Media Center

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

William Hill Confirms 'Ongoing Discussions' Regarding U.S. Takeover
Cannae Holdings and Senator Investment Group Send Letter to CoreLogic Shareholders
Small Investors Have Pushed Big Companies Toward Social Change. A New SEC Rule Will Limit Their Influence.
Aryzta Sale to Elliott Looks Dead in the Water
China to Enhance Corporate Governance of Listed Companies
Proxy Advisor InGovern Seeks Removal of Pallonji Mistry From SWSL Board
Suez Poison Pill Violates Minority Shareholder Rights - CIAM
French Billionaire Arnault Builds Up Lagardere Holding
Bank of East Asia to Sell Insurance Business With Elliott Backing
Nam Tai Sets the Record Straight
CEOs Notch Victory as SEC Adds Hurdles for Shareholder Campaigns
SEC Raises Bar for Shareholder Resolutions
Qatari Investor Backs Shareholder Push for Lagardere Board Changes
MIT Partners With PRIM to Tackle Investment Conundrum
Investor Litt Targets Aimco Over Plans to Split
Big Four Accounting Firms Unveil ESG Reporting Standards
CoreLogic Files Definitive Proxy Statement for Nov. 17 Special Meeting
IsZo Capital Comments on Nam Tai's Appointment of Three Kaisa-Affiliated Individuals to Key Leadership Roles
300 Companies Back NASDAQ in Opposing SEC Investment Manager Proposal
Shapoorji Pallonji Group to Separate Interests From Tata Group
As Nelson Peltz Takes Stake in Comcast, Some Believe He Faces 'Long Odds' in Pushing for Change
Elliott Approaches Cubic About Deal; Firm Adopts Poison Pill
Nikola Founder's Fortune Sinks as His Exit Sparks Stock Rout
Nikola Saga Hits Three Speculative Areas at Once: SPACs, Robinhood Traders, and Electric Vehicles
Diversity Lagging on Boards of Publicly Traded Companies, Researchers Say
Hundreds of U.S. Companies Fight New Rules on Hedge Fund Disclosure
Trian Fund Management Takes Stake in Comcast
Eveready, Suzlon, and Zee Entertainment: Promoters of Three Firms Face Proxy Firm Veto
U.S. Investor Wages £115 Million on Stake in William Hill
Third of Pearson Investors Revolt Against 7.4M Pounds CEO Pay Offer
IsZo Capital Issues Letter to Nam Tai Shareholders Regarding Its Slate's Strategic Vision
SEC Proxy Adviser Rules Yield No 'Meaningful' Benefits, ISS Says
Allegations of Deception Cast Shadow Over Nikola's Lofty Aims
Has Aryzta's New Chairman Got the Appetite for the Job Ahead?
Women Gaining Corporate Board Seats at a Faster Rate Than Men, Study Shows
Goldman Holds Top Rank in Activism Defense, Spotlight Claims: Data
Opinion: Virtual AGMs Bringing Increased Engagement
Japan's Problems With Shareholder Voting Underscore Need for Reform
Businesses' Woes Deepening Over Korean 'Fair Economy Act'
Six Ways Boards Are Enhancing Their Evaluations and Related Disclosures
Activist Funds Won't Need U.S. Antitrust Nod Under New Proposal
Egregious Founder Shares. Free Money for Hedge Funds. A Cluster of Competing Interests. Welcome to the Great 2020 SPAC Boom.
Inside the Greatest Trade of All Time—and What Bill Ackman Is Investing in Now
Biden Would Kill SEC's Reg BI: Morningstar Analyst
ValueAct Played a Key Role in Speeding up Citigroup CEO's Retirement, Sources Say
Companies Need to Plan for the Convergence of Private Equity and Shareholder Activism
Color Blind? How Boardroom Diversity Data Eludes Advocates
A Capitalist Repents: Jeff Ubben Is Out to Make Things Right

