Media Center

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

Disney, Salesforce and Others Draw Activist 'Swarm' After Shares Decline
Vodafone Interim CEO Says 'We Can Do Better' on Slow Growth
Advent-Backed Cobham Studies Takeover of U.S. Defense Peer Mercury
FedEx Is Laying Off More Than 10% of Its Management Ranks
Capricorn Shareholders Back Six Directors Proposed by Fund; Strategic Review on Tap
GSK Beats Expectations, Shingles Vaccine Bolsters Outlook
Ancora Holdings Urges Green Plains to Put Itself Up for Sale
Kelso Group Takes 0.4% Stake in THG
Six Flags Appoints New Independent Director to its Board of Directors
Elliott Takes Stake in Vantage Towers, Filing Shows
Amarin Files Definitive Proxy Materials and Mails Letter to Shareholders
Anson Hedge Fund Backs Sandpiper Group in First Capital Proxy Fight
Bayer Under Investor Pressure to Speed Up CEO Changeover
The SEC Reveals 2023 Priorities in New Agenda
Western Digital to Get $900 Million Investment From Apollo, Elliott
Opinion: Activist Funds Must Invest More Than Money to Make Impact in Japan
Voting Rights in Corporate Governance: History and Political Economy
Opinion: Antitrust and ESG
Why Has Elliott Management's Paul Singer Taken a Position in Salesforce?
Citigroup's Kiran Moorthy Sees Activists Mix Things Up in Slowdown
Politicians Want to Keep Money Out of ESG Funds. Could It Backfire?
Board Changes Could Signal Salesforce's Willingness to Appease Investors
Women Make Gains on Corporate Boards, Report Finds
Examining 2023's Most Pressing Governance Concerns
Sustainable and Impact Investing Continues Growing – Cambridge Survey
CEO Pay Cuts Could Be Just the Start
Management Feel Unprepared for SEC’s Climate Rule, Survey Finds
Jeff Smith Makes for a Substitute Warren Buffett
Update on ESG, Stakeholder Governance, and Corporate Purpose
Getting the Shareholders You Deserve

2/1/2023

Disney, Salesforce and Others Draw Activist 'Swarm' After Shares Decline

Wall Street Journal (02/01/23) Thomas, Lauren

Shareholder activists, emboldened by beaten-down share prices, are increasingly crowding into the same big names. Software company Salesforce Inc. (CRM) faces at least four activists, while Walt Disney Co. (DIS) has drawn the attention of two well-known activists, one of which is mounting a fight for a board seat. Cloud-software company Splunk Inc. (SPLK) last year drew two activists, and toy maker Hasbro Inc. (HAS) fended off a pair in a challenge for board seats. In all, there were 17 instances in which a U.S. company drew more than one activist in 2022, situations that bankers refer to as swarming, according to data compiled by Lazard Capital Markets Advisory Group. That was up from nine in 2021 and seven in 2020. While there were 20 instances in both 2019 and 2017, industry experts anticipate the number will continue to climb this year as overall levels of activism increase. A down market for stocks has helped drive up the volume of activist campaigns, as investors pounce on opportunities to push for change at underperforming companies. There were 135 activist campaigns in the United States in 2022, a 41% jump from the prior year, Lazard found. Big companies like Disney and Salesforce that are grappling with issues including unpopular acquisitions and bloated cost structures and that have liquid stocks are particularly likely to draw multiple activists simply because there are only so many such opportunities at any given time. Having multiple activists can turn what is already a headache for corporate executives into a potential nightmare. Patrick Gadson, co-chair of the law firm Vinson & Elkins LLP's shareholder activism practice, said activists usually have their own respective time horizons and return expectations, so that when more than one shows up in the same stock, their objectives often clash.

