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.
Alexion Pharmaceuticals Rejects Elliott Push for 'Proactive Sale'
The Battle Over Green Investment Is Hotting Up
Lagardère Group Chairman Resigns 'For Personal Reasons'
Enzo Biochem Issues Open Letter to Shareholders
Investor to Oppose Instructure's Plans to Sell to Thoma Bravo
ABB CEO Says More Spin-Offs Possible
An Overwhelming Majority of Investors Expect Companies to Implement Effective Environmental, Social-Impact and Governance Practices
Moral Money: Davos Boss Tells Execs to Align Pay With Stakeholder Interests
Carl Icahn Blasts HP's Decision to Reject Xerox's Acquisition Bid
Carl Icahn Urges HP Shareholders to Reach Out to Board
'Significant Board Changes' Needed at Valaris, Shareholder Says
Pershing Square Raises Stake in Howard Hughes Corp.
Hudson's Bay Confident of Approval for Chairman's Buyout Bid
Amherst Is in Talks to Buy Front Yard After Investor Pressure
Microsoft Shareholders Defeat Two Investor Proposals
AT&T Aims to Cut 4% in Labor Costs Amid Effort to Bolster Financials, CFO Says
Paul Singer's Elliott Management Adds 4 Stocks to Portfolio in 3rd Quarter
Brexit Disruption 'to Spark Activist Investor Interest' in U.K.
Companies Vow to Improve Climate Disclosure After TCI Warning
Crystal Amber Bets on Britain's De La Rue
E.l.f. Beauty Shares Under Pressure as Marathon Partners Urges Company to Sell Itself
Netherlands to Force Companies to Have More Women on Boards
Icahn Urges HP to Move Forward With Xerox Merger Discussions
Third Point Posts Strong November Gain
Corporations Are Agreeing More to CalPERS Diversity Demands
Punish Directors Who Don't Make Climate Disclosures, Says Hedge Fund
TCI Hedge Fund Does More on Climate Action Than ESG Funds
Tribune Publishing Adds Two Board Seats for Alden; Hedge Fund's Stake Capped at 33% Until End of June
Ferguson First-Quarter Profit Rises as U.S. Residential Activity Picks Up
Crystal Amber to Double Stake in Banknote Maker De La Rue
Icahn Is Said to Push Ahead With Bid to Control Occidental Board
Toshiba, Once a Hedge Fund Target, Seeks to Become One
Elliott Calls Capgemini's $4 Billion Altran Bid Too Low
Vodafone Wins German Court Backing in Price Fight With Elliott
Catalyst Capital Group Makes Rival Takeover Offer for Hudson's Bay Co.; Land & Buildings Expresses Interest
Scout24 Is Exploring Sale or Separation of Auto Platform
In Oil and Gas, Activist Investors Lose Steam
An Investor Tries to Oust a Trump Confidant
Xerox Says It Will Take HP Buyout Offer Hostile by Going Directly to Shareholders
Crystal Amber to Buy More De La Rue Shares
Voce Calls for New Directors on Argo Board
Japan and Australia to Boost Asia M&A Activity in 2020, UFP Says
Starboard Takes Stake in CVS
Investor Presses Valaris for Broader Changes, Plans on Special Meeting
Investor Takes Step Back From Nashville Lender
More Women on Singapore Boards but Diversity Still Lacking
Shared Investors Make HP-Xerox Deal 'More Likely'
Who Says You Can't Trust ESG Data? One of the Biggest Names in ESG.
The Ackman Surge Continues
Climate Change Has Made ESG a Force in Investing
Hedge Fund Activists Are 'Shepherds, Not Wolves'
Carl Icahn Just Needs Any Xerox-HP Deal
Hedge Fund Boss Pays Himself £200 Million Despite Fund's Profits Falling
Major Institutional Investors Say Zuckerberg's 'Totalitarian Grip' on Facebook Must End
Institutional Investors Watch for Volatility, Activism
Labor in the Boardroom
Code Green: Investors Are Coming for Environmental Offenders
ISS and Glass Lewis Policy Updates
Video: Copy That
Shadow Governance
ISS Benchmark Policy Updated—Executive Summary
ESG Reporting Best Practices
TCI Plays Outrider to Mark Carney's Climate Drive
A Common-Sense Approach to Corporate Purpose, ESG, and Sustainability
Gordon Singer — Elliott's Quiet Man Making Noise in Europe
Investors Lay Down Challenge to Corporate France
Investors and Issuers Aligned on Board Diversity
The Business Case for More Diversity
Arnaud Lagardère's Battle to Retain Grip on French Empire
Corp Fin Enters Brave New Shareholder Proposal World
Why Investors React Negatively to Companies That Put Women on Their Boards

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

12/6/2019

Alexion Pharmaceuticals Rejects Elliott Push for 'Proactive Sale'

Reuters (12/06/19) Mathias, Tamara

On Dec. 6, Alexion Pharmaceuticals Inc. (ALXN) said its board of directors has unanimously decided against Elliott Management's call for a "proactive sale" process. "We have recently engaged in good faith with...Elliott Management, to listen to their point of view, including their recommendation that we immediately launch a proactive sale process," Alexion said in a statement. "Consistent with its fiduciary duties, the board unanimously decided that conducting a proactive sale process would not be in the best interest of shareholders." The hedge fund has built a stake in the company and has been pressuring it to take more action to bolster its stock price.

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12/5/2019

The Battle Over Green Investment Is Hotting Up

Financial Times (12/05/19) Tett, Gillian

Christopher Hohn, founder of TCI hedge fund, entered the climate debate this week, announcing that he would engage companies like Airbus (EADSY) and Moody's (MCO) if they failed to improve their standards of disclosure and action over climate risks. Hohn then criticized BlackRock (BLK) for failing to impose equally strict disclosure requirements in its own investments. BlackRock responded to Hohn's attack by saying it "has the largest stewardship team in the world, and engaged 370 companies globally on the topic of climate risk in the past two years." The tussle has generated questions about whether it is possible for the asset management world to fight climate change while the sector is so dominated by passive funds that track indices, rather than active managers. BlackRock has grown largely on the back of exchange traded funds (ETFs) and other forms of passive investing that track the performance of a particular market or sector. Moreover, the ETF sector recently passed the $6 trillion mark, and BlackRock projects this will double by the end of 2023. BlackRock officials argue that if climate activists want to attack finance for its lack of "green" credentials, they should start with the index companies and proxy advisers. However, Hohn contends that asset managers should still insist on screening ETFs for climate issues, possibly using the metrics developed by the Carbon Disclosure Project. Changes at BlackRock are unlikely to be made immediately, and observers say investors should keep an eye out for BlackRock's comprehensive internal analysis of all its operations in relation to climate change, covering both active and passive funds. Further, the World Economic Forum plans to push the world's biggest asset managers to agree on joint standards and commitments for active and passive funds in Davos next month, and European regulators are raising pressure for reform as well, with Brussels preparing a lengthy taxonomy of green standards.

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12/5/2019

Lagardère Group Chairman Resigns 'For Personal Reasons'

Financial Times (12/05/19) Pooler, Michael

Citing personal reasons, Xavier de Sarrau has resigned as chairman of the supervisory board of Lagardère Group (MMB), a position he had held since 2010. De Sarrau will remain a member of the supervisory board and be replaced as its chairman by Patrick Valroff, who has served on the board for about 10 years. The development comes as the French group crosses swords with Amber Capital, a London-based hedge fund that recently became the group's third-largest shareholder by increasing its stake to 6.8%. Lagardère has shrunk considerably under the leadership of Arnaud Lagardère, who took over the group after the sudden death of his father Jean-Luc Lagardère in 2003. Amber has criticized the firm's corporate governance and tried to oust de Sarrau as chairman at its last annual shareholder meeting, which failed. In the past Amber has pointed to what it sees as a breach of independence at Lagardère's supervisory board. Valroff, the new chairman, has strong links with Crédit Agricole (CRARY), the main lender to Arnaud Lagardère's personal holding company, Lagardère Capital & Management. LC & M, through which Arnaud Lagardère holds a 7.3% stake in Lagardère, had €204 million of debt at the end of 2017, which exceeds the current value of his shares in the group that bear his family's name. In October a French commercial court demanded Arnaud Lagardère publish a decade of annual accounts for LC & M, another of Amber's demands. Arnaud Lagardère has defied the court order and is appealing the decision. Meanwhile, four members of Lagardère’s supervisory board have their mandates coming up for renewal by shareholders next year, and Arnaud Lagardère's own mandate as the group's managing partner is up for renewal by the supervisory board in March 2021.

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12/5/2019

Enzo Biochem Issues Open Letter to Shareholders

Business Wire (12/05/19)

Enzo Biochem Inc. (ENZ), an integrated diagnostics and life sciences company, has issued an open letter to shareholders. The letter says that the company will hold its 2019 Annual Meeting of Shareholders on Jan. 31, 2020. "This year's meeting is particularly critical, as Harbert Discovery Fund—a short-term oriented activist hedge fund with no experience in our industry—is seeking to replace two highly qualified directors up for election. We have attempted to work constructively with Harbert in order to understand their perspectives and integrate their director nominees into our Board refreshment process. However, they have steadfastly thrown up roadblocks at every step since they made their demands a few months ago. They refused to provide the names of their nominees while simultaneously demanding that the Board replace without shareholder vote two duly elected independent directors with these then-unnamed candidates." The letter also accuses Harbart of seeking to obtain board seats in order to "abandon Enzo's long-term strategy and attempt to drive a fire sale of the Company at depressed valuations."

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12/5/2019

Investor to Oppose Instructure's Plans to Sell to Thoma Bravo

Reuters (12/05/19) Herbst-Bayliss, Svea

Rivulet Capital has said it will resist Instructure Inc.'s (INST) plan to sell itself to private equity firm Thoma Bravo for $2 billion, calling the deal too cheap and too hurried. Rivulet Capital, which owns 5.23% of Instructure, said it plans to vote against the transaction where Thoma Bravo would pay $47.60 a share for the company. Rivulet is the first large investment firm to speak out on Instructure's plans after other investors had privately and publicly pushed the company to consider selling part or all of itself. On Oct. 31, Sachem Head Capital Management disclosed a stake in the company and started pushing for a full sale process. A few days later Praesidium Investment Management, which has owned the stock for some time, joined the public push for the company to consider a sale. The stock price climbed to $53 a share by late November but tumbled on news of what Thoma Bravo was planning to pay, and now trades at $48.55 a share. Neither Sachem Head nor Praesidium have said how they currently feel about the proposed deal.

