Activist Database

Activist Deadline Calendar & Standstill Database

Featuring standstill agreement and nomination deadline windows, provisions and timelines

Media Center

Featuring all breaking news and in depth articles and editorial press coverage pertaining to shareholder activism and corporate governance.
Barclays' Gerry Gimstone to Step Down in January
Oil Firm PDC Energy Gets Challenge From Investor Kimmeridge
Telecom Italia CEO Doesn't Rule Out Losing Control of Fixed Network
Barclays Bosses Urge Shareholders to Reject Activist's Advances
Navient May Still Make a Deal With Canyon Capital, Analysts Say
Aviva Backs Barclays Boss in Battle With Bramson
CEO at Maker of Sharpie, Rubbermaid Under Board Pressure
Engine Capital Takes Aim at Large Construction Firm
Telecom Italia to Grow Core Profits From 2020, to Explore All Options on Network
Departing Caesars CEO to Stay Longer, as Revenue Increases
Glencore to Cap Coal Output Following Shareholder Pressure on Emissions
Stock Buybacks Are on Track for Another Record Year
This Investor Wants to Put an Employee on Google’s Board
Investor Cat Rock Says Just Eat Shareholders Back Merger Proposal
Hanjin Strikes Back at Activist Shareholder Demanding Reforms
South Korea Market Reforms Sought by Group Led by U.S. Investor
Starboard Target Magellan Health to Explore Potential Sale—Sources
Starboard Value Nominates Five to Bristol-Myers Board
Allergan Rebuffs Investor Call to Split CEO, Chairman Roles
Dollar Tree has no Plans to Sell Its Struggling Family Dollar Business
Canyon Capital Turns to Proxy Fight After Navient Rejects Proposal
Private Equity Mines for a Solution at Hudbay Minerals
Diageo-LVMH Bid Tipped to Land Pernod Ricard
Bramson's Unlikely Barclays Board Seat Bid Sharpens Scrutiny of Bank
Appaloosa's Tepper Says Allergan Should Consider Selling Itself
Carl Icahn Urges Caesars Entertainment to Sell Itself
BHP CEO Staying Around to Deal With Tailings and Transformation
There's a Pizza Price War Going on, and Papa John's Is Likely to Be the Big Loser, Stifel Says
Car-Rental Company Avis Names New Finance Chief
SEC Wants to Make It Easier for Companies to Explore IPOs
Nordea CEO Hits Back at 'Impatient' Critics With Revenue Message
Papa John's Founder Schnatter Says He Welcomes Starboard
Nelson Peltz Sells $120 Million in Procter & Gamble Stock
Cash-Hoarding Japanese Firms Please Investors as Share Buybacks Hit Record
Hedge Fund Operator Plans $1 Billion India-Focused ESG Fund
Tiger Global Dumps Barclays Stake in Blow to Staley
Carl Icahn Builds 10% Stake in Caesars
Newell Brands Stock Falls as Sales Raise Concern
Starboard Gauges Bristol-Myers Shareholder Support for Celgene Deal
Climate Change Activism Entering a New Era
Opinion: Can Peace Break Out After This Italian Board Brawl?
Third Point Claims 300% Return on Activism Since 2011
Opinion: Focus Should Be on Active Stewardship to Restore Trust in Business
Proxy Advisor Legislation: Let's Fix What's Broken and Leave the Rest Alone
Blackstone Cast-offs Offer Easy Fit for Elliott
Breakingviews—Italian Grudge May Steer Vivendi's Big M&A Mandate
Outside Director Requirement Could Help Improve Corporate Governance
Small Companies Face Added Pressure to Put Women on Boards
The Rise of Women in Corporate Boardrooms
The Road Ahead for Shareholder Activism
Want a Better Board? Look to Private Equity

Voting Database

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

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13D Monitor | In The Media

2/22/2019

Oil Firm PDC Energy Gets Challenge From Investor Kimmeridge

Reuters (02/22/19) French, David

On Feb. 22, Kimmeridge Energy Management Company said it has taken a stake in PDC Energy Inc. (PDCE) and called on the Denver-based oil and gas producer to cut costs and return more cash to shareholders. PDC said it continued to focus on capital discipline and executing its operational and financial goals. The company will provide a shareholder update on its plans when its 2018 earnings are released on Feb. 28. According to Kimmeridge, PDC trades at a steep discount to where its assets should be valued, and its return on average capital employed needs to be increased significantly. To accomplish this, the investor is calling for PDC to cut expenses in areas like rig costs. Further, Kimmeridge wants PDC to implement a dividend, return the proceeds of asset sales to shareholders, and, over the long term, link executive pay to stock performance and consider strategic moves to bolster its positions in the Denver-Julesberg basin in Colorado and the Texas portion of the Permian basin.

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2/22/2019

Telecom Italia CEO Doesn't Rule Out Losing Control of Fixed Network

Reuters (02/22/19) Prodhan, Georgina

Luigi Gubitosi, Telecom Italia's (TI) new CEO, said on Feb. 22 that he does not rule out losing control of the company's fixed-line network under a possible deal with rival Open Fiber. The future of the fixed network has been at the core of a fight between shareholders Elliott and Vivendi, which has a 24% stake. Elliott has been pushing for a merger, while Vivendi opposes Telecom Italia losing control of its biggest asset. "There is no pre-defined ending of the story in any sense. I'm not excluding anything, nor am I recommending anything at this stage," Gubitosi told analysts on a conference call. The day before he laid out a three-year strategy, part of which involved starting talks with Open Fiber on "all possible options including a full business combination on fixed network." Meanwhile, Gubitosi said he aimed to turn Telecom Italia into a "normal" company that pays dividends to shareholders. However, he said reinstating the dividend last paid six years ago was not part of the current 2019-21 plan. He also supports the conversion of the company's non-voting savings shares into ordinary shares.

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2/21/2019

Barclays Bosses Urge Shareholders to Reject Activist's Advances

London Telegraph (02/21/19) Burton, Lucy

Barclays (BCS) executives have called on investors to reject Sherborne Investors head Ed Bramson's bid for a seat on its board as they prepare to meet the activist investor in New York. In the bank's first formal letter to investors on the issue, chairman John McFarlane urged shareholders not to support the activist in a vote later this year. He said the board was confident in its strategy and believed it was "important to avoid a further period of significant disruption which we have only just freed ourselves." Chief executive Jes Staley, who will sit down with Bramson next month, added that it was still not clear how the top shareholder wanted the lender to change and that he hoped to get "more depth" when they met. Both Barclays and Bramson are trying to appease investors ahead of a vote in May over his bid for a board seat. "We don't believe he needs a seat to engage with management," Staley said. The pushback against Bramson came as the bank promised to give cash back to shareholders despite profits staying flat at £3.5 billion last year. The bank said it would resume paying a dividend of 6.5p this year, with Staley promising to "return a greater proportion" of profits to shareholders in future.