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2/1/2023

Vodafone Interim CEO Says 'We Can Do Better' on Slow Growth

Bloomberg (02/01/23) Seal, Thomas

Margherita Della Valle, the interim CEO of Vodafone Group (VOD), has reaffirmed guidance but noted that the company "can do better" in the wake of decreased European sales. The group's organic service revenue gained 1.8% to €9.52 billion ($10.4 billion) in the third quarter, Vodafone said, compared to the average 1.75% growth estimate from five analysts surveyed by Bloomberg. The slowdown marked the first time it fell below 2% since fiscal 2021. Sales were boosted from markets outside of Europe, in particular because of hyperinflation and price increases in Turkey, which represents 4% of service revenue. It grew 53% in the quarter, and stripping it out would leave total service revenue growth at 0.5%, Vodafone said. Meanwhile, questions have emerged about Vodafone's leadership after CEO Nick Read exited the company in December, with Chief Financial Officer Della Valle assuming the role of interim CEO. She said on Feb. 1 that "there is more to do and our focus is to provide a better service to our customers, become a simpler business, and deliver growth." In response to rising energy and labor inflation, Vodafone is curbing costs and will attempt to rebound in essential markets like Germany, its largest. Jefferies analyst Jerry Dellis described an 8.7% fall in Spanish sales as a "major disappointment." Vodafone leaders are also facing strategic investors such as United Arab Emirates-backed Emirates Telecommunications Group Company PJSC, known as e&, which has gradually enlarged its position to 12% and may potentially focus on Vodafone's African assets. Xavier Niel, a French billionaire entrepreneur who holds a 2.5% stake in Vodafone, last year unsuccessfully bid on the company's Italian division. Meanwhile, Vodafone anticipates its deal with KKR & Co. and Global Infrastructure Partners to share control of its mast operating spinout Vantage Towers will close in the first half of the year. The joint venture with private equity is expected to hold 89.3% of Vantage. However, the transaction could be affected by Elliott Investment Management, which disclosed a stake with 5.6% voting rights on Jan. 31.

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2/1/2023

Advent-Backed Cobham Studies Takeover of U.S. Defense Peer Mercury

Bloomberg (02/01/23) Foerster, Jan-Henrik

Advent International-backed British defense company Cobham (CBHMY) is considering a takeover of U.S. peer Mercury Systems Inc. (MRCY), which announced it is looking at strategic alternatives. Cobham Chairman and Advent managing partner Shonnel Malani said on Wednesday that the firm is weighing an acquisition amid increasing defense spending worldwide, calling Mercury "the perfect fit" as both it and Cobham are the only mid-tier players that maintain radar components. Mercury's shares, which have been pressured by Elliott Investment Management and Jana Partners, have slipped 11% in New York over the last year for a market value of approximately $2.9 billion. Mercury is one of the last remaining independent, public providers of sophisticated aerospace and defense industry electronics that counts the U.S. government among its customers. This means any acquisition could attract the scrutiny of Washington regulators more closely eyeing transactions in critical industries. Advent purchased Cobham for £4 billion ($4.9 billion) in 2020, and has been striving to grow the business via buyouts of firms including Ultra Electronics Holdings Plc. Advent has also offered to buy U.S. satellite imagery supplier Maxar Technologies Inc. (MAXR). "Defense spending is increasing and private capital can play a crucial role here," Malani said. "We're not just buying companies, we genuinely want to develop them strategically."

