7/22/2025

Shareholder Proposals on AI Gain Steam

Investment Executive (07/22/25) Deschamps, Tara

When Canada’s most valuable companies hosted their annual general meetings this year, there was a new topic for shareholders to vote on among the usual requests to appoint board members and OK their executive compensation. The proposal from Quebec-based investor rights group le mouvement d’éducation et de défense des actionnaires centered on artificial intelligence. It asked 14 companies, including Canada’s biggest banks, retailer Dollarama Inc. (DOL) and telecom giant BCE Inc. (BCE), to sign a voluntary code of conduct the federal government developed to govern the technology. Experts say the proposal is likely just the start of what they expect to become an annual phenomenon targeting the country’s biggest companies — and beyond. “This is a new kind of frontier in Canada for shareholder proposals,” said Renée Loiselle, a Montreal-based partner at law firm Norton Rose Fulbright. “Last year, this was not on the ballot. Companies were not getting shareholder proposals related to AI and this year, it absolutely is.” Loiselle and other corporate governance watchers attribute the increase in AI-related shareholder proposals to the recent rise of the technology itself. While AI has been around for decades, it’s being adopted more because of big advances in the technology’s capabilities and a race to innovate that emerged after the birth of OpenAI’s ChatGPT chatbot in 2022. The increased use has revealed many dangers. Some AI systems have fabricated information and thus, mislead users. Others have sparked concerns about job losses, cyber warfare and even, the end of humanity. The opportunities and risks associated with AI haven’t escaped shareholders, said Juana Lee, associate director of corporate engagement at the Shareholder Association for Research and Education (SHARE). “In Canada, I think, in the last year or two, we’re seeing more and more shareholders, investors being more interested in the topic of AI,” she said. “At least for SHARE ourselves, many of our clients are making it a priority to think through what ethical AI means, but also what that means for investee companies.” That thinking manifested itself in a proposal two funds at the B.C. General Employees’ Union targeted Thomson Reuters Corp. (TRI) with. The proposal asked the tech firm to amend its AI framework to square with a set of business and human rights principles the United Nations has. It got 4.87% support. Meanwhile, MÉDAC centered its proposals around Canada’s voluntary code of conduct on AI. The code was launched by the federal government in September 2023 and so far, has 46 signatories. Signatories promise to bake risk mitigation measures into AI tools, use adversarial testing to uncover vulnerabilities in such systems and keep track of any harms the technology causes. MÉDAC framed its proposals around the code because there’s a lack of domestic legislation for them to otherwise recommend firms heed and big companies have already supported the model, director general Willie Gagnon said. Several companies it sent the proposal to already have AI policies but didn’t want to sign the code. “Some of them told us that the code is mainly designed for companies developing AI, but we disagree about that because we saw a bunch of companies that signed the code that are not developing any AI,” Gagnon said. Many of the banks told MÉDAC they’ll soon sign the code. Only CIBC has so far. Conversations with at least five companies were fruitful enough that MÉDAC withdrew its proposals. In the nine instances where the vote went forward, the proposal didn’t succeed. It garnered as much as 17.4% support at TD Bank (TD) but as little as 3.68% at engineering firm AtkinsRéalis Group Inc. (ATRL). Loiselle said you can’t measure the success of a proposal based on whether it passes or not. “The goal of these shareholder proposals is more for engagement,” she said. Sometimes, even just by filing a proposal, companies reveal more about their AI use or understand it’s an important topic for shareholders and then, discuss it more with them. While proposals don’t always succeed, Lee has seen shareholder engagement drive real change. SHARE recently had discussions with a large Canadian software company. AI was central to its business but didn’t crop up in its proxy statement — a document companies file governing their annual general meetings. The firm also had no board oversight of the technology. SHARE was able to get the company, which Lee would not name, to amend its board charter to include oversight of AI and commit to more disclosure around its use of the technology in its annual sustainability report. “This is a really positive development and it’s leading to improvement related to further transparency,” she said. If the U.S. is anything to judge by, Lee and Loiselle agree Canadian shareholders will keep pushing companies to adhere to higher AI standards. South of the border, AI-related proposals first cropped up around two years ago. They’ve targeted Apple (AAPL), The Walt Disney Co. (DIS), and Netflix (NFLX), where a vote on disclosing AI use and adhering to ethical guidelines amassed 43.3% support. The frequency and spectrum of AI-related requests shareholders have has only grown since and is likely to be mirrored in Canada, Loiselle said. “The landscape for shareholder proposals is changing and I think that change is here to stay,” she said.