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2/21/2019

Navient May Still Make a Deal With Canyon Capital, Analysts Say

Bloomberg (02/21/19) Maranz, Felice

Canyon Capital Advisors has withdrawn an initial offer to acquire Navient (NAVI), and will instead nominate directors for the board of the student-loan servicer. Credit Suisse analyst Moshe Orenbuch saw the move as a logical next step for Canyon, noting that the alternative “entails a public fight for board seats and change in business strategy that would likely indicate greater focus on expenses, balance sheet and capital efficiencies.” Canyon's decision may not mean that it will not eventually reach a deal with Navient. KBW analyst Sanjay Sakhrani says exiting Navient is a worst case scenario for Canyon, but the optimal move for the investor is to make a formal bid for the company. Navient appears to be in the midst of a strategic shift that includes reinvesting capital returns to shareholders in its business, notes Jefferies analyst John Hecht. That may be a focus for “activist shareholders who may prefer a more simplified strategy with a greater emphasis on capital returns,” adds Hecht.

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2/21/2019

Aviva Backs Barclays Boss in Battle With Bramson

Financial News (02/21/19) Cobley, Mark

A top-40 shareholder in Barclays (BCS) said it will back the bank's management in its upcoming boardroom showdown with Sherborne Investors' Edward Bramson. On Feb. 21, Aviva Investors Chief Investment Officer for Equities David Cumming said, "As significant shareholders in Barclays and Sherborne Investors, we do not see merit in Edward Bramson's proposal to join Barclays' board as a non-executive director. We expect the incoming chair of Barclays to provide appropriate oversight of the group's strategy and lead the required changes to the board." Bramson, who holds a 5% stake in Barclays, has been pressuring the bank to downsize its investment bank and plans to seek a board seat. Shareholders will vote on his candidacy at Barclays' annual general meeting in May. The support from Aviva, which holds a 0.85% stake in Barclays, follows that of Merian Global Investors' Richard Buxton, who said earlier this month, "We don't agree with what he [Bramson] is trying to do. The idea that this is the right moment to significantly downsize the investment bank is wrong."

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2/21/2019

CEO at Maker of Sharpie, Rubbermaid Under Board Pressure

Wall Street Journal (02/21/19) Terlep, Sharon; Lombardo, Cara

The board of directors of Newell Brands (NWL) has discussed replacing Chief Executive Michael Polk after the household-goods conglomerate forecast another year of declining sales. Starboard Value and billionaire Carl Icahn control the majority of the board seats. Following several quarters of disappointing sales, Polk came under pressure from Starboard and Icahn last year, but held onto his job after Newell agreed to separate deals with the investors. Board members are considering potential CEO candidates, but a change is not imminent. On Tuesday, the company said William Burke, chief operating officer, would retire in May, the latest in a series of Polk's closest allies who have left the company since last year. Newell shares fell 20% on Friday following its quarterly report, and its forecast renewed skepticism on Wall Street over the company's ability to engineer a turnaround. The board also has offered new financial incentives for Polk should the company rebound.

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2/21/2019

Engine Capital Takes Aim at Large Construction Firm

Crain's New York Business (02/21/19) Geiger, Daniel

Engine Capital released a letter earlier this month lambasting AECOM's (ACM) board of directors, senior executives, and Chairman and CEO Michael Burke, who has earned tens of millions of dollars at the helm of the $5 billion company even as its share price has dipped. The Manhattan-based shareholder firm is urging other stock owners to block the re-election of sitting members of AECOM's board at a March 6 meeting in an attempt to upend its management and the compensation structure for executives. AECOM is one of New York City's largest design, engineering, and construction management firms. It works on large projects, such as East Side Access and a flood-protection system that will ring Lower Manhattan. While New York is a major market for the Los Angeles-based firm, AECOM recently eliminated its top management in Manhattan, letting go of former Port Authority leader Chris Ward and other executives in an apparent effort to consolidate management of New York business and operations in its Boston office. Engine Capital's open letter argues that changes are needed at the top. The investment firm pointed out that Burke has earned nearly $80 million since taking over as AECOM's chief in 2014, including $15.6 million last year. During his tenure, the company's share price has dipped 9%, even as the S&P 500 has jumped 44%. Five other executive officers earned $28.5 million in compensation last year despite the stock's slide, and Burke has enjoyed other lavish perks, such as exclusively flying on private planes.

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2/21/2019

Telecom Italia to Grow Core Profits From 2020, to Explore All Options on Network

Reuters (02/21/19)

Telecom Italia (TIM) on Thursday pledged to accelerate cost cutting, increase shareholder returns, cut debt and grow core profits from next year in the first three-year strategy plan under new Chief Executive Luigi Gubitosi. TIM has been caught in a battle since early 2018 between top shareholders Vivendi (VIVHY) and Elliott Management Corp. over how to revive Italy's largest phone group, an underperforming business saddled with 25 billion euros ($28.34 billion) of debt. The former state phone monopoly said it would revamp its domestic business, grow its Brazilian unit and pursue several initiatives to unlock value, including a mobile sharing agreement with Vodafone (VOD) in Italy announced earlier on Thursday.

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2/21/2019

Departing Caesars CEO to Stay Longer, as Revenue Increases

Wall Street Journal (02/21/19) Al-Muslim, Aisha

Caesars Entertainment Corp. (CZR), which is being pushed to consider a sale by Carl Icahn, reported that revenue rose in the latest quarter and its departing chief executive will stay on longer than expected. Net revenue at the casino and resort operator jumped 11% to $2.12 billion, within range of the consensus forecast of $2.11 billion. Caesars said Wednesday it has engaged in discussions with Icahn, who has acquired an approximately 10% stake in the company and reportedly plans to push the casino operator to consider selling itself after it received at least two approaches. Caesars had said it would evaluate Icahn’s suggestions, including his request for board representation. In November, Caesars said Chief Executive Mark Frissora would leave the company, remaining in the role until Feb. 8. The company now says that Frissora has agreed to stay in the role until April 30 to support a seamless transition. The company may extend the time by one month as the board of directors’ compensation and management development committee continue its search for Frissora’s successor.

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2/20/2019

Glencore to Cap Coal Output Following Shareholder Pressure on Emissions

Associated Press (02/20/19) Jordans, Frank

After facing shareholder pressure to reduce global emissions of greenhouse gases, Glencore (GLNCY) said it will cap how much coal it mines. Glencore said it made the decision after consulting with investors, known as the Climate Action 100+ initiative, who have clubbed together to lobby for corporate action against climate change. Glencore said it will prioritize future investments to increase production of commodities "essential to the energy and mobility transition and to limit our coal production capacity broadly to current levels."