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2/1/2023

GSK Beats Expectations, Shingles Vaccine Bolsters Outlook

Reuters (02/01/23) Fick, Maggie; Grover, Natalie

On Feb. 1, GSK (GSK) beat fourth-quarter profit and sales forecasts as a result of sales of Shingrix, the company's blockbuster shingles vaccine, and issued a positive forecast for 2023. The move reinforced CEO Emma Walmsey's spin-off last year of consumer business Haleonx. GSK reported adjusted fourth quarter profit of 25.8 pence per share on sales of about 7.4 billion pounds ($9.11 billion), surpassing the 21.2 pence per share on sales of about 7.1 billion pounds predicted by analysts in a company-compiled consensus. Shingrix generated 769 million pounds in the quarter ended Dec. 31, beating the 748 million in the GSK-compiled consensus estimates. GSK's turnover was further assisted by stronger than anticipated sales of its HIV and respiratory treatments. As of 0900 GMT, GSK shares increased 0.4%, outperforming the FTSE 100 which was up 0.3%. In 2022, GSK withstood a prolonged challenge by Elliott and Bluebell, and it also achieved clinical trial success for a potential blockbuster vaccine for respiratory syncytial virus, a leading cause of pneumonia in older adults and young children, and saw M&A activity. Barclays analyst Emily Field noted, "The big question is oncology, there's a lot of skepticism about the return GSK has been getting in investor dollars." Meanwhile, U.S. legal disputes over heartburn medication Zantac affected GSK's shares in the second half of 2022. Some of those concerns were allayed following a beneficial ruling in December, but other lawsuits remain. On Feb. 1, GSK forecast 2023 adjusted operating profit would rise by 10% to 12% with sales increasing by 6% to 8%, excluding any contributions from its COVID-19 solutions business at constant exchange rates.

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1/31/2023

Six Flags Appoints New Independent Director to its Board of Directors

Business Wire (01/31/23)

Six Flags Entertainment Corporation (SIX) has added Marilyn Spiegel to its board, and she will stand for election along with the company's six other directors at this year's annual general meeting. In welcoming Spiegel, Six Flags Non-Executive Chairman Ben Baldanza cited her 30+ years in the hotel and entertainment sectors as providing the business "with valuable insight and guidance as we seek to elevate the guest experience and deliver long-term, profitable growth." The announcement follows positive discussion between the theme park operator and Land & Buildings Investment Management LLC, with which it has engaged several times in the last few months. "The addition of Marilyn to Six Flags' Board, with her extensive track record in the hospitality industry and her experience overseeing operations with significant real estate portfolios, is a positive development for Six Flags' shareholders," declared Land & Buildings CIO Jonathan Litt. "As we've previously stated, we believe the company has a tremendous value creation opportunity in front of it—including by exploring ways to potentially monetize its uniquely valuable real estate portfolio. We look forward to continuing to engage with the Board and leadership team." Spiegel expressed confidence that her hospitality expertise and ability to motivate frontline team members and improve margins "will help guide the Company on its exciting transformation."

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1/31/2023

Bayer Under Investor Pressure to Speed Up CEO Changeover

Reuters (01/31/23) Weiss, Patricia; Burger, Ludwig

The supervisory board of Bayer (BAYRY) is facing pressure from a top-10 shareholder to replace CEO Werner Baumann expeditiously, with company shares depressed by litigation stemming from its 2018 takeover of Monsanto while market trust in top management is also scarce. "When it comes to CEO succession we say: the sooner the better," said Union Investment portfolio manager Markus Manns. This comes on the heels of another key German portfolio manager urging Supervisory Board Chairperson Norbert Winkeljohann to accelerate finding a replacement for Baumann. The Frankfurter Allgemeine Sonntagszeitung newspaper quoted Deka's Ingo Speich as saying Baumann could no longer push strategic changes due to the erosion of his market credibility. "The Bayer stock is in a crisis of trust which the executive board is responsible for," he explained. "Bayer has to take investor demands more seriously going forward. The Bayer stock is currently reacting more strongly to news from investors than to operating results. That's a clear sign that something is wrong." Company stock has lost over 40% of its value since the Monsanto transaction. Manns said the non-executive supervisory board may need time to find a candidate who qualifies to succeed Baumann. Baumann was awarded a new contract in 2020 that expires next year, and he said then that he would depart Bayer at the end of that term. Bluebell Capital Partners is also demanding the company's breakup, including divesting its consumer health unit and later spinning off its pharmaceuticals and agricultural segments. Inclusive Capital Partners announced it had also acquired a stake in Bayer earlier this month.