9/24/2020

French Billionaire Arnault Builds Up Lagardere Holding

Reuters (09/24/20) White, Sarah; Rosemain, Mathieu

LVMH (LVMUY) owner Bernard Arnault disclosed that he has accrued a direct stake in embattled publisher Lagardere (MMB), which is the center of a proxy battle between some of France's leading businessmen. The battle ensued when the company's managers sought aid in warding off a board shake-up attempt by Amber Capital. Lagardere has subsequently on-boarded new investors, including Vivendi (VIVHY) owner Vincent Bollore. But they clash with Lagardere's strategy, driving speculation that Bollore and Arnault will want to compete for some of its holdings. According to Arnault, his family holding company now controls more than 5% of Lagardere, and he is committed to the integrity of the group's main operations. He also has invested in the vehicle through which Lagardere CEO Arnaud Lagardere controls the firm, and said the two of them, with a collective 12.8% stake, would act in concert. Although Vivendi has recently built up a 23% stake in Lagardere and has partnered with Amber in a bid to gain seats, Arnaud Lagardere exerts significant influence over the company, as his share is held through a "commandite" scheme that empowers him to veto many decisions. A Vivendi spokesperson on Sept. 24 said the firm was "very happy" with Arnault becoming a direct Lagardere shareholder. Sources say Bollore initially was in Arnaud Lagardere's corner earlier this year in fighting off Amber, but the relationship soured after Arnault's involvement was revealed. Vivendi and Amber have now gone to court to attempt to induce an expedited shareholder meeting to change Lagardere's governance. Its supervisory board unexpectedly renewed Arnaud Lagardere's status as CEO months ahead of schedule in August. "It's a company that's managed only in the interest of one person and those close to him," said Amber's managing partner Joseph Oughourlian. Lagardere's attorneys Florian Bouaziz and Didier Malka refuted allegations of a lack of independence of the board, claiming Vivendi had initially voted for the renewal of the current one and against Amber. The court will rule on the shareholder meeting request on Oct. 14.

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9/23/2020

Qatari Investor Backs Shareholder Push for Lagardere Board Changes

Reuters (09/23/20) White, Sarah

Qatar's sovereign wealth fund is urging fair board representation for all major investors in French media and publishing group Lagardere (MMB), echoing demands from shareholders like Amber Capital for a corporate shake-up. Qatar Holding, Lagardere's third largest investor with a 13% stake, said on Sept. 22 that it considered it "legitimate that all significant shareholders be fairly represented." This statement follows demands by Amber and Vivendi (VIVHY), now Lagardere's two top investors, for board seats. Qatar Holding said it remained committed to Lagardere as a long-term investor, and it had acknowledged the request "by two core shareholders," while also reserving the right for representation. The Qataris and other shareholders are currently not explicitly represented on Lagardere's supervisory board, which this year accepted new members including former French President Nicolas Sarkozy. Vivendi invested in Lagardere earlier this year when the company's leading managers sought aid to fend off Amber at a shareholder meeting. However, Lagardere CEO Arnaud Lagardere has also brought in LVMH (LVMUY) boss Bernard Arnault as an investor in his family holding company, while Vivendi owner Vincent Bollore has switched sides. Vivendi partnered with Amber to request board seats, and the two have gone to court in France in an attempt to trigger another shareholder meeting.

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9/22/2020

CoreLogic Files Definitive Proxy Statement for Nov. 17 Special Meeting

Business Wire (09/22/20)

CoreLogic (CLGX) has filed its definitive proxy statement with the Securities and Exchange Commission in connection with its upcoming Special Meeting of Shareholders on Nov. 17, 2020. The CoreLogic board recommends shareholders vote against the removal of CoreLogic's directors. CoreLogic says it is "delivering outstanding financial and operational performance. Our strong financial results in 2020 are supported by increasing organic growth and recurring revenues as well as record profitability, margins, and free cash flow. We have just raised financial guidance for 2020 and 2021, which underscores our high confidence in CoreLogic's future and the value-creation opportunities inherent in continued execution of our strategic plan. The Company believes it is poised for significant valuation upside, which shareholders will not benefit from under Senator/Cannae's inadequate acquisition proposal. The Board remains open to all paths to create value, but we are confident in our view that we will produce value for shareholders far in excess of $66.00 per share. CoreLogic has provided significant transparency and detailed information to all shareholders, including Senator and Cannae, through multi-year projections, margin targets, planned divestitures and capital allocation plans, that we believe clearly demonstrates that CoreLogic is worth substantially more than $66.00 per share. Our Board of Directors is comprised of highly qualified independent directors with track records of shareholder value creation and taking decisive actions to ensure continuing success in an evolving industry landscape. We believe the Senator/Cannae nominees are inherently conflicted and lack the breadth and depth of experience that CoreLogic's current directors possess and is necessary to provide effective oversight of CoreLogic."