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2/20/2019

Stock Buybacks Are on Track for Another Record Year

Barron's (02/20/19) Walsh, Ben

Stock buybacks are on pace for another record year, according to Bank of America Merrill Lynch, which used data from its corporate clients. Last week, “buybacks by corporate clients picked up to their fourth-largest weekly level in our data history (since 2009),” equity and quantitative strategist Jill Carey Hall wrote. So far in 2019, buybacks have surged 91% year-over-year. Buyback announcements passed $1 trillion in 2018, fueled by a drop in the corporate tax rate and a late-year swoon in share prices that saw the S&P 500, which entered October up more than 9%, end the year down a hair over 6%. As buybacks have surged past their pre-financial crisis highs, they have attracted a growing group of critics who say they are a short-term tool used by executives to boost shares at the expense of longer-term investments. More recently, buybacks have faced ire from politicians in Washington.

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2/20/2019

This Investor Wants to Put an Employee on Google’s Board

Washington Post (02/20/19) McGregor, Jena

CtW Investment Group, a group that works with union-sponsored pension funds, filed an unusual proposal late last year at Alphabet (GOOGL), Google’s parent company, that calls for the board to nominate a non-executive employee to be elected by investors as a director at next year’s annual meeting. If the proposal ends up on the company’s proxy this year, it would likely be a first for a technology company, and one of the rare occasions when a shareholder has tried to get an employee onto a U.S. corporate board. CtW’s filing, made in late 2018 but which has not previously been reported, argues that an employee director would add to the “knowledge and insight on issues critical to the success of the company” and would be “particularly useful in the board’s oversight of corporate culture.” “We really see this as becoming a real long-term risk to the company,” said Emma Bayes, director of engagement at CtW Investment Group. An employee representative could help mitigate "risks to human capital and to corporate culture, but also help prevent some of the reputation damage that these uprisings cause."

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2/20/2019

Investor Cat Rock Says Just Eat Shareholders Back Merger Proposal

Reuters (02/20/19)

Just Eat Plc (JSTTY) shareholder Cat Rock Capital Management LP’s push to start merger talks by the London-listed takeaway ordering website has found “strong support” from stakeholders, the investor said on Wednesday. Cat Rock Capital, which has stakes in both Just Eat and Dutch-listed Takeaway.com (TKAYF), said Just Eat could generate “significant value” by negotiating a merger. “We have been particularly encouraged to hear that several other Just Eat shareholders have written to the Board...that it should be actively engaging in merger discussions with well-run industry peers,” Cat Rock said. The investor had earlier urged Just Eat to pursue merger talks with a peer such as Takeaway.com, saying it did not trust the board to get the appointment of a new CEO right. Just Eat CEO Peter Plumb left the company last month following criticism from Cat Rock and some other shareholders about his plan to grow earnings.

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2/20/2019

Hanjin Strikes Back at Activist Shareholder Demanding Reforms

Korea Herald (02/20/19) Arin, Kim

Hanjin Group (KRW) on Wednesday opposed Korea Corporate Governance Improvement’s qualification to exercise shareholder rights, in a move to counter its recent string of criticisms and demands on corporate governance and transparency. The Korean conglomerate, which operates the country’s leading air carrier Korean Air, claimed that KCGI was only a minority shareholder and had no grounds to make such demands. “According to the commercial act on special cases for listed firms, minority shareholders have to hold stake for over six months if they want to have a say in management,” a Hanjin official said in a statement, explaining that this by default disqualifies KCGI, which acquired stake in Hanjin KAL in November. KCGI is now the second-largest shareholder of the Korean Air’s holding company with a 10.71% stake next to Hanjin Chairman Cho Yang-ho and his family who also serve as executives. The Seoul-based private equity firm demanded last month for a top executive reshuffle and more outside managers, which would likely disrupt the chaebol group’s family-controlled management.

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2/20/2019

South Korea Market Reforms Sought by Group Led by U.S. Investor

Bloomberg (02/20/19) Deveau, Scott; Kim, Sohee

An investor group led by California-based Dalton Investments LLC is seeking to overhaul how the South Korean government and the country’s largest pension fund operate. The goal is to correct the so-called Korea discount and to increase returns for all shareholders. In a Feb. 20 letter to South Korea's National Pension Service, presidential Blue House, and National Assembly, the group warned, "If action is not taken now, this problem will only become more pronounced during a period of low growth, fierce competition, high unemployment, aging demographics and greater wealth inequality." Dalton says Korean companies need to be persuaded to make better decisions on deploying capital and take into account how share buybacks and increased dividends would boost returns. Dalton says its efforts were supported by Brandes Investment Partners, KCGI, Value Partners and Ruane, Cunniff & Goldfarb. The letter adds, "Far too often, companies make investment decisions based on affiliate companies and conglomerates instead of their own shareholders." The group also believes the South Korean government needs to enact more shareholder-friendly measures, such as reducing taxes on dividends, inheritances, and long-term equity investments. The use of electronic voting systems is encouraged as well to achieve greater minority shareholder involvement. Furthermore, Dalton says the National Pension Service, which is the third-largest worldwide and has about $100 billion invested in Korean equities, needs be more active in pushing for better returns and hire more qualified investment professionals. In addition, Dalton points out that the average return on equity for Korean companies is one of the lowest in the world, at 9%.

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2/20/2019

Starboard Target Magellan Health to Explore Potential Sale—Sources

Reuters (02/20/19) O'Donnell, Carl; Roumeliotis, Greg

Sources said on Feb. 20 that Magellan Health Inc. (MGLN) will explore selling itself under pressure from Starboard Value LP. The U.S. healthcare plan and pharmacy benefits manager is seeking ways to unlock value after a nearly 40% drop in its shares since April 2018 and has announced a multi-year "improvement plan" to boost profitability. The sources said Magellan is being advised by Goldman Sachs Group Inc. and is in the early stages of considering acquisition interest. In December, Starboard disclosed a 9.8% stake in Magellan.

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2/20/2019

Starboard Value Nominates Five to Bristol-Myers Board

Wall Street Journal (02/20/19) Maidenberg, Micah

Bristol-Myers Squibb Co. (BMY) said in a Feb. 20 securities filing that Starboard Value LP has nominated five directors to the board and has been meeting with the drugmaker's executives. The move comes as Bristol-Myers prepares to acquire Celgene Corp. (CELG) in a $74 billion deal. The company added that Starboard has acquired 1 million shares in Bristol-Myers, purchasing 990,000 shares on Jan. 31. Bristol-Myers told Starboard that it would review the proposal for the board seats.