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1/31/2023

Opinion: Activist Funds Must Invest More Than Money to Make Impact in Japan

Nikkei Asia (01/31/23) Givens, Stephen

Elliott Management last week quietly launched a campaign to pressure Dai Nippon Printing (DNPLY) to divest itself of its sizable "strategic holdings" in friendly domestic companies with which it does business. The Japanese corporate establishment itself admits that corporate cross-shareholdings not only depress stock value but also shield management from accountability to general shareholders. Yet despite pious public acknowledgments that its so-called strategic holdings need to be shed, Dai Nippon's domestic corporate and institutional shareholders are unlikely to support Elliott's demands in sufficient numbers to force management of the conglomerate to do anything meaningful, writes Stephen Givens, a corporate lawyer and an adjunct professor at Keio University Law School in Tokyo. If Elliott proceeds to submit a formal proposal for a shareholder vote, the odds are overwhelming that it will fail, based on past voting patterns, he says. The establishment does not in its heart believe corporate cross-shareholdings are bad, or at least bad for the establishment, writes Givens. "The cocooning effect of cross-shareholdings makes life happier for corporate executives by insulating them from unwanted takeovers and demanding shareholders like Elliott." But this explanation invites a further question, says Givens: How have Japan's corporate shareholders managed time and again to get away with the glaring contradiction between lip service about divesting strategic holdings and voting against activist proposals to actually divest? "A large part of the answer is of the activists' own making. They have chronically failed to inspire sympathy, to persuade, and to do the things necessary to be taken seriously and to be seen as legitimate by the larger domestic constituencies that shape public opinion in Japan. The failure to communicate sympathetically and persuasively to a domestic audience, in turn, owes to the fact that the activist funds are tin-eared and uncomprehending foreigners. The funds' capital is foreign money. The fund managers making demands are foreign, or in a few cases, foreign-educated, nonestablishment Japanese who manage foreign money from offshore. The establishment looks down on the foreign funds with barely disguised contempt as opportunistic carpetbaggers looking to make a quick buck in a proud and insular corporate monoculture. Activists firing off demands from perches in Singapore and London evoke anti-colonial emotions and cover for the establishment to dismiss proposals that actually make sense." Elliott's own history in Japan leaves it vulnerable to charges of carpetbagging, says Givens. "The fund management company maintains a shadowy profile here and shut its small Tokyo office earlier this year. In recent years, it has made money behind the scenes by clever arbitrage plays in domestic transactions involving taking listed companies private. Nothing is wrong with clever arbitrage, of course. But it is not a pedigree that gives Elliott standing to speak with statesmanlike authority about what is best for Japan or Dai Nippon's shareholders. Third Point demonstrated nearly a decade ago that with the right domestic endorsements, objectively reasonable activist proposals can win," says Givens. With behind-the-scenes support from the administration of former Prime Minister Shinzo Abe, Third Point achieved victories against some of Japan's most deeply entrenched names. "Third Point's moral victories in Japan, however, did not result in financial rewards commensurate with those offered by lower-hanging fruit in the U.S. and Europe. As a result, the fund company withdrew from Japan for greener pastures elsewhere." Elliott, if it is serious about making serious money in Japan, needs to make a serious commitment to the country that it has avoided making so far, says Givens. "Japan's tragedy du jour may well be that it is too Japanese to attract the quality of activists it really needs."