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12/4/2019

ABB CEO Says More Spin-Offs Possible

Reuters (12/04/19) Revill, John

Peter Voser, chairman and interim CEO of Swiss engineering company ABB Ltd. (ABB), said the company is looking to spin off more businesses. The company is carrying out a strategic review of underperforming businesses and agreed to sell its power grids business last year under pressure from investors to simplify its operations. Voser noted that the synergies between ABB's electrification, industrial automation, drive technology, and robotics divisions are "not so great," but said that a separation of the electrification division, currently ABB's biggest business by sales, was not on the table. Voser's comments, confirmed by ABB, boosted the company's shares by 2.5%, making the stock the biggest gainer on Switzerland's blue chip index. Voser will be replaced by Sandvik (SDVKY) CEO Bjorn Rosengren in February and will return to his role as chairman.

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12/4/2019

An Overwhelming Majority of Investors Expect Companies to Implement Effective Environmental, Social-Impact and Governance Practices

PR Newswire (12/04/19)

According the 2019 Edelman Trust Barometer Special Report, which surveyed 600 institutional investors in six countries, 84% of investors agree maximizing shareholder returns can no longer be the primary goal of the corporation, preferring a multi-stakeholder approach.  Seventy percent of respondents say they believe companies that place too much emphasis on shareholder return will be partially responsible for consumer or employee activism, and 74% say that companies with employee activism are less attractive investments. Almost all respondents expect the board of directors to oversee at least one environmental, social, and governance (ESG) topic, and 52% say tying executive compensation to ESG target performance would positively impact their trust in a company. In addition, 54% of investors say ESG practices positively impact trust, and 61% have increased their investment allocation to companies that excel with regard to ESG factors. Board diversity is also a topic of interest, with 55% of investors saying it has a significant positive impact on trust. Seventy-nine percent of respondents stated that most companies are not prepared to handle activist campaigns, with the main issue an inability to define and specify new and emerging areas of risk and value creation. Ninety-six percent of investors use one or more social platforms on a weekly basis, and 82% of investors consult a company's social media channels when evaluating an investment. Top strategies for underperforming companies to shore up trust with investors include announcing a change to business strategy (52%), conducting a business or strategic review process (51%), and implementing significant cost cuts (46%).

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12/4/2019

Moral Money: Davos Boss Tells Execs to Align Pay With Stakeholder Interests

Financial Times (12/04/19) Tett, Gillian; Nauman, Billy; Edgecliffe-Johnson, Andrew

World Economic Forum founding Chairman Klaus Schwab has issued a new "Davos manifesto" ahead of January's annual meeting in the Swiss mountain resort. The document unveiled in 1973 stated that "the purpose of professional management is to serve clients, shareholders, workers, and employees, as well as societies, and to harmonize the different interests of the stakeholders." The new document says the purpose of a company "is to engage all its shareholders in shared and sustained value creation." And multinationals must do nothing less than "improve the state of the world." One line may catch the attention of Davos attendees: "executive remuneration should reflect stakeholder responsibility." Meanwhile, a survey of more than 600 investors in the United States, United Kingdom, Canada, Germany, Japan, and the Netherlands by public relations and marketing consultancy Edelman reveals that 84% agreed that companies should balance shareholders' needs with those of their customers, employees, suppliers, and communities. Some 71% of investors said that overemphasizing shareholder returns exposed a company to consumer or employee engagement. More than 60% said they were investing more in companies that excel on ESG standards, 52% said that linking executive pay to ESG targets boosts their trust in a company, and 86% said they would accept lower returns to invest in a company that addressed sustainability or impact investing considerations.

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12/4/2019

Carl Icahn Blasts HP's Decision to Reject Xerox's Acquisition Bid

CNBC (12/04/19) Feiner, Lauren

In an open letter to HP Inc. (HPQ) shareholders on Wednesday, investor Carl Icahn scolded the company's board for rejecting a takeover bid from Xerox Corp. (XRX). Icahn, who owns 10.85% of Xerox's outstanding shares and 4.24% of HP's outstanding shares, urged shareholders to push the board to further explore a possible acquisition by Xerox. HP's stock price rose more than 2% in late morning trading Wednesday. Icahn suggested that HP's executives were motivated by self-preservation in rejecting the takeover bid. HP's board unanimously voted last month to reject Xerox's bid, claiming the offer was not in the best interest of its shareholders and would undervalue the company. In its rejection, HP directors noted that Xerox's declining revenue since June 2018 "raises significant questions for us regarding the trajectory of your business and future prospects." After HP's rejection, Xerox decided to go straight to shareholders with its offer.

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12/4/2019

Carl Icahn Urges HP Shareholders to Reach Out to Board

Reuters (12/04/19) Bera, Ayanti

Carl Icahn on Dec. 4 called for the shareholders of HP Inc. (HPQ) who agree with the merger with Xerox Holdings Corp. (XRX) to reach out to the personal computer maker's directors for swift action. Icahn, who has a 10.85% stake in Xerox and a 4.24% stake in HP, said in a letter that the company's refusal to combine could be a delaying tactic to hold the "lucrative" positions of its executives. "HP shareholders deserve the opportunity to decide for themselves whether a combination with Xerox makes sense before the idea is summarily rejected by HP's board," Icahn said. Xerox on Nov. 5 made a $33.5 billion cash-and-stock offer to HP, which subsequently turned down the offer, saying it was open to exploring its own bid for the printer maker.

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12/4/2019

'Significant Board Changes' Needed at Valaris, Shareholder Says

Seeking Alpha (12/04/19) Surran, Carl

In a letter to shareholders of Valaris (VAL), Luminus Management, which holds an 18.7% stake, says shares could be worth at least four times current levels if the company was "appropriately governed" and should shareholders gain "renewed confidence in [the company's] future direction." According to Luminus, Valaris has underperformed "on both an absolute and relative basis over almost every relevant time period" despite owning "a superior asset base, a robust liquidity profile, and access to secured debt markets." The firm says it is "unfathomable that a company with such a high-quality asset base and abundant liquidity would trade as if a restructuring or default were imminent," and it is calling for a shareholders meeting to seek "significant board changes" to reverse the company's "chronic underperformance."

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12/4/2019

Pershing Square Raises Stake in Howard Hughes Corp.

Reuters (12/04/19) Herbst-Bayliss, Svea

Investor William Ackman's hedge fund Pershing Square Capital Management has raised its stake in real estate company Howard Hughes Corp. (HHC). On Tuesday the investment firm reported that it had increased its stake in Howard Hughes Corp. from 12.6% to 14.8%, which includes 2.2 million shares of common stock and 4.2 million underlying forward purchase contracts. Pershing Square has owned Hughes Corp. shares for years and Ackman chairs the company's board.

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12/4/2019

Hudson's Bay Confident of Approval for Chairman's Buyout Bid

Bloomberg (12/04/19) Rastello, Sandrine

Hudson's Bay Co. (HBC) is optimistic that shareholders will endorse a take-private operation from its chairman, Richard Baker, when it comes to a vote this month. The Dec. 17 vote pits Baker against private-equity firm Catalyst Capital Group Inc., which made a competing offer of C$11 a share for the company, representing a 6.8% premium to the C$10.30 a share that Baker agreed to pay in October. A board special committee led by David Leith has supported Baker and rejected Catalyst's bid in part because Baker and his allies, who own about 57% of shares, have indicated they will not sell. The Baker group's bid to win over the bulk of minority holders could prove challenging with Catalyst holding 17.5% of the common stock. HBC declined for a second day Wednesday, closing well below both offer prices that day and suggesting investor concern that both bids may fail. Leith said he's concerned the complexity of the transaction and barrage of statements between rival bidders has made it hard for retail investors to make up their mind. Catalyst has appealed tot he Ontario Securities Commission to halt the Baker offer, which they say was made with "inadequate and inaccurate" disclosure to shareholders. The regulator has agreed to hold a hearing on the matter Thursday in Toronto.

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12/4/2019

Amherst Is in Talks to Buy Front Yard After Investor Pressure

Bloomberg (12/04/19) Deveau, Scott; Tan, Gillian; Clark, Patrick

Amherst Holdings LLC is in advanced talks to purchase Front Yard Residential Corp. (RESI), a single-family landlord that in May put itself up for sale after settling with investor Snow Park Capital Partners, according to sources. Discussions are ongoing, the sources said. Front Yard began a strategic review in May as part of a settlement with Snow Park Capital Partners. The company also added two new directors as a component of the settlement and said it would weigh selling the business. The company said during a conference call in November that it planned to announce the results of the review "shortly." Front Yard has more than $1.6 billion in debt, and Snow Park said earlier in 2019 that Front Yard's shares were trading at a significant discount to the underlying value of its assets. It also said the company was beset by poor decision making and a lack of urgency to deal with its "existential" problems. Snow Park has since sold out of the stock, according to a September regulatory filing.

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12/4/2019

Microsoft Shareholders Defeat Two Investor Proposals

Associated Press (12/04/19)

Microsoft (MSFT) said on Dec. 4 that shareholders defeated two investor proposals calling for the company to add a rank-and-file employee on its board of directors and report on gender disparities in company salaries. NorthStar Asset Management pushed for getting a non-management employee on the board, citing internal dissent over Microsoft's immigration and military contracts. The company said preliminary vote results showed NorthStar's proposal received less than 5% support. Meanwhile, a separate proposal to require the company to address pay disparity concerns received less than 30% support.

