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

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.

Read the article

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.

Read the article

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.

Read the article

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.

Read the article

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.

Read the article

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.

Read the article

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."

Read the article

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.

Read the article

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.

Read the article

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.

Read the article

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.

Read the article

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.

Read the article

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.

Read the article

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.

Read the article

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.

Read the article

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."

Read the article

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.

Read the article

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.

Read the article

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.

Read the article

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."

Read the article

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.

Read the article

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.

Read the article

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.

Read the article

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%.

Read the article

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."

Read the article

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."

Read the article

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.

Read the article

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.

Read the article