4/29/2029

Shareholder Activism in Asia Drives Global Total to Record High

Nikkei Asia (04/29/29) Shikata, Masayuki

Activist shareholders had their busiest year on record in 2024, with the Asia-Pacific region making up a fifth of campaigns worldwide, pushing some companies higher in the stock market and spurring others to consider going private. The worldwide tally of activist campaigns rose by six to 258, up by half from three years earlier, according to data from financial advisory Lazard. Campaigns in the Asia-Pacific tripled over that period to 57, growing about 30% on the year. Japan accounted for more than 60% of the regional total with 37, an all-time high. Activity is picking up this year as well in the run-up to general shareholders meetings in June. South Korea saw 14 campaigns, a jump of 10 from 2023. Critics say South Korean conglomerates are often controlled by minority investors that care too little about other shareholders. Australia and Hong Kong saw increases of one activist campaign each. North America made up half the global total, down from 60% in 2022 and 85% in 2014. Europe had 62 campaigns last year. The upswing in Japan has been fueled by the push for corporate governance reform since 2013 and the Tokyo Stock Exchange's 2023 call for companies to be more mindful of their share prices. The bourse has encouraged corporations to focus less on share buybacks and dividends than on steps for long-term growth, such as capital spending and the sale of unprofitable businesses. Demands for capital allocation to improve return on investment accounted for 51% of activist activity in Japan last year, significantly higher than the five-year average of 32%. U.S.-based Dalton Investments called on Japanese snack maker Ezaki Glico (2206) to amend its articles of incorporation to allow shareholder returns to be decided by investors as well, not just the board of directors. Though the proposal was rejected, it won more than 40% support, and Glico itself put forward a similar measure that was approved at the following general shareholders meeting in March. U.K.-based Palliser Capital took a stake last year in developer Tokyo Tatemono (8804) and argued that more efficient use of its capital, such as selling a cross-held stake in peer Hulic, would boost corporate value. Activist investors are increasingly seeking to lock in unrealized gains from rising land prices, reaping quick profits from property sales that can go toward dividends. Companies in the Tokyo Stock Exchange's broad Topix index had 25.88 trillion yen ($181 billion at current rates) in unrealized gains on property holdings at the end of March 2024, up about 20% from four years earlier. After buying into Mitsui Fudosan (8801) in 2024, U.S.-based Elliott Investment Management this year took a stake in Sumitomo Realty & Development (8830) and is expected to push for the developer to sell real estate holdings. This month, Dalton sent a letter to Fuji Media Holdings (4676), parent of Fuji Television, calling for it to spin off its real estate business and replace its board of directors. Activist campaigns have sparked share price rallies at some companies. Shares of elevator maker Fujitec (6406) were up roughly 80% from March 2023, when it dismissed Takakazu Uchiyama -- a member of the founding family -- as chairman under pressure from Oasis Management. The rise in demands from activists "creates a sense of tension among management, including at companies that don't receive such proposals," said Masatoshi Kikuchi, chief equity strategist at Mizuho Securities. Previously tight cross-shareholdings are being unwound, and reasonable proposals from minority investors are more likely to garner support from foreign shareholders. Some companies are going private to shield themselves from perceived pressure. Investments by buyout funds targeting mature companies in the Asia-Pacific were the highest in three years in 2024, according to Deloitte Touche Tohmatsu. Toyota Industries (6201) is considering going this route after facing pressure from investment funds last year to take steps such as dissolving a parent-child listing with a subsidiary and buying back more shares. Toyota Industries holds a 9% stake in Toyota Motor (7203). The automaker "may have proposed having [Toyota Industries] go private as a precautionary measure," said a source at an investment bank.