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12/3/2019

AT&T Aims to Cut 4% in Labor Costs Amid Effort to Bolster Financials, CFO Says

Dallas Business Journal (12/03/19) Womack, Brian

AT&T Inc. (T) CFO John Stephens said at an investor conference on Dec. 3 that the company has been seeking ways to curtail spending and is looking to cut about 4% in labor costs. The news follows a three-year plan issued in October amid pressure from Elliott Management Corp., which unveiled a stake in AT&T and called for changes in September. Consolidated revenue growth should be 1% to 2%, and adjusted margin for EBITDA in 2022 should reach 35%, compared to about 33% this year. AT&T indicated that a "companywide cost-reduction plan" will assist in expanding margins. Stephens said former telecommunications executive Bill Morrow is helping with the review. "He's gone out and collected best-in-class comparative data. He's done the analysis from every which way, if you will," Stephens said. Elliott said it supported the new plan.

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12/3/2019

Paul Singer's Elliott Management Adds 4 Stocks to Portfolio in 3rd Quarter

Yahoo! Finance (12/03/19)

Paul Singer's Elliott Management established holdings in AT&T (T), Mobile Mini (MINI), Carbonite (CARB), and Cision (CISN) during the third quarter. As previously reported in September, Singer's firm invested in 3.12 million shares of AT&T, dedicating 0.99% of the equity portfolio to the stake. Elliott picked up 2 million shares of Mobile Mini, allocating 0.62% of the equity portfolio to the stake. The hedge fund holds 4.53% of outstanding shares of the company. Having previously exited a position in Carbonite in the second quarter, Singer's firm entered a new 1.1 million-share stake. Singer holds 3.15% of Carbonite's outstanding shares. The firm purchased 161,300 shares of Cision, expanding the equity portfolio by 0.01. Also during the quarter, Elliott boosted its holdings of Marathon Petroleum (MPC), Vornado Realty Trust (VNO), Peabody Energy (BTU), Dell Technologies (DELL), CommScope (COMM), and Roadrunner Transportation Systems (RRTS).

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12/3/2019

Brexit Disruption 'to Spark Activist Investor Interest' in U.K.

City A.M. (12/03/19) Clark, Jessica; McCarthy, Sebastian

A new report from professional services firm Alvarez & Marsal (A&M) notes that Brexit-related disruption will "lead to greater opportunities for activists in the U.K.," and that "a weakening of sterling could prompt greater interest in buyouts and public-to-private deals." A&M's report showed that 54 U.K. companies are now at risk from activists, rising from 52 in April, though the United Kingdom's dominance is eroding as activism across Continental Europe gathers momentum. The European market for activism is set to grow next year, with 158 countries on the continent braced for activists, rising from 150 in April.

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12/3/2019

Companies Vow to Improve Climate Disclosure After TCI Warning

Financial Times (12/03/19) Hook, Leslie

Companies including Charter Communications (CHTR) and Moody's (MCO) have vowed to improve their environmental disclosures after receiving warning letters from hedge fund TCI. Ten companies—including Airbus (EADSY), Moody's, Safran, and Charter Communications—have received letters from TCI reprimanding them over their climate records and threatening to vote against directors if they do not improve. Moody's pledged to improve after it was criticized for receiving a "D grade" in its emissions rating from CDP, a non-profit climate assessment group. TCI, which holds a 3% stake in Moody's, called this score "untenable." Charter Communications, in which TCI holds a 4.2% stake, was also quick to respond to the campaign. Several companies including Airbus said they were still preparing their response. The developments come as carbon emissions disclosures are becoming a higher priority for many fund managers. The number of companies that disclosed their emissions to the CDP rose by a fifth in 2019 compared with the previous year, and more than 500 institutional investors refer to the CDP database when making investment decisions. Only 2.2% of companies that disclosed their emissions to CDP received an "A grade" last year, the level that TCI considers acceptable.

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12/3/2019

Crystal Amber Bets on Britain's De La Rue

Reuters (12/03/19) Hussain, Noor Zainab

Crystal Amber on Dec. 3 disclosed a stake of 14.33% as of Nov. 29, up from a previous stake of 7.12%, making the fund De La Rue's largest investor. Just days ago the banknote printer warned of "significant doubt" that it can continue as a going concern and said it would scuttle its dividend to address increasing debt. De La Rue also announced a first-half loss last week as it faces strong competition, but Crystal Amber said at the time that it was "not alarmed" by the poor results and would purchase additional shares. The fund also said it was "very encouraged" by De La Rue's new chief executive, Clive Vacher, who assumed the top job in October.

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12/3/2019

E.l.f. Beauty Shares Under Pressure as Marathon Partners Urges Company to Sell Itself

MarketWatch (12/03/19) Linnane, Ciara

Shares of E.l.f. Beauty Inc. (ELF) slipped 1.4% in premarket trade Dec. 3, after investment company Marathon Partners urged the low-cost cosmetics company to consider all of its strategic options. Among the options is a possible sale of the company. Marathon owns a 7.8% ownership interest in E.l.f. In a letter to the company's board of directors, Marathon said it believes the company is worth $22 to $27 a share to strategic buyers and contended that it would be "highly challenging" for the company to exceed the midpoint of that range if it stays independent. Marathon went on to criticize the company for its "excessive" executive compensation, along with its corporate governance lapses.

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12/3/2019

Netherlands to Force Companies to Have More Women on Boards

Reuters (12/03/19)

The Dutch parliament on Dec. 3 voted to require companies listed in the Netherlands to have at least 30% of supervisory board seats held by women. The motion to introduce the requirement passed by 87 votes to 63. Companies that do not already meet the minimum threshold will have to replace any man leaving the board with a woman, or leave the position empty. The motion further required that 5,000 other large companies draw up detailed plans to increase the number of women on their supervisory and executive boards. In 2013, the Dutch government said 30% of all supervisory board seats should be held by women, but did not introduce any consequences for companies failing to meet that mark. Currently, less than 10% of Dutch listed companies meet the target for both their executive and supervisory board, while only a third have enough female supervisory board members to meet the new requirement.

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12/3/2019

Icahn Urges HP to Move Forward With Xerox Merger Discussions

Bloomberg (12/03/19) Deveau, Scott

Carl Icahn is urging HP Inc. (HPQ) to continue takeover talks with Xerox Holdings Corp. (XRX), arguing that HP's standalone plans amount "to little more than rearranging the deck chairs on the Titanic." Icahn is the largest shareholder in Xerox with a nearly 11% stake, and he also owns a 4.2% stake in HP, making him its fifth-largest holder. In a letter to fellow HP shareholders, Icahn said a tie-up between the companies could yield more than $2 billion in synergies. Last month HP rejected an unsolicited cash-and-stock offer from Xerox worth about $33 billion. Icahn said he was perplexed by HP's refusal to grant Xerox mutual due diligence to explore a takeover. He urged his fellow shareholders to let HP's directors know that immediate action is needed to explore this opportunity. HP has argued the proposal undervalues the company and raised concerns about Xerox's ability to raise the necessary capital, as well as its debt load. HP's shares, which have fallen more than 18% in the past year, closed down 1% on Tuesday.

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12/3/2019

Third Point Posts Strong November Gain

Institutional Investor (12/03/19) Taub, Steve

Dan Loeb's Third Point Offshore Fund posted a strong 3% gain for November, boosting its net return for this year to 14.6%, though it still lags the 27.6% surge in the S&P 500. Third Point's November report revealed much more data than the firm had been sharing with investors, drilling further into its equity book to reveal a 2% gross return from equities driven by a 4% gain in the long book and offset by a 2% loss in the short book. Third Point said its activism positions produced a 1.4% return while "fundamental and event" driven bets kicked in a 0.8% gain. Activism accounted for 15.3 percentage points of the fund's 16.4% gross return, and the firm reported a 0.87% gross gain from its credit book. Private investments kicked in a strong 0.6% gain for the month and 1.4% for the year. Baxter International (BAX) and Sony Corp. (SNE) were among Third Point's five biggest winners in November and for the year; the other biggest winners for the year were managed care company Centene (CNC), retailer Burlington Stores (BURL), and embattled utility Pacific Gas & Electric Co (PCG). Third Point's equity book is nearly 60% net long, up from 39% the previous month. Healthcare and financial stocks together represent roughly half of Third Point's net long exposure, and its top gross longs are Sony, Baxter, Nestle (NSRGY), United Technologies (UTX), and EssilorLuxottica (ESLOY).

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12/2/2019

Corporations Are Agreeing More to CalPERS Diversity Demands

Chief Investment Officer (12/02/19)

Fifty-three percent of the 682 companies engaged by the California Public Employees' Retirement System (CalPERS) in the 2019 proxy season added at least one diverse member to their boards of directors. The pension plan voted against 225 directors at 97 companies in the 2018 proxy season, more than twice the number of board directors as it voted against in 2019. Simiso Nzima, CalPERS corporate governance director, said CalPERS will continue to engage companies regarding board diversity until the new proxy season starts next year. CalPERS did not disclose whether board directors are re-elected even if CalPERS casts a no vote. Some critics have charged that the pension plan has overstepped its bounds in corporate engagement, a charge that pension system officials reject. CalPERS Chief Investment Officer Ben Meng acknowledged at a Nov. 18 meeting that CalPERS does not currently have academic evidence that taking into account environmental and social concerns in engaging corporations leads to better investment returns. He said the pension system continues to research this. However, in corporate governance issues such as board diversity, he said the pension plan is on solid footing with academic evidence backing up CalPERS.

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12/2/2019

Punish Directors Who Don't Make Climate Disclosures, Says Hedge Fund

The Guardian (12/02/19) Kollewe, Julia

Hedge fund TCI plans to engage directors of companies that fail to disclose their carbon emissions. TCI, which manages assets worth $28 billion, has written to companies including Airbus (EADSY), Moody's (MCO), and Alphabet (GOOGL) warning them it would vote against their directors if they do not improve their pollution disclosures. The hedge fund also warned it would vote against auditors where the annual report and accounts failed to report material climate risks, and it threatened to dump investments where a "portfolio company refuses to disclose emissions and does not have a credible plan for their reduction." TCI’s move comes as the world’s governments meet in Madrid this week for the UN climate summit, and as the UN appointed the Bank of England governor, Mark Carney, who steps down in January, as its special envoy for climate action and finance from February. A new report shows that 46% of U.K. boards spent zero hours discussing the climate emergency this year, and they were the least likely of all the countries studied to do so. Moreover, a recent survey by Harvey Nash and London Business School finds that 32% of U.K. boards feel little or no responsibility for the climate crisis.