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9/22/2020

As Nelson Peltz Takes Stake in Comcast, Some Believe He Faces 'Long Odds' in Pushing for Change

Philadelphia Business Journal (09/22/20) Caffrey, Michelle

Nelson Peltz's Trian Fund Management has amassed a $900 million stake in Comcast Corp. (CMCSA). It is not yet clear what Peltz intends to accomplish with this investment, which represents less than 1% of the company's common shares. In a recent statement, Trian said it believes Comcast's shares are undervalued and it's started "constructive discussions" with the media giant's management team. Analysts including Moffett Nathaanson's Craig Moffett and Sanford C. Bernstein & Co.'s Peter Supino have argued that Comcast is undervalued. As the pandemic has amplified the differences between Comcast's businesses, analysts have again raised the idea of spinning out its struggling media operations, NBCU and Sky. Speaking on CNBC on Tuesday morning, IAC Chairman Barry Diller said there's no obvious need for an activist investor at Comcast, calling it a "superbly managed and superbly hedged" company. He said the fact Comcast owns both production and distribution assets is a strength, compounded by the fact it also owns a broadband network that's increasingly in demand. Whatever Trian intends, Comcast will not be controlled easily by an outside investor. Chairman and CEO Brian Roberts holds about one-third of voting shares. Trian's recent proxy battle with Procter & Gamble (PG) shows Peltz and his firm are capable of working with management productively, even after a contentious fight.

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9/21/2020

Hundreds of U.S. Companies Fight New Rules on Hedge Fund Disclosure

Financial Times (09/21/20) Henderson, Richard; Aliaj, Ortenca

Hundreds of U.S.-listed companies have come out against a proposal from the Securities and Exchange Commission (SEC) that would shield the vast majority of hedge funds from disclosing their stock market holdings. A total of 381 companies on Monday signed a letter, organized by the New York Stock Exchange (NYSE), saying the proposal would deal a "debilitating blow" to investor relations. The proposed rules governing 13F filings would relieve all but the world’s largest 550 investment managers from disclosing their public equity holdings. This would allow most hedge funds to keep their portfolios secret. Smaller companies in particular would be hurt by the proposal because they would lose visibility to a higher proportion of their investor base than larger groups, making them more vulnerable to activism, the letter argued. Under the SEC plan, only investors with assets of more than $3.5 billion will have to submit quarterly 13F filings, raising a threshold that is currently set at $100 million. Jay Clayton, SEC chairman, said the aim was to reduce "unnecessary burdens" on smaller fund managers. The NYSE suggested that the SEC form a working group of public companies, investors, and academics to recommend alternative changes to the 13F filing. The group arguing against the changes included many major companies including Cigna (CI), FedEx (FDX), Home Depot (HD), BP (BP), and Alibaba (BABA). The proposal has attracted other detractors, including Allison Herren Lee, the SEC's only Democratic commissioner.

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9/21/2020

Trian Fund Management Takes Stake in Comcast

Wall Street Journal (09/21/20) Driebusch, Corrie; Rizzo, Lillian

Trian Fund Management has launched a campaign against Comcast (CMCSA), wagering that its stock is undervalued. A source says Trian has accrued some 20 million shares in Comcast, owning approximately $900 million or about 0.4% of the company. Comcast's market value is roughly $200 billion. Executives at the hedge fund recently initiated discussions with Comcast management, although Trian's interest is unclear, apart from its conviction of Comcast's share undervaluation. Trian is reputed for promoting changes at companies it engages with, like breakups, sale of underperforming units, or moves to boost efficiency and better use capital. The fund frequently pursues board representation and attempts to avoid public feuds, and it often goes after large businesses, like Procter & Gamble (PG), DuPont de Nemours, and General Electric (GE). Yet driving change at Comcast could be daunting, as the family of chairman and CEO Brian Roberts controls a significant voting stake. Company stock also has performed relatively well, peaking before the onset of the coronavirus pandemic, while Comcast's broadband business has remained resilient. Trian verified its Comcast stake in a securities filing, disclosing ownership of roughly 7.2 million company shares as of the end of the second quarter, which currently stands at about 20 million. "We have recently begun what we believe are constructive discussions with Comcast's management team and look forward to continuing those discussions," the fund announced. Comcast's stock rose more than 2% on the news, although on Sept. 21 it closed down 1.3% at $44.68.