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8/6/2025

Commentary: Seven & i Standalone Revamp Enters Pivotal Phase

Reuters (08/06/25) Lockett, Hudson

Reuters columnist Hudson Lockett asserts that Seven & i’s (SVNDY) latest strategic update did the bare minimum to reassure investors hoping for a seismic shake-up following the collapse of a $46 billion takeover bid from rival Alimentation Couche-Tard (ANCTF) last month. But with the Japanese convenience store chain's shares down 9% since the deal's collapse, CEO Stephen Dacus faces mounting pressure to deliver on plans to revive growth. "It would be easy to criticize Dacus for failing to offer anything substantially new to investors during Wednesday's strategy briefing for analysts and media in Tokyo, during which Seven & i's shares barely budged," Lockett says. He doubled down on previously announced initiatives like expanding fresh food offerings at U.S. stores and expanding fresh baked goods to stores nationwide in Japan, as well as listing its North American business next year to enable better shareholder returns, accelerated store openings and potential acquisitions. "Still, the update provided useful clarity on how the $35 billion company views its shortcomings," adds Lockett, "namely, execution, not strategy." “It’s all about people and processes,” according to Dacus, who highlighted recent changes such as weekly meetings with regional business heads and the launch of monthly business reviews. Combined with other initiatives to improve efficiency those measures are meant to help increase Seven & i's earnings per share to 210 yen ($1.42), up more than 140% from the 2024 fiscal year. But with the stock more than a fifth below Couche-Tard's now-defunct 2,600 yen offer price, shareholder patience will quickly wear thin. Analysts currently forecast earnings per share of 101 yen for this fiscal year, or less than half the target level, per Visible Alpha. If results don’t start showing signs of improvement soon, expect a raft of shareholder proposals at next year’s general meeting. "Dacus has made his case," concludes Lockett. "Now he has to prove it."

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8/6/2025

Blowout South Korea Stock Rally on a Knife-edge over Tax Plans

Reuters (08/06/25) Hunter, Gregor

South Korea's tax policies have thrown the outlook for Asia's best-performing major stock market into doubt, with investors assessing the impact of higher corporate tax and trading levies on the country's long-promised reforms. Foreign investment flows into South Korean equities totaled $4.52 billion in July, LSEG data showed — the fastest pace in almost a year and a half — as the prospect of corporate reforms and a trade deal with the Trump administration lured overseas money. However, the KOSPI index, which had risen 33.3% so far this year, leading gains across the region, experienced its sharpest one-day drop since April on Friday. The index slumped 3.9% following the announcement of tax measures. Foreign analysts are uncertain if the "Korea discount" — a steep valuation gap with other Asian markets — will narrow as the government begins to implement reforms, but some institutional investors regard the changes as positive in the long run. Many of the country's biggest multinationals, the family-owned conglomerates known as chaebols, tightly control voting power and lack independent boards to safeguard minority investor interests. "We've been victims of poor corporate governance in Korea for over a decade," said Jonathan Pines, head of Asia ex-Japan at Federated Hermes. "Even though the market is up significantly, we believe it has further to go," he said. "The news flow is likely to remain positive, and Korean market valuations are still among the cheapest in the world." Korean stocks trade at a 12-month forward price-to-earnings ratio of 10.1, the lowest of any major market in Asia, according to data from Goldman Sachs. The investment bank gives the country an "overweight" rating and a target level of 3,500 in the next year, implying a 9.4% gain from current levels. South Korean equities gained momentum after the Financial Services Commission introduced its Corporate Value-Up Programme in February last year, aimed at improving corporate governance standards. Activist investors and corporate governance advocates remain hopeful about reforms under President Lee Jae-myung. Manoj Jain, co-CIO of Hong Kong-based Maso Capital, remains cautiously optimistic. "In conversations with management teams, pleasingly, we have sensed a change in tone where boards are now more receptive to shareholder views and feedback," Jain said. "We are in the second inning in terms of corporate governance reform," said Namuh Rhee, chairman of the Korean Corporate Governance Forum. "The biggest headwind is strong lobbying by chaebol and their lobbying agencies." The government may yet amend its tax plans. Jung Chung-rae, the leader of the ruling Democratic Party, said on Monday the party will hold internal discussions over the proposed levies. Finance minister Koo Yun-cheol, facing a grilling from Korean opposition lawmakers in parliament on Wednesday, said he would listen to public opinion, including a suggestion from a lawmaker to revise the rules constituting "large shareholders" subject to capital gains taxes.

