Daniel Loeb's Third Point posted a video on Oct. 18 criticizing corporate leadership at Campbell Soup (CPB) as the hedge fund looks to replace the company's entire board at its Nov. 29 shareholder meeting. The four-minute "Empty the Can" video cites "dismal soup sales" and lowered expectations at Campbell, and takes a jab at the company's iconic "Mmm, Mmm, Good" jingle by ending with the lyrics "Mmm, Mmm, Bad." The video comes a day after family members of company founder John Dorrance, who hold a combined 41% of Campbell's shares, announced their support for the current board; three of those family members sit on the board. In the video, Third Point argues that a "fresh new" board could recruit a new CEO "to turn this company around before it's too late. We know Campbell's can thrive again." The hedge fund owns about 7% of the company's stock.

Tilman Fertitta, the billionaire owner of Golden Nugget Casinos, reportedly has approached Caesars Entertainment (CZR) about a merger that would value Caesars at $13 per share. Sources say Fertitta is waiting for a response from Caesars' board about the reverse merger. Under the deal, Fertitta's privately owned hospitality company Landry's would exchange its private shares for stock in Caesars, which would technically be the acquirer but Fertitta would be the company's largest shareholder and, as such, become chairman and CEO. This would give Caesars' shareholders, including Apollo Global Management and TPG Global, smaller stakes in a larger company. Those shareholders, as well as HG Vora Capital, have been receptive to a sale.

On Oct. 18, PPG Industries Inc. (PPG) reported a drop in adjusted earnings per share to $1.45 in the third quarter from $1.52 a year ago, indicating that higher prices and cost cuts were not enough to cover rising expenses for its ingredients. Shares dropped 10% last week—the biggest decline in a decade—when the company announced that it was paying more for the chemicals it uses to make paint and coatings, as well as for oil, shipping, and labor. PPG said it repurchased about $250 million shares in the third quarter and plans to use about $1 billion on acquisitions and share repurchases in the fourth quarter. Trian Fund Management LP has a 2.9% stake in PPG. The company said it welcomes shareholder input.

CEOs of 20 public companies, pension funds, and investment firms have signed the Commonsense Corporate Governance Principles 2.0, pledging to use these standards to inform the corporate governance practices within their own organizations. Executives who signed on include Jeff Ubben of ValueAct Capital, Larry Fink of BlackRock (BLK), and Coca-Cola (KO) chief executive James Quincey. The principles are intended to promote a constructive dialogue on good corporate governance, create economic growth, and sustain the health of America's corporations and markets. The updated principles include a number of additions and enhancements, including that board members should be prepared to serve for a minimum of three years; if board elections are not annual, companies should explain why; companies should allow some form of proxy access; poison pills and other anti-takeover defenses should be put to a shareholder vote and re-evaluated by the board regularly; and asset managers should disclose if they rely on proxy advisors to inform their decision making.

A shareholder in Hudbay Minerals Inc. (HBM) reportedly has requested a meeting with the Toronto miner to discuss replacing board members and to seek assurances it will not pursue acquisitions or a joint venture without consulting shareholders. Waterton Global Resource Management has informed Hudbay Chairman Alan Hibben that it reserves the right to do anything it deems necessary to improve the company's performance, according to a source. Waterton has upped its stake in the company from 4.8% to roughly 7%, the source said. Hudbay has invited Waterton to meet with some board members after management had a brief initial meeting with the firm in late August, a Hudbay representative said. Waterton is urging Hudbay to agree to a moratorium on acquisitions following a report this month that the company is in talks to acquire Mantos Copper SA, a Chilean miner. Waterton detailed its opposition to the deal in a public letter on Oct. 4. The private equity firm is worried that Hudbay has not given it assurances that it will not pursue the transaction in any form, the source said.

Swiss engineering company ABB Ltd. (ABB) is working with advisers to prepare the possible separation of its power grid unit, according to sources. A sale of the unit would meet a longtime demand of Cevian Capital AB. The investor became a major shareholder in ABB more than three years ago and began pushing for a breakup of the company, and particularly a separation of its power grids division, which is worth more than $10 billion. The Zurich-based company is receiving advice from Credit Suisse Group AG and Dyal Co. on a possible sale or spinoff of the unit, the sources said, and the board is likely to make a decision by the end of the year on whether to pursue a deal. Infrastructure funds, private equity firms, and some Asian rivals could be interested in the asset, though some could be discouraged by the investment, financing, or regulatory requirements, the sources said. ABB could retain part of the business following any transaction, the sources added.