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9/17/2020

Women Gaining Corporate Board Seats at a Faster Rate Than Men, Study Shows

The Business Journals (09/17/20) Stych, Anne

The percentage of females on corporate boards is on the rise, with women gaining seats at a faster rate than men. Women of color, meanwhile, are advancing faster than any other group or gender. The nonprofit 2020 Women on Boards has determined that women now hold 22.6% of the board seats among the country's biggest publicly traded companies in the Russell 3000 Index, a 2.2 percentage point gain from 20.4% last year and a 6.5 percentage point increase over the last four years. Sixty percent of those boardroom seats were newly created and not gained by women replacing men, the group said. However, even though Black and Asian/Pacific Islander women are gaining seats in the Fortune 500 more quickly than any other group or gender, women of color still hold the fewest board seats. The 2020WOB Gender Diversity Index shows that women hold 6,034 board seats of 26,711 among the 2,982 companies on the 2020 Russell 3000 list. Of the 2,966 companies that were on the list in both 2019 and 2020 years, 785 added women directors in the last year. One-third have just one or zero women on their boards. Among the 25 states that have more than 20 companies on the Russell 3000, all but two (Florida and Utah) surpassed the 20% aim for women on their boards in 2020, up from 17 states in 2019. The states that surpassed more than 20% for the first time are Alabama, Colorado, Indiana, Pennsylvania, Tennessee, and Texas.

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9/23/2020

Businesses' Woes Deepening Over Korean 'Fair Economy Act'

Korea Times (09/23/20) Nam, Hyun-woo

Concerns are growing among domestic Korean businesses as lawmakers push to introduce a set of new regulations on corporations that restrict the largest stakeholder's control of corporate boards. Companies claim the regulations, dubbed "the fair economy act," will limit their capability to prevent activist funds' attempts to place outside directors of their choice on the board. Korea Chamber of Commerce and Industry (KCCI) Chairman Park Yong-maan recently accused lawmakers of ignoring businesses' opinions regarding the fair economy act. Park's comments came as the government attempts to revise the Commercial Act and the Fair Trade Acts. In the revision of the Commercial Act, companies are required to appoint more than one audit committee member from outside the board through a shareholder vote. In this process, the combined voting right of a company's owner and its affiliated persons and organizations is limited to 3% no matter how big a stake they possess in the company. The current Commercial Act allows a company to appoint board members without limits in voting rights, and places a 3% voting right cap only on the largest shareholders when the company is appointing audit committee members from board members through a shareholders meeting. When the revision comes into effect, however, a company has to appoint at least one audit committee member from outside of the board, while the largest shareholders face the same 3% limit. In this case, general shareholders can form a coalition between shareholders to increase their voting power. As companies detest the revision, the Federation of Korean Industries, Korea Federation of SMEs, and four other business lobby groups in the country issued a joint statement expressing worries about the fair economy acts' adverse effects on the economy. Along with the revision to the Commercial Act, businesses have raised concerns about the revision to the Fair Trade Act, which will enhance the regulations on trading between affiliates. Currently, the country's Fair Trade Commission regulates intra-group trade toward a listed affiliate when the owner family's stake in the company surpasses 30%; the revision will lower this to 20%, making more conglomerate units subject to the regulation.