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12/2/2019

TCI Hedge Fund Does More on Climate Action Than ESG Funds

Financial Times (12/02/19) Vincent, Matthew

Hedge fund TCI has vowed to punish company directors that do not address climate change. This is remarkable because a hedge fund has been able to do what most specialist environmental funds do not attempt, which is remaining a shareholder to bring about change from within. TCI will vote against company directors if they fail to disclose their carbon dioxide emission and reduction targets. As asset manager Sarasin & Partners recently noted, directors of the world's biggest fossil fuel groups were reappointed with an average 97% investor support. Conventional fund managers do not vote for change, because their investors do not demand it, their quarterly returns do not depend on it, or their notion of "fiduciary duty" does not extend to it. Managers of so-called environmental, social, and governance (ESG) funds do vote for change, but only by divesting from high-emission companies or buying shares in companies trying to tackle climate change. In doing so, those ESG firms are preaching to and investing in the converted. TCI argues that those engaging with steel and oil groups have failed to wield their power as owners, because their championing of ESG concerns has not been matched by support for climate-related shareholder resolutions. By contrast, TCI's threat to vote against directors already appears to be having an effect, as, for example, Charter Communications (CHTR) looks set to follow TCI's disclosure demands in its first emissions report, despite TCI being only a 4.7% shareholder.

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12/2/2019

Tribune Publishing Adds Two Board Seats for Alden; Hedge Fund's Stake Capped at 33% Until End of June

Chicago Tribune (12/02/19) Channick, Robert

Hedge fund Alden Global Capital, which recently became the biggest shareholder in Tribune Publishing (TPCO), has added two representatives to the newspaper company's board of directors, while agreeing to cap its ownership interest at 33% through June. Tribune Publishing announced the appointment of Dana Goldsmith Needleman and Christopher Minnetian late Monday, expanding the board from a half-dozen to eight members. Needleman and Minnetian are top executives with funds affiliated with Alden Global Capital. Alden also agreed it would not launch a proxy battle or form a group with other shareholders to "seek to control or knowingly influence the management, board, or policies of the company," according to a Dec. 1 filing with the Securities and Exchange Commission. However, the standstill agreement would be terminated if another investor with at least a 15% stake purchases an additional 5% of the company's outstanding shares, or seeks to control the company.

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12/2/2019

Ferguson First-Quarter Profit Rises as U.S. Residential Activity Picks Up

Reuters (12/02/19) Shabong, Yadarisa

Plumbing parts distributor Ferguson Plc (FERG) has reported a 5% rise in first-quarter profit, boosted by improved residential housing activity in the United States, and said it was on track to split off its U.K. business, for which organic revenue dropped 4.2% due to uncertainty in the repair, maintenance, and improvement markets. Nelson Peltz's Trian Fund Management LP disclosed a 6% stake in the company in June. Adjusted group profit excluding U.K. operations rose to $433 million from $413 million last year in the three months ended Oct. 31. However, the firm also said its U.S. gross margins were slightly lower in the quarter, blaming tough comparisons from last year. In September, Ferguson named a new CEO and said it would separate the U.K. operations in a bid to focus on its larger market in the United States.

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12/1/2019

Crystal Amber to Double Stake in Banknote Maker De La Rue

Financial Times (12/01/19) Thomas, Daniel; Pooley, Cat Rutter

Investor Crystal Amber has built a nearly 14% stake in De La Rue (DELRF), up from its previously disclosed 7% position, making it one of the struggling banknote maker's biggest investors. Shares in De La Rue plummeted to an all-time low last week after the company warned that that there was "material uncertainty" over its future as it swung to a £12 million loss. The company warned on profits twice this year before last week's announcement as it suffers from falling earnings and rising debt. One source says that Crystal Amber has held discussions with the company's new management over the past week, being met with approval for a “common sense” approach to fixing the problems facing the company. Crystal Amber chief Richard Bernstein had been highly critical of the company's previous management, many of whom have since left the company, since building a stake in 2017. De La Rue's latest struggles have been caused by the breakdown of a lucrative contract printing banknotes for Venezuela, which has been unable to pay banknote suppliers despite needing a high volume due to hyperinflation. The company is also facing a Serious Fraud Office investigation into possible corruption in South Sudan, where it won the contract to print the country's banknotes. De La Rue has said it is too early to put an estimate on any potential liabilities arising from the investigation.

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11/29/2019

Icahn Is Said to Push Ahead With Bid to Control Occidental Board

Bloomberg (11/29/19) Deveau, Scott

Carl Icahn has advanced his effort to replace Occidental Petroleum Corp.'s (OXY) entire board by submitting nominations for as many as 14 directors. Icahn, who owns a $1 billion stake in the company, aims to replace all 10 members of the current board and fill new seats that might be created under Occidental's bylaws. The investor has been vocally critical of Occidental's $37 billion takeover of Anadarko Petroleum Corp., attacking the lack of a shareholder vote and pricey $10 billion financing the company obtained from Warren Buffett to get the deal done. In a Nov. 8 letter explaining his decision to launch a proxy fight, Icahn said the merger made "no sense" to anyone other than CEO Vicki Hollub and certain board members, who he said "grossly overpaid" for Anadarko to avoid becoming a takeover target themselves. Icahn has argued Occidental should launch a strategic review, including a potential sale of the combined company, once the Anadarko deal is completed. Occidental's stock has slumped 43% since it first bid for Anadarko in April, and the company is the fifth-worst performer in the S&P 500 index this year. The company plans to cut spending by 40% next year and accelerate asset sales in order to pay down debt and protect its dividend, and earlier this month it said it's on track to exceed the upper end of its asset plan by the middle of 2020.

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11/29/2019

Toshiba, Once a Hedge Fund Target, Seeks to Become One

Nikkei Asian Review (11/29/19) Yamashita, Akira

Toshiba (TOSBF) plans to launch a high frequency trading business. The move comes two years after investors engaged the Japanese conglomerate on restructuring its operations following a controversial corporate saga. Toshiba welcomed global hedge funds onto its shareholder register in 2017 after dozens of them participated in a $5.4 billion emergency rights issue. The company has outperformed the wider market since then, with its shares gaining by a fifth. Toshiba has developed an ultrahigh speed machine that uses quantum computing and a proprietary algorithm to find arbitrage opportunities in foreign exchange trading. The company is seeking to obtain a license to operate a hedge fund. Toshiba plans to launch a trial using its own funds and eventually wants to sell the technology to financial institutions. Banks have shown strong interest in the project.

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11/27/2019

Elliott Calls Capgemini's $4 Billion Altran Bid Too Low

Bloomberg (11/27/19) Thomson, Amy

Elliott Management Corp., which has a stake of more than 10% in Altran Technologies SA (ALTKY), says Capgemini's offer for Altran is insufficient and that the sales process is flawed. The investor says a fair value for the company is more than 20 euros per share, based on analysts' estimates for the company’s future earnings, it said Nov. 27 in a statement. The investor had said previously in a filing that Capgemini's current offer of 14 euros per share undervalues the company. "Altran shareholders are offered an inadequate premium to forgo the company's promising standalone prospects, despite the huge value-creation potential of the combination," Elliott said in the statement. Capgemini's incoming CEO Aiman Ezzat said earlier this month that the company's bid for Altran won't be increased. The transaction was supposed to close in 2019, but has likely been delayed until next year after a shareholder lobby raised objections in a French court. A spokesperson for Altran said that the company has been in touch with Elliott and is aware of its concerns. The deal announced in June mandates that 50.1% of Altran shares be tendered for the transaction to go forward. Under French law, Capgemini would need 90% of shares to squeeze out the minority shareholders, making Elliott boosting its stake to more than 10% a crucial consideration.

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11/27/2019

Vodafone Wins German Court Backing in Price Fight With Elliott

Bloomberg (11/27/19) Loh, Tim; Matussek, Karin

Vodafone Group Plc (VOD) won support from a German court for the price it paid for Kabel Deutschland Holding AG, dealing a blow to investor Elliott Management Corp.'s effort to glean a larger payout. The 84.53 euros ($93) a share Vodafone paid to Kabel Deutschland's shareholders as a component of the 2013 acquisition is "adequate," a court in Munich ruled on Nov. 27; the payout also includes an annual top up. Elliott has attempted to get a higher offer from Vodafone, which agreed to purchase Kabel Deutschland six years ago. Elliott refused to tender its 13.5% stake, and requested that the court require new audits of the deal in 2015. The court in 2016 granted Elliott's request to review the actions of Kabel Deutschland's board during the negotiations. Vodafone owns approximately 75% of Kabel Deutschland, with Elliott and other investors still owning stakes. German law permits investors to decline to sell during a takeover attempt and request higher compensation, leaving a court to assess the stock's value.

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11/27/2019

Catalyst Capital Group Makes Rival Takeover Offer for Hudson's Bay Co.; Land & Buildings Expresses Interest

Canadian Press (11/27/19)

Investment firm Catalyst Capital Group Inc. is making a competing takeover offer for Hudson's Bay Co. (HBAYF). Catalyst Capital, which has approximately a 17.5% stake in Hudson's Bay, is offering $11 a share in cash, besting an offer of $10.30 made by a group of investors led by Hudson's executive chairman Richard Baker. Investor Land & Buildings has voiced interest in the new proposal. Catalyst announced in October that it and other minority shareholders that together control a 28.24% stake of the company's common shares intend to vote in opposition to the offer by the Baker-led group. Baker's offer, which is subject to court and regulatory approvals, must obtain the support of a majority of Hudson's shareholders, excluding the shareholders behind the bid and their affiliates, as well as approval by a 75% majority vote at a special meeting of shareholders that HBC intends to hold in December. Catalyst's offer is better in terms of both value and treatment of shareholders and can be finalized in a timely manner, said Gabriel de Alba, managing director and partner of Catalyst. "Catalyst is committed to taking the necessary steps to ensure that its superior offer is evaluated on its merits and that the board is able to liberate itself from the coercive influence of Richard Baker and act for us all," de Alba said in a statement. "We continue to believe that the offer from the Richard Baker Group woefully undervalues Hudson's Bay and its real estate," said Land & Buildings founder Jonathan Litt in a statement. "Land & Buildings is interested in financially participating in this transaction with Catalyst should it move forward."