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2/20/2019

Allergan Rebuffs Investor Call to Split CEO, Chairman Roles

BioPharma Dive (02/20/19) Pagliarulo, Ned

Allergan (AGN) argues that Appaloosa LP's push to separate the roles of CEO and chairman would reduce the effectiveness of CEO and Chairman Brent Saunders. The hedge fund, led by David Tepper, has issued a proposal ahead of the company's May 1 annual general meeting asking shareholders to vote to require an independent chairman. "While we appreciate the input of Appaloosa as we do all of our shareholders, we strongly disagree that an immediate separation of the CEO and Chair positions is warranted," Allergan said, although it indicated some support for separating the roles at the next leadership change. However, Tepper wrote in a Feb. 19 letter to the board, "This response, following three years of proxy proposals and prodding from large shareholders such as Appaloosa, bears remarkable similarity to last year's aborted 'Strategic Review'—that is, a lame attempt to deflect pressure through token measures that sidestep the Company's defects and desperately preserve the managerial status quo." The hedge fund said it would have considered Bob Hugin, former chairman and CEO of Celgene (CELG) who recently was appointed to Allergan's board, as a credible candidate for independent chairman.

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2/20/2019

Dollar Tree has no Plans to Sell Its Struggling Family Dollar Business

Yahoo! Finance (02/20/19) Sozzi, Brian

Dollar Tree (DLTR) plans to stay focused on trying to fix the struggling Family Dollar business it spent a steep $9 billion to buy some three years ago, according to people familiar with the matter, despite being under pressure from investors to sell the business amid a string of same-store sales declines, pressured profit margins, integration issues, and skepticism on the chain’s future on Wall Street. Instead, Dollar Tree will push forward with revamping 1,000 Family Dollar locations this year after seeing a somewhat positive consumer response to ones done in 2018. The decision to stay the course with the beleaguered Family Dollar brand pits Dollar Tree management against investor Jeff Smith of Starboard Value, which disclosed a 1.7% stake in Dollar Tree in January. Smith is pushing Dollar Tree to divest its lagging Family Dollar business, which he values in the range of $1 billion to $3 billion (well below the $9 billion purchase price). Smith believes the chain would be better served in the hands of a private equity firm. "Dollar Tree has failed to execute on the turnaround of Family Dollar and the chain continues to languish, with flat-to-negative same-store sales growth and continued margin compression. while also posturing for a complete board overhaul," Smith wrote in a letter to Sasser and Dollar Tree's board on January 7. "While we believe that a turnaround of Family Dollar is possible, we also believe that such a dramatic turnaround effort is much better suited to be executed in the private market."

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2/20/2019

Canyon Capital Turns to Proxy Fight After Navient Rejects Proposal

Wall Street Journal (02/20/19) Thomas, Patrick

Canyon Capital Advisors LLC said Wednesday that plans to launch a proxy fight with Navient Corp. (NAVI) and that it has withdrawn its interest in acquiring the student-loan servicer. Canyon, which has about a 10% stake in the company, said it will propose a minority slate of candidates for election at Navient’s annual meeting. Canyon said the candidates would bring a fresh perspective and oversight to the company’s strategic direction. Navient’s board said Monday that it voted to turn down the $12.50-a-share proposal, worth about $3.2 billion, from Canyon Capital and private-equity firm Platinum Equity Advisors LLC, believing it undervalues the company and is lacking in other ways. Navient services student loans, handling billing and helping borrowers with repayment plans and loan consolidations, but Canyon said the company has focused too much on new, noncore businesses with uncertain growth and profitability prospect. Platinum Equity and Navient declined to comment.

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2/19/2019

Private Equity Mines for a Solution at Hudbay Minerals

Yahoo! Finance (02/19/19) Jannarone, John

Hudbay Minerals (HBM) has seen total shareholder returns lag the S&P 500 by 95 percentage points over the last five years and 308 percentage points over the last decade, according to data from Bloomberg. The 10-year performance data is relevant since Chairman Alan Hibben joined the board about a decade ago, after which the company engaged in a series of acquisitions. Waterton Global Resource Management, a private-equity firm focused on mining investments, has amassed a 12% stake in Hudbay and nominated a slate of eight directors to replace existing members of the 10-person board. Observers note that Hudbay's board of directors and C-suite collectively own significantly less than 1% of the company's shares, which might explain why they appear tolerant of the company's stock performance.

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2/19/2019

Diageo-LVMH Bid Tipped to Land Pernod Ricard

Irish Independent (02/19/19) Torsoli, Albertina; Donnelly, Ellie

French distiller Pernod Ricard, which is being engaged by Elliott Management, could fall prey to a joint bid by luxury group LVMH Moet Hennessy Louis Vuitton and rival distiller Diageo, say analysts at Berenberg. This is "a likely scenario" the analysts, led by Zuzanna Pusz, wrote in a Feb. 18 report. LVMH "could take the lead in a potential bid," while such a deal could result in the end of a joint venture that LVMH and Diageo have had since 1987, Pusz wrote. Elliott wants Pernod Ricard to cut costs and revamp corporate governance. The Ricard family wants it to stay with a strategy that produces consistent long-term shareholder returns. Elliott's involvement is a "game changer" and could potentially remove obstacles to an unsolicited approach, the analyst report said. A spokesperson for Pernod Ricard referred to comments made last week by CEO Alexandre Ricard, who said the French distiller "will remain a consolidator." LVMH CEO Bernard Arnault deflected speculation in January that he may have played a role in pushing Elliott on the Pernod Ricard front. "We have nothing to do with any of that," Mr. Arnault said at the time. "No one from our company knows Elliott, the activists, investment fund. We have no contact with them. Secondly, Alexandre Ricard and our family are friends."

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2/19/2019

Bramson's Unlikely Barclays Board Seat Bid Sharpens Scrutiny of Bank

Reuters (02/19/19) Cruise, Sinead; White, Lawrence

Edward Bramson's bid to join the Barclays board is expected to fail, according to shareholders. However, he has brought attention to its investment banking strategy that Bramson says has depressed profitability. Bramson's Sherborne vehicle has a 5.5% stake in Barclays. When Barclays reports its 2018 results on Feb. 21, investors will scrutinize whether the trading and advisory business that Bramson says should be shrunk has boosted the bank's performance, and whether those improvements are sustainable. "The onus is now on the Barclays management team to convince the market that their plan is the best way forward," one investor said. "This probably requires more disclosure on the varying returns within the corporate and investment bank."

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2/19/2019

Appaloosa's Tepper Says Allergan Should Consider Selling Itself

Reuters (02/19/19) Mishra, Manas; Mathias, Tamara; Herbst-Bayliss, Svea

Appaloosa LP's David Tepper sent a letter to Allergan Plc's (AGN) board on Feb. 19 calling on the drugmaker to consider selling itself if management cannot turn around its recent lagging performance. The letter came just hours after Allergan announced that it had added a former industry executive to its board but would split the roles of chairman and CEO only when the person who currently holds the positions is replaced. The hedge fund had been pressuring the company to separate the roles. Tepper wrote, "If in fact the board is unable or unwilling to hold management accountable for its shortcomings or find a suitable replacement, it is your fiduciary obligation to explore other options, including a merger or sale of the company." Earlier this month, Appaloosa said CEO Brent Saunders might receive the help he needs to improve returns by adding an independent chairman. Allergan's shares have fallen 15% over the past year.