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8/5/2025

Commentary: Redbubble Board’s Carrot to Activist Shareholders to Rack Off

Australian Financial Review (08/05/25) Wootton, Hannah

For a company valued at only $62.6 million, Redbubble-owner Articore (RDBBF) is producing a disproportionate amount of drama, according to Australian Financial Review columnist Hannah Wootton. "For a start, it made the historically curious decision to hire Anne Ward and Ben Heap as chair and director," she says. "Considering both are better known for their governance over the dumpster fire at Star Entertainment, their ousting by activist shareholders in June wasn't surprising." Then, there was the push from the same group, led by Articore's former chairman Richard Cawsey and founder Martin Hosking (representing 16% of shares) to take a broom to the full board. Along with Redbubble, Articore owns US-based TeePublic. The company's shares were once trading at more than $7 during the pandemic. The activists think that the current price of 22 cents shows its dire need of a reboot. They reckon their picks — Cawsey himself as chair, and Victorian State Library president Christine Christian, prolific company director Carole Campbell and e-commerce veteran Andrew Nash as directors — have the turnaround experience to do it. The board, in clear disagreement with Cawsey and co, have now offered them $50,000 to essentially go away. The surprising offer came last month. In exchange for the cash (purportedly to “cover the costs” of the insurgents) the group must call off the demand for an extraordinary general meeting. They also cannot attempt (or even vote for) another one for two years. They must not communicate with the ASX or any regulators about any of their concerns without Articore's sign-off. They must also agree to non-disparagement terms and not to make any legal claims against the company regarding its governance. External advice to the board on the offer also suggested it also use its powers to parachute two of the activists' nominees, Christian and Nash, into casual director vacancies. Cawsey said this didn't allay the group's governance concerns. "Needless to say, going away quietly isn't in Hosking and Cawsey's style," says Wooton. "The former took to LinkedIn to reject the deal. The latter wrote to shareholders doing the same." “You've got so few rights as a shareholder in public companies ... I'm shocked they are asking us to give them away,” Cawsey said. Articore's board sent a statement saying it had offered the group the cash to offset their legal costs. It said it was willing to consider the group's director picks, but wanted to avoid the cost of an EGM and the risk it would “derail the significant progress made to date” on its turnaround.

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8/1/2025

How Much are Southwest’s New Assigned Seats? It Depends

CNBC (08/01/25) Josephs, Leslie

Southwest Airlines’ (LUV) first assigned seats went on sale this week for flights starting Jan. 27 of next year. The price depends on the route, when you’re traveling and where you sit. For example, a roundtrip ticket in the “Choice” ticket class — the second cheapest type of ticket — between Denver International Airport and Orlando International Airport leaving Feb. 14 and returning Feb. 21, which coincides with Presidents Day, was going for $692 on Southwest’s website on Thursday. For seats the airline deems “preferred,” it would be $46 for a window or aisle seat in Rows 7 to 13, or $41 for a middle seat in those rows. Customers with elite frequent-flyer status on the airline or with Southwest Airlines credit cards will be exempt from some of the fees. The changes are all part of Southwest’s plan to ditch the hallmarks of its more than half-century-old business model. For decades, that included open seating (and uniform legroom throughout the cabin) along with a quirky boarding system that led to a mad dash at the airport for a seat, and two free checked bags for all customers. Southwest’s rivals have made billions on bag and seat fees, raising questions for years from investors and Wall Street analysts about whether the carrier was maximizing revenue. Last year, Elliott Investment Management took a big stake in Southwest, calling for such changes, and leading to a board shakeup. Major U.S. carriers brought in $12.4 billion assigned-seating fees between 2018 and 2023, according to Senate panel report. Southwest’s first-ever bag fees started with tickets sold in late May. The airline is charging $35 for a first checked bag and $45 for a second, roughly in line with other airlines. The carrier also joined rivals in launching a no-frills basic economy ticket, where customers don't get free, advanced seat selection, something Southwest expects it will benefit from next year, when seat assignments go into effect. “We assume there will be a positive impact in Q1 when we go to assigned seat, that's a more compelling buy-up from basic economy to Choice,” Andrew Watterson, Southwest's chief operating officer, said on an earnings call last week. “However, should we succeed in making it a positive before then, that's an additional tailwind as we go throughout the second half.” Southwest will reward its most loyal customers though, with choice seats as perks. Frequent flyers with top-tier A-List Preferred status on Southwest will get extra-legroom seats at booking, as well as two free checked bags, and A-List status-holders can book them 48 hours before departure, though there is no guarantee they'll be available. Both groups will have complimentary access to preferred seats. Several Southwest credit cards also provide access to preferred seats, regardless of the fare type.

