Media Center

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

Nestle Focuses on Factories, Procurement to Hit Cost-Cutting Goal
Nestle Still Committed to Global Confectionery—CEO
Japan Investors Flock to Stocks Engaged by Activists
Investors Get More Backing for Change at PDC Energy
Daniel Loeb's Hedge Fund Wants Centene to Consider Selling Itself
Hostile Takeover Tactics Come to the World of Small Private Lending
Navient Elects First Female Board Chair
SEC Adds Proxy Advisors, Shareholder Proposal Thresholds to Regulatory Agenda
Legg Mason Cuts 12% of Staff in Revamp as Peltz Joins Board
D.E. Shaw's Koffey Leaves Hedge Fund
Alton Towers Owner Merlin Urged by US Investor to Go Private
EQT Files Definitive Proxy and Mails Letter to Shareholders
How a Sleepy Texas Trust Turned Into Permian Oil Proxy War
Canopy's Proposed U.S. Deal Is a Boon for the U.S. Cannabis Sector, Says This Investor
Nissan Board Nominees Not Broaching Merger Issue: Member
HKEx Sets Guidance on Board Diversity
SRD II Requirements for Proxy Advisory Services
Video: Oasis Management's Fischer on New Japan Fund, Corporate Governance, Chaebols
Texas Pacific Investors Say Nominee Elected Trustee at Disputed Meeting
Big Super Fails to Back Shareholder Resolutions
Telecom Italia Chief Favors Network Control in Any Open Fiber Tie-Up
Icahn-Backed Oil Refiner CVR Energy Considers Options
Coming This Summer: SEC Roundtable on the Impact of Short-Termism
Investor Adviser Gives 'Final Warning' Over Promoting Senior Women
Voce Issues Statement Regarding Argo Proxy Contest
FirstEnergy Shareholders Approve 7 Measures at Annual Meeting
Shareholders May Engage Pot Stocks Next
Fortum Makes Progress in Talks to Resolve Uniper Standoff
PPG Won't Break Up, Despite Pressure From Investor
Institutional Investors Calling on Companies to Do More Around Disability Inclusion
Front Yard to Explore Alternatives
Kimmeridge Corrects Inaccuracies in PDC CEO's Letter to Shareholders
Podcast: Preventing Activist Engagement This Proxy Season
For the First Time, Amazon Faces an Enormous Slate of Shareholder Proposals
Mack-Cali Board Ends Settlements Talks With Investor Bow Street
Texas Land Bank Proxy Fight Turns Ugly as Dissident Nominee Sued
ValueAct Founder Joins Board of Agritech Start-Up AppHarvest
Sony CEO Stresses Value of Sony Pictures Entertainment at Strategy Briefing
Blackstone, Whiting, Callon Consider Bids for Shale Driller QEP
Fare Value
Campbell Asks International Division Bidders to Reconfirm Offers
'Poorly Managed' Cenkos Pressured to Acquire Rival Broker
Deja Vu at Sony With Investor Loeb Back in the Picture
Foreign Fund 'Not Satisfied' After Kyushu Railway Refuses Proposals
Mack-Cali Alleges Conflict of Interest in Investor's 'Clarifications'
Coast Capital Refiles FirstGroup Requisition Meeting After Error
Fortum Must Shoot Down Investor Proposals for Uniper—Union
Keith Meister's Corvex Reaps Gains From Revamped Portfolio
PDC Energy President & CEO Bart Brookman Mails Letter to Shareholders
Legg Mason Appoints Nelson Peltz and Ed Garden of Trian Partners to Board of Directors
Elliott Management Opposes Airline Azul on Avianca Brasil Bankruptcy Plan
Voce Capital Takes Aim at Insurer Argo
U.S. Investor Urges First Group to Split and Pull Out of 'Destructive' U.K. Rail Network
ISS Backs Investor Kimmeridge's Two Nominees to PDC Board
Mal Durkee Joins Opus Bank as Elliott's Director Designee
Bill Ackman's Pershing Square 1st Quarter Letter to Shareholders
Turmoil at Thyssenkrupp Marks Battle for Germany's Economic Identity
EQT Corp. Proxy War With Rice Brothers Heats Up
Blue Lion Files Proxy Statement Seeking to Replace Two HomeStreet Directors
Trian Nears Settlement With Legg Mason, Could Get 3-to-4 Board Seats
U.K. Shareholder Activism and Battles for Corporate Control
In Light of Ever-Increasing Cybersecurity Risks, Boards Must Deepen Their Oversight and Engagement
Hedge Funds Start to Figure Out Socially Responsible Investing
Coast CIO Interview: FirstGroup CEO in Job 'A Year Too Long'
The Specter of the Giant Three
Shareholder Activism: Boards Need to Assess Vulnerabilities
Amazon Faces Investor Pressure Over Facial Recognition
SEC's Clayton Redefines 'Short-Termism' Concerns to Focus on Deregulatory Agenda
A Top Aurora Cannabis Exec Dishes About What It's Like Working With Famed Investor Nelson Peltz
Wanted: Activist Investors in the UAE
The Activist Effect
Booming Buybacks Aren't Likely to Wane Despite Market Volatility
Corporations Are Holding Off Investors–but for How Long?