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2/19/2019

Carl Icahn Urges Caesars Entertainment to Sell Itself

Reuters (02/19/19) Ajmera, Ankit

In a Feb. 19 regulatory filing, investor Carl Icahn called on Caesars Entertainment Corp. (CZR) to sell itself. Icahn, who disclosed a 9.78% stake in the U.S. casino operator, said in the filing, "[The] Board should conduct a strategic process to comprehensively assess the best path forward for Caesars and [I] believe that shareholder value might be best served, and enhanced, by selling the company."

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2/19/2019

BHP CEO Staying Around to Deal With Tailings and Transformation

Reuters (02/19/19) Lewis, Barbara

BHP Billiton (BBL) CEO Andrew Mackenzie said he has no plans to quit the company and plans to focus on transformation and on the "nuclear level of safety" needed to avoid a repeat of the Vale dam collapse in Brazil. Speculation about his future at BHP first arose in 2017, when Elliott Advisors began pushing for change and Ken MacKenzie was appointed chairman. Mackenzie told reporters, "I've got a lot to do right now and I've got a lot to do on tailings dams." Further, he said he was excited about leading a "transformation agenda" to help with the next phase of growth and maximize the productivity of operations. "The transformation agenda is the biggest lever we have got to play. It's reporting direct to me. I'm getting a lot out of it," he remarked.

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2/19/2019

There's a Pizza Price War Going on, and Papa John's Is Likely to Be the Big Loser, Stifel Says

CNBC (02/19/19) Franck, Thomas

Stifel's Chris O'Cull said investors in Papa John's (PZZA) will be disappointed in the near term due to sluggish sales. He downgraded the stock to sell from hold and wrote that the company's recent promotions suggest the pizza maker is struggling to compete for customers amid low-price deals at rivals Dominos (DPZ), Pizza Hut, and Little Caesars. O'Cull wrote, "In order for Papa John's to drive transactions we believe it will need to commit to an everyday low price menu that will probably hurt franchisees' profits until consumer perception of its value changes. These offers are clearly designed to drive transactions, but to be successful they must increase transactions enough to offset the dollar impact of the discount, otherwise the results lower store margin percentage and dollars." The downgrade follows Papa John's recent announcement that Starboard Value has made a $200 million investment in the chain and that its CEO, Jeffrey Smith, will become its chairman. The fund's investment is in the form of a convertible stock purchase of 11% to 15%.

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2/19/2019

Car-Rental Company Avis Names New Finance Chief

Wall Street Journal (02/19/19) Trentmann, Nina

Avis Budget Group Inc. (CAR) on Feb. 19 appointed John F. North III as chief financial officer, a move that comes as the company works to increase its share price and its profitability. North, currently CFO at automotive retailer Lithia Motors Inc. (LAD), will join Avis on March 18, the company said in a statement. North will succeed Martyn Smith, who was selected as the company's interim CFO in May 2017. Avis is facing pressure from SRS Investment Management LLC—for years its biggest shareholder—to boost efficiency and drive profitability. SRS last April won two seats on Avis' board and signed a standstill agreement with the company's management. The fund holds 15.5% in Avis' voting rights, and its economic interest—comprising equity and derivatives—amounts to 31%. The company's net profit declined 13% to $213 million in the quarter ended Sept. 30, 2018, compared with $245 million a year earlier. Further, shares have dropped approximately 27% in the past 12 months, during which the S&P 500 rose by 1.6%, notes FactSet.

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2/19/2019

SEC Wants to Make It Easier for Companies to Explore IPOs

Wall Street Journal (02/19/19) Rubin, Gabriel T.

Under a proposal that securities regulators released Tuesday, any company exploring whether to go public would get greater leeway to discuss their plans privately with potential investors prior to announcing an initial public offering. Looking to increase the number of public companies, the Securities and Exchange Commission (SEC) has proposed allowing all companies to "test the waters" before deciding whether to seek an IPO. The conversations would allow companies to identify information that is important to investors and to gauge market interest before formally announcing a public offering. Previously, the agency had permitted only smaller, emerging firms to talk to investors privately. Large companies have had to publicly file their securities offering documents to regulators before gauging investor interest. Making it easier and more appealing for companies to go public has been a central goal of SEC Chairman Jay Clayton. The number of public companies has fallen by nearly 50% since the late 1990s.

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2/18/2019

Nordea CEO Hits Back at 'Impatient' Critics With Revenue Message

Bloomberg (02/18/19) Pohjanpalo, Kati

Nordea Bank Abp (NRDBY) CEO Casper von Koskull said investors will see a turnaround this year. "When I look at 2019, my clear ambition is that we have growing income and reduced costs. Markets are always impatient," he said in a recent interview. "The starting point is that we need to get our own market position back on track, because we've been below that. There's a lot of business momentum, a lot of it is just getting the machine back and doing what we are good at." Von Koskull underscored his enthusiasm about the company's prospects by buying shares worth about $2 million. Despite spending years cutting costs and jobs and automating as much as possible, shareholders were disappointed with the company's fourth-quarter results. Cevian—which has a place on the nomination board that proposes members for Nordea's board—said profits were "way too low," and Sampo—which holds about a fifth of the bank's stock—noted that "Nordea has some key performance indicators that don't meet its Nordic peers."

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2/18/2019

Papa John's Founder Schnatter Says He Welcomes Starboard

Reuters (02/18/19) DiNapoli, Jessica

Papa John's International Inc. (PZZA) founder John Schnatter welcomes Starboard Value LP's investment in the pizza restaurant chain, according to his attorney, even as he filed an updated lawsuit on Feb. 18 against the company. Starboard's has invested up to $250 million in the pizza chain and named the fund's chief executive, Jeff Smith, as its chairman. Schnatter, who has approximately a 30% stake in the company, served as chairman until last summer. He stepped down following reports he had used a racial slur on a media training conference call. He had stepped down as CEO in December 2017. Schnatter remains on the board of directors, but his influence has been diluted because with the Starboard investment, the number of directors rose to nine from six. "Mr. Schnatter welcomes the comments that have come from Mr. Smith and the company in the past few days," Schnatter's lawyer Garland Kelley said in a statement. "Today's amended lawsuit reflects support for Mr. Smith and his plans to invigorate the company for the benefit of all shareholders." The lawsuit seeks to undo a new provision of a voting agreement between Papa John's and Starboard that requires the hedge fund vote its company shares in favor of Papa John's preferred directors. "Such a provision serves only one purpose, to further entrench the prior board, one that has repeatedly proven itself willing to place its own self-interest above that of shareholders," Schnatter said in a statement. Schnatter also continues to challenge the poison pill Papa John's adopted last year that he says prevents him from having talks about the pizza chain with other shareholders. The lawsuit was initially filed in August.