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7/22/2025

Seven & i Denies Snubbing Couche-Tard’s $46 Billion Takeover Bid

Bloomberg (07/22/25) Yoshida, Koh

Seven & i Holdings Co. (SVNDY) pushed back against Alimentation Couche-Tard Inc.’s (ANCTF) assertions that it refused to engage in meaningful talks over a potential merger, saying that the Canadian suitor didn’t take antitrust concerns seriously enough and doesn’t understand how business is conducted in Japan. The operator of Circle K convenience stores “decided on its own it was easier to walk away,” the special committee of Seven & i’s board said in a statement on Tuesday. The 7-Eleven owner was responding to Couche-Tard’s 1,500-word missive issued last week explaining that it was ending its pursuit because of a “calculated campaign of obfuscation and delay.” The acrimonious exchange draws a line under an almost yearlong dance between the two companies that began when Couche-Tard’s unsolicited ¥6.77 trillion ($45.8 billion) takeover approach became public. During that time, Couche-Tard had increased its proposed buyout price, while Seven & i underwent a drastic overhaul to split the company, initiate a ¥2 trillion share buyback and appoint a new chief executive. “We are turning our full attention to creating value through our standalone plan,” Seven & i’s special committee said in the statement. “We know better than anyone that we need to perform and deliver.” Seven & i shares have declined 12% since Couche-Tard abandoned its bid. Stephen Dacus, the newly appointed CEO, is due to give an update on the retailer’s turnaround strategy in August, with a focus on how he plans to improve the core convenience stores business. Couche-Tard’s campaign, which if successful, would have been the biggest foreign takeover of a Japanese company. Although Couche-Tard placed the blame squarely on intransigence from Seven & i’s management, there’s a broader trend underway that’s likely to lead to more mergers and acquisitions as regulators push for more openness and governance among Japanese companies. “Recently, Japanese companies have enhanced their corporate governance,” the committee said. “We have been well ahead of other Japanese companies in how we responded to Couche-Tard’s unsolicited offer.” 7-Eleven perfected its model in Japan but has struggled to replicate that success in the US. Now a new player believes it can do a better job at creating a global convenience store empire. The remaining path for Seven & i is to pursue greater growth and profitability in the convenience stores business, which investors have been clamoring for. Two years ago, activist fund ValueAct Capital Management LP pushed for this strategy and unsuccessfully sought to replace Ryuichi Isaka, the prior CEO. Seven & i has a long history of enacting reforms under external pressure. In 2016, concerns raised by activist fund Third Point LLC over executive appointments resulted in the exit of former chairman Toshifumi Suzuki and Isaka’s appointment. ValueAct’s engagement helped fuel Seven & i’s decision to sell its Sogo & Seibu Co. department stores to Fortress Investment Group in 2022 for ¥250 billion.