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8/1/2025

Breakingviews: Dan Loeb Exposes Risks in UK Listing Reforms

Reuters (08/01/25) Unmack, Neil

The United Kingdom’s major recent listing reforms, finalized in 2024, were a bold bet that weaker investor protections would kickstart London’s moribund initial public offering market. So far, that hasn’t happened. One test of the rules may be on the horizon, however, involving a vehicle managed by U.S. hedge-fund impresario Dan Loeb. The problem is that it mostly illustrates the downsides of the new approach. Third Point Investors (TPIL) is undertaking a bold reinvention. The London-listed investment company, run by Loeb’s New York-based Third Point Management, has traded at a big discount to its $509 million net asset value and struggled to grow. Now, it wants to merge with a Cayman-based reinsurer set up by Third Point, called Malibu Life Reinsurance, effectively changing the London vehicle from a listed equity fund into a specialist in writing annuities and buying asset-backed credit and corporate debt. Loeb will manage the reborn company too. Investors who get with the program could benefit. The transaction would swap their shares for Malibu equity at net asset value (NAV), whereas U.S.-listed annuity providers often trade at a premium, implying possible future upside. Yet it’s also a risky move: Malibu is a startup, will have to compete with big players like Apollo Global Management, and probably won’t make its targeted return on equity of 17% at least until 2027. It may even trade below book value, especially given the lack of London-based peers. Rebellious shareholders have criticized the deal. One of them, Asset Value Investors, called it “odious,” and accused the TPIL board of lacking independence. A key bone of contention is that shareholders who choose to opt out ahead of the merger may not be able to cash out fully, and face at least a 4.8% NAV discount on redemption. Beating Loeb in a vote looks tough. UK listing rules previously required related-party transactions, like merging with a company that a manager or CEO also runs, to secure majority support among independent shareholders. That would have excluded Loeb’s 25% stake in TPIL from any vote, giving minorities an amplified voice. The Financial Conduct Authority’s new approach has no such general requirement, meaning Loeb’s 25% ownership may help him carry the day. Were that stake to be excluded, the battle may be less clear cut. Investors opposing the deal claim to speak for 24% of shares, versus 21% backing it, according to a statement on Friday. Creating vibrant new companies in London, which is what Loeb presumably thinks he is doing, is exactly what the FCA’s listing reforms are all about. The alternative, winding down TPIL, would only shrivel the market, and Loeb could probably block it anyway. Yet, arguably independent investors facing such a radical change of strategy should have the right to fully redeem without facing a discount. If Malibu thrives, TPIL’s move will prove to be a worthy gamble. Yet the fight also shows that UK listing reforms have a cost. And, with London IPOs at a 30-year low, the stated benefits of the changes are still hard to discern.