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2/18/2019

Nelson Peltz Sells $120 Million in Procter & Gamble Stock

WCPO Cincinnati (OH) (02/18/19) Monk, Dan

A couple of years after disclosing a $3.5 billion stake in Procter & Gamble (PG), Nelson Peltz has sold about 3% of his investment in the Ohio-based consumer products giant. According to ABC's affiliate in Cincinnati, "Peltz sold 1.2 million shares over three days last week, generating about $120 million from the sale and locking in a roughly $18 million profit as P&G shares trade near its all-time high." Peltz, who gained a seat on P&G's board of directors by staging a proxy fight against the company in 2017, has pushed for changes that some had feared would result in a P&G break up. P&G eventually announced plans to reorganize itself into six business units. Peltz continues to hold 36.7 million shares in P&G, which are worth about $550 million more than he paid for them two years ago.

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2/17/2019

Cash-Hoarding Japanese Firms Please Investors as Share Buybacks Hit Record

Reuters (02/17/19) Tomisawa, Ayai; John, Alun

Japanese share buybacks hit a record this fiscal year, with companies like SoftBank Group Corp. (SFTBY), Sony (SNE), and Itochu Corp. (ITOCY) announcing plans in recent weeks to buy back shares worth more than 1.3 trillion yen. This brings the total value of buybacks flagged since April 1 to more than 6.5 trillion yen ($58.92 billion), which is the most for any fiscal year since 2003, according to I-N Information Systems. Investors have long criticized Japanese companies for hoarding cash rather than investing it or returning it to shareholders. Buying back shares reduces a company's equity base and increases its return on equity (ROE). "This past month has seen a lot of very positive shareholder-friendly activity from a wide array of Japanese companies," said Seth Fischer, founder and chief investment officer of Oasis Management. "To attract foreign investors, companies should continue this path of increasing shareholder returns, while continuing to improve their corporate governance." Oasis is among the investors that have been vocal in encouraging Japanese firms to boost returns. ROE at Japanese companies is expected to fall below 10% this fiscal year for the first decline in three years, according to Nomura Securities. Meanwhile, the brokerage CLSA says 56% of Japanese non-financial companies in the benchmark Topix index sit on net cash, compared with less than 20% in the United States or Europe.

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2/17/2019

Hedge Fund Operator Plans $1 Billion India-Focused ESG Fund

Bloomberg (02/17/19) Karve, Ameya

As investor concerns about corporate governance at Indian companies surge, Avendus Capital Ltd. has started accepting money for one of India's first funds to base investment decisions on environmental, social, and governance (ESG) parameters. Avendus expects to raise $1 billion over the next couple of years with nearly 70% of that money coming from overseas investors. The firm has an exclusive agreement with Institutional Investor Advisory Services India Ltd. to assess NSE Nifty 100 Index companies based on ESG scores. It will aim to invest in no more than 25. Sustainable investment is well-entrenched in the United States and Europe, but is still in its infancy in India. Meanwhile, corporate India is struggling with a range of governance issues from poor disclosures on debt to troubled relationships between companies and their founding firms.

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2/17/2019

Tiger Global Dumps Barclays Stake in Blow to Staley

Financial Times (02/17/19) Crow, David; Morris, Stephen

Sources say Tiger Global has sold its entire holding in Barclays (BCS), dealing a blow to the British bank's efforts to garner support for its turnaround strategy. The U.S. hedge fund was one of Barclays' biggest investors with a 2.5% stake and had been among the staunchest defenders of CEO Jes Staley's plan to revive the investment bank to improve its share price. Tiger began reducing its position last summer before offloading it entirely earlier this year, the sources said. Most of Tiger's position was held through swaps, meaning that the unwinding of its position did not show up on Barclays' share register. One source said Tiger's decision to exit Barclays likely was made because the fund saw more attractive investment opportunities elsewhere, not because it lost confidence in Staley. The news comes as Barclays is trying to keep Edward Bramson from obtaining a board seat and engineering a shift in strategy that would involve shrinking the investment bank. Bramson, who has built a 5.5% stake in Barclays via his Sherborne investment vehicle, earlier this month said he was seeking a board seat at the bank's annual meeting in May. However, one top-five shareholder said he expects Bramson to lose the proxy battle. "Everything I hear from investors is that there is a consensus to not vote in his favor," the investor said. "He wants to be elevated above other large shareholders like us, and he hasn't even revealed his grand brilliant plan."

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2/15/2019

Carl Icahn Builds 10% Stake in Caesars

Financial Times (02/15/19) Fortado, Lindsay; Indap, Sujeet

Carl Icahn has amassed a 10% stake in Caesars Entertainment (CZR) and is pushing the casino chain to sell itself. A source says Icahn contacted Caesars on Feb. 14 to say he had built a stake that exceeds 10% when derivatives transactions are included. He also told the company he might seek a board seat but has not yet decided; he must make that decision by early March. The source also noted that the board is open to a sale or merger but is waiting for the right opportunity.

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2/15/2019

Newell Brands Stock Falls as Sales Raise Concern

Barron's (02/15/19) Jasinski, Nicholas

Newell Brands (NWL) saw double-digit declines in its stock on Feb. 15 after reporting less revenue than expected in the fourth quarter and a dismal sales outlook for 2019. Investors viewed the company's 2016 merger with Jarden Holdings favorably at the time, but Newell's shares have lost nearly 60% of their value, even before the recent drop, since the deal closed. The company's challenges include post-merger execution issues, lagging brands, and high management turnover. Carl Icahn's Icahn Enterprises and Starboard Value took sizable stakes in Newell and pushed it to cut costs and sell about 40% of its brands in an effort to raise about $10 billion for stock buybacks and debt reduction.

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2/15/2019

Starboard Gauges Bristol-Myers Shareholder Support for Celgene Deal

Reuters (02/15/19) Herbst-Bayliss, Svea; Roumeliotis, Greg

Sources say Starboard Value has asked a proxy solicitor to gauge the level of support among Bristol-Myers Squibb Co. (BMY) shareholders for the U.S. drug maker's deal to acquire Celgene Corp. (CELG) for $74 billion. The deal would be the biggest ever in the pharmaceuticals industry and merge two major sellers of cancer drugs. The sources noted that the hedge fund has not decided whether it would oppose the Celgene deal and ultimately may take no action. The deal will be put before Bristol-Myers shareholders for a vote in April. So far, no major Bristol-Myers shareholder has voiced opposition publicly to the deal. Starboard's Jeff Smith said in a recent CNBC interview that the hedge fund was "certainly interested in the story at Bristol-Myers," but would not say whether Starboard had a position in the stock. According to Smith, "We evaluate those situations to determine whether we can have a positive impact. Bristol-Myers might fit that profile. It might not fit that profile. We haven't made that decision."