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7/22/2025

Shares of Department Store Kohl’s Surge 30% in Wild Trading

CNBC (07/22/25) Fonrouge, Gabrielle

Shares of Kohl’s (KSS) surged on Tuesday morning in volatile trading that echoed the meme stock rallies of recent years. The legacy department store’s stock more than doubled from Monday’s close of $10.42 per share, only to see those gains wiped out about a half an hour after markets opened. Trading in the stock was temporarily halted at one point Tuesday morning. Still, shares were trading more than 40% higher before 2 p.m. ET. Meanwhile, the trading volume by late morning Tuesday was almost 17 times higher than the average over the past 30 days. There were no apparent corporate announcements or major stock ratings to send shares soaring on Tuesday, but Kohl’s has all the markings of a meme stock. It’s a legacy department store that many retail investors grew up shopping at, and it’s heavily shorted, with about 50% of shares outstanding sold short, according to FactSet. It has a sprawling retail footprint of more than 1,100 stores and has been the subject of takeover offers, activist campaigns, and bankruptcy watchlists in recent years. “There’s a lot of irrational exuberance around the stock. It’s a very similar thing to what we saw with Bed Bath and Beyond back in the day,” said Neil Saunders, managing director of GlobalData. “There’s nothing really that Kohl’s has done to fundamentally earn this level of increase. The business fundamentals remain quite weak.” There has been recent chatter around Kohl’s stock in the Wall Street Bets forum on Reddit, which became popular during the GameStop (GME) short squeeze in 2021. Some pointed to it as a potential squeeze candidate given the short interest and its name recognition among retail investors. When investors flock to a heavily shorted stock, those with short positions may buy more to cover their losses, which can drive the price higher. Beyond its share price, Kohl’s business has been struggling for several years. Its sales are falling, it faces rising competition and it’s currently led by an interim CEO after its former CEO Ashley Buchanan was ousted over a conflict of interest scandal. In May, Kohl’s said it expects sales to fall between 5% and 7% in fiscal 2025, with comparable sales down between 4% and 6%.

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7/21/2025

BP Appoints Albert Manifold as Chairman amid Strategy Revamp

Reuters (07/21/25) Kalia, Yamini; Shabong, Yadarisa

BP (BP) named Albert Manifold, the former boss of building materials producer CRH (CRH) as its new chairman on Monday, as it looks to address investor concerns about its strategy and weak share performance. Manifold, who has not previously held a senior position in the energy sector, will succeed Helge Lund from October as BP navigates a major strategy revamp under persistent takeover and break-up speculation. During his tenure at CRH, its shares soared nearly fivefold. "(Manifold's) impressive track record of shareholder value creation at CRH demonstrates he is the ideal candidate to oversee BP's next chapter," said Amanda Blanc, BP's senior independent director, who led the succession process on behalf of the board. Under his 11-year stint as CEO of CRH, the Irish company reshaped its portfolio by buying and selling assets and moved its primary listing to New York in 2023. BP's shares rose 0.5% to 402.05 pence in early London trading. Norwegian national Lund, 62, who has been BP's chair since 2019, fell out of favor with investors after he backed ex-CEO Bernard Looney's ill-fated foray into renewables. He was re-elected in April with sharply reduced support after coming under pressure from activist investor Elliott Management and criticism from climate-focused shareholders. BP said in April that Lund intends to exit the firm, "likely" in 2026. Sam Laidlaw, the former chief executive of British Gas owner Centrica (CNA), and Ken MacKenzie, retired chair of mining group BHP (BHP), were also reportedly approached to succeed Lund.

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7/21/2025

Elliott Boosts Stake in Data Center REIT Equinix

Bloomberg (07/21/25) Gould, Ryan; Tse, Crystal

Elliott Investment Management has built up its stake in Equinix Inc. (EQIX) and is pushing the data center operator to take steps to boost its share price, people with knowledge of the matter said. The activist firm now has a large investment in Equinix that makes it one of the company’s top 10 investors, the people said, asking not to be identified discussing private information. Equinix’s shares have fallen more than 16% this year, giving it a market value of about $76 billion. The stock suffered its worst one-day drop since March 2020 last month, after an analyst day on which the company revealed higher-than-expected capital expenditures. Elliott has disclosed in filings that it owns 150,000 shares, or about 0.2%, of Equinix. The firm has been building its position in Equinix since the analyst day, according to the people. Elliott frequently invests through derivatives that aren’t required to be disclosed and can result in a larger stake. While the exact size of Elliott’s holding and its intentions couldn’t be learned, the firm may push for additional margin improvements, a potential buyback or adjustments to a recently announced capital expenditure plan. Engagement between Elliott and Equinix is so far collaborative, the people said. “Equinix is focused on executing our strategy and driving value for shareholders,” a spokesperson for the company said. “We regularly engage with our investors, including Elliott, to better understand their perspectives as we advance this goal.” The adoption of artificial intelligence has fueled demand for data center space. So-called hyper-scalers including Amazon Web Services and Google Cloud Platform are in a land grab for real estate. Equinix and peers, though, have been hit with higher project financing costs because interest rates have remained high. “While the changes the company is making are likely to be beneficial in the long term, we believe there will be some pain out of the gate,” Raymond James analyst Frank Louthan wrote about Equinix. Louthan cut the recommendation on the real estate investment trust to market perform from strong buy following the analyst day. As the most prolific activist investor on Wall Street, Elliott has engaged several large technology companies including Salesforce Inc. (CRM) and Texas Instruments Inc. (TXN). Last week, Hewlett Packard Enterprise Co. (HPE) agreed to add Elliott nominee Robert Calderoni as a board director as well as chair of its newly-formed strategy committee. The agreement also allowed Elliott the option to add another board member within a year. Elsewhere, Elliott owns UK-based Ark Data Centres through its private equity arm, while its partner and senior portfolio manager Jason Genrich — who also looks after the HPE investment — sits on the board of another REIT, Crown Castle Inc. (CCI). Genrich previously sat on the board of data center operator Switch Inc. (SWCH).

