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

Cat Rock Gnaws at Just Eat’s Finance Chief
Morrisons Braced for Counterbid
Murakami Gains Majority in Japan Asia Group
Investors Seek ‘Step Change in Corporate Governance on Climate Risk’
Exxon Plans No 'Huge Shifts in Strategy' After Losing Board Fight
Stores to be Rebranded by GameStop
Big Investors Take Tougher Line on Companies' Net Zero Plans
Glaxo Is Attempting a Turnaround. An Investor Wants to Accelerate It. Buy the Stock.
Boards Looking Beyond Traditional Experience for New Director Appointments
Superintendent Lacewell Announces New NY DFS Initiative to Promote DEI
Procter & Gamble CEO David Taylor to Step Aside
TreeHouse to Pay $27M to Settle Class Action Following 2016 Purchase of Conagra Unit
Fluidigm Pares Gain on Report Takeover Interest May Be Muted
Nikola Founder Trevor Milton Charged With Securities Fraud
Corporate Governance in the Post-Pandemic World
Should There Be a Mandatory Retirement Age for Senior Executives?
Five Elements of Engagement Stewardship: Insights From Two Letters
When It Comes to ESG, Companies Often Find It Hard to Stand Out
Your Vote Counts: Why This AGM Season Was Revolutionary
When It Comes to ESG, Companies Often Find It Hard to Stand Out
Delaware Supreme Court's Response to Chancery for Turning Away Stockholder's Claims
The Impact of ESG-Driven Shareholders on M&A Activity
Small Cap Emergencies Could Signal Opportunity as Well as Threats

8/1/2021

Morrisons Braced for Counterbid

The Times (London) (08/01/21) Chambers, Sam

The private equity firm Clayton, Dubilier & Rice (CD&R) is poised to kick off a bidding war for Morrisons (MRWSY) amid mounting opposition to the £6.3 billion offer on the table for the grocer from a consortium led by American buyout rival Fortress. CD&R is understood to have been lining up equity and debt financing for a counterbid that could come as soon as this week. Should it win the auction, CD&R plans to open a chain of Morrisons convenience stores at the 900-plus petrol stations operated by Motor Fuel Group, which it has owned since 2015. CD&R, advised by former Tesco boss Sir Terry Leahy, is also understood to be focusing on how it can use excess space in Morrisons’ supermarkets more imaginatively. The firm intends to work alongside the chain’s executive team, led by chief executive David Potts. Silchester, Morrisons’ biggest shareholder with a 15.1% stake, last week criticized the board for not allowing more time for higher competing offers to emerge. Two other top 20 shareholders — JO Hambro and M&G — also said the 252p-a-share offer undervalued the supermarket chain. CD&R has until August 9 to table an offer. The stage is set for a bidding war. Fortress has enlisted investment giant GIC, Singapore’s sovereign wealth fund, to join its consortium, which is already backed by Canadian pension fund CPPIB and a division of the billionaire Koch family empire. Sources said other private equity firms and family offices had also been running the rule over Morrisons. A source close to one suitor said there were likely to be multiple incremental bids, with the potential for the eventual price to hit 290p a share. Morrisons shares closed at 264p on Friday.

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7/29/2021

Superintendent Lacewell Announces New NY DFS Initiative to Promote DEI

New York Department of Financial Services (07/29/21)

Superintendent of Financial Services Linda A. Lacewell on Thursday announced new action by the New York State Department of Financial Services (DFS) to promote diversity, equity, and inclusion in the banking and non-depository financial industries. In the industry letter to New York-regulated banking institutions and New York-regulated non-depository financial institutions, DFS outlined its expectation that these organizations make the diversity of their boards and senior leadership a business priority and a key part of their corporate governance, including creating and maintaining a diverse pipeline of future leaders. This action follows DFS’s circular letter to New York insurers to promote diversity, equity, and inclusion in the insurance industry. In that letter, DFS outlined its expectation that insurers make the diversity of their boards and senior management a business priority and key element of their corporate governance. As a first step, DFS will collect data from all New York-regulated Banking Institutions with more than $100 million in assets, and all Regulated Non-Depository Financial Institutions with more than $100 million in gross revenue, and from all entities authorized to engage in virtual currency business activity, including virtual currency licensees and virtual currency trust companies, related to the gender, racial, and ethnic composition of their boards or equivalent body and senior management as of Dec. 31, 2019, and 2020, including information about board tenure and key board and senior management roles. The data will be collected in the fall of 2021 and published on an aggregate basis in the first quarter of 2022.

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7/29/2021

Procter & Gamble CEO David Taylor to Step Aside

Wall Street Journal (07/29/21) Terlep, Sharon

Procter & Gamble Co. (PG) said David Taylor would step down as chief executive after a six-year run atop the consumer-products company, where he battled with investor Nelson Peltz, revived sales, and navigated through a pandemic. Taylor will be succeeded on Nov. 1 by his top deputy Jon Moeller, who has been P&G’s chief operating officer for the past two years and was previously its finance chief. Taylor will serve as executive chairman. The leadership change comes at a delicate moment for company. While the Covid-19 pandemic spurred demand for household products last year, it has strained supply chains and pushed up costs in a sector that operates on thin profit margins. “When I came into this role, we were not delivering what we knew we were capable of,” Taylor said on Thursday. Sales slowed even more in Taylor's first years, drawing ire from Wall Street and landing the company in a proxy fight with Peltz. P&G narrowly won a shareholder vote in 2017 but gave a seat on the board to Peltz, CEO of Trian Fund Management LP. Critics said P&G needed to invest in e-commerce startups and lessen its reliance on bricks-and-mortar retailers and mass-market brands like Tide and Gillette. Instead, Taylor doubled down on P&G's big names while eschewing deal making as rivals snapped up new brands. The strategy proved to be especially prescient amid the pandemic, when shoppers flocked to known names and, largely unable to travel or dine out, were willing to pay top dollar for diapers, soap, and detergent.