5/24/2019

Hostile Takeover Tactics Come to the World of Small Private Lending

Bloomberg (05/24/19) Lee, Lisa

Highland Capital Management is seeking to oust two directors at Medley Capital Corp. (MCC), a business development company (BDC) controlled by twins Seth and Brook Taube, who are trying to merge it with their other companies amid a sharp decline in performance. Highland, which holds a small stake in MCC, says the plan is flawed and is proposing to manage MCC. "There has been an uptick in shareholder activism in the BDC space in the last three to four years," said Schulte Roth & Zabel LLP partner John Mahon. "Highland's proxy move is a new step in activism in its aggressiveness. If Highland succeeds, that could bring more activism to the BDC world." Highland's proxy battle through its affiliate, NexPoint Advisors LP, follows FrontFour Capital Group's opposition to the Taubes' proposal to combine MCC with their Sierra Income Corp. and Medley Management Inc. (MDLY). FrontFour, a larger shareholder in MCC, has argued that the merger transfers $120 million away from shareholders, based on MCC's stock price decline after the deal's announcement in August. FrontFour sued in Delaware Chancery Court, which agreed with the firm's claim that MCC directors, including the Taube brothers, breached their fiduciary duty in approving the merger. In April, MCC and FrontFour reached a settlement in which MCC agreed to amend its transactions to include a go-shop process. Now, Highland is seeking to appoint two directors to the board and oust Seth Taube and Arthur Ainsberg, arguing that the continued presence of five of the original board members jeopardizes shareholder interests. Institutional Shareholder Services and Glass Lewis recommended that investors vote for Highland's directors.

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5/24/2019

Navient Elects First Female Board Chair

Philadelphia Business Journal (05/24/19)

Within weeks of avoiding a proxy battle with its biggest stockholder, student loan servicer Navient Corp. (NAVI) has named management consultant Linda Mills as chair of its board, effective June 6. Mills will replace Chairman William M. Diefenderfer III, who decided not to stand for re-election. She joined the board in 2014 and is president of Cadore Group, a management and technology consulting firm. Mills also serves on the board of directors of American International Group Inc. (AIG), the Smithsonian National Air and Space Museum, and the board of visitors for the University of Illinois College of Engineering. Following engagement by shareholder Canyon Partners over the company's slate of director nominees, Navient earlier in May agreed to add two new board members. Canyon has a 10.5% stake in Navient. Both former investment banker Marjorie Bowen and fintech investor and former banking executive Larry Klane will be nominated by Navient for election at the company's June 6 annual meeting. In return, Canyon agreed to withdraw its nominees and vote for Navient's choices. The two sides had been battling publicly since Navient spurned Canyon's $3.2 billion takeover bid, arguing the $12.50 per share offer "substantially undervalues" the company. Canyon withdrew its bid a few days later and proposed a minority slate of independent board candidates "to bring a fresh perspective and oversight to Navient's strategic direction, about which Canyon has significant concerns." Canyon had argued that Navient used a "material portion" of its cash flow to invest in new businesses and ventures, such as loan origination, that it thinks is ill-advised. It also said management has not done enough to halt its waning performance and is also the subject of several lawsuits brought by federal regulators and state attorneys general that are over the company's equity value.

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5/23/2019

SEC Adds Proxy Advisors, Shareholder Proposal Thresholds to Regulatory Agenda

Pensions & Investments (05/23/19) Bradford, Hazel

The Securities and Exchange Commission (SEC) is weighing updating rules on the use of proxy advisory firms and thresholds for shareholder proposals, according to its new semiannual regulatory agenda. No additional details were offered in the agenda, which forecast an April 2020 release date for advanced notice of proposed rule-making on the two issues. SEC Chairman Jay Clayton has publicly backed reviewing rules on the proxy process and proxy advisory firms and updating the ownership thresholds for shareholder proposals. More transparency about how proxy advisory firms develop reports and reveal conflicts of interest has been advocated by Congress and business interest groups. The current shareholder proposal rule, which permits shareholders with a minimum of $2,000 of company stock or 1% of eligible voting shares for at least one year to offer proposals, is backed by the Council of Institutional Investors, according to deputy director Amy Borrus. "For decades, shareholder proposals have been a key tool for retail and institutional investors to communicate with other shareholders and company directors and executives on important issues affecting public companies," she said in an email. "Many companies have voluntarily adopted corporate governance best practices contained in CII's policies in response to shareholder proposals. There is little evidence that the current volume of shareholder proposal—which constitute around 2% of the voting items at company annual meetings—puts a significant burden on companies."