European consumer behemoths Unilever (UN) and Nestle (NSRGY) reported sales growth on Thursday that broadly matched analyst estimates, which was exactly what they needed. A misstep at Nestle could bolster an activist investor; at Unilever, it could attract one. The companies are struggling with poor sales growth as consumers turn to smaller products and as growth in emerging markets slows. Of the two, Unilever is under the greater pressure to produce better operating results after promising to revive its performance after spurning a generous takeover approach from Kraft Heinz Co. (KHC) last year. The Anglo-Dutch conglomerate had planned to simplify its structure into a single holding company in the Netherlands, but was forced to abandon that plan this month amid opposition from big U.K. shareholders. Any drop in performance could encourage an investor to push for another takeover approach. Nestle is in a stronger position. CEO Mark Schneider is seeking to steer a steady course between chasing profit at the expense of the top line growth, and profitless revenue growth. So far, he seems to be doing well, but he cannot afford a misstep. In July, Dan Loeb urged him to accelerate the pace of disposals. Loeb also wants Nestle to divest its 24 billion-euro ($28 billion) stake in L'Oreal SA, something Schneider has so far resisted. Any operational weakness could give the investor motivation to push even harder, by, for example, demanding a board seat.

One of the largest shareholder rebukes over executive pay occurred at Telstra's annual meeting in Sydney on Oct. 16, leading many others to declare that chief executives are overpaid. John Mullen, Telstra's chairman, defended Telstra CEO Andy Penn's AU$4.5 million pay package, but also stated that he thinks executive salaries are too high. He argued that "changing this takes time and needs to be embraced by all of corporate Australia not just one company or one industry, as the marketplace for talent is international and is industry agnostic." Graham Kraehe, who is chairman of Bluescope Steel, Brambles, and a former member of the Reserve Bank board, said he also believes CEOs are paid too much. "Corporate Australia has lost some trust and I think corporate Australia needs to show some leadership in saying this is an issue," he said. During his speech at Telstra's annual meeting, Mullen stressed that "the multiple difference in the U.S. is 300 times between the CEO and the average employee, U.K. is 180 odd, and here we're 50-something. So, we're certainly way down the pecking order in terms of that but still 50 times is a lot." However, the Communications, Electrical, and Plumbing Union of Australia (CEPU), which represents Telstra workers, seized on Mullen's comments. "The top six executives are collectively paid 200 times more than the average Telstra worker," said Shane Murphy who heads the communications branch of the union. "The inequity is ridiculous."

On Oct. 17, Campbell Soup Co. (CPB) said four key shareholders—Bennett Dorrance, Mary Alice Malone, Archbold van Beuren, and Charlotte Weber, all descendants of former chairman John Dorrance—oppose Third Point's plans to oust the company's entire board. The family members, who own a combined 41% stake in Campbell, plan to vote in favor of the company's existing board at the Nov. 29 shareholder meeting. Third Point, which owns 7% of the company's stock, said in a statement, "This group of billionaire heirs and heiresses are attempting to intimidate smaller shareholders by flaunting their inherited voting bloc as an impenetrable moat." Shares in Campbell dropped 3.9% in morning trading, and Third Point said the decline suggested shareholders are unhappy with these heirs' decision to support the current board. Third Point wants to replace all directors with a 12 person-slate that includes George Strawbridge, another descendant of John Dorrance.

Nearly half of Origin Energy's shareholders—46%—voted in favor of a shareholder proposal that asked the company to review its membership in energy industry lobbying groups and establish criteria for supporting such organizations. Although the vote fell short of the mark needed to force Origin to abide by the motion, the company promised to improve transparency with regard to its lobbying interactions. The Australian Center for Corporate Responsibility (ACCR), which backed the motion, called the vote tally a record for a shareholder proposal on an environmental, social, and governance issue in Australia. "It is a landmark shift from the investment community and signals that oppositional lobbying on climate and energy policy will no longer be tolerated," said Dan Gocher, director of climate and environment for ACCR. The vote took place Wednesday during Origin's annual general meeting. ACCR argued that the lobbying groups have taken positions that could conflict with the company's commitments on climate change and its long-term financial interests. The prospect of a similar motion from ACCR also prompted Westpac (WBK) to agree this week to review its membership of lobbying groups.

Several public funds with holdings in Facebook Inc. (FB) are backing a shareholder proposal filed by Trillium Asset Management in June to oust CEO Mark Zuckerberg as chairman. Those joining the shareholder proposal include the state treasurers of Rhode Island, Illinois, and Pennsylvania, and New York City's comptroller. Although the announcement has no practical effect on Zuckerberg and his position as both CEO and chairman, as his share of the voting power among Facebook investors is 59.9%, the news underscores the increased scrutiny of the company's corporate governance after a series of controversies. The proposal will be voted on at Facebook's May 2019 shareholder meeting. New York City's pension fund held 4.7 million Facebook shares as of March 31, currently valued at more than $745 million, and the three states hold a combined 200,000 shares valued at around $32 million.