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2/22/2019

Climate Change Activism Entering a New Era

Australian Financial Review (02/22/19) Boyd, Tony

Glencore announced this week that it will cap its coal production. Founder Ivan Glasenberg sees a structural decline in thermal coal demand and a need to shift capital expenditure to focus on metals such as cobalt, but is not abandoning fossil fuels. Still, the move is significant because the directors of the company, which is listed in London, Johannesburg and New York, have recognized their duties under the law to take climate change risk seriously. In Australia, an opinion prepared in 2016 by leading barrister Noel Hutley found that company directors who fail to properly consider and disclose foreseeable climate-related risks to their business could be held personally liable for breaching their statutory duty of due care and diligence under the Corporations Act. Glencore bowed to pressure from Climate Action 100+, a shareholder group that includes AustralianSuper and many other industry super funds and retail funds. About 290 investors from 29 countries with $30 trillion in assets under management are signatories to its climate change governance campaign. Meanwhile, Australian regulators have become increasingly vocal about climate change and have worked to coordinate their efforts to pressure boards of directors to address risks associated with climate change.

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2/22/2019

Opinion: Can Peace Break Out After This Italian Board Brawl?

Bloomberg (02/22/19) Webb, Alex

New Telecom Italia (TI) CEO Luigi Gubitosi has unveiled a turnaround plan that is less ambitious than the one offered by his predecessor Amos Genish less than a year ago, writes Bloomberg Opinion columnist Alex Webb. Genish was ousted in November after allies of Elliott Management secured control of the board from Vivendi. Gubitosi is targeting cumulative equity free cash flow of 3.5 billion euros ($4 billion) over the next three years, and is forging an alliance with Vodafone Group (VOD) to build next-generation 5G networks. Also, he wants to reduce net debt by about 13% over the next three years to 22 billion euros, and divestments are not needed to realize this goal, which should help ease tensions with Vivendi because the shareholder opposes giving up control of its networks business. Telecom Italia is in talks to combine that business with Open Fiber. The company's annual shareholder meeting in March likely will be a referendum on that deal – a vote for the Elliott slate of directors would indicate support for the divestment, and for Vivendi's team, opposition. "By excluding the deal from his financial targets, Gubitosi has taken a sensible step to placate Vivendi, and also ensured that the vote doesn't become a referendum on his job," according to Webb.

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2/21/2019

Third Point Claims 300% Return on Activism Since 2011

Reuters (02/21/19)

Third Point has earned a 300% return in the last eight years, the hedge fund told investors in a letter on Thursday, praising management at companies it pushed to perform better for taking the right steps. The $14 billion firm, run by Daniel Loeb, lost 11.3% in 2018 but said corporate activism, including campaigns it waged at Campbell Soup (CPB) and Nestle SA (NSRGY) last year, will remain a priority in the future. Eight months after publicly pressuring Nestle for more sales and restructuring, Loeb praised Nestle and Schneider for announcing plans to explore alternatives for its Herta charcuterie business and announcing a strategic review of its skin health business. “We believe Nestlé can sustain this new momentum beyond 2020, as the company continues to sharpen its strategy, better align its portfolio around key categories, and improve its organization to become more agile,” the letter said. Loeb added “We remain confident in Mr. Schneider’s leadership.” This is the first time Loeb has spoken extensively about Nestle since admonishing the company in July saying “This is a call for urgency — rather than incrementalism.” The letter also said that Third Point had called on management at United Technologies, where it remains a large owner, to consider a “value-creating transaction” for Carrier, and said “management are receptive to these suggestions.”

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2/20/2019

Opinion: Focus Should Be on Active Stewardship to Restore Trust in Business

Financial Times (02/20/19) Skeoch, Keith

Corporate failure arguably has a greater effect on workers who lose their jobs and local communities, than on pension funds and other investors that suffer heavy losses. But much of the asset management industry believes its interests are best served by ensuring profits are maximized, writes Keith Skeoch, co-chief executive of Stanford Life Aberdeen and a board member of the Financial Reporting Council. While corporations must take a thoughtful approach to creating sustainable value, institutional investors need to upgrade their stewardship practices. The first step is to recognize that the legitimacy of asset managers hinges on what they deliver for savers. The second step is to embed meaningful environmental, social and governance factors in the investment process that deliver a financial return. The third step is for asset managers to recognize that what is good for equity shareholders is not always in the interest of everyone who matters. Active stewardship increasingly includes engaging, probing, escalating concerns and holding boards accountable. Although corporate purpose is key to value creation, it needs to be more than a plaque in the reception area, concludes Skeoch.

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2/20/2019

Proxy Advisor Legislation: Let's Fix What's Broken and Leave the Rest Alone

Forbes (02/20/19) Ferracone, Robin

Robin Ferracone, founder and CEO of Farient Advisors, an independent executive compensation and performance advisory firm, said the debate around proxy advisor legislation is prompting investors to ask questions about whether proxy advisors "have too much uncensored power in the overall voting process," whether the proposed legislation would address any such problem, and to what extent do investors follow recommendations on pay from Institutional Shareholder Services and Glass Lewis. She notes that both House Bill 4015 and Senate Bill 3614 require proxy advisors to register with the Securities and Exchange Commission and subject themselves to audits for conflicts of interest, but the House bill goes further in requiring internal policies be established to avoid conflicts of interest and calling for more oversight and accountability of proxy advisors, among other things. "Our Farient Advisors team recently researched the influence of proxy advisors on Say on Pay votes and the differences in how investors are using proxy advisor recommendations," Ferracone writes. "The bottom line is investors consult proxy advisor research to inform their voting decisions, but in the end, follow their own advice in casting their votes."

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2/19/2019

Blackstone Cast-offs Offer Easy Fit for Elliott

Nasdaq (02/19/19) Unmack, Neil

Elliott Advisors has acquired a 6.1% stake in Dutch trust and business administration company Intertrust. The investment came a day after Blackstone sold its 6.77% stake in the group. "An uninspiring post-private equity share performance means Paul Singer's fund may not need to work too hard," writes Neil Unmack, a Reuters Breakingviews columnist. Shareholders who bought in at the initial public offering have seen a gain of around 6% in three years, and Intertrust's total shareholder return is roughly half that of the AEX Index, according to I/B/E/S data from Refinitiv. As a result, this is probably a good time for Singer's fund to buy in. Intertrust's new CEO Stephanie Miller plans to raise the group's targets back above 38%, while expanding through acquisitions. Elliott does not need to demand cost cuts, disposals, or a new strategy. Moreover, shares are offering a forward free cash flow yield of nearly 10%, giving Intertrust a cash fountain that could one day attract another buyer, adds Unmack.

