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3/5/2021

ON Semiconductor to Terminate More Than 700 Employees in Its Second Wave of Pandemic Layoffs

Phoenix Business Journal (03/05/21) Blye, Andy

ON Semiconductor (ON) has announced plans to lay off approximately 740 employees across the company and its subsidiaries during the first half of 2021. This is the second round of layoffs for ON Semiconductor (ON) in the past year after it planned to terminate 475 employees last April. The company said these terminations are part of its ongoing efforts to refocus on growth drivers and streamline operations. The layoffs come during a global shortage of semiconductor chips due, in part, to shifting consumer demand during the Covid-19 pandemic. The company is estimating the layoffs will cost between $58 million and $62 million during the first half of this year due to severance, medical benefits, payroll taxes, and other costs. The filing warned that this restructuring may not manifest as a reduction in future operating expenses. The executive team at ON Semiconductor are experienced but have not been in their current roles very long. CEO and President Hassane El-Khoury took over in December, Wei-Chung Wang became the executive vice president of manufacturing and operations in January, and Thad Trent started as executive vice president and CFO just last month. In December, Starboard Value LP placed two of its preferred directors on the board in an effort to enhance shareholder value.

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3/5/2021

At the Current Rate, Corporate Boards Won't Hit Gender Parity Until 2032, New Report Warns

CNBC (03/05/21) Boorstin, Julia

Women hold 23.5% of all board seats on the Russell 3000 as of the fourth quarter of 2020, according to Equilar's new Gender Diversity Index. The share of women on Russell 3000 boards rose from 21.5% in the fourth quarter of 2019. Women accounted for 39% of all new director appointed seats last year, down from 44% in 2019. In the fourth quarter of 2020, 49% of women were serving on their first board, and women accounted for 44% of all new board seats. At the current rate, gender parity will not be reached until 2032, which is two years later that what Equilar projected a year ago. The share of Russell 3000 companies that still have no women on their boards is 6%. Just 2.4% of Russell 3000 companies, or 71 companies, have boards that are at least half female.

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3/5/2021

Kohl's Investor Group 'Skeptical' That the Amazon Returns Program Is Good for Earnings

MarketWatch (03/05/21) Garcia, Tonya

An investor group has detailed problems with Kohl's (KSS) earnings report for the fourth quarter. In a letter, Macellum Advisors, Ancora Holdings, and other shareholders say Kohl's dividend does not reflect the progress touted by the board, sales are not keeping up with other retailers, and its Amazon (AMZN) return program will not have a positive impact on the company's earnings. The investor group controls about 9.5% of the company's shares. Kohl's earnings report and guidance "substantiate the immediate need for change on the board," according to the letter. The retailer's earnings and revenue beat analysts' expectations. In response to the letter, Kohl's said it rejects short-termism and the attempt to disrupt its momentum. The company said it is "building momentum" and has a strategy for growth.

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3/5/2021

Hedge Fund Takes Aim at UniCredit's Incoming Chairman

Financial Times (03/05/21) Borrelli, Silvia Sciorilli

UniCredit (UNCRY) could face an "increased level of risk" because of incoming chairman Pier Carlo Padoan, according to Bluebell Capital Partners. The London-based hedge fund started building a stake of an undisclosed size in the Milan-based lender in February. UniCredit is in talks with the Italian government about a potential takeover of Monte dei Paschi di Siena (BMDPF), but shareholders oppose a deal. In a letter, Bluebell questioned the independence of Padoan, who was Italy's finance minister when the government bailed out Monte dei Paschi di Siena. Bluebell called Padoan a "politically exposed person." Rome must sell its 68% stake in Monte dei Paschi di Siena by the end of 2021, under a deadline set by the European Commission. Padoan will join UniCredit on April 15.

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3/4/2021

Top Toshiba Shareholder Gets Further Support for Proposed Investigation

Reuters (03/04/21) Yamazaki, Makiko; Umekawa, Takashi

Effissimo Capital Management has garnered additional support in its push for a probe of Toshiba Corp. (TOSYY), in which it is the top shareholder with a 9.9% stake. On March 5, Glass Lewis became the second major proxy advisor, after Institutional Shareholder Services Inc. (ISS), to recommend that shareholders vote in favor of an independent investigation into whether investors were pressured ahead of the company's annual general meeting (AGM) last year. Sources have said the Harvard University endowment fund had been told by a Japanese government adviser that it could be subject to a regulatory probe if it voted against management at the AGM, and the fund reportedly abstained from voting as a result and later learned there was no basis for any probe. Toshiba's own investigation into complaints about the AGM indicated no involvement in any effort to pressure the Harvard fund but did not reach a conclusion as to whether there had been any pressure. The vote about the proposed independent investigation will take place at an extraordinary shareholders' meeting on March 18. Meanwhile, Glass Lewis, unlike ISS, issued support for a proposal from Farallon Capital Management, Toshiba's second largest shareholder, for the board to present a five-year capital policy plan or make certain returns to shareholders.