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11/27/2019

Scout24 Is Exploring Sale or Separation of Auto Platform

Bloomberg (11/27/19)

Scout24 AG says it plans to sell or separate its auto-trading operation, after facing months of pressure from investor Elliott Management Corp. The process is ongoing, said CEO Tobias Hartmann. Elliott's Paul Singer has been calling for the German online classified company to split in two to improve its focus on its real estate operation. In a letter in early August, Singer said a €300 million share buyback plan announced at the time was "grossly lacking in ambition." German online used-car platform Auto1 Group GmbH has teamed up with private-equity firm Hellman & Friedman LLC to bid for the auto-trading unit, Bloomberg News earlier reported. The two are competing with buyout suitors including Permira and Apax Partners. First-round bids valued AutoScout24 at more than €2 billion. Scout24 said it expects revenue to grow between 8% and 11% in 2020. But some analysts have recently cautioned that revenues could come under pressure next year, when a new real estate agent law goes into effect. The rule "is not a long-term concern anymore (as we have been arguing for a while), but it might impact short-term property trading and hence, agent budgets negatively in the next months," said JPMorgan Chase (JPM) analysts in a recent note.

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11/27/2019

In Oil and Gas, Activist Investors Lose Steam

Forbes (11/27/19) Trela, Nate; Askren, Hana; Segal, Philip

Steady but low oil and gas prices in North America have led to slower energy M&A and activist investors are finding that when deals do happen, they are often low premium, all-stock deals that blunt shareholder returns. In the energy deal landscape, bidders are basing offers on current commodity prices but sellers want more optimistic valuations. As a result, companies are settling on equity-heavy terms that require investors to be more patient because they are unlikely to be realized in the next few quarters. The average premium for the three all-equity oil and gas deals this year was 10.8% compared to an average premium of 28.6% from 2013 to 2018. The broad lack of activity has put a damper on activists' favored demands, such as major divestitures and company sales. For example, Elliott Management had to adjust its bid for QEP Resources (QEP) several times this year before finally settling in August, with QEP staying independent while working with Elliott on realigning its board composition. In other cases, companies had already unsuccessfully explored strategic options before investors demanded them, as was the case of Saltstone Capital at Abraxas Petroleum (AXAS). There have also been cases where activists' goals aligned with the companies' strategy but not their timetables.

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11/26/2019

An Investor Tries to Oust a Trump Confidant

New York Times (11/26/19)

Blackwells Capital is pressuring Colony Capital (CLNY) CEO Tom Barrack, chairman of President Donald Trump's inaugural committee, to resign. "With Mr. Barrack's track record and personal issues, no reasonable, fiduciarily-aware public company Board of Directors would select Mr. Barrack as CEO of Colony or any other public company today," wrote Blackwells Capital in a letter to Colony. "Mr. Barrack is undoubtedly distracted by at least two Congressional investigations and at least one reported criminal investigation into his political and personal activities, including as Chairman of the Inaugural Committee for President Trump and as a man who sought a special role within the Trump administration." According to the investment firm, Barrack "destroyed more than $775 million in just nine months." Blackwells, which owns 1.85% of Colony, is seeking to oust Barrack, replace two board members, and push Colony to sell assets and repurchase shares. Although Barrack has announced plans for Marc Ganzi to succeed him in 2021, Blackwells says that is not fast enough and noted that Ganzi is a personal friend of Barrack's.

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11/26/2019

Xerox Says It Will Take HP Buyout Offer Hostile by Going Directly to Shareholders

CNBC (11/26/19) Feuer, William; Newburger, Emma; Feiner, Lauren

In a Nov. 26 letter to HP (HPQ), Xerox (XRX) CEO John Visentin announced plans to take its $33.5 billion buyout directly to shareholders. Visentin wrote, "While you may not appreciate our 'aggressive' tactics, we will not apologize for them. The most efficient way to prove out the scope of this opportunity with certainty is through mutual due diligence, which you continue to refuse, and we are obligated to require. We plan to engage directly with HP shareholders to solicit their support in urging the HP Board to do the right thing and pursue this compelling opportunity." He added, "The potential benefits of a combination between HP and Xerox are self-evident. Together, we could create an industry leader—with enhanced scale and best-in-class offerings across a complete product portfolio—that will be positioned to invest more in innovation and generate greater returns for shareholders." Carl Icahn, who owns a 10.6% stake in Xerox and recently bought a $1.2 billion stake in HP, has pushed for a merger.

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11/26/2019

Crystal Amber to Buy More De La Rue Shares

Reuters (11/26/19) Aripaka, Pushkala

Crystal Amber said on Nov. 26 that it was "not alarmed" by De La Rue's (DELRF) weak first-half results and would purchase more shares of the British banknotes and passport printer. De La Rue warned of "significant doubt" that it can continue as a going concern and reported a first-half loss as it contends with stiff competition. "We think today's news is really reflecting the mismanagement in the past...so we are not alarmed and are buying more shares," said Richard Bernstein of Crystal Amber, the company's second-biggest shareholder with a stake of just over 7%. Bernstein said the fund was "very encouraged" by new CEO Clive Vacher, who assumed the top spot in October and has been tasked with turning around the company and reducing its debt burden. Crystal Amber said in September that De La Rue suffered from a lack of strong and knowledgeable leadership, and last year said the company was "highly vulnerable" to a takeover.

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11/26/2019

Voce Calls for New Directors on Argo Board

Royal Gazette (Bermuda) (11/26/19) Kent, Jonathan

Voce Capital Management is pushing for five new independent directors to replace incumbents on the board of Argo Group (ARGO), saying the governance situation at the Bermudian re/insurer has "significantly deteriorated" since its annual meeting this year. The hedge fund cited an investigation by the U.S. Securities and Exchange Commission into executive compensation and subsequent ratings agency actions. Voce, which owns about 5.8% of Argo, also criticized the "lucrative package" given to former CEO Mark Watson on his "sudden retirement" this month. The hedge fund said it has launched a process to call a special meeting of shareholders as it seeks support for the replacement of directors. It has been fighting a proxy battle with Argo since February, when it accused the company of having a "spendthrift culture" and misdirecting corporate assets to support Watson's "lifestyle and hobbies." Voce said in a statement, "There are crucial leadership, governance, and strategic choices which are being made in real time and will have lasting and potentially irreversible effects once rendered." It is calling for the replacement of five of Argo's existing board members with "highly qualified, fully independent directors." Voce said, "Once we file our definitive consent solicitation statement, we will simply be asking shareholders to consent to the calling of a special meeting, which is permitted by Argo's bylaws and will require the concurrence of holders of at least 10% of Argo's common stock. Consents at this stage will not determine if any Argo directors are removed or replaced, only whether a shareholder meeting to consider and vote on such proposals will occur."

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11/25/2019

Japan and Australia to Boost Asia M&A Activity in 2020, UFP Says

Bloomberg (11/25/19) Vishnoi, Abhishek; Guo, Lynn

United First Partners expects an increase in mergers and acquisitions in Asia next year due to rising shareholder activism in Japan and a weakening local currency in Australia. The investment and advisory group noted that companies with high cash or cross-shareholdings will face more scrutiny from activist investors in Japan while Australian companies will attract more interest from foreigners. Shareholder activism has been on the rise in Japan since Prime Minister Shinzo Abe implemented a stewardship code for investors in 2014 and a corporate governance code in 2015. According to data compiled by Bloomberg, 1,591 deals with listed companies as engagement candidates have been announced this year in Asia, with Japan and Australia accounting for 241 and 100 deals, respectively.

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11/25/2019

Starboard Takes Stake in CVS

Wall Street Journal (11/25/19) Driebusch, Corrie

Investor Starboard Value LP has taken an ownership interest in CVS Health Corp. (CVS) and has held discussions with the drugstore-and-insurance giant's corporate management. The stake appears to be relatively small, according to the sources, while the talks held recently have been "amicable." What is not known as of press time is exactly how much Starboard currently owns and what specifically it has discussed with the company. But Starboard's presence in a stock usually causes a company to pay attention. Indeed, Starboard has a history of ushering in change at companies ranging from Darden Restaurants Inc. (DRI) to eBay Inc. (EBAY). CVS shares have been fluctuating since the company purchased health insurer Aetna Inc. (AET) for approximately $70 billion nearly a year ago. The stock declined significantly after CVS in February issued a downbeat earnings projection for the year due to challenges in its pharmacy-benefits and long-term-care units. The shares eventually rebounded as the company reported a series of unexpectedly robust financial results, and research analysts have taken a more favorable view. But some investors have privately voiced frustration about increasing costs from the company's Omnicare nursing-home pharmacy operation, the lack of a clear plan for a successor to CEO Larry Merlo, and the big size of its 16-member board, which is a legacy of the Aetna purchase.

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11/25/2019

Investor Presses Valaris for Broader Changes, Plans on Special Meeting

Reuters (11/25/19) Herbst-Bayliss, Svea; Osterman, Cynthia

Hedge fund Luminus Management has said it plans to call a special shareholder meeting at Valaris PLC (VAL) and press for broader improvements at the offshore contract drilling services company. Valaris' stock surged 12% after Luminus called on the company to improve operations, refresh the board, and shore up governance. The fund also wants management to "take a holistic and balanced approach to managing its capital structure, with a specific focus on ensuring liquidity, pushing out debt maturities, and effectively monetizing debt discounts." Luminus now owns 18.7% of Valaris, up from 4.5% a few months ago, and has enough shares to meet the threshold to call a special meeting. Its recent demands are far broader than its earlier requests when it had pushed for changes to the company's balance sheet, including a push to sell bonds in order to pay out a $2.5 billion special dividend. Luminus and Valaris management had agreed to a standstill wherein Valaris undertook an additional $100 million in cost cuts and shook up its board, in exchange for Luminus not buying more shares. The agreement expired in late October when the company rejected the hedge fund's settlement proposal. Some restrictions still remain, and the hedge fund is not permitted to own an economic stake of 20% or more. Luminus, which invests more than $2.5 billion for clients in energy and power investments, has delivered an average return of 11.8% a year since its launch in 2002.

