusive Capital Partners are now dedicated to ESG-focused engagement, and capital inflows to ESG-focused investment products accelerated last year. Boards will need to work with management and other stakeholders on a way to formally measure and monitor ESG factors. Shareholder engagement picked up in the last quarter of 2020, first-time investors accounted for almost a third of all activist campaigns last year, and the current state of the market means investors will have plenty of opportunities to build stakes in companies. Moreover, more traditional investment managers are using activist strategies, and private equity funds and passive institutional investors are also employing hard engagement tactics. Boards will need to update their company's response plan to an activist shareholder campaign. Conducting a response dry run will enable the board to build rapport with management and their advisors.

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