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5/23/2019

How a Sleepy Texas Trust Turned Into Permian Oil Proxy War

Houston Chronicle (05/23/19) Blum, Jordan

The Texas Pacific Land Trust's (TPL) holdings in the Permian Basin, the world's fastest-growing oil and gas basin, has boosted its value from $300 million in 2012 to nearly $7 billion today. Those holdings also have made Texas Pacific the focal point of what is arguably the fiercest shareholder battle in the energy sector. The Dallas-based trust's structure, dating back to the 1880s, features a board operated by only three trustees who serve lifetime appointments. One trustee died in March, and hedge fund investors have launched a proxy fight to choose the next trustee, with a stated goal of transforming the trust into a traditional corporation with a larger board and modern governance practices. However, Texas Pacific's leadership is concerned that converting to a corporation could lead to its sale and has argued that most shareholders have held the stock for generations and enjoyed steady dividend checks. The proxy fight is led by Horizon Kinetics, which owns more than 23% of the trust, and SoftVest, which holds a nearly 2% stake. Eric Oliver, the opposition trustee candidate who runs SoftVest LP, notes that "we're talking about 900,000 acres of arguably the lowest cost for barrel of oil in the world, so the stakes are much higher." The trustees filed suit against Oliver on May 21, accusing him and his allies of federal securities law violations for making false and misleading statements to investors, and delayed the June 6 shareholder vote indefinitely. Meanwhile, the opposition has accused the trustees of tampering with the integrity of the corporate voting system through multiple delays, and on May 22, they reportedly met and declared Oliver the new trustee. Meanwhile, Texas Pacific has nominated Donald Cook, a retired Air Force four-star general who has served on boards of major corporations like Burlington Northern Sante Fe railroad and the USAA Federal Savings Bank. Both Glass Lewis and Institutional Shareholders Services have concluded that Texas Pacific needs reform but believe Cook is the best choice because of his experience and his apparent willingness to push for change. Cook has agreed to stand for re-election in three years and advocate for quarterly investor calls and management meetings, among other things.

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5/17/2019

Bill Ackman's Pershing Square 1st Quarter Letter to Shareholders

GuruFocus.com (05/17/19)

Pershing Square Holdings generated strong performance during the first quarter of 2019 and year-to -date, according to the first quarter letter to shareholders. NAV per share increased 36.9% during the first quarter and by 38.4% year-to-date, compared with the S&P 500's year-to-date total return of 13.9%. Pershing Square's portfolio companies have generated substantial positive performance in line with their continued business progress. Chipotle's (CMG) first quarter results continued to demonstrate the significant progress that CEO Brian Niccol and his team have made in dramatically improving performance and positioning the company for long-term sustainable growth. Same-store sales grew 10% in the quarter led by transaction growth of approximately 6%, a significant acceleration in sequential growth. Automatic Data Processing Inc.'s fiscal third quarter earnings results continue to highlight the significant opportunity for accelerated revenue growth and improved prospective profitability, and its bookings growth jumped to 10%, a significant acceleration from previous periods. Restaurant Brands International's (QSR) most recent earnings results continue to reinforce Pershing Square's thesis that the company's royalty-based, franchise model is a uniquely valuable business with a large, long-term, capital-light, unit-growth opportunity. This quarter, QSR's unit count expanded by more than 5% while organic EBITDA grew 6% (excluding a 1% headwind from the timing of franchisee ad fund expenditures that temporarily exceeded contributions). Each of QSR's three brands generated positive organic EBITDA growth with Burger King's EBITDA up 10%.

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5/17/2019

Blue Lion Files Proxy Statement Seeking to Replace Two HomeStreet Directors

PRNewswire (05/17/19)

Blue Lion Capital, which has a 6.5% stake in HomeStreet Inc. (HMST), has announced that it has filed its definitive proxy materials with the Securities and Exchange Commission and has delivered an open letter to HomeStreet's shareholders. "We have always believed that HomeStreet can be a high-performing bank and a great investment," said Charles W. Griege Jr, managing partner of Blue Lion. "Unfortunately, numerous strategic missteps, inadequate corporate stewardship, and poor financial performance have eroded shareholder confidence and destroyed shareholder value." Blue Lion says, "HomeStreet requires a refreshed Board with the right balance of operating skills, capital markets expertise, relevant industry experience, and a commitment to sound corporate governance practices. Blue Lion also believes that HomeStreet's corporate governance structure has reduced management's accountability to the Board and the Board's accountability to shareholders. Accordingly, Blue Lion is recommending that shareholders support its proposal to have the Board select an independent member of the Board as Chair as promptly as possible. Today, HomeStreet's CEO, Mark Mason, serves in both capacities. Blue Lion believes that one person with the combined role of Chairman and CEO diminishes the CEO's accountability to the Board and the ability of the Board to independently oversee management."