Pension & Investment Research Consultants (PIRC) is recommending that shareholders oppose a controversial proposal from Ashmore Investments (AJMPF) over concerns that CEO Mark Coombs could take "creeping control" of the company. The share buyback proposal—which could boost Coombs' shareholding from 38.61% to 40.65% without having to pay a takeover premium—will be voted on at the company's Oct. 19 annual general meeting. "Such waiver raises concerns about potential creeping control of the company," said the proxy advisor. "This resolution would only be supported if the concert party is committed not to increase its percentage holding in the company, which is not the case. On this basis, an oppose vote is recommended." Institutional Shareholder Services also recommended a vote against the proposal. PIRC also advised shareholders to oppose the remuneration report—calling Coombs' pay for the year under review "highly excessive" at 1,016% of salary—and the re-election of independent non-executive director Clive Adamson over claims he has not addressed the opposition to the 2017 remuneration report.

Japan’s Fujifilm Holdings Corp. has won an appeal in its legal dispute with Xerox Corp. (XRX), with a New York court overturning preliminary injunctions sought by an investor that had blocked their planned merger. Xerox this spring terminated a $6.1 billion deal with Fujifilm in a settlement with Carl Icahn and Darwin Deason that also gave control of the U.S. photocopier giant to new management. The ruling by the New York State Appellate Court could give the Japanese firm leverage to bring Xerox management back to the negotiating table. Fujifilm is also suing Xerox in a separate U.S. suit that seeks more than $1 billion, accusing it of breach of contract in abandoning the deal. Its chances of success are, however, unclear as Xerox's new management, backed by Icahn and Deason, is opposed to the proposed merger. Analysts have said the only way for Fujifilm to gain any traction with Xerox now is to raise its offer. Fujifilm said it stands by its view that the original planned merger remains the best option for the shareholders of both companies. The U.S. firm is now led by John Visentin, who worked as a consultant to Icahn in the proxy fight and just this month it appointed Louie Pastor, previously deputy general counsel at Icahn Enterprises, as general counsel. Icahn and Deason own 15% of Xerox.

Livermore Partners is urging Detour Gold Corp. (DRGDF) to shake up its board and conduct a strategic review, becoming the second investor to pressure the Canadian mining company. In an Oct. 16 letter, Livermore Managing Director David Neuhauser said the board had failed its shareholders on “numerous governance and operational matters.” The letter comes after Paulson & Co. called for Detour's entire board to be replaced and demanded that the company run a formal process to evaluate alternatives. “We think there needs to be wholesale change at the board level,” Neuhauser said in an interview. “I have zero conviction that the current management team and board can execute.” Investment company Coast Capital Management L.P., another Detour shareholder, has also requested a sale and board changes. Livermore's Neuhauser said he was not acting together with Paulson but had formed his opinion based on publicly available information. Both Livermore and Paulson are part of a recently created alliance of gold mining investors called the Shareholders Gold Council. While Neuhauser supports Paulson's demands, he said he would be satisfied if most of the board was overhauled. He said Detour needed to a retain a global investment bank to evaluate all strategic options, including a sale or a joint venture with a partner such as a Chinese miner.

Dell Technologies Inc. announced Tuesday it still plans to go public by buying back its tracking stock (DVMT), despite opposition from Carl Icahn. The billionaire investor disclosed an 8.3% holding in Dell tracking stock on Monday, saying he will do everything in his power to prevent the computer manufacturer's plans. Dell in July announced a $21.7 billion cash-and-stock deal to buy back shares tied to its interest in software provider VMware (VMW). “Dell Technologies continues to believe that the proposed offer for DVMT shares ... is fair and in the best interests of DVMT shareholders,” a Dell spokesman said.

Aryzta says a proposal by its largest shareholder, Cobas Asset Management, to boost the company's capital by 400 million euros ($463 million), half the amount the board wants, is inadequate and features substantial execution risk. "The Board of Directors and executive management of Aryzta remains firm and unanimous that 800 million euros of equity capital is required to reduce its excessive debt levels, strengthen its balance sheet, and provide the necessary liquidity and working capital funding to deliver on its multi-year turnaround plan," the company said in a statement on Oct. 16. "The Board of Directors unanimously believes that the Cobas proposal is inadequate and presents significant execution risk for shareholders."

