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

ENKRAFT Piles Pressure on Energiekontor to Change Strategy
Crown Castle Responds to Investor Elliott's Recommended Changes
The Pershing Square Foundation Awards $3 Million to Innovative SARS-CoV-2 Research Projects
Bankers Warn Corporate Clients to Expect Resurgence in Shareholder Attacks
Hedge Fund Elliott Weighs Stake in Café Rouge Owner
UBS Launches Big Data Tool to Protect Against Activist Investors
Japan Fast-Tracks Annual Meetings Into Digital Era
Elliott Pushes Crown Castle to Bolster Fiber Business
Scout24: Valuation Boost Upon AutoScout24 Divestment
Dan Loeb's Third Point Posted a Big Gain in the Second Quarter. It Wasn't Enough
SoftBank Governance Reforms Stop Short of Vision Fund: Sources
Swiss Fund Teleios Hurries to Build up Stake in Glenveagh Properties
Cerberus Urges Orderly Process After Commerzbank CEO Ouster
Commerzbank's CEO and Chairman to Resign Amid Pressure From Cerberus
Toshiba Clash With Investor Poses First Test of Japanese National Security Law
Aryzta Must Target €600 Million in Asset Sales, Say Investors
Veraison Shareholder Group Increases Stake in Aryzta to Over 20%
Tribune Publishing Gives Co-Founder of Hedge Fund Alden Global a Board Seat
Jana Directors Join Bloomin' Brands Board
E.l.f. Beauty Reaches Agreement With Investor
Audit Review Head Calls for Urgent Reform After Wirecard Scandal
Goldman Sachs Starts Diverse Board Member Policy for Handling IPOs
ESG Disclosures Often Not Clear/Useful to Investors Says GAO
In Bill Ackman's New Megadeal, a Cut for Minority-Owned Wall Street Players
Why Sony Is a Compelling Investment Case
These Asset Owners Are Trying to Make Sustainability Easier
Can Pershing Square's Standout Year Continue?
Olympus Exit Foreshadows a Japan Camera Sector Shake-Up
The Downfall of Wirecard Is Stirring an Epic Shareholder Revolt in Germany
SEC's Proxy Advisor Rule Should Be Finalized Despite Clayton's Potential Departure
The Hostile Bid Is Dead. Long Live the Hostile Bid?

7/7/2020

The Pershing Square Foundation Awards $3 Million to Innovative SARS-CoV-2 Research Projects

Business Wire (07/07/20)

The Pershing Square Foundation has awarded $3 million to nineteen recipients at 10 academic research institutions conducting research related to the SARS-CoV-2 virus. As scientists across various disciplines around the world have risen to the challenge of combatting SARS-CoV-2, the foundation worked with its network of talented cancer research scientists and physician-scientists involved in the Pershing Square Sohn Cancer Research Alliance (PSSCRA) to create a funding opportunity for SARS-CoV-2 research. The foundation's PSSCRA initiative annually awards a cancer research prize that provides funding and emboldens early-career investigators to pursue research projects at a stage when traditional funding is lacking. "The foundation remains committed to supporting cancer research and we are proud of the PSSCRA community that we have built over the last seven years," said foundation trustee Bill Ackman. "Amid this global health crisis, we felt that we had an opportunity to quickly leverage the expertise of this exceptional scientific community to identify areas in which we could rapidly deploy funds to scientists researching SARS-CoV-2 in a way similar to our approach to funding cancer research." By tapping the PSSCRA community for this project, the foundation sought to foster synergy among experts across cancer research, immunotherapy/immunology, genetics, and epigenetics to shed new light on SARS-CoV-2 research, expand basic scientific knowledge, and strengthen the arsenal for current and future health crises. Proposals were evaluated for innovation, scientific excellence, and application to the SARS-CoV-2 virus.