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11/25/2019

Investor Takes Step Back From Nashville Lender

Nashville Business Journal (11/25/19) Garner, Meg

Investor Gaylon Lawrence Jr. is cooling off on CapStar Bank (CSTR). Last year, federal regulators gave Lawrence a one-year window to buy up to 15% of the lender's outstanding stock. Since then Lawrence has not bought additional shares and a recent Securities and Exchange Commission filing indicates that he does not intend to resolicit permission to cross the 10% threshold. This marks a sharp turn in the relationship between Lawrence and CapStar, of which he owns 6.3%. Lawrence first applied to buy more shares in October 2017, days after CapStar sued him for mounting an alleged "creeping takeover." Lawrence has repeatedly denied CapStar's allegations and continues to fight them in court. Prior to the litigation, Lawrence had grown his holdings by 66% within a roughly nine-week period. Earlier this year, CapStar officials blocked Lawrence's attempt to nominate himself and Jason West, who oversees Lawrence's non-agricultural assets, to the bank's board of directors. Two months later, CapStar announced Timothy Schools as its new president and CEO, replacing longtime leader Claire Tucker, who now serves as chief executive officer emerita. In September, the bank announced its private-equity investor, Corsair Investments LP, was selling its stake in the bank, making Lawrence its largest investor.

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12/6/2019

More Women on Singapore Boards but Diversity Still Lacking

Nikkei Asian Review (12/06/19)

Listed companies in Singapore continue to look to the old boys' network when it comes to finding independent directors. Some 98% of companies rely on personal contacts of board members and management to identify potential independent directors, according to a recent survey by the government-backed Singapore Institute of Directors (SIDS) and Singapore Exchange Regulation. Corporate observers in Singapore say this can have negative consequences, leaving boards short of experience with regard to emerging trends such as sustainability. Women now account for 15.7% of directors in Singapore's 100 largest listed companies, up a half percentage point from a year ago, according to the Council for Board Diversity. The SIDS survey also reveals that 43% of companies have independent directors with tenures exceeding nine years and are less independent than they ought to be. Governance experts have called for regular rotation of members to avoid conflicts of interest and to allow for the addition of directors who have new ideas and perspectives.

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12/5/2019

Shared Investors Make HP-Xerox Deal 'More Likely'

CRN (12/05/19) Johnson, O'Ryan

Thomas J. Chemmanur, a professor of finance at the Carroll School of Management, Boston College, told CRN that shared investors make a deal between HP (HPQ) and Xerox (XRX) more likely. Five of the top 10 investors in HP—The Vanguard Group, State Street, BlackRock (BLK), Icahn Associates, and Geode Capital—own a combined 23% of HP with $6.08 billion invested, and the same group owns 31.86% of Xerox. Icahn and Xerox expect to achieve $2 billion in synergies through a merger, but HP was skeptical of that in a Nov. 24 letter to Xerox. Though talks between the two companies have been ongoing since August, HP has pushed back against Xerox’s offer of $22 a share, saying it can grow without a merger. Icahn has called on shareholders to demand "immediate action" from HP's board, outlining what he sees as the benefits of a merger that he calls an "obvious no-brainer."

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12/5/2019

Who Says You Can't Trust ESG Data? One of the Biggest Names in ESG.

Institutional Investor (12/05/19) Segal, Julie

A new white paper published by Generation Investment Management indicates that although the sheer volume of data available tracking companies' environmental, social, and governance (ESG) standings has exploded in recent years, the ESG conclusions that can be drawn from the information are still limited. "The risk is that it puts the spotlight on what is available, rather than what is most important," said the paper. Felix Preston, the firm's director of research, said in an interview, "We need better data that connects with the scale and urgency of the problems we face." Generation said organizations want data that can be easily used to screen companies. "We believe that bridging the gap between the value of rich contextual information and the need to 'plug values into the spreadsheet' is where ESG data needs to go," according to the paper. While vendors are collecting data on environmental and social risks in supply chains and breaches of environmental regulations and allegations of corruption, among other things, Generation argues that the information is spotty and does not indicate whether a company is changing or what is on management's mind. "Last year's greenhouse gas emissions data for a company's operations is a commonly used metric. A more complete picture of how the company is doing would depend on understanding its supply chains, interactions with customers, opportunities to innovate and more," the paper said. Preston noted that the kind of contextual information that Generation's investment teams discuss and implement in their processes is broadly available. "Start weaving [that] into mainstream data," he said. "At the moment in the ESG world, it seems like [machine learning] is focused on filling gaps and standardizing. But it could be used to bring in all this rich context that would be beneficial and better reflect sustainability risks and opportunities that companies face."

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12/5/2019

The Ackman Surge Continues

Institutional Investor (12/05/19) Celarier, Michelle

Bill Ackman's Pershing Square Capital is on the way to having its best year ever, with its publicly traded fund, Pershing Square Holdings (PSHZF), gaining 3.2% last month. That brings its year-to-date gain to 51.3%, or close to double the return of the S&P 500, which has gained 27.6% this year. However, the past few months have been rocky for most hedge fund managers, and even Ackman's gains are slightly less than the 54.5% posted at the end of September. Ackman told Pershing Square investors last month that he had a new investment that he was still building and would likely announce next quarter, and if unveiled before the end of the year, it could give a final boost to the fund's performance. All the holdings in Pershing Square's concentrated portfolio have shown gains this year, but the big winner is Chipotle Mexican Grill (CMG), which is up nearly 90% on the year. Meanwhile, shares of both Fannie Mae (FNMA) and Freddie Mac (FMCC) have provided outsize gains this year, with both up around 150% on the year.

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12/5/2019

Climate Change Has Made ESG a Force in Investing

The Economist (12/05/19)

Environmental, social, and governance (ESG) standards are becoming ever more important in the world of investing and capital markets, because at least $3 trillion of institutional assets now track ESG scores and the share is quickly rising. In America and Europe, some regulators, companies, and investors want to move away from measuring corporate performance based mainly on shareholder returns. Such calls are fueling demand for ESG ratings, which create a single score from disparate non-financial indicators, such as a firm's carbon emissions or its board diversity. However, these ratings are not yet ready for the weight they are being asked to bear. The most obvious sign of this is that—unlike credit ratings—ESG scores are not well-correlated with each other, frequently disagreeing about which companies are good or bad. Moreover, ratings are often based on business models rather than businesses themselves, meaning that it does not matter what firms sell as long as it is done sustainably. Tobacco and alcohol companies feature near the top of many ESG rankings, and many funds marketed on their green credentials invest in fossil fuels. The scoring systems sometimes measure the wrong things and rely on patchy figures, because only half the 1,700-odd companies in the MSCI world index reveal their carbon emissions, and penalizing non-disclosure can lead to strange results. Bigger firms tend to get better ESG scores because they are able to afford better disclosure. Even when figures are disclosed, they may be too out-of-date to be useful. ESG data have the potential to hold bosses and fund managers truly accountable, but right now the ESG rating industry is in its infancy.

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12/4/2019

Hedge Fund Activists Are 'Shepherds, Not Wolves'

City A.M. (12/04/19) McCarthy, Sebastian

According to a study led by Durham University Business School, activist hedge funds should be identified as "shepherds and not wolves." The study—which looked at a comprehensive dataset of 358 U.S. divestitures initiated by shareholder activists from 1994 to 2016—says there is no evidence of hedge fund activists being corporate raiders, and they actually are the only type of activists that have a positive long-term impact on businesses. Researchers say hedge fund activists often are mistakenly associated with mergers and acquisitions, "which focus on the short-term and ignore the long-term game." Professor Michael Guo notes, "Hedge fund activists had always been depicted as big, bad wolves who come into firms, asset strip them, and sell them for profits to fill their own pockets, but our research shows that this is not actually the case. In fact, these activists have the ability to streamline firm practices, make organizations much more efficient, and sell off any dead wood in the organization, thus creating a positive turnover for the company." He adds that the research proved "these activists are able to give an external, expert opinion on which parts of the business are performing well, fit for purpose and worth investing in still, whilst also identifying problem areas for the firm, and implementing a resolution to these."

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12/4/2019

Carl Icahn Just Needs Any Xerox-HP Deal

Seeking Alpha (12/04/19)

Billionaire investor Carl Icahn will become richer if HP (HPQ) and Xerox (XRX) merge, because he owns shares in both companies. Who buys whom and how will determine exactly how much he makes, but even if Xerox's $33 billion bid for HP is replaced by a deal that's the other way around, Icahn and the companies' other shareholders will do just about as well. Xerox believes it can cut $2 billion of overlapping annual costs, which taxed and capitalized on a multiple of 10 should create around $16 billion of new value. Add that to their combined market capitalizations before talks were first leaked, and the deal is worth a little over $50 billion. Assuming HP offered the same 20% premium it rejected from Xerox, all in stock, it would end up with almost 75% of the merged company. Both sets of shareholders would benefit from the cost savings, but without the debt needed to fund the $25 billion cash payout in Xerox's offer. Regardless of which way the deal goes, Icahn's 11% stake in Xerox and 4% in HP should be worth about 50% more combined after a merger. Under these assumptions, every Xerox shareholder potentially could be about two-thirds better off and HP investors could gain close to 40%, whichever way the deal happens.