Barratt Developments could face a revolt at its annual general meeting Oct. 17, after PIRC recommended investors vote against the re-election of Chairman John Allan. PIRC says Allan, who is also chairman of Tesco, "cannot effectively represent two corporate cultures...the possibility of having to commit additional time to the role in times of crisis is ever present." PIRC recommends investors vote for the re-election of CEO David Thomas. It also recommends investors vote against the company's compensation report, noting that the chief executive's pay is "excessive" at 33 times that of the average employee.

Chief Executive Group's 2018-2019 CEO & Senior Executive Compensation Report for Private Companies found that the median CEO total compensation was $350,622 last year—no significant change from the year before. Additionally, the research found that the median total compensation package for CEOs of companies with revenues of more than $1 billion is more than five times that of chief executives whose firms generate between $100 million and $250 million in revenues. Of the nearly 30 million businesses in the United States, less than 6,000 are publicly traded and only the biggest 8% of those make it into the S&P 500. In terms of company ownership, CEOs of private equity owned companies had the highest total compensation packages overall, with a median compensation package 87.7% higher than that of sole proprietor CEOs.

On Oct. 16, 61% of Telstra Corp.'s (TTRAF) shareholders voted against the Australian telecom firm's executive pay proposal, increasing the possibility that its board could be ousted next year if the protest vote is repeated. The rejection of the remuneration report by shareholders was widely expected, with both CGI Glass Lewis and Institutional Shareholder Services recommending that shareholders oppose it. Telstra Chairman John Mullen told investors, "We will listen, we will consult yet again, and we will do everything we can to amend and enhance our remuneration policies where it is demonstrated that we can do better." However, he said the board would not change direction or completely eliminate bonuses for executives simply because of criticism from proxy advisers and shareholders.

Carl Icahn reportedly has accumulated a significant stake in Dollar Tree (DLTR), which acquired rival Family Dollar in a 2015 deal that Icahn had sought. Icahn's firm made a profit of about $200 million on its investment when Family Dollar was acquired by Dollar Tree for $8.5 billion in cash and stock. Dollar Tree's shares slipped 11% from $92.37 to $81.75 over the last 12 months, with analysts arguing that it has struggled mainly because it took on too much debt to make the deal happen.

Five or more private equity firms may bid for Athenahealth (ATHN) as an auction for the health information technology company nears a conclusion, according to sources. Potential bidders include Bain Capital; Hellman & Friedman; Clayton, Dubilier & Rice; and TPG, the sources said. Elliott Management also is considering a bid, they said. Elliott has a 9% stake in Athenahealth and may keep it if it is unable to acquire the company, the sources said. Athenahealth has received indications of interest of more than $135 a share, with final bids due by the end of October. Elliott has been calling for changes at Athenahealth since May 2017 and said in May 2018 it was prepared to offer $160 a share for the company, subject to due diligence.

Oasis Management is calling for Alpine Electronics (AELEF) to pay a dividend of 300 yen ($2.68) a share under a scenario in which a planned buyout by parent Alps Electric (APELY) is rejected. The Hong Kong-based hedge fund's proposal aims to counter a proposal from Alpine stating that a special dividend of 100 yen per share will be paid if the deal proceeds. Oasis, which owns about 10% of Alpine, opposes the buyout, which requires approval of more than two-thirds of Alpine's shareholders. The hedge fund argues that the swap ratio of 0.68 Alps share for each Alpine share is too low. Elliot Management has an 11.2% stake in Alps and a 9.78% stake in Alpine.

Campbell Soup Co. (CPB) has responded to proxy materials from Daniel Loeb's Third Point, which is seeking to replace the company's entire 12-member board. In a recent filing with the Securities and Exchange Commission, Campbell provided more information about its performance over the last 18 months and a more detailed outline opposing Third Point's view on the company. In its shareholder presentation, Campbell stressed that the entire food and beverage industry faces challenges, and it spelled out actions taken by its current board during the period of "underperformance" since fiscal 2016, such as replacing various executives. Among other things, officials said Third Point has been "cherry-picking data to mislead shareholders" and that its 12-member board would not be in shareholders' best interests. The presentation states that "Third Point's 'plan' underscores their superficial understanding of the company" and that the hedge fund "has failed to put forward any ideas not already considered or included in the board's plan."