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7/29/2025

The Most Precarious Job in America's Boardrooms: CEO

Reuters (07/29/25) Herbst-Bayliss, Svea; Binnie, Isla

U.S. companies are removing their CEOs at the fastest clip in two decades, data shows, as increased scrutiny from shareholders and boards result in reduced tolerance for sub-par returns or wayward conduct. At least 41 CEOs have exited S&P 500 companies so far this year, compared with 49 for all of 2024 — making the fastest pace on an annualized basis since 2005, according to data from nonprofit executive research group The Conference Board and data analytics company ESGAUGE. In interviews, more than a dozen executive recruiters, investors, bankers, lawyers, and industry advisers attributed the high turnover this year to a range of reasons, some building up from economic and social changes since the Covid-19 pandemic. While high inflation, geopolitical instability and the Trump administration’s trade war has complicated the job of CEOs, diversity gains made boards more independent and demanding of the person in the top job, these people said. At the same time, in a stock market setting new records but driven mostly by large tech names, underperformance had given activist investors, who push for corporate changes from selling a division to buying back more stock, greater sway, leading to management changes. "Trying to fire the CEO has become a referendum on what's perceived to be a failed company strategy," said Peter da Silva Vint, managing partner at consulting firm Jasper Street, which works with companies facing pressure from activist investors. "And investors have become more comfortable with it as a mechanism to send a message." CEOs at companies that are lagging their peers are most at risk for demands from activists, with almost half — 42% — of S&P 500 companies that changed leaders last year foundering in the bottom 25th percentile for total shareholder returns, according to a November study by The Conference Board. Take the case of Kenvue (KVUE), where the board said it was replacing CEO Thibaut Mongon "to unlock shareholder value and reach its full potential" after the stock had lost 16.5% since its spin out from Johnson & Johnson (JNJ) two years ago. In contrast the S&P 500 has climbed 41% since August 2023, when Kenvue became a fully independent company. Kenvue took action after three U.S. hedge funds — Starboard Value, Tom's Capital, and Third Point — called for change at the company, and Starboard CEO Jeffrey Smith got a board seat in March to settle that hedge fund's proxy fight. The battle at Kenvue continues, however. The other two funds continue to call for more changes, including divesting assets and possibly selling the entire company, according to people familiar with the matter. With a new CEO on board investors, are confident a sale is sure to follow, the sources said. "Activist investors are feeling more empowered, and if they have bought into a company's five-year plan then they want someone to exercise it," said Georgetown University professor Jason Schloetzer, an expert in corporate governance. "And if the guy at the top can't do it, they'll find the next one." Beyond shareholder activism and performance, changes in the makeup of boards over the past decade when there had been a new focus on adding diversity was also playing a role in the shakeup at the top, corporate governance experts said. Such boards were acting with greater independence, putting CEOs on tighter leash, these people said. "Newer members have more objectivity relative to prior generations," said Jason Baumgarten, head of global board and CEO practice at executive recruitment firm Spencer Stuart. Meanwhile, reputational risk and corporate culture have become central to a company's long-term value, Jasper Street's da Silva Vint said. "Today's boards are far more willing to act decisively, removing executives, not only to enforce policy, but to protect shareholder, employee, and public trust," he said.

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7/29/2025

Victoria’s Secret Gets Runway Ready Again

Women's Wear Daily (07/29/25) Clark, Evan

Victoria’s Secret & Co. (VSCO) confirmed that its runway show would be returning this year with a teaser on Instagram that also encouraged shoppers to download the brand’s app to get additional details. For years the show was a televised staple for fashion, drawing big-name models with big social reach to the runway each fall and plastering the brand everywhere with not just the famed Angel wings, but fantastical looks. After a hiatus and some soul searching about just who the show was for and why the brand seemed so obsessed with pleasing the male gaze, Victoria’s Secret took back to the runway again in Brooklyn last October. The glitz and the glam were definitely there — as were the models, including Adriana Lima, Alessandra Ambrosio, Grace Elizabeth, Taylor Hill, and Tyra Banks, and wings aplenty. Cher, Tyla and Lisa were musical guests. But the vibe was different. The show’s return was orchestrated by women and the looks on display were not aspirational one-offs, but looks that would be in the brand’s stores. Hillary Super, who became chief executive officer of the company shortly before the show last year, is clearly ready to carry on the tradition and use the event to stoke brand heat, building interest with consumers as the runway is readied. The trick is going to be to use that brand heat to drive the business, which is still in turnaround mode and facing engagement from activist investors. Last month, Barington Capital chief James Mitarotonda slammed the company for revenue and stock declines, “operational and strategic shortcomings” and pushed for it to replace most of all of its board members.  Mitarotonda said the company should be “reestablishing merchandising discipline, launching bold, exciting, and imaginative marketing campaigns, and, where appropriate, reintroducing successful legacy elements, such as the iconic Angels campaign.”

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