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7/5/2020

SoftBank Governance Reforms Stop Short of Vision Fund: Sources

Reuters (07/05/20) Nussey, Sam; Sen, Anirban; Azhar, Saeed

Two sources said SoftBank Group (SFTBY) has no intention of boosting board oversight of its $100 billion Vision Fund, opposing calls from Elliott Management and indicating governance reforms have fallen short. Softbank CEO Masayoshi Son has in recent months complied with other Elliott demands, among them launching a 2.5 trillion yen ($23 billion) buyback and boosting the number of outside directors, including the board's only woman. But board composition at Vision Fund remains largely unchanged despite a calamitous loss stemming from wagers on startups like WeWork. Elliott asked SoftBank to set up a board-level subcommittee to oversee and aid the Vision Fund's investment process. One source said Softbank executives rejected the idea, arguing instead for investments already vetted by top management and $3-$5 billion deals to the large limited partners. Vision Fund's poor performance scuttled plans to raise a further mega fund from investors including the first fund's anchor supporters, the sovereign wealth funds of Saudi Arabia and Abu Dhabi. Following the WeWork fiasco, Son vowed to improve oversight of portfolio firms and terminate bailouts of struggling companies. Recent group-level governance revisions at Softbank include the establishment of a nominating and remuneration committee chaired by an outside director. A key role for nominating panels is succession planning, and 62-year-old Son announced in June that he may continue leading SoftBank beyond his sixties.

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7/4/2020

Cerberus Urges Orderly Process After Commerzbank CEO Ouster

Bloomberg (07/04/20) Arons, Steven; Henning, Eyk; Nicola, Stefan

Cerberus Capital Management is advocating an "orderly process" to replace the chairman and chief executive officer of Commerzbank AG (CRZBY), who were both ousted from the company. Cerberus suggested that a new chairman to replace Stefan Schmittmann should be selected first, followed by a formal process to locate a successor for CEO Martin Zielke, according to a statement issued late July 5. Zielke tendered his resignation to the supervisory board on July 3 as he took responsibility for a decline in the lender's share price, which has dropped by approximately half during his four-year tenure. Schmittmann said he would leave in August. The exits followed a campaign by Cerberus in which it had called for board seats; and private expressions of dissatisfaction by the German government, the bank's largest shareholder. We "are surprised by this development, as we had expected current management to continue and to become more aggressive on cost takeout," stated Citigroup Inc. analysts led by Nicholas Herman in a note on July 6. "We struggle to identify a long list of internal candidates." Roland Boekhout, the bank's head of corporate clients, is seen as the internal favorite to replace Zielke, sources said. The bank is also vetting finance chief Bettina Orlopp, the sources said. Board member Nicholas Teller could take over from Schmittmann at least on a temporary basis, they said. Deputy Chairman Uwe Tschaege, who's a labor representative, will automatically take on the job if no one has been selected by the time Schmittmann departs. Commerzbank's supervisory board could choose replacements for the vacant roles as early as July 8, a source said, or could wait to source additional external candidates. "The sudden departure of Commerzbank's chairman and chief executive calls for an orderly process of filling the vacant positions. First, a new chairman has to be found, followed by a formal process to find a successor for the CEO, to be executed by the supervisory board," said a Cerberus representative in an email.

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7/3/2020

Toshiba Clash With Investor Poses First Test of Japanese National Security Law

Financial Times (07/03/20) Lewis, Leo; Inagaki, Kana

At Toshiba (TOSYY), a clash with Singapore-based investor Effissimo represents the first test case of Japan's controversial new national security law on foreign investment. The conflict was triggered when Effissimo, which is Toshiba's largest shareholder with a 15% stake, submitted a proposal that would have put its founder and two other directors on Toshiba's board. Under Japan's newly revised Foreign Exchange and Foreign Trade Act (Fefta), Effissimo's proposal could draw government intervention if the move to shake up the board were considered a threat to Japan's national security. Toshiba was designated by the government in May as the highest category of national security-related business. Although the government has stressed that the Fefta regime is not designed to deter or constrain financial investors, foreign fund managers have expressed concerns that the law might be used to hobble activism. Yoshimitsu Kobayashi, Toshiba's chairman, said last month that the board had “no intention of clashing with our shareholders.” Toshiba is proposing to replace one non-executive director on its board, and the competing slates will be voted on at the group's annual meeting at the end of July. Toshiba has also previously said it has an “extremely progressive” and balanced board, with 10 out of 12 directors coming from outside the group.