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5/24/2019

U.K. Shareholder Activism and Battles for Corporate Control

Harvard Law School Forum on Corporate Governance and Financial Regulation (05/24/19) Bagot, Sam

Sam Bagot, a partner at Cleary Gottlieb Steen & Hamilton LLP, says a recent U.K. High Court decision, Stobart Group v. Tinkler, considered several issues pertinent to the criticism of boards by shareholder activists who have nominated a director to the board. The case involved London-listed Stobart Group, where shareholders proposed a resolution to remove the company's chairman. The company filed suit against Tinkler, a board director, for breaching his duties by failing to put before the board the matters relating to board composition and strategy on which he disagreed and undermining the board by taking those matters directly to certain major shareholders of Stobart. The High Court held that Tinkler had committed serious breaches of his directors' duties, in particular a breach of the core duty of loyalty to Stobart by speaking to certain significant shareholders, criticizing the board's management, and agitating for the removal of the chairman of Stobart without having raised his concerns and criticisms with the board; and emailing certain major shareholders and employees without prior approval of the board. "This decision clearly highlights the risks to board nominees of shareholder activists of becoming involved in briefing against the board in discussions with shareholders in furtherance of an activist campaign," said Bagot. "The decision also highlights the risks to board nominees of shareholder activists of disclosing confidential management information to shareholders in furtherance of an activist campaign."

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5/22/2019

Hedge Funds Start to Figure Out Socially Responsible Investing

Bloomberg (05/22/19) Chasan, Emily; Karsh, Melissa

As nearly $31 trillion has moved into investment funds and strategies that focus on environmental, social, and governance (ESG) practices, hedge funds have largely found themselves left out, but they're now beginning to find a way in. Approximately 30% of hedge funds say they're utilizing ESG criteria to inform investment decisions, according to research by data provider Preqin. "The activity level relative to ESG within the hedge fund industry historically has been fairly low, but it's going to increase significantly," said Don Steinbrugge, chief executive officer of hedge fund consultant Agecroft Partners. "It's an area that a lot of institutional investors are thinking about. It's going to be a big growth area." Hedge fund investors such as pension fund clients are inquiring more deeply about climate change and social issues. That means managers must determine if and how to adopt "ethical" or "sustainable" investment practices in an industry known for shorter-term and aggressive bets. Some activist funds, which tend to take longer-term bets, have begun to get involved. Jeff Ubben's ValueAct Capital Management launched a fund in 2018 geared toward social and environmental investments, and Nelson Peltz's Trian Fund Management has promised to support ESG issues. "We're absolutely convinced it is a way to both reduce risk and improve returns," says Clifton S. Robbins, founder and chief executive officer of Blue Harbour Group, which has been including ESG considerations in its investment strategy for three years. Blue Harbour, which manages $2.2 billion, in May issued a report to clients outlining for the first time how often it has urged companies to add wellness programs, boost diversity among senior officers, and called for companies to cut emissions. The firm's analysts and principals have been trained to weigh companies against a 20-page ESG diagnostic questionnaire and to incorporate this data into investment strategies.

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5/21/2019

The Specter of the Giant Three

Harvard Law School Forum on Corporate Governance and Financial Regulation (05/21/19) Bebchuk, Lucian; Hirst, Scott

Research by Lucian Bebchuk, a professor and director of the Program on Corporate Governance at Harvard Law School, and Scott Hirst, associate law professor at the Boston University School of Law and director of Institutional Investor Research at the Harvard Law School Program on Corporate Governance, on the "Big Three" index fund managers—BlackRock (BLK), Vanguard, and State Street Global Advisors—indicates that there is a real prospect they will grow into the "Giant Three" and dominate shareholder voting in most significant public companies. "We estimate that the Big Three could well cast as much as 40% of the votes in S&P 500 companies within two decades," they write. "We argue that policymakers and others must recognize—and must take seriously—the prospect of a Giant Three scenario." Among other things, they found that more than 80% of all assets flowing into investment funds over the last decade have gone to the Big Three, and the average combined stake in S&P 500 companies held by the Big Three surged from 5.2% in 1998 to 20.5% in 2017. Further, they noted, "Because the Big Three generally vote all of their shares, whereas many of the non-Big-Three shareholders of those companies do not, shares held by the Big Three represented an average of about 25% of the shares voted in director elections at S&P 500 companies in 2018."

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