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9/22/2020

Six Ways Boards Are Enhancing Their Evaluations and Related Disclosures

Harvard Law School Forum on Corporate Governance (09/22/20) Klemash, Steve W.; Doyle, Rani; Burgess, Fiona

Annually since 2018, the EY Center for Board Matters (CBM) has reviewed proxy statements filed by Fortune 100 companies to identify trends in board evaluation practices. This year, it finds that a vast majority (95%) of 2020 Fortune 100 proxy filers provide at least some disclosure about their evaluation process, up slightly from 2019 and 2018. Since 2018, the most significant change EY has observed is that more boards are expanding their evaluation process to include individual director evaluations. Almost half of 2020 Fortune 100 proxy filers disclosed that they performed individual director evaluations along with board and committee evaluations, up from 24% in 2018. Twenty-nine percent made clear that the individual director evaluation component includes director peer evaluations, up from 10% in 2018, and 11% made clear that it involves self-evaluation, up from 5% in 2018. The use of both questionnaires and interviews continues to increase, as does the use of third-party facilitators. Fifty-three percent of 2020 Fortune 100 proxy filers disclosed the general topics covered in their board evaluation program, up from 49% in 2019 and 40% in 2018. More companies are also making disclosures about changes made in response to evaluations. This increase is responsive to increasing investor interest in the results of a board's evaluation process. Finally, in 2020, 21% of proxy filers in the Fortune 100 disclosed that they address certain evaluation matters and proactively seek feedback on an ongoing basis, beyond the formal annual evaluation, more than double the 9% that did so in 2018.

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9/22/2020

Activist Funds Won't Need U.S. Antitrust Nod Under New Proposal

Bloomberg Quint (09/22/20) McLaughlin, David

The Federal Trade Commission (FTC) has proposed a rule that would make it easier for activist funds to build stakes in companies without first alerting management of their plans and waiting for antitrust approval to proceed. Under current rules, hedge funds that want to buy 10% or less of a company's voting securities are exempt from filing for antitrust approval only if the purchase is made "solely for the purpose of investment" with no intention of participating in the direction of the issuer's business decisions. The new proposal would exempt those investments from reporting requirements as long as the investor doesn't already own a stake in the company and the new purchase would not put it over a 10% holding. The investor also cannot own more than 1% of the shares of a company that competes with the issuer. The FTC voted to advance the proposal and gather public comment before it becomes final. Republican Commissioner Noah Phillips wrote in a statement that exempting reporting requirements for investments of 10% or less of a company would reduce regulatory burdens on investment activity that doesn't harm competition. Investors have to notify the engaged company, wait as long as a month, and pay up to $280,000 in fees, according to Phillips. During the review period, the engaged company can publicize the investor's plan, which can drive up the share price, and management can take defensive measures, Phillips wrote. Out of the 1,800 filings made between fiscal year 2001 and 2017 for share purchases of 10% or less, none were challenged by the FTC or the Justice Department, according to the FTC.

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9/21/2020

Egregious Founder Shares. Free Money for Hedge Funds. A Cluster of Competing Interests. Welcome to the Great 2020 SPAC Boom.

Institutional Investor (09/21/20) Celarier, Michelle

In an interview with Institutional Investor, Bill Ackman discusses the recent debut of his $4 billion special-purpose acquisition company (SPAC) Pershing Square Tontine Holdings. SPACs have a checkered history and generally poor perfomance, with an average loss of 18.8% since 2015, but Ackman's SPAC has been wildly successful and the structure is experiencing a resurgence in popularity. SPACs are increasingly seen as a valid asset management strategy. Hedge funds Third Point, Glenview Capital Management, and Starboard Value, as well as private-equity funds Apollo Global Management, TPG Capital, and Fortress Investment Group, have all launched SPACs in the past five years. Ackman's Pershing Square Tontine Holdings got rid of the premier feature of SPACs, so-called founder shares that typically give their sponsors 20% of the new company. Ackman also got rid of other common SPAC features that create a clustered net of competing interests that drag down performance. He changed the terms of the warrants investors receive along with stock in the IPO and also promised to invest at least $1 billion of Pershing Square's capital to help complete a merger. Both moves should make a costly secondary offering in the form of a private investment in public equity (PIPE) unnecessary. Ackman designed the Pershing Square SPAC to have the smallest upfront warrant ever, thus minimizing the risk of shareholder redemptions and the need to raise expensive PIPE capital. Investors in Pershing Square Tontine get one-ninth of a warrant per share upfront but can only get the other two-ninths of a warrant—comprising a third—if they hold onto their shares after the redemption date. Another hedge fund sponsor, Starboard Value, has already taken a shine to the warrant structure, recently filing for a SPAC IPO with warrant terms designed to work like those of Pershing Square. Some recent SPAC mergers are doing better than in the past, and many SPAC players argue that returns will continue to improve because the market has matured, yet demand was waning in the last few weeks of the summer, and short-sellers have already started attacking recent examples of the structure. While Ackman has shined a spotlight on the flaws of SPACs, he still argues that "the basic construct is a good idea."