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7/1/2020

Audit Review Head Calls for Urgent Reform After Wirecard Scandal

Financial Times (07/01/20) Kinder, Tabby

Donald Brydon, the former chair of the London Stock Exchange who was commissioned by the U.K. government to review the audit market last year, is pushing for a speedier overhaul of the sector in the wake of the Wirecard (WCAGY) scandal. EY, a Big Four accounting firm, had audited Wirecard since 2009 but failed to uncover €1.9 billion in fraud for several years. The company now faces investor lawsuits and a regulatory investigation. According to Brydon, "We must not wait until there is a market failure, there has to be a whole mindset change on what is the purpose of an audit. Another couple of big scandals and suddenly you have a global audit profession that is entirely in disarray because choices become more limited or there are knee-jerk reactions." EY could have uncovered the fraud but reportedly failed to conduct routine audit procedures to verify Wirecard's bank balances for at least three years. Wirecard recently filed for insolvency, and its CEO has been arrested and released on bail. "Given the focus on Wirecard, making it clear that auditors have an obligation to find fraud rather than stumble over it would be a smart move to change auditor behavior," said Brydon. His report on the U.K. audit profession was submitted to the Department for Business, Energy, and Industrial Strategy in December. In the report, he proposed that accounting standards are overhauled to include a requirement for auditors to "endeavor to detect material fraud in all reasonable ways" and that auditors should be taught forensic accounting methods and "fraud awareness." Brydon added, "It would be very apt at this time for the government to lay out its plans and timing for reforming audit. There are many in the accounting profession who genuinely want reform, but there are also others who are in denial and want to put the blame somewhere else."

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7/6/2020

ESG Disclosures Often Not Clear/Useful to Investors Says GAO

Forbes (07/06/20) Knutson, Ted

A Government Accountability Office (GAO) study said most environmental, social, and governance (ESG) disclosures from public companies offer little clarity or use for investors. GAO reported that it was difficult to compare climate or resource-related data when companies applied different calculation methods or reported results in different units of measurement in yearly disclosures, 10-K filings, proxy statements, and voluntary sustainability reports of 32 companies it reviewed. "Specifically, we found instances where companies defined terms differently or calculated similar information in different ways," the authors said. "We most frequently identified these inconsistencies in quantitative topics associated with climate change, personnel management, resource management, and workforce diversity." Board accountability and workforce diversity were addressed most often, and human rights least frequently. Shareholders complained about difficulties in understanding and interpreting both quantitative and narrative ESG disclosures. The authors observed that ESG has become of paramount concern for institutional investors, with 12 of 14 surveyed investors saying they seek information on these issues to better understand risks that could impact company financial performance over time. The investors also monitor ESG disclosures to inform their vote at shareholder meetings or decide on stock purchases. A GAO review of a sample of companies from the S&P 1500 found an estimated 10% received one or more shareholder proposals last year, and about 5% received one or more shareholder proposals related to increasing ESG disclosures. Yet all of the private asset management firms and representatives from three of seven polled pension funds told GAO that they do not use shareholder proposals to influence companies' ESG disclosures. The authors said although some have supported making comparable ESG disclosures mandatory, voluntary disclosures allow firms to reveal only ESG data that is relevant for their specific businesses, lowering costs for them. None of the 18 companies the GAO investigators queried said their businesses had quantified the costs of ESG disclosures. Securities and Exchange Commission Chairman Jay Clayton said his agency's approach to categorizing ESG disclosures as general "materiality" content has served investors and capital markets well for decades, and should continue to do so.

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7/6/2020

In Bill Ackman's New Megadeal, a Cut for Minority-Owned Wall Street Players

Vanity Fair (07/20) Cohan, William D.

Bill Ackman's Pershing Square Tontine Holdings Ltd., a special purpose acquisition company (SPAC), is set to go public later this week and likely exceed its $3 billion target because of massive investor demand. This marks the largest initial public offering of 2020 and the biggest SPAC ever, but it is also noteworthy because Ackman decided to give seven very small, veteran-, women-, and minority-owned investment banks meaningful roles in the underwriting and distribution of the stock being sold. He is hoping that by sharing the economics of the deal with these less-powerful firms, he will provide them the capital and profits they need to compete more effectively with Wall Street giants. Ackman still chose giant firms Citigroup (C), Jeffries, and UBS (UBS) as the lead underwriters of the SPAC, but the smaller firms will get to share $18 million in fees. Ray McGuire, a vice chairman at Citigroup, said June 23 that the SPAC deal is extraordinary because, in addition to its structure, “[Ackman] had the courage and conviction to include minority firms as co-managers with 20% of the fees. Other issuers have allocated 20 basis points to each firm, which is 'feel-good, check-the-box' but is certainly not material.” Ackman also decided that two of the four independent directors of Tontine should be women. If all goes according to Ackman's plan, he will soon have a huge new unrestricted pool of some $5 billion in equity capital, or more, to make a huge acquisition, plus the publicly traded stock of the SPAC to use as acquisition currency. “We intend to pursue merger opportunities with private, large capitalization, high-quality, growth companies where our ownership in the merged company would generally represent a minority of shares outstanding at the time of the merger,” Ackman wrote in the prospectus.