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7/29/2021

TreeHouse to Pay $27M to Settle Class Action Following 2016 Purchase of Conagra Unit

Food Dive (07/29/21) Doering, Christopher

An Illinois judge granted preliminary approval on Tuesday of a deal where TreeHouse Foods Inc. (THS) agreed to pay $27 million as part of a class-action lawsuit first filed in 2016 claiming the company overstated how its business was doing following the $2.7 billion purchase of Conagra Brands' (CAG) private label business earlier that year. A hearing for final approval of the class-action settlement is scheduled for Nov. 16. The deal, reached in February following 11 months of negotiations between TreeHouse and the lead plaintiff, the Mississippi Public Employees Retirement System, was reached through the use of a mediator. The plaintiffs claimed TreeHouse, between Feb. 1, 2016, (the day the Conagra deal closed) and Nov. 2, 2016, "made false and/or misleading statements and/or failed to disclose" that its private label business was struggling; its acquisitions strategy was underperforming; and it had overstated its financial guidance. Despite a healthier business internally, TreeHouse has continued to face challenges outside its corporate walls. The maker of private label bars, dressings, oatmeal, and other offerings failed to benefit from the demand for food during the pandemic as much as other brand-name competitors because of capacity constraints and supply chain problems. Its stock price, languishing in the $40 range, caught the attention of Jana Partners, which took a 7.5% a stake in TreeHouse in February and appointed two independent directors to its board as part of an agreement. In its filing, Jana said it believes TreeHouse shares are "undervalued and represent an attractive investment opportunity," and that the company should consider a sale of its business. The company is now one step closer to ending what was a volatile period in its history with the preliminary approval of the settlement this week.

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7/29/2021

Nikola Founder Trevor Milton Charged With Securities Fraud

Wall Street Journal (07/29/21) Ramey, Corinne

The Securities and Exchange Commission has filed securities-fraud charges against Nikola (NKLA) founder and former executive chairman Trevor Milton for allegedly lying to shareholders about its business making commercial trucks powered by alternative fuel. Milton faces two counts of securities fraud and one count of wire fraud, with conviction on the first charge carrying a maximum 25-year prison sentence. "In order to drive investor demand for Nikola stock, Milton lied about nearly every aspect of his business," declared Manhattan U.S. Attorney Audrey Strauss. Milton, who resigned from Nikola in September, pleaded not guilty and was released on a $100 million bond. A spokesman for his attorneys said, "Mr. Milton has been wrongfully accused following a faulty and incomplete investigation in which the government ignored critical evidence and failed to interview important witnesses." Nikola stated that Milton has not been involved in its operations or communications since he resigned, adding that they have "cooperated with the government throughout the course of its inquiry." The company's stock closed down 15%. Milton promoted Nikola to small investors when it went public with a special-purpose acquisition company (SPAC). The indictment pointed out that, unlike when shares are first issued through an initial public offering, executives following a SPAC merger have no restrictions on speaking about a company. Strauss said Milton declared on a podcast that an advantage of a blank-check company was that he could talk to the market, which he did with the intent to drive retail investors to buy Nikola stock. Prosecutors refuted some of his claims as false, amounting to a scheme to defraud individual, nonprofessional shareholders. They said as the company's stock price appreciated, Milton's shares were once valued for at least $8.5 billion. Nikola in September was shaken by assertions cited by short seller Hindenburg Research, charging the company and Milton of making deceitful statements and distorting the progress on some of its key technology, including the hydrogen-powered semis. The company's stock fell in the wake of this news. Meanwhile, FactSet says Milton still owns about 20% of Nikola. Jeffrey Ubben, the founder of ValueAct Capital Management LP and a member of Nikola's board, couldn't immediately be reached for comment, but last year he told Bloomberg that the company went public too early.

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7/29/2021

Small Cap Emergencies Could Signal Opportunity as Well as Threats

Investors' Chronicle (07/29/21) Norrington, James

Directors must act in the interests of all their stakeholders and if the owners of a company’s shares aren’t happy and have a significant slice of the equity, they have recourse to action. The extraordinary general meeting (EGM) can be the high-noon showdown between management and activist shareholders. July saw a number of EGMs, although perhaps the most caustic was averted when a truce of sorts was reached between Hurricane Energy (HUR) and 25% shareholder Crystal Amber Fund. The fund was unhappy with an offer management made to bondholders that would have left the lenders owning 95% of the company. The High Court ruled against the company, agreeing with Crystal Amber that the board had been way too pessimistic and premature in trying to push through a deal with holders of $230 million of bonds which are due for payment in July 2022. What then put a stop to the EGM motions was the resignation of non-executive directors and the election of Crystal Amber nominees. Now, with the oil price back around $74 a barrel, there is some credence to Crystal Amber’s argument that Hurricane’s $145 million unrestricted cash position will improve over the next 12 months before the redemption of bonds falls due. The market seems to agree, as Hurricane’s market capitalization is back up to £58 million. Huge challenges remain in the era of decarbonization, but the episode does suggest the newsflow around EGMs may be worth following for real contrarian value investors.

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