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7/21/2025

South Korean Conglomerates Face Regulatory Pressure over Treasury Shares

The Chosun Daily (07/21/25) Nam-hee, Kim; Mi-geon, Kim

Following a recently enacted amendment to South Korea’s Commercial Act that expands directors’ fiduciary duties to encompass both the company and its shareholders, the government and the ruling party are preparing a more stringent legislative package. The proposed revisions would mandate the cancellation of treasury shares and the adoption of cumulative voting, a system that enables shareholders to concentrate their votes on individual board candidates. The initiative has raised alarms across South Korea’s corporate landscape, particularly among conglomerates with large treasury stock holdings, as they closely track potential changes that could undermine management control. In parallel, concerns are growing over a separate legislative drive to amend the Financial Investment Services and Capital Markets Act to regulate dual listings, which allow both parent and subsidiary companies to be publicly traded. As of July 21, 2025, a total of 219 listed companies in South Korea hold treasury shares amounting to more than 10% of their outstanding stock, according to data from financial information provider FnGuide. The Democratic Party (DP) plans to propose an amendment to the Commercial Act during the regular National Assembly session in September that would, in principle, require corporations to cancel their treasury shares. Supporters of the legislation argue the measure would help boost per-share value and improve the price-to-book ratio (PBR). The proposal is reportedly modeled on Germany’s legal framework, which mandates cancellation of treasury shares once they exceed the 10% threshold. Several major South Korean holding companies are now reviewing their treasury stock strategies in light of the pending legislation. SK Co. (034730), the holding company of SK Group, maintains a treasury stock ratio of 25%—a significant level. With Chairman Chey Tae-won’s personal stake in the company standing at just over 25%, mandatory cancellation of treasury shares could substantially weaken the group’s ability to defend its management rights through internal holdings. The company previously faced a high-profile hostile takeover attempt in 2003, when British hedge fund Sovereign Asset Management INC. acquired SK shares and demanded Chey’s ouster. Doosan Co. (000150), the holding company of Doosan Group, holds over 18% of its outstanding shares as treasury stock. After its proposed merger between affiliates Doosan Bobcat and Doosan Robotics was scrapped last year following opposition from minority shareholders, investor scrutiny has shifted to governance reform and shareholder return strategies. Other conglomerates with similarly high treasury stock ratios are also under increasing pressure from minority shareholders to cancel their holdings. South Korea revised its treasury stock regulations in 2011 to allow boards of directors to determine how to manage such shares. Prior to the change, companies were required to either cancel treasury shares immediately or dispose of them within one year. The reform was introduced amid growing concerns that domestic firms lacked effective mechanisms to defend themselves against foreign activist investors—an issue brought to the forefront by the SK-Sovereign incident. In the absence of defense tools like golden shares or dual-class voting rights, which are available in other countries, many South Korean firms have relied on treasury stock as a safeguard against hostile takeovers. The proposed amendment to the Capital Markets Act targeting dual listings represents another major point of contention. The DP is considering a requirement for parent companies to allocate a portion of subsidiary IPO shares to their own shareholders when a subsidiary is listed separately. The move is aimed at addressing criticism that spin-off listings erode the value of parent companies and disadvantage existing shareholders.