On Oct. 2, a group of institutional investors, asset managers, state treasuries, and Environmental, Social, and Governance (ESG) advocates petitioned the Securities and Exchange Commission to mandate standardized disclosure of ESG information by publicly traded companies. They believe standardized data will provide a better way to review companies' risk management and long-term performance while saving time and trouble. Signers of the petition include the $361.6 billion California Public Employees' Retirement System, Sacramento; New York State Comptroller Thomas P. DiNapoli; Illinois Treasurer Michael W. Frerichs; Connecticut Treasurer Denise L. Nappier; Oregon Treasurer Tobias Read; and the $2.6 billion Seattle City Employees' Retirement System. Asset managers signing the petition include Aberdeen Standard Investments, Calvert Research and Management, Legal & General Investment Management America, and Trillium Asset Management LLC. According to Bryan McGannon, director of policy and programs at US SIF in Washington, many companies already do sustainability disclosure, but "the biggest challenge to investors is consistent data so you can do apples-to-apples comparisons...We realistically believe that we need to build a case and demonstrate that there is a need for this."

Sempra Energy (SRE) has appointed Cynthia L. Walker and Michael N. Mears to its board of directors. Sempra's board and Elliott Management mutually agreed to the appointments as part of a cooperation agreement announced in September. Walker is senior vice president of marketing and midstream operations and development for Occidental Petroleum (OXY). Mears currently serves as chairman, president, and chief executive officer of Magellan Midstream Partners (MMP). Walker and Mears will serve on the board's LNG and Business Development Committee, which will work with the board on an expanded review of Sempra's businesses. Three current independent board members—William C. Rusnack, James C. Yardley, and Alan L. Boeckmann—also will serve on the committee. Boeckmann will serve as chair of the committee. "With their considerable management experience in the energy industry, especially in the midstream sector, Cynthia Walker and Mike Mears will add critical depth and experience to our board as we continue to expand our energy infrastructure businesses," said Sempra CEO Jeffrey W. Martin.

Carl Icahn said Monday that Michael Dell and private equity firm Silver Lake are "manipulating" and "coercing" shareholders of the tracking stock of VMware (VMW) into accepting their buyout offer. By using "scare tactics," he said, Dell and Silver Lake are "literally stealing" $11 billion from shareholders in a plan to take Dell (DVMT) public again. Icahn argues that Dell and Silver Lake are significantly undervaluing VMware, a software company, for their own financial gain. "You've got two guys that are going to make $11 billion," he said on CNBC's Halftime Report. "Eleven billion dollars for doing nothing. It's unrivaled even on Wall Street's standards." Icahn recently revealed an 8.3% stake in VMware. He is seeking to block Dell's plan to return to the public market by acquiring the Dell tracking stock. Dell was also considering an initial public offering if its plan to buy the VMware shares failed. Icahn said in a letter that he would gather votes against the deal. "I intend to do everything in my power to STOP this proposed DVMT merger," the letter stated. "In my opinion, it is better to have peace than war. I still enjoy a good fight for the right reasons, and in the current situation, I do not see peace arriving quickly!"

Following the commencement of a shareholder campaign in the lead-up to its December annual general meeting (AGM), Westpac (WBK) said it would review its membership of business lobby groups, along with their positions on climate change and other policies. In response, the Australasian Centre for Corporate Responsibility (ACCR) has agreed to withdraw a shareholder resolution calling on the bank to disclose more information about its membership of the Business Council of Australia and other groups. The "adversarial campaigning" of industry groups has contributed to Australia's stalled climate and energy policy debate, according to the ACCR. A similar ACCR resolution will be voted on at Origin Energy's (OGFGY) AGM on Oct. 17, and it has secured the backing of ISS and CGI Glass Lewis. "Shareholders would benefit from increased disclosure on these issues, as it would allow them to better assess the relative risks and benefits of the company's climate change and energy policy-related lobbying activities, and how the company is managing those activities," ISS said in a note to clients. "Therefore, this proposal merits shareholder support."

The findings of a survey of 80 firms globally by the Alternative Investment Management Association are a sign that hedge funds are considering the longer game. Just over a tenth, or $59 billion, of their combined $550 billion under management have been committed to environmental, social, and governance (ESG) strategies. The traditionally shorter-term investment holding periods of hedge funds conflict with the longer-term nature of sustainable investing, says Per Lekander, partner at Lansdowne Partners, a hedge fund in London. Client demand, regulation, and risk management—in addition to the potential for outsized returns—are behind the shift, according to fund managers. However, the appetite for ESG among hedge funds in the U.S. is less clear. The European market is more advanced than the U.S. on responsible investing, says David Silverman, managing director at Blue Harbour Group. "Overall, European companies have superior disclosure of ESG factors in comparison to U.S. peers," he says.