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1/30/2023

Citigroup's Kiran Moorthy Sees Activists Mix Things Up in Slowdown

Bloomberg (01/30/23) Gopinath, Swetha

In an interview on investor activism in 2023, Kiran Moorthy, head of European shareholder advisory at Citigroup (C), said, "Activism activity in the U.K. has long been more vigorous than continental Europe. However, the key question for most activists today remains 'is the U.K. a value play or a value trap,' as it's not necessarily clear what the catalysts are to unlock that value. The depreciation of the pound, in and of itself, does not necessarily provide impetus for an agitant to pursue a U.K. company." He added, "Where we are seeing activity are funds screening for U.K. domiciled mid-caps with significant overseas revenue. It is potentially an efficient way to trade the currency and valuation discount, without necessarily being exposed to the currency risk." When asked about activism across Europe, Moorthy said, "You're starting to see the maturation of activism. It's no longer a small list of very public funds who have become activist. It's become pervasive. The larger activist funds have become more private, institutional investors are increasing their engagement with companies, and you're starting to see the next wave of activist funds spun off and pursuing larger targets. It's becoming more mainstream and less of a U.S. only construct." According to Moorthy, "With the current uncertain M&A option, activists behind the scenes are laser focused on driving operational changes, granular cost, and other margin improvements. Nearly one third of companies in Europe have seen returns on invested capital near or below their average cost of capital, which has been elevated due to largely macroeconomic factors. This is added impetus for activists to focus on improving operational performance via cost cuts."

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1/30/2023

Politicians Want to Keep Money Out of ESG Funds. Could It Backfire?

New York Times (01/30/23) Lieber, Ron

BlackRock (BLK) CEO Laurence D. Fink is embroiled in a fight with Republican lawmakers over the asset manager's stance on environmental, social, and governance (ESG) investing. Differences of opinion over what constitutes an asset manager's fiduciary duty poses a challenge and had resulted in a split among red states. Last year, Louisiana Treasurer John M. Schroder announced plans to sell $794 million of investments managed by BlackRock, stating in a letter to Fink that "according to my legal counsel, [ESG] investing is contrary to Louisiana law on fiduciary duties, which requires a sole focus on financial returns for the beneficiaries of state funds." Schroder added, "This divestment is necessary to protect Louisiana from actions and policies that would actively seek to hamstring our fossil fuel sector. Simply put, we cannot be party to the crippling of our own economy." Meanwhile, North Carolina Treasurer Dale R. Folwell, who has called on Fink to resign, said, "My fiduciary duty to those that teach, protect, and serve, as well as to our retirees, directs that the current North Carolina Retirement Systems investments in BlackRock remain at this time. Our job is to find the best value with the lowest cost and highest margin of safety. Pulling money away from BlackRock and giving it to someone who will charge us four times as much is not the right thing for our members." According to Columbia University's Cynthia Hanawalt, "There is a cognitive dissonance between political narratives and people's practical obligations. If there is reason to believe that companies are vulnerable to climate risk or the impact of some other ESG factor, fiduciaries are obligated to consider those factors."

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1/30/2023

Board Changes Could Signal Salesforce's Willingness to Appease Investors

Yahoo! News (01/30/23) Miller, Ron

Elliott Management said recently it made a multibillion-dollar investment in Salesforce (CRM). Soon after, Salesforce said it would bring in three new board members, and according to The Wall Street Journal, Elliott intends to nominate its own list of directors. Salesforce is also dealing with other firms—Starboard Value purchased a "significant stake" in the company in October, and ValueAct Capital and Inclusive Capital Partners also made investments. In fact, ValueAct Capital CEO and chief investment officer Mason Morfit is one of the three new board members. He joins Arnold Donald, former president and CEO at Carnival Corp. (CCL), and Mastercard (MA) CFO Sachin Mehra, replacing Bret Taylor, co-chair and co-CEO. Taylor said in November he would step down at the end of the month along with longtime board members Sanford Robertson and Alan Hassenfeld. Patrick Gadson, a partner at law firm Vinson & Elkins who oversees shareholder activism and mergers and acquisitions, says Elliott typically requests board seats as a starting point in discussions with a company where it is operating to help reinforce its demands. The discussions related to changes in board makeup have been continuing since last summer, indicating that the investors have been working privately for some time. William Blair, a division of Equity Research, wrote in a recent note regarding Salesforce's operating margins compared to its peers: "In comparison, this group of five companies has a similar revenue scale to Salesforce, yet has an operating margin profile of 41%, well above Salesforce, largely due to more efficient sales and marketing spend." William Blair believes Salesforce likely could not achieve that, but may reach 30%. Notably, Salesforce has committed to margins of 25% by 2026, but that may not be sufficient for Elliott and the other investors as they strive to make Salesforce more efficient and profitable.