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7/21/2025

Southwest Airlines Sets January as Date for Assigned Seats

Dallas Morning News (07/21/25) Arnold, Kyle

The assigned seating era at Southwest Airlines (LUV) finally has a precise date. Come January, the air carrier will end more than 50 years of the pick-your-spot philosophy that defined its history. Southwest will use assigned seating for flights starting Jan. 27, 2026. That includes extra legroom seating, which includes up to 5 extra inches to stretch out. Customers will be able to pick their seats for any flight that date and later. The move is part of a raft of operational adjustments designed to mollify dissatisfied shareholders and make Southwest more competitive with its industry peers. In recent months, Southwest has implemented a slew of changes that came after Elliott Management waged a proxy battle with Southwest leadership last year. Since the investor battle started last summer, Southwest has seen its board of directors overhauled and started charging for the first two pieces of luggage, marking the end of the “bags fly free” days. It also started red-eye flights in some markets. “Our Customers want more choice and greater control over their travel experience,” Southwest executive vice president of customer and brand Tony Roach said in a statement. “Assigned seating unlocks new opportunities for our customers—including the ability to select extra legroom seats — and removes the uncertainty of not knowing where they will sit in the cabin. This is an important step in our evolution, and we’re excited to pair these enhancements with our legendary customer service.” Southwest’s boarding process hasn’t necessarily been a free-for-all all. Customers were given boarding preference based on loyalty with the airline, how early they checked in prior to their flight, or whether they had purchased priority boarding. But it was true that passengers were free to sit wherever they wanted, although those with earlier boarding priority tended to choose the front of the plane. Now the front of the plane will be reserved for those who purchase Southwest’s new “choice extra” fare bundle, which includes earlier boarding, seat choice and more frequent flyer reward points. Southwest announced the changes a year ago, but needed time to revamp jets. The Boeing 737 jets will have 48 to 68 extended legroom seats, depending on the model. In addition to the first few rows, there will also be extended legroom seats at the exit rows, which will also be available to buy at a premium cost. The move brings Southwest in line with a practice, a very lucrative one, that all other major airlines use.

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7/21/2025

Elliott Calls on BP’s New Chair to Urgently Fix Shortcomings

Bloomberg (07/21/25) Gopinath, Swetha

Elliott Investment Management, which is one of BP Plc’s (BP) largest shareholders, wants the energy giant’s incoming chairman to urgently improve the firm’s cost base and capital allocation, citing a weak turnaround plan. BP on Monday appointed Albert Manifold as its new chairman, replacing Helge Lund amid pressure for a change in the company’s direction from the activist shareholder. Manifold, previously the boss of building materials company CRH Plc (CRH), will join BP as a non-executive director and chair-elect on Sept. 1. “As one of BP’s largest shareholders, Elliott believes the company requires decisive and effective leadership to overcome its chronic operational under-performance,” its spokesperson said in a statement. Manifold is stepping into the role at a pivotal time for BP. After years of underperformance, BP Chief Executive Officer Murray Auchincloss reset its strategy in February by promising to refocus on oil and gas after years of failed low-carbon investments. With a plan that features portfolio divestments to shrink debt and improve the balance sheet, BP has so far announced only small asset sales. Elliott, which has built up a stake of about 5% in BP as one of its largest bets globally, has been demanding that the energy firm make drastic cost cuts and divestments to strengthen its future as a standalone company. It has said BP’s turnaround plan lacks urgency and ambitions. The activist investor wants BP to reshape its business to be more like other oil majors such as Shell Plc by cutting spending in areas such as renewable energy, as well as making sizable non-core asset divestments. Manifold’s leadership of CRH was notable for a decision in 2023 to switch the company’s primary listing from London to New York. Its US shares rose more than 70% since the change in September 2023. While Manifold lacks oil and gas experience, he oversaw a more than fourfold in the shares of CRH during his 11 years as CEO. Elliott made note of Manifold’s track record of delivering shareholder value at CRH, and said it looks forward “to working with him to urgently address BP’s shortcomings.” The activist investor is pushing for improvements around BP’s “cost base, capital allocation and poorly received turnaround plan.”

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