Data from various publicly available sources shows a resurgence in activist campaigns during the first half of 2018 after a decrease in 2016 and 2017. Globally, there were about 150 campaigns in the first half of 2018, up from about 100 in the first half of 2017, with a concentration of activity among several leading activists. Elliott accounted for more than 10% of the total number of new campaigns, and three activists—Elliott, Starboard, and ValueAct—accounted for about 20% of activity. Meanwhile, three activists—TCI, Elliott, and ValueAct—accounted for about 40% of the capital deployed in public campaigns commenced in the first half of 2018, and three activists—Starboard, Elliott, and Icahn—accounted for about 45% of all of the board seats won by activists during that period. The most frequently engaged companies are those with market capitalizations of $100 million to $500 million, and the most common objective of activist campaigns was a matter related to mergers and acquisitions.

Carl Icahn is preparing for another battle with Michael Dell. Icahn fought Dell when he took his namesake computer company private five years ago. Now, Icahn is set to challenge plans to take it public again, having disclosed on Monday that he has upped his stake in shares that track Dell Technologies Inc.'s (DVMT) interest in VMware Inc. (VMW) to 8.3%. Icahn stated in a letter that he intends to vote against Dell Technologies' plan to buy the stock and advises other shareholders to do the same. Icahn argued that the current deal significantly undervalues DVMT stock. "I firmly believe Dell and Silver Lake are trying to capture $11 billion of value that rightly belongs to us," the letter stated. Icahn said he believes DVMT is worth about $144 a share, based on recent DVMT and VMware share prices, but it currently trades at approximately $94.50. A special committee of Dell's board of directors representing DVMT shareholders previously said it examined several options and determined the current offer maximizes value. The deal has been unpopular with shareholders since it was announced. Holders of around 20% of DVMT—including Icahn, Elliott Management Corp., some teams at BlackRock Inc. (BLK), and others—reportedly were already thinking about rejecting it.

Greenlight Capital has acquired a “medium-sized” stake in telecoms company BT and expressed interest in its separation from Openreach. In a recent letter to investors, Greenlight said: “It is possible that new management will unlock value by splitting Openreach from the telecom service provider.” Greenlight bought its stake at an average price of 219p and said that the shares were cheap after “years of trouble including regulatory concerns, an accounting fraud in Italy and Brexit.” BT has yet to name a successor to CEO Gavin Patterson, who is slated to leave by the end of the year. The management shakeup comes after years of financial underperformance and tensions between BT and Ofcom over whether to fully separate BT from Openreach, which controls the nation's largest broadband infrastructure network. Greenlight's stake is the latest sign that investors believe that the telecoms sector is ripe for a shake-up. There has also been a sharp rise in British companies engaged by activist shareholders. Figures from investment bank Lazard show that the number of campaigns in the U.K. has doubled to 21 this year compared with the same time in 2017. Rich Thomas, head of European shareholder advisory at Lazard, said: “The three to four-year evolution of activism the U.S. experienced is happening in the U.K., but at a much accelerated pace. It's more disruptive because the playbook has been written. What we're seeing in 2018 is the new normal.”

Cobas Asset Management is pressuring Swiss-Irish baker Aryzta to hold an extraordinary general meeting to discuss a better funding plan. Under its alternative proposals, Cobas said it would back a 400 million euro ($464 million) capital increase—half of what Aryzta's board wants. “Cobas cannot defend actions that lead to such destruction of shareholder value as would occur through the highly dilutive capital increase proposed by the Aryzta's board of directors,” said Cobas, Aryzta’s largest shareholder with a 14.5% stake. Aryzta's board had urged shareholders to support its plan to raise 800 million euros in new capital to reduce debt and restore growth. Cobas had said this month the planned capital increase was excessive and it would present less dilutive measures. Cobas said it would also ask Aryzta to sell non-core assets, which could raise an additional 250 million euros. “Serious expression of interest from third parties for several assets have already been received,” the investor said, adding that a deal could be arranged in a “very short time frame.” “This alternative proposal of raising 650 million euros (640 million euros net of expenses) significantly improves the outlook for shareholders in the medium term in comparison to the 800 million euro (750 million net of expenses) proposed by the board,” Cobas said. Cobas added it would be prepared to support Aryzta's raising up to 400 million euros in extra capital in the next 12 months, “if properly explained.”

Institutional Shareholders Services (ISS) and the Council of Institutional Investors (CII) have launched a website in opposition to a proposed bill that they say would alter the proxy advisory landscape. The website, Protect the Voice of Shareholders, was launched Oct. 2 and "corrects the inaccurate rhetoric pushed by H.R. 4015 proponents," according to an ISS and CII news release. H.R. 4015, the Corporate Governance Reform and Transparency Act of 2017, passed the House of Representatives last year and is now being considered in the Senate. Under the bill, proxy firms would have to register with the Securities and Exchange Commission, disclose potential conflicts of interest and codes of ethics, and publish their methodologies for formulating proxy recommendations and analyses. ISS and CII are opposed to the bill. "While proponents of H.R. 4015 have created the illusion of problems in proxy advising that need fixing by Congress, what they really seek to do is minimize the voice of shareholders and investors on matters like CEO pay," said Ken Bertsch, executive director of CII. "H.R. 4015 would require proxy advisory firms to share their research reports and voting recommendations with the companies that are the subject of their reports and recommendations before they share them with their paying customers, institutional investors. Giving companies the right to review proxy advisors' work before it goes to actual clients is unprecedented interference in the commercial marketplace."