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7/6/2020

These Asset Owners Are Trying to Make Sustainability Easier

Institutional Investor (07/06/20) Whyte, Amy

Dutch pension managers APG and PGGM, along with AustralianSuper and the British Columbia Investment Management Corp. (BCI), launched the Sustainable Development Investments Asset Owner Platform (SDI AOP) on July 6. The global platform aims to provide data for investors to assess companies based on their adherence to the United Nations' (UN) Sustainable Development Goals. According to Jennifer Coulson, vice president for environmental, social, and governance (ESG) at BCI, "Any investor will be able to subscribe to the platform and it will allow them to very easily identify to what extent a company's business is aligned with the Sustainable Development Goals." She noted that the Dutch funds invited BCI to join the project. "The Dutch had been working on it, but it was really important that this be a global platform and have global appeal," Coulson said. "We didn't want this to be only applicable to Europeans; we wanted this to be something that all asset owners and all asset managers can adopt so that company data is easily compared." The platform had sustainability classifications for 8,000 companies at the time of its launch. These classifications were generated using APG's data science company Entis. Coulson noted that "the platform really utilized [artificial intelligence] tech to do this at scale." She stressed that the SDI AOP is "very specific" to the UN's sustainability goals and is "not just a broad ESG framework." Beginning this fall, the platform will be made commercially available to other asset owners and managers, distributed through analytics firm Qontigo.

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7/2/2020

Can Pershing Square's Standout Year Continue?

Institutional Investor (07/02/20); Celarier, Michelle

Bill Ackman's Pershing Square Holdings just reported its best quarterly performance since it went public in 2014, rising 1.1% even as markets floundered in June. The fund rose 28.9% this year and 24.9% during the second quarter as Ackman wound down $2.6 billion in credit default swaps, enabling him to buy more shares just as the market was starting to return. Most of Ackman's holdings have begun to recover, and he sold out those that didn't, but his bullish call may yet sour as markets have turned volatile again, hitting some of his holdings. Hilton Worldwide Holdings (HLT) fell more than 7% for the month and is down 34% for the year, while Restaurant Brands International (QSR) was flat in June and is down 14% for the year. Another holding, Starbucks (SBUX), fell about 5.6% last month, but it is up almost 12% over the past three months. The worst performer is likely Howard Hughes (HHC), which is down about 59% for the year through June. Others fared better, such as Lowe's Cos. (LOW), whose stock was up 3.6% in June and 12.8% for the year, and Chipotle Mexican Grill (CMG), which is up 5% for the month and up 25.7% for the year. Last month, Ackman filed plans for a listed special purpose acquisition corporation called Pershing Square Tontine Holding, which plans to raise $3 billion, with another $1 billion from Pershing Square. At the end of June Pershing Square Capital, with $10.3 billion, was almost fully invested, meaning Ackman will be raising fresh capital for the new venture.

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7/1/2020

SEC's Proxy Advisor Rule Should Be Finalized Despite Clayton's Potential Departure

Forbes (07/01/20) Brannon, Ike

Securities and Exchange Commission (SEC) Chairman Jay Clayton could vacate his position to become the U.S. attorney for the Southern District of New York, sparking concerns about the fate of his rulemaking agenda. However, Clayton has confirmed that a rule to enhance oversight of proxy advisory firms will be issued in the next three months. The rule is the product of years of study, public input, and stakeholder feedback, with the SEC first broaching the issue of proxy advisory firms having too much power over their clients' actions back in 2010. Ike Brannon, a former senior economist for the Treasury and Congress, says it makes little sense to suggest that the SEC pause its work just as it is about to conclude. "Given the lengthy and deliberate rulemaking process and the SEC's responsiveness to public feedback, it is hard to credibly suggest that this effort has been driven by the short-run machinations of a political appointee," he says. "Instead, this rule is an outcome of a process that began a decade ago, was done entirely in the public realm, received input from stakeholders on both sides, and will reach a final outcome that will give neither side what they were seeking. In short, this is precisely how the regulatory process should operate, and the ultimate result comports perfectly with the SEC's explicit mission to facilitate capital formation and protect investors."

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