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12/4/2019

Hedge Fund Boss Pays Himself £200 Million Despite Fund's Profits Falling

The Guardian (United Kingdom) (12/04/19) Neate, Rupert

Billionaire hedge fund manager Sir Chris Hohn paid himself £200 million last year, which is just slightly more than his Children's Investment (TCI) fund made in profit. Hohn collected $261 million (£200 million) in dividend payments in 2018 from TCI. The pay is less than the $274 million he collected in 2017 and the $364 million he paid himself in 2016, but it amounts to £548,000 per day and is 1,333 times that collected by the prime minister. One of the more generous U.K. philanthropists, Hohn gave away $232 million (£177 million) last year through his personal charity, the Children's Investment Fund Foundation. This week, he announced plans to engage directors of companies that fail to disclose their carbon emissions. Hohn has written to companies such as Airbus (EADSY), Moody's (MCO), and Google parent Alphabet (GOOGL) warning them to improve their pollution disclosures or his fund would vote against reappointing their directors. "TCI believes that climate change-related risks, in particular a company's greenhouse gas emissions, will have a material effect on a company's long-term profitability, sustainability, and investor returns," said the letters. "These risks include regulation, taxation, competitive disadvantage, brand impairment, financing, physical asset impairment, and litigation."

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12/4/2019

Major Institutional Investors Say Zuckerberg's 'Totalitarian Grip' on Facebook Must End

Chief Investment Officer (12/04/19) Navedo-Perez, Steffan

A group of major institutional investors is pressuring Facebook (FB) to appoint an independent board chair, a position currently held by CEO Mark Zuckerberg. New York City Comptroller Scott M. Stringer, a member of the group, says, "There is no check-and-balance at Facebook without an independent board chair—and Mark Zuckerberg's totalitarian grip as both CEO and Board Chair must end. Facebook's unrelenting turmoil shows why independence and accountability matter—and why power should not be consolidated around one person. Outside shareholders have sounded the alarm on the need for real oversight and governance reforms, and it's time for Facebook to listen." The group also includes the Illinois State Treasury, Rhode Island Treasury, Connecticut Treasury, Vanguard, BlackRock (BLK), MFS, AllianceBernstein, American Funds, BNY Mellon (BK), Goldman Sachs (GS), John Hancock (JHI), JPMorgan (JPM), Putnam, and State Street (STT). The group sought an independent board chairman in its 2019 shareholder proposal, and released evidence revealing mutual funds joined the supermajority (68%) of Facebook's outside shareholders who voted against management's opposition to an independent board chair.

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12/4/2019

Institutional Investors Watch for Volatility, Activism

Advisor.ca (12/04/19)

In a recent survey of global institutional investors, 53% of respondents cited volatility as the top risk to portfolios, while 50% cited interest rates and 37% cited a credit crunch. Investors also said they were preparing for an upcoming year of slower economic growth, rising public debt, and Brexit complications. More than half (58%) predicted that the next global financial crisis would occur within one to three years. In response, institutional investors are looking to protect on the downside through active management and diversification instead of making major changes to their portfolios. About 74% of respondents said the 2020 market environment will be favorable for active management, and their current allocation split has gone from 64% active and 36% as of 2015 to 71% active and 29% passive. In addition to downside protection, another survey indicates that investors are reconsidering shareholder primacy. The 2019 Edelman Trust Barometer, also release Wednesday, indicates that 91% of Canadian investors agreed that maximizing shareholder value should not be the only goal of a corporation. One reason that consideration of all stakeholders is important is to circumvent employee activism, as 81% of respondents said companies with activist employees were less attractive as prospective investments. Almost half of survey respondents said they look for companies that maintain a healthy company culture, and more than one-third said they wanted companies to showcase how they actively address social issues. Furthermore, 86% of respondents said they would support a reputable activist investor if they believed change was needed at a company.

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12/4/2019

Labor in the Boardroom

Harvard Law School Forum on Corporate Governance and Financial Regulation (12/04/19) Jager, Simon; Schoefer, Benjamin; Heining, Jorg

A recent working paper by Massachusetts Institute of Technology assistant professor of economics Simon Jager and colleagues provides empirical evidence on the effects of shared governance such as worker-elected directors on company boards. For 'Labor in the Boardroom,' the researchers examined Germany's 1994 reforms that abolished worker-elected directors in certain new firms and permanently preserved them in others. Jager and colleagues report that along a variety of measures, shared governance shifts firms toward a more capital-intensive mode of production. The evidence is inconsistent with the disinvestment prediction of the canonical hold-up mechanism: capital increases rather than decreases when workers get seats on the board. At best, small and statistically insignificant wage increases in shared governance firms, further making the standard hold-up mechanism unlikely to hold. The researchers also report that shared governance does not appear to reduce firms' external-finance capacity. Whether the additional capital stock brings the overall economy closer to social efficiency remains an open question.

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12/3/2019

Code Green: Investors Are Coming for Environmental Offenders

MarketWatch (12/03/19) Saigol, Lina

A new study from Alvarez & Marsal (A&M) examined the environmental, social, and governance (ESG) credentials of about 1,300 European companies and found that the worst performers were more susceptible to activist intervention. A&M found that 62% of European activist engagements since 2017 were in the bottom two ESG quartiles, and companies in these groups were on average 25% more likely to face an activist campaign. This was especially true for U.K. and Italian companies, for whom being in quartile three nearly doubled the probability of being engaged by activists. More broadly, A&M found that the United Kingdom remains the largest European market for activists, with 54 London-listed companies currently at risk, up from 52 in April 2019. However, this may change as activism gains momentum across Continental Europe. Industrials retain their position as the sector most at risk from activist campaigns, with 52 companies at risk, compared with 51 in April 2019.

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12/3/2019

ISS and Glass Lewis Policy Updates

Harvard Law School Forum on Corporate Governance and Financial Regulation (12/03/19) Gregory, Holly; Kelsh, John; Holland, Clare

Institutional Shareholder Services (ISS) and Glass Lewis & Co. have updated their proxy voting policies for shareholder meetings starting in 2020. The article reviews key changes, presenting them in a comparative table. Governance-related policy updates pertain to problematic governance and capital structures at newly public companies; management proposals on share repurchase programs; shareholder proposals seeking an independent board chair; board gender diversity; exemptions for new nominees; exclusion of shareholder proposals; board accountability; shareholder proposals on gender pay equity; and the performance of audit, governance, and compensation committees. Compensation-related policy updates include the use of economic value added metrics in the secondary financial performance assessment screen; contractual payments and arrangements; double-trigger changes-in-control arrangements; company responsiveness following a low say-on-pay vote; post-fiscal year end compensation decisions; applying upward discretion for short-term incentive awards; and peer group for pay-for-performance model. The article also provides guidance in preparing for the 2020 proxy season, including key dates and recommended actions for companies.

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12/2/2019

Shadow Governance

Harvard Law School Forum on Corporate Governance and Financial Regulation (12/02/19) Nili, Yaron; Hwang, Cathy

The authors describe the major findings of their new paper "Shadow Governance," in which they investigate non-charter, non-bylaw shadow governance documents and show how they influence corporate decision-making. The paper analyzes an original dataset of shadow governance documents from the investor sites of companies listed in the S&P 1500, including documents required by the Securities and Exchange Commission and S&P (such as board committee charters and corporate governance guidelines) and non-required documents (such as diversity and climate disclosures). They found that, while committee charters and other required documents are the most commonly disclosed shadow governance documents, many companies do not even disclose these. Companies in the highest quartile of market cap disclosed an average of 11 shadow documents, compared to an overall average of 8.5 documents for all companies. Moreover, as board size increases, the number of documents disclosed increases. Companies differ in how they disclose these documents, and the disclosure decision is often ad hoc. Proxy advisers drive some adoption and disclosure, as do shareholder settlements, especially in the campaign finance space.

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12/2/2019

ISS Benchmark Policy Updated—Executive Summary

Harvard Law School Forum on Corporate Governance and Financial Regulation (12/02/19) Mishra, Subodh

Institutional Shareholder Services (ISS) has updated its benchmark proxy voting guidelines for the upcoming year. The main updates for the United States address problematic governance structures at newly public companies, independent board chair shareholder proposals, and share repurchase program proposals. When assessing time-based sunset requirements, ISS will consider the company's lifespan, its post-initial public offering ownership structure, and the board's disclosed rationale for the specific duration selected. ISS will not consider a sunset period of more than seven years from the date of the IPO to be reasonable. ISS will likely support well-crafted independent chair shareholder proposals at companies where boards rely on a weak lead independent director role or there is evidence that directors failed to oversee material risks facing the company or did not adequately respond to shareholders' concerns. With regard to share repurchase program proposals, a grant of authority to the board to engage in a buyback generally will be warranted unless it is used for an abusive practice, such as to reward company insiders, boost compensation metrics to increase payouts to executives, or threatens a company's long-term viability. The policy updates will be effective for meetings that occur on or after Feb. 1, 2020.

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12/2/2019

ESG Reporting Best Practices

Harvard Law School Forum on Corporate Governance and Financial Regulation (12/02/19) Quaadman, Tom; Rust, Erik

The Center for Capital Markets Competitiveness at the U.S. Chamber of Commerce has developed the best practices for disclosing environmental, social, or governance (ESG) information to investors as well as other stakeholders. Companies should consider the intended recipient of their reports and should tailor the tone and content of their reports for that particular audience. In their ESG reports, companies should clearly define in plain English technical terms and terms that do not have a universally accepted definition. Although it is important to allow companies discretion in how they report and discuss ESG information, companies should focus on their risks and opportunities when possible and discuss their approach to risk management. Companies should make it easy for users to find ESG information and explain why they selected the metrics and topics they ultimately disclose. Companies also should describe their internal review and audit process or any external verification of the information that the company received. These best practices can serve as a useful guide for companies, according to the center. More regulatory requirements mandating ESG disclosures are not warranted due to the progress companies have made on voluntary ESG reporting, says the center.