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9/21/2020

Inside the Greatest Trade of All Time—and What Bill Ackman Is Investing in Now

Barron's (09/21/20) Cohan, William D.

In the space of three weeks in March 2020, Bill Ackman turned a $27 million premium paid to buy credit default swaps into a profit of $2.6 billion. He then reinvested a chunk of that windfall in the long positions he wanted to protect by buying the insurance in the first place. Ackman's $27 million bet has netted him and Pershing Square Capital $3.6 billion, and on an internal rate-of-return basis, the article argues, this ranks as one of Wall Street's greatest trades ever. Ackman had some significant losses between 2015 and 2018, but his fortunes turned in 2019, when Pershing Square was up 58.1% compared to 31.5% for the S&P 500. The firm is up an additional 50%, net of fees, through Sept. 15, and his assets under management are back to $11 billion. In July, Ackman raised $4 billion for a special purpose acquisition company (SPAC), the largest SPAC initial public offering of 2020 and one of the largest IPOs of the year. Though he sees opportunities in the market, Ackman predicts another spike of Covid-19 cases as colder weather sets in. Ackman is more worried about volatility in the financial markets related to the outcome of a close presidential election. Toward the end of January, Ackman says he was getting "increasingly bearish" and considered locking in some gains by selling big holdings, but decided instead to hedge his long exposure by buying insurance. After a week of buying protection, Ackman had accumulated $51 billion of notional protection on the U.S. investment-grade bond index, $18 billion of protection on the European investment-grade bond index, and $2.5 billion of protection on the U.S. high-yield bond index.

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9/16/2020

ValueAct Played a Key Role in Speeding up Citigroup CEO's Retirement, Sources Say

CNBC (09/16/20) Son, Hugh

ValueAct was "very disappointed" in Citigroup's (C) performance under Michael Corbat and his deputies since it established a stake in 2018, and that was a key factor in Corbat's retirement announcement last week, according to sources. ValueAct was disappointed that the bank missed important performance goals for returns and expenses that it had set for itself in 2017, and that eroded the lender's credibility, the sources said. ValueAct never urged the ouster of Corbat, according to the sources. Rather, the firm, led by partner Dylan Haggart, was vocal with the bank's board and management about the company's shortcomings, fostering tension inside the company. ValueAct owns approximately 27 million shares of Citigroup and is underwater on the investment as of this week, according to the sources. Last week, Citigroup said that Corbat would leave the company in February, and that Jane Fraser would become the first female head of a large Wall Street bank. CNBC reported Thursday that Corbat had moved up his retirement date because of pressure from regulators over the company's internal controls and as investors including ValueAct became impatient. Since ValueAct established its stake in 2018, Citigroup has replaced most of its leading executives. ValueAct wants to "create accountability, and with that boards tend to be sharper, more on their game," a source said. "If it works, that extra urgency drives performance. The CEO becomes lauded and everything works out great. If it doesn't, it helps you arrive at decisions earlier." ValueAct spokesperson Drew Stroud said that the investment firm has "provided our perspectives on strategic priorities, budgeting, and performance expectations" to Citigroup. He said Citigroup "appreciated our open and constructive dialog with Mike, the entire Citi management team, and the board." Citigroup spokesperson Jennifer Lowney said that the bank had a "constructive relationship" with ValueAct and "they continue to be an important partner. We have benefited from their expertise and value their perspective." She said that "as far is Mike is concerned, his decision to retire was entirely his own and he always planned to do so in 2021."