On Oct. 16, Telstra (TLSYY) CEO Andy Penn and his embattled executive team will face shareholders at the company's annual general meeting in Sydney. Telstra is facing a big protest vote on its remuneration report, with the proxy advisory firms Ownership Matters, Institutional Shareholder Services, and CGI Glass Lewis recommending that shareholders vote against it. Observers say the company likely will register a "strike" against the report, meaning a vote of more than 25% against its adoption. If Telstra received a second strike next year, the board would face an automatic spill. Although the Australian Shareholders Association has sided with the board, industry insiders anticipate the vote will be a "landslide." In addition to losses in share price, investors are upset that Telstra cut its dividend in February.

On Oct. 12, Detour Gold Corp. (DRGDF) said Paulson & Co. rejected its settlement offer regarding management changes, including a plan to appoint a new CEO. The settlement would have resulted in nearly half of the Canadian gold miner's board being refreshed in six weeks and interim CEO Michael Kenyon stepping down before the next annual general meeting. Further, Detour had offered to drop a civil claim against John Paulson's hedge fund, which owns a 5.4% stake in the company. In September, the hedge fund said it planned to solicit proxy forms in support of removal of certain directors from Detour's board.

At least five potential suitors have expressed continued interest in Athenahealth Inc. (ATHN) as the auction for the health record technology company nears an end, according to sources. Elliott Management Corp., which owns 1.4% of Athenahealth, reportedly is one of the parties still actively evaluating a potential deal. The company has indications of interest surpassing $135 a share, the sources said. Final bids are due near the end of October.

Barry Rosenstein's JANA Partners has one of the best-performing activist funds that is keeping a low profile. JANA Strategic Investment Fund is up in the mid-teens this year after posting a net internal rate of return of 22% in each of the two previous years, according to an investor. The strategy holds $1.6 billion in capital, including co-investments, and $1.35 billion excluding the co-investments, but its results are not reported to investors in the firm's better-known funds—its flagship fund JANA Partners and JANA Nirvana—and it does not send out quarterly letters to investors. JANA Strategic is a drawdown vehicle that resembles a private equity fund more than a hedge fund, with investors only sending their committed capital to JANA when the fund is ready to make an investment. Each time the fund makes an investment, it generally gives investors an opportunity to increase their bet by co-investing in the deal. Furthermore, the fund has made a number of activist investments by partnering with industry executives who have invested millions of dollars of their own money alongside JANA.

Ethnic minorities account for 84 of the 1,048 director positions in the 100 biggest companies on the London Stock Exchange, down from 85 last year, according to a government-backed campaign to improve diversity in the boardroom. Fifty-four of the FTSE 100 companies do not have a single ethnic minority on their board of directors, up from 51 a year ago. Overall, 8% of the directors of the biggest companies are ethnic minorities, and ethnic minorities who are U.K. citizens hold just 2% of director positions. Anglo American Chairman Sir John Parker, who conducted the review, said he did not expect to see significant progress in the first year of the campaign, but he warned companies that he would like to see them take action. The Parker review set a target for companies in the FTSE 100 to appoint at least one board-level director from an ethnic minority background by 2021. A day before the Parker review released its findings, Prime Minister Theresa May unveiled plans to require companies to disclose race pay gap statistics.

Investors, issuers, and other market participants are set to offer their ideas for improving the U.S. proxy system during a roundtable the Securities and Exchange Commission (SEC) has scheduled for Nov. 15. The various sides on proxy-related issues have begun jockeying for public awareness and support. The SEC's Investor Advisory Commission held a broader discussion on proxy voting during its regular meeting in September, and Ken Bertsch, executive director of the Council of Institutional Investors (CII), called for better use of technology to improve the voting process. Participants also expressed concern about the undue influence of proxy advisory firms such as Institutional Shareholder Services (ISS) and Glass Lewis. David Katz, a partner at law firm Wachtell, Lipton, Rosen & Katz, said the current system is costly for both sides, while Deborah Majoras, chief legal officer of Proctor & Gamble (PG), stressed that there must be an accurate vote count. Also during the meeting, SEC Chairman Jay Clayton announced that the agency has decided to withdraw two 2004 "no-action" letters issued to Egan-Jones Proxy Services and ISS. Meanwhile, ISS and CII have launched a website to oppose H.R. 4015, the Corporate Governance Reform and Transparency Act. The U.S. Chamber of Commerce has released a report that calls for raising the resubmission threshold for shareholder proposals.