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1/30/2023

Sustainable and Impact Investing Continues Growing – Cambridge Survey

Pensions & Investments (01/30/23) Bradford, Hazel

Institutional investors have increased sustainable and impact investing activity by 81% over the past four years overall, with significant variation by investor type and region, according to a Cambridge Associates survey released Monday. The biennial client survey found 65% of 144 respondents actively engage in sustainable and impact investing, compared with 61% in 2020 and 36% in 2018. The 2022 survey for the first time included family offices and high-net-worth individuals. Institutional investors outside of the U.S. invest more of their portfolio, with one-third reporting that more than half of their long-term portfolios are allocated to sustainable and impact investments. By contrast, more than half of U.S. respondents reported less than 10% allocated to such investments. Climate change and resource efficiency were the most common focus areas for respondents engaging in sustainable investing, with 77% investing in those themes, compared with 38% in the 2018 survey. Other themes mentioned were investing in diverse managers and social and environmental equity. The continued expansion of sustainable and impact investing "reflects a growing recognition that these factors are material to investment decision-making and long-term portfolio outcomes," said Liqian Ma, global head of sustainable and impact investing research at Cambridge.

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1/30/2023

Management Feel Unprepared for SEC’s Climate Rule, Survey Finds

Corporate Secretary (01/30/23) Distefano, Noemi

Most management teams feel unprepared for the forthcoming U.S. Securities and Exchange Commission (SEC) rule on climate-related disclosures, according to a survey by ICR. Roughly eight in 10 management teams (78%) are concerned about reporting ESG-related risks and strategies because of the pending SEC rule. If approved, it would mandate that companies disclose information about their governance of climate-related risks and how these have had, or are anticpated to have, a material impact on their business. Despite uncertainty about the rule’s final scope and the timing of when it could be approved, governance professionals at a recent Corporate Secretary event encouraged companies to prepare to comply. The survey, conducted at a recent ICR Conference, collates responses from management teams, institutional investors, sell-side research analysts, investment bankers, and private equity professionals. It found that 73% of management teams incorporate ESG-related information into corporate announcements. It also found that a majority (65%) of non-management teams think companies’ ESG disclosures are "sometimes helpful" in making investment decisions. This compares with 7% that always factor ESG disclosures into their investment decisions and 28% that consider such disclosures never helpful. "Despite the recent raft of anti-ESG regulations and pressures, ESG factors are here to stay," says Lyndon Park, managing partner for global ESG advisory and shareholder activism at ICR. "There are tangible reasons why 78% of the survey respondents feel unprepared for the SEC’s forthcoming climate rule, one of which is that the SEC published its proposed rules very early, pushing aggressively for TCFD-based disclosure, including Scope 3 emissions information, which is difficult to account for or control, as it lies outside the Scope 1 and Scope 2 emissions within operational control of the companies," Park notes. He says another reason is tied to the SEC’s delay in finalizing its ruling from the end of 2022, as originally intended. "In addition to this uncertainty, many issuers and investors have focused their ESG efforts based on 'materiality' as companies, especially smaller and recently public [ones], have focused their initial [ESG] efforts on ESG factors that are business-relevant and material, often based on the SASB framework that investors have coalesced around," he points out. He says there is still a way for companies to get ready ahead of the SEC’s final ruling on the issue. The first step is to start collecting Scope 1 and Scope 2 emissions data, crafting a strategy, and developing achievable goals in line with the TCFD framework. "Intellectual honesty is a must," he says, "so rather than speculatively setting Scope 3 targets based on incomplete information or data that’s out of their control, companies can begin the assessment work related to Scope 1 and Scope 2 emissions. Companies would be best served to start from there."