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9/16/2020

Companies Need to Plan for the Convergence of Private Equity and Shareholder Activism

Forbes (09/16/20) Goldfarb, Bruce

There is increasing collaboration among investors and the convergence of strategies between activist investors and private equity (PE) firms. Today's crossover activist-PE investors combine the value-enhancing plan element of traditional activists with the buyout capital characteristic of private equity firms, partly driven by activists' large cash piles. Such crossover activist-PE strategies may take several forms. For example, Elliott Management several years ago created a PE arm called Evergreen Coast Capital to participate in buyouts of entire companies. Conversely, the private equity firm KKR built a 10.7% stake in Dave & Buster's Entertainment (PLAY) earlier this year and signaled a desire to seek board or management changes. Cannae Holdings and hedge fund Senator Investment Group LP recently joined forces to launch a bid for the property data company CoreLogic Inc. (CLGX). Meanwhile, Third Point sponsored a special purpose acquisition company (SPAC) called Far Point Acquisition Corp. and teamed with PE firm Silver Lake Partners to acquire Global Blue Group AG (GB). Activists generally own significant minority stakes in the companies they engage, unlocking value for the benefit of all public shareholders, while PE firms have generally unlocked value outside of public markets. While the tension between public and private market models will continue to exist, crossover strategies will likely continue to be more commonplace. In order for an activist-PE campaign to win over investors, it needs to combine a solid strategic and operational plan with the capital to acquire and invest in the business.

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9/16/2020

Color Blind? How Boardroom Diversity Data Eludes Advocates

Reuters (09/16/20) Kerber, Ross; DiNapoli, Jessica; Jessop, Simon

As investors, executives, and politicians demand greater racial and ethnic diversity in Western corporate boardrooms, they say the lack of ethnicity data is slowing progress on efforts to improve diversity in the top echelons of global corporations. "We would like to see the makeup of all directors," said Benjamin Colton, co-head of stewardship efforts at State Street Corp. "We understand there may be directors who don't want to self-identify, and in those cases we might engage on that a little more." Among the top 200 companies in the S&P 500, African Americans hold only about 10% of board seats and Hispanic or Latino people hold only 4% of board seats. That representation falls below their shares of the U.S. population of 13% and 19%, respectively. Factors including insular social and professional networks have kept boardrooms largely white for years. The concern about underrepresentation of minority groups is leading to new data-gathering efforts and legislation. In addition, several researchers have each launched new efforts to gather more diversity data, both drawing on information from groups such as the Latino Corporate Directors Association. These efforts are in early stages, however, and the data are patchy. Researcher Just Capital says 21% of 931 companies in the Russell 1000 index now offer at least some information about their boards' racial diversity, but it is often narrow or vague. More corporate disclosures are likely, but some directors might not want certain characterizations publicly listed, or might recall how such information has been used to exclude minorities. Recently, California legislators passed a bill mandating boards have one director from an underrepresented community by the end of next year, and requiring the state to publish a report on companies' compliance.

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9/16/2020

A Capitalist Repents: Jeff Ubben Is Out to Make Things Right

Bloomberg (09/16/20) Hammond, Ed

In June, Jeff Ubben stepped down from ValueAct Capital, the hedge fund he founded, and launched Inclusive Capital Partners, which backs companies tackling problems that address environmental, social, and governance (ESG) issues. Ubben is reckoning with the investment philosophy that guided his success during the ValueAct years, especially the relentless focus on shareholder primacy. Company owners now have too much power, he said, expressing regret about his time at ValueAct, where he carved out a reputation as a thoughtful, long-term investor who would work with the companies his firm engaged. Today, Ubben says this distinction was mostly false. "We had plenty of business plans built on buying companies and firing the workforce of the acquired company, and then buying the next one," he said. Ubben worries that company directors spend too much time on questions like whether they should raise prices. He believes the same dislocation between valuation and opportunity exists today as it did at the start of his investing career. Shareholder-first capitalism has, he says, made businesses so good at maximizing profit that there is little left to squeeze and left them ill-equipped to react to other issues investors care about. Ubben is also contemptuous of much of the ESG world's tendency toward corporate spin, which "may be a great way to grow your asset management business" but will do little to improve the world. Instead, Ubben hopes that by partnering, as investor or board member, he can help oil majors resist shareholder pressure to repurchase shares or undertake other methods for short-term gain. The investor now envisions a future where bosses are paid based on "total societal impact."

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