Hong Kong-based Argyle Street Management Ltd. is urging Japan’s largest listed life insurer, Dai-ichi Life Holdings Inc., to sell its large stock portfolio and repurchase up to $13 billion worth of its own shares. In a letter dated Oct. 5, the Hong Kong-based fund said that it considered Dai-ichi’s shares undervalued. It suggested one reason was the insurer’s large portfolio of shares, which could be more volatile than other investments and cause people to perceive Dai-ichi as higher-risk. Argyle proposed that Dai-ichi sell much of its stock portfolio and use the proceeds to repurchase ¥1 trillion to ¥1.5 trillion ($8.9 billion to $13.4 billion) of its own shares. “We believe the board and management should actively pursue this approach,” wrote Argyle’s chief investment officer, Kin Chan. Dai-ichi is in the midst of a much smaller buyback of up to ¥39 billion as part of its goal to return 40% of group profits to shareholders. Argyle also said its calculations indicated Dai-ichi's equity portfolio underperformed a Japanese equity benchmark over the past decade. The investor, which manages about $1.4 billion in assets, owns less than 1% of Dai-ichi's shares outstanding, according to a source. Its financial logic, however, may attract support among Dai-ichi's shareholders.

Carl Icahn, the top shareholder of Hertz (HTZ), recruited new CEO Kathryn Marinello nearly two years ago to revitalize the embattled car rental company. In an interview, Marinello says of Icahn, “he's obviously enormously patient to be suffering through this with us. But at the same time he sees the end goal. He sees the great leadership team we've built. He understands the great assets we have and the brand that we have. And he's a believer.” Since Marinello took the helm last year, she has been investing in new information technology, upgrading the company's fleet of vehicles, partnering with companies like Apple (AAPL) and Aptiv (APTV) that are developing self-driving cars, and hiring new leadership. Still, quarterly profits have been swinging positive and negative and its stock has dropped 15% so far this year. With revenues of $8.8 billion, it has also fallen to No. 335 on the Fortune 500. Marinello knows that Hertz's turnaround still needs improvement. She says the only advice she gets from Icahn is “just move faster.” She says, “The need to innovate and quickly launch is something that we probably will never do fast enough, but we're working on it.”

Athenahealth, which has come under pressure from Elliott Management to explore a sale, reportedly has approached suitors it previously rejected as no stronger offers have materialized. Elliott in June ousted Athena founder and CEO Jonathan Bush. But after indicating in the spring it would pay $160 a share for the company, or about $7 billion, the fund has since backed off that bid. Now, suitors whose offers were considered too low months ago are being invited back, according to sources. Offers are now believed to value the company at no more than $135 a share, and Elliott’s bid is not the highest one, sources said. Without a sale, the shares could fall to between $110 and $120, according to an analyst. The company’s shares closed slightly down Thursday at $120.78. The company will likely not make a decision until next week at the earliest on how to proceed, according to sources. Athenahealth is deciding between a full sale, a merger with Pamplona Capital’s NThrive, or to continue as a listed company. If the company chooses not to sell or merge, it will have to find a new CEO to replace Bush, sources said. Former GE chief Jeff Immelt has been running Athena as its executive chairman since the summer. “They definitely need a CEO that is not Jeff Immelt,” the analyst said. “If I’m the candidate, I would want to know what Elliott’s perspective is going forward.” Elliott owns 9% of Athena.

Prime Minister Theresa May's government, which already requires large companies to report pay disparities between men and women, is considering a rule that would force companies to report any pay disparities among ethnic groups in their workforce. The rule comes after a study last year, the Race Disparity Audit, which showed pay disparities between ethnic minorities and their white counterparts in Britain. The audit found that the unemployment rate was 8% for black, Asian, and other ethnic-minority people, which was almost double that of white British adults, at 4.6%. Additionally, people who identified themselves as Pakistani, Bangladeshi, or black received the lowest average hourly pay among ethnic groups. The government said it plans to invite employers to offer ideas on how to report on pay by ethnicity. Currently, businesses in Britain share their employees' racial background only on a voluntary basis.

Larger hedge funds invested in Toshiba are starting to grumble that Japan's most famous industrial conglomerate is dragging its feet on a pledge to offer a 700 billion yen share buyback program. Nobuaki Kurumatani made the promise soon after he became the new CEO this year. Toshiba has