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2/18/2019

Breakingviews—Italian Grudge May Steer Vivendi's Big M&A Mandate

Reuters (02/18/19) Cox, Rob

The Italian media group Vivendi (VIVHY) is still holding a grudge over its 2018 battle with Elliott Advisors over Telecom Italia (TI), and observers say it could play a role in one of this year's biggest European deals. Vivendi is considering about six firms to handle the sale of up to 50% of Universal Music Group, and global and French banks are jockeying for a position. JPMorgan Cazenove media analyst Daniel Kerven pegged Universal Music Group's fair value at 44 billion euros ($50 billion), which is higher than estimates from Deutsche Bank (29 billion euros), Goldman Sachs (35 billion euros), and Exane BNP Paribas (25 billion euros). Observers note that these valuations often influence the way companies select advisers. However, Vivendi reportedly is upset over JPMorgan's capital arm arranging a derivatives transaction to help Elliott acquire 8.8% of Telecom Italia while reducing the position's volatility. Vivendi has been battling with Elliott over strategy, management, and the board of Telecom Italia, in which it owns 24%. Observers say this means JPMorgan's rivals potentially can count on its exclusion from the deal, though that could change if JPMorgan were able to bring in a big company to purchase a slice of Universal Music Group at a top price.

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2/15/2019

Outside Director Requirement Could Help Improve Corporate Governance

Japan Times (02/15/19)

Japan's Legislative Council late last week submitted to Justice Minister Takashi Yamashita a report outlining proposed revisions to the Companies Law. The revised law would mandate that big companies have at least one outside director. The rule would apply to both listed companies and big unlisted companies. Ninety-eight percent of listed firms already have an outside board member. Legally requiring companies to have an outside director would demonstrate that Japanese businesses place great emphasis on strengthening their corporate governance in the wake of the accounting scandal that rocked Toshiba Corp.

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2/13/2019

Small Companies Face Added Pressure to Put Women on Boards

Wall Street Journal (02/13/19) Broughton, Kristin

There are fewer large public companies with all-male boards as investors in recent years have demanded boardroom diversity. Now, proxy advisors are encouraging community banks, regional energy companies, and other small and midsize enterprises to increase gender diversity on their boards or risk losing shareholder support. Under a policy taking effect this year, Glass Lewis & Co. will recommend that investors vote against re-electing directors who chair nominating committees at companies with all-male boards. The proxy advisory firm said it would target companies in the Russell 3000 Index during annual meeting season. "Companies that don't have women on their boards are outliers," said Courteney Keatinge, senior director of environmental, social, and governance research at Glass Lewis. "And we want to make sure those outliers are called out." Institutional Shareholder Services Inc. plans to implement a similar policy in 2020. According to Glass Lewis, only four companies in the S&P 500 had all-male boards at the end of last year, down from 31 five years earlier. Further, there were 509 companies in the Russell 3000 with male-only boards at the end of the year, down from 708 companies over the same period. Glass Lewis said it will take into account existing efforts at companies to recruit women directors, as well as any agreements companies have in place with significant investors.

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2/13/2019

The Rise of Women in Corporate Boardrooms

Forbes (02/13/19) Berger, Laura

Columnist Laura Berger details some of the long-term shifts that are building diversity in boardrooms worldwide. She notes that almost 33% of global S&P 500 boards now include three or more females. Furthermore, the ratio of companies with three or more women directors has increased to 29% at the end of last year from 19% in 2015. Institutional Shareholder Services (ISS) has announced its areas of measurement in 2019 will be gender, skills/background, ethnicity, age, and tenure. The proxy advisory and corporate governance firm added that there will also be a keen focus on board diversity. Looking ahead, Berger advocates boards look at whether their proxy statement showcases the board's diversity and discloses diversity goals to help demonstrate the value the board places on diversity, as recently proposed by the EY Center for Board Matters.

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2/13/2019

The Road Ahead for Shareholder Activism

Harvard Law School Forum on Corporate Governance and Financial Regulation (02/13/19) Weinstein, Gail; de Wied, Warren S.; Richter, Philip

Last year was a record year for activism in terms of number of campaigns, capital deployed, number of activists involved, first-time activists, and board seats obtained. While statistically activism continues to grow, the activist investing market in the United States is mature, with the number of repeat activism targets exceeding the number of first time targets, according to research from Fried, Frank, Harris, Shriver & Jacobson. Activism is concentrated among a small number of leading activists, the significance of board seats won is overstated, non-U.S. activism has slowed, super-cap companies remain infrequently engaged, and returns for activist funds have been low and highly volatile. In response to the expansion of activism in recent years, corporate boards and senior executives now think like activists, institutional investors have become more involved and vocal, and merger and acquisition activity has changed, with the majority of transactions now initiated by a bidder rather than by an engaged company's decision to initiate a sale process. Fried, Frank, Harris, Shriver & Jacobson sees the road ahead containing many pitfalls for activists, including political uncertainty that will drive market volatility and more challenging financing conditions. A significant market disruption or tightening of liquidity could lead to a shakeout among activists and the return of distressed activism. Moreover, M&A-related activism may become more aggressive; activity in environmental, social, and governance is likely to increase; and growth could pick up in Europe and Asia.

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2/13/2019

Want a Better Board? Look to Private Equity

Institutional Investor (02/13/19) McElhaney, Alicia

Companies that are looking to better align their board with their institutional shareholders and better handle shareholder activism should look to the private-equity model of boards, according to new research from Columbia Law School professors Ronald Gilson and Jeffrey Gordon. In a paper entitled "Board 3.0—An Introduction," the researchers explain that private equity sponsors offer robust incentives, adding that this has resulted in a different mode of board and director engagement that seems associated with high value creation. Gilson and Gordon describe the current board structure of publicly traded companies as Board 2.0, and call for a model that combines these directors with those that follow a new model of corporate governance—Board 3.0. Under the 3.0 model, the 2.0 directors would serve on compliance and special committees, while the new directors would serve on a "strategic review" committee that would monitor the strategy and performance of the company. The 3.0 directors, which would serve a limited time in their role, would be compensated through stocks in a long-term manner. The Board 2.0 is "dominated by part-time independent directors who are dependent on company management for information and are otherwise heavily influenced by stock market prices as the measure of managerial performance," says the paper. The authors express concern that institutions may back up activist hedge funds, which may not be acting in the best interest of shareholders, via proxy votes in the hopes of dissolving a dispute.

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