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1/28/2023

Update on ESG, Stakeholder Governance, and Corporate Purpose

Harvard Law School Forum on Corporate Governance (01/28/23) Lipton, Martin

The recent political and public attention given to environmental, social, and governance (ESG) issues should not deter directors and officers from addressing ESG risks. The state of Florida said it would start divesting $2 billion worth of assets currently managed by BlackRock (BLK); similar announcements have been made by Louisiana, Missouri, South Carolina, Arkansas, Utah, and West Virginia. More money flowed out of ESG funds in 2022 than into them for the first time in over 10 years. Meanwhile, 21 GOP attorneys general wrote a letter to Institutional Shareholder Services and Glass Lewis to question whether their net-zero emissions policies were based on the financial interests of investment beneficiaries rather than on other social goals, and warned that their boardroom diversity policies may violate contractual and fiduciary duties in addition to state anti-discrimination laws. At the same time, revised European ESG regulatory guidance has resulted in extensive downgrades in the designations of ESG portfolio funds of many of Europe's top asset managers. Anti-ESG shareholder activism is on the rise as well, as highlighted by Strive Asset Management, a fund that was launched in May 2022 to take on the major U.S. asset managers and "restore the voices of everyday citizens." The fund has already approached Exxon Mobil (XOM), Disney (DIS), Chevron (CVX), and Home Depot (HD) to request they reverse some ESG-related initiatives. Strive also unveiled its "ESG Transparency Campaign" that calls for investors to question their financial advisors about whether they are invested in funds that voted in favor of racial equity audits, emissions reduction plans, or executive compensation linked to environmental and social goals. It is important that companies' supervisors and boards continue to consider ESG risks in addition to all other material risks and issues to ensure the company's value over the long term. Moreover, addressing ESG and sustainability-related risks is consistent with directors' fiduciary duty of care, as well as with the board's legal obligation under the Caremark doctrine.

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1/27/2023

Getting the Shareholders You Deserve

IR Magazine (01/27/23) He, Allen

This year's proxy season is poised to be remarkable because of the unprecedented number of anticipated shareholder proposals. Companies that are not sufficiently prepared may experience a variety of pressures. Active owners as well as activists are seeking to maximize corporate margins to withstand economic uncertainties apart from disruptions stemming from the pandemic. These include abandoning longer-term R&D projects or delaying further investments in employees through wages and benefits, despite research indicating that such activities generate value over the long-term. Companies also tend to see higher long-term return on invested capital when a greater proportion of long-term shareholders are associated with them, and such companies are likely to face fewer material shareholder proposals. By engaging long-term shareholders, companies can tune out the short-term noise and stick to their long-term strategy. However, the reality is less straightforward. A 2022 FCLTGlobal survey examining engagement experiences between companies and investors found that of those surveyed, more than 60% faced hurdles in accessing long-term-oriented investors. More than 50% of those surveyed said they sought to talk to portfolio managers, but their success rate was below 50%. Instead, companies were directed to lead sector analysts or engagement/stewardship teams, which are not responsible directly for managing money or making buy/sell decisions. Meanwhile, 90% of investors said they took into account ownership characteristics when dealing with portfolio companies, but only 50% of the companies customized their communications and engagement strategies by investor type. Communication and engagement efforts generally consist of generic statements that do not address the priorities of long-term shareholders. Companies may enhance their long-term strategy by closely evaluating their shareholder base; not waiting until proxy season to engage with their large, long-term shareholders; having regular check-ins; reducing corporate access to shorter-term shareholders; prioritizing contact with key investment decision-makers and the engagement team during meetings; and actively promoting long-term strategy through customized communication.

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