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3/4/2021

Ovintiv Adds Investor Kimmeridge's Nominee to Board to Settle Proxy Fight

Reuters (03/04/21) Khan, Shariq

Oil and gas producer Ovintiv Inc. (OVV) said March 4 it added a nominee of hedge fund Kimmeridge Energy Management to its board, bringing an end to a proxy battle and earning the fund's support at its annual shareholder meeting. Kimmeridge has a 2.5% stake in Ovintiv and is among its top 10 shareholders. It entered into a proxy battle for three board seats in January and had called for the company to make changes to its capital spending and concentrate on governance. Katherine Minyard, investment principal at Cambiar Investors, will join the board, and the fund will withdraw the nominations of founder Ben Dell and Columbia University research scholar Erin Blanton as independent directors. Kimmeridge started to call for changes at Ovintiv in November 2020, citing concerns about executive compensation and lack of board refreshment. In January, Kimmeridge broadened its demands to include cut costs and sale of non-core assets. Since then, Ovinitiv has announced the sale of its Duvernay assets in Alberta, established new debt reduction targets, and aligned its executive compensation with climate change related goals.

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3/4/2021

Exxon CEO Darren Woods Promises Investors a Strong Dividend Despite 2020 Losses

CNBC (03/04/21) Stevens, Pippa

Exxon (XOM) CEO Darren Woods told CNBC on Thursday the oil giant is committed to its dividend even though the company lost more than $20 billion in 2020 and investors are pushing for change. “We’re going to continue to return cash to shareholders through a very strong dividend,” Woods said on CNBC, noting that 2020 was "certainly the worst environment" the oil major has ever faced. Amid the challenges over the last year, Exxon cut its capital spending plan and reduced its workforce in an effort to preserve its dividend. The company’s current yield of 6.2% is among the highest in the S&P 500, making it an attractive bet for investors seeking income. Woods’ comments came a day after Exxon’s annual investor day, where the company highlighted its global portfolio, financial capability, and commitment to reducing emissions through carbon capture. Exxon has faced pressure from investors since at least December, and on Monday the company announced two new board members, including Jeff Ubben. Still, Engine No. 1, a group that's been pushing for change at Exxon since December, said the new board changes are not enough, nominating its own slate of four new directors. The firm, which includes founders from hedge funds such as Partner Fund Management and Jana Partners, has won the support of California pension giant CALSTRS. “While ExxonMobil has now conceded the need for board change, what is missing are directors with diverse track records of success in the energy industry who can position the Company for success in a changing world,” Engine No. 1 said Wednesday.

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3/4/2021

Proxy Advisory Firms Release First Reports on Latest Best Practices

Harvard Law School Forum on Corporate Governance (03/04/21) Davis, Stephen

The six leading proxy advisors have each publicly released reports showing how they comply with the latest industry Best Practice Principles. EOS at Federated Hermes, Glass Lewis, Institutional Shareholder Services, Minerva, PIRC, and Proxinvest committed to their first reports covering 2020 after the adoption of the current version of the Best Practice Principles for Shareholder Voting Research. The European Securities and Markets Authority was the driving force behind the process that prompted the industry to develop its own voluntary standards. The proxy advisory firms are disclosing information in annual compliance reports on an "apply and explain" basis on service quality, conflict of interest avoidance or management, and communication policy. The firms also have created an oversight committee to provide independent assessments of compliance reports. The committee has begun its first review of the statements to assess compliance. Moreover, the committee will invite market views on industry performance and will release an annual report on whether the principles and independent oversight are improving stakeholder confidence in the proxy voting and research advisory industry.

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3/4/2021

GameStop Bucks Market's Slump Amid Renewed Reddit Chatter

Bloomberg (03/04/21) Lipschultz, Bailey

An apparent resurgence of Reddit users' enthusiasm for GameStop Corp. (GME) stock has erased the company's losses as shares climbed to their highest level since Feb. 1. GameStop share appreciation started building around 2:25 p.m. on March 4 in New York amid a burst of Reddit posts promoting the stocks. AMC Entertainment Holdings Inc. (AMC) and Koss Corp. (KOSS) shares also increased to briefly turn positive before closing lower. The rally defied a volatile round for stocks and bonds with the S&P 500 briefly losing its 2021 gain. GameStop ended Thursday up 6.6% to $132.35, its best closing price in about a month, while shares reached $134.88 in after-hours trading. The jump came minutes after investor and GameStop board member Ryan Cohen tweeted an apparent screenshot from a Pets.com (IPET) TV ad, which some Twitter users suspected was a cryptic message about the company's outlook. When Cohen last tweeted, posting a picture of an ice cream cone, GameStop shares skyrocketed amid a frenzy of day trading, and the company experienced its second best week ever and a two-day rally of 142%.

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