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12/2/2019

TCI Plays Outrider to Mark Carney's Climate Drive

Reuters (12/02/19) Hay, George

Chris Hohn of hedge fund TCI said his firm will vote against directors of companies that do not disclose how their balance sheets would be hit by climate change. Doing so would help outgoing Bank of England Gov. Mark Carney's push for greater transparency about the financial risks of global warming. Carney has championed the Task Force on Climate-related Financial Disclosures, which wants companies to disclose their carbon emissions and issue a climate risk analysis. The Task Force on Climate-related Financial Disclosures is founded on the notion that more information makes markets more efficient. Carney, who on Sunday was appointed as UN special envoy for climate action and finance, asserts that companies representing assets worth $120 trillion already support the idea of transparency, but in most sectors, full disclosure on strategic resilience is limited. Despite warnings by Carney and others about government action to make it mandatory, this is still uncertain and at least a year away. The link between disclosure and investment success is not yet straightforward, because even if all companies disclosed more information, share prices would still depend in part on whether politicians collectively decide to tackle climate risks through carbon taxes and other green measures. For Hohn, meanwhile, presenting activist investment as part of the solution to the climate problem is good marketing, especially because it is true.

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12/1/2019

A Common-Sense Approach to Corporate Purpose, ESG, and Sustainability

Harvard Law School Forum on Corporate Governance and Financial Regulation (12/01/19) Glassner, Frank B.

America's top business and financial leaders have acknowledged that environmental, social, and corporate governance policies are linked to business risk, value creation, financial performance, and sustainability. The central concept at the heart of the Business Roundtable's "Statement on the Purpose of a Corporation" is "while each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders." This assertion suggests that each company can determine how to tell its ESG and sustainability story, how to deal with its stakeholders, and how ultimately to define its purpose and achieve sustainability. Companies now must consider the skepticism and criticism that the statement has drawn, the confusing terminology surrounding sustainability, how to deal with different sustainability metrics and standard-setters, whether to fit sustainability reporting into their legal disclosure obligations, and whether customized sustainability reporting undermines comparability in the marketplace. Investors are now working to integrate sustainability issues into their investment decisions as well as their stewardship duties and proxy voting policies. Companies will need to take a holistic approach to defining their purpose and integrating ESG and sustainability issues into their financial reporting, shareholder communications, investor relations, board engagement, and proxy solicitation campaigns. They should consider publishing a statement of corporate purpose; looking closely at the content of corporate reporting; tailoring shareholder communications to address the interests of all stakeholders; and organizing a systematic, annualized approach to shareholder relations and communication. Meanwhile, investors must devote more resources toward evaluating ESG issues at companies, develop deeper expertise about the risks and value drivers, and push third-party ratings and advisory firms to develop better methods of assessment.

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11/29/2019

Gordon Singer — Elliott's Quiet Man Making Noise in Europe

Financial Times (11/29/19) Fletcher, Laurence

Gordon Singer is Paul Singer's son and works at the hedge fund his father founded, Elliott Management. Though he does not lead any of the firm's high-profile activism, those who know the firm praise Gordon's ability to replicate Elliott's investing style in Europe while allowing for the continent's regulatory and cultural differences. His relationship with former Arsenal Football Club executive Ivan Gazidis, prompted by an interest in British football, prompted the firm to hire him as CEO of AC Milan, one of its highest-profile investments. Nonetheless, there have been some setbacks, and it remains to be seen whether Gordon will become as influential in the investing world as his father. One hedge fund investor commented: "Gordon Singer is a bright lad, but Paul Singer is the man."

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11/29/2019

Investors Lay Down Challenge to Corporate France

Financial Times (11/29/19) Keohane, David; Agnew, Harriet

French boards, regulators, and politicians are wrestling with how to respond to the arrival of activist investors who are testing the country's reputation for protectionism. The past year has seen investors including Elliott Management, Third Point, and CIAM challenging some of France's biggest companies, including Capgemini (CGEMY), Pernod Ricard (PDRDY), EssilorLuxottica (ESLOY), and Renault (RNLSY). In March, finance minister Bruno Le Maire said France would seek more measures to thwart activists, including the option of using taxpayers' money to defend companies of strategic interest. Despite this, investors and corporate governance experts say the French establishment's protectionist reflexes may prove less effective or even counterproductive in 2019. Analysts also say the eruption of activism in France is part of a wider trend across Europe thanks to the combination of corporate governance climbing the agenda and conglomerates falling out of fashion. Activist activity is stirring tensions in the upper echelons of the business world. For example, media company Lagardère (MMB) has sued Amber, its third-largest shareholder, for €84 million in damages, alleging the London fund had sought to destabilize it. Last month, a French parliamentarian committee called for more transparency around the borrowing and lending of a company's shares, an examination of when a given level of short selling prevents a market functioning properly, and the fast-tracking of investigations by the French markets regulator. U.S. short seller Muddy Waters says the committee's report "takes a myopic view of corporate governance and communication issues," and that "instead of addressing these issues, the report targets those whose job is to spot them—short sellers."

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11/27/2019

Investors and Issuers Aligned on Board Diversity

IR Magazine (11/27/19) Ashwell, Ben

IR Magazine's latest Board Diversity report finds that just about 30% of investors surveyed globally say they have asked companies a board diversity question within the last year. Fund managers are most likely to ask questions about board diversity, with 40% saying they have discussed the topic with portfolio firms in the last year. The report also found that 35% of surveyed investor relations officers had received investor questions on board diversity in the past 12 months. About 41% of North American respondents have faced a question on this topic, compared with 30% of Europeans and 37% of Asians. Notably, 54% of mega-caps and 52% of large caps have received board diversity questions, compared with just 24% of mid-caps and 21% of small caps, demonstrating how the nature of corporate governance engagement can change significantly according to market cap size. IR Magazine notes that boardroom diversity is one of the easiest environmental, social, and governance data points for investors to obtain, which may account for these results.

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11/26/2019

The Business Case for More Diversity

Wall Street Journal (11/26/19) Holger, Dieter

Diversity and inclusion appear to be good for business, according to an analysis of companies in the S&P 500 index by the Wall Street Journal. The research shows that the 20 most diverse companies have better operating results on average than the lowest-scoring firms, and their shares generally outperform those of the least-diverse firms. The financial industry was the best-performing sector, followed closely by the communications-services and consumer-staples industries, while the energy and materials sectors brought up the rear. Female representation on boards remains fairly low, only 17 companies fully disclose ethnic diversity at the board level, and only 22 have at least one board member under the age of 40. Other data reveals that board independence is high, which analysts say is allowing companies to get diverse points of view due to different professional backgrounds. Most of the top-ranked companies say that cultivating workers from different backgrounds and having diversity at the highest levels helps with product development. Larger companies tended to score better than smaller companies. U.S. money manager Nuveen Investments started engaging about 470 midcap and small-cap companies last year on boardroom diversity.

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11/26/2019

Arnaud Lagardère's Battle to Retain Grip on French Empire

Financial Times (11/26/19) Agnew, Harriet

Since taking over Lagardère (LGDDF) from his father in 2003, Arnaud Lagardère has attracted a great deal of criticism for his management style and the performance of the business. Lagardère has been lax in his duties as CEO and the company's share price has substantially underperformed its benchmarks, while management and restructuring costs have soared. Now Lagardère is facing his moment of truth in the form of a battle with investor Amber Capital, in which a French court recently ruled that the CEO must publish a decade's worth of accounts for Lagardère Capital & Management (LC&M), a private holding company. The new ruling threatens to lift the lid on Lagardère's personal debt levels and put his empire under renewed scrutiny, as previous reports have established that LC&M had €204 million of debt at the end of 2017. It remains to be seen whether investors and the supervisory board continue to support Lagardère once they have a better sense of his true financial situation. Lagardère SCA's dated "commandite" structure means that despite only owning a 7.2% stake in the group through LC&M, Lagardère's position is highly protected. Shareholders cannot remove Lagardère as they could in a normal company; instead, the supervisory board votes to renew his mandate every six years. The counterbalance to Lagardère's unlimited powers as general partner of the SCA is that he also has unlimited responsibility for the company's liabilities, which Amber uses to argue that shareholders need to know what Lagardère's financial guarantee is worth. Four members of the supervisory board who have so far supported the status quo have their mandates coming up for renewal by shareholders next year, and Lagardère's own mandate comes up for renewal by the supervisory board in March 2021.

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11/26/2019

Corp Fin Enters Brave New Shareholder Proposal World

Bloomberg Law (11/26/19) Rasmussen, Peter

Starting in 2020, Securities and Exchange Commission (SEC) staff may respond orally instead of in writing to some no-action requests. The Division of Corporation Finance policy shift will slightly restrict the flow of information to the public, but will be less consequential because staff responses have not historically been a source of extensive useful analysis by the staff. SEC staff will also make some information about the disposition of exclusion requests available in chart form, identifying the company, proponent, relevant dates, staff action taken, regulatory basis for exclusion, and whether the staff issued a written response. Currently, the staff has included only two dispositions in the chart: one with a written letter and one that was orally communicated. Glass Lewis & Co. addressed the new policy by saying it believes that companies should only omit proposals in cases where the SEC staff has explicitly concurred with the company's asserted basis for exclusion. Similarly, in instances where the SEC has orally permitted a company to exclude a shareholder proposal and there is no "written record" provided by the SEC about the determination, Glass Lewis believes that the company should provide "some disclosure" concerning the staff action. The SEC has also proposed extending the stockholding period required for shareholders to submit a proposal from one year to three years. It would also raise requirements for excluding proposals based on vote totals. The proposals have generated a significant number of comments, including comments from leading shareholder advocates and investment managers, who urge the SEC to extend the current 60-day comment period to 120 or 180 days.

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11/25/2019

Why Investors React Negatively to Companies That Put Women on Their Boards

Harvard Business Review (11/25/19) Solal, Isabelle; Snellman, Kaisa

The market value of companies declines for two years following the appointment of a female board member, according to an analysis of board composition and financial data of 1,644 public companies in the United States. In an experiment with nearly 200 alumni and current students of a top international business school, participants did not perceive a difference in the competence of a male and female board appointment with identical bios after seeing the press release of a fictional company. However, there was a difference in the perceived goals of the company. Participants believed the company that appointed the female director cared more about its social performance. Companies that made other investments in diversity, such as offering work-life benefits, suffered a greater decline in value for appointing female directors. Shareholders that engage companies are not necessarily convinced about diversity being a source of value creation. According to a 2016 Bloomberg analysis, five of the biggest funds that engage companies put more than 100 candidates on boards in the previous five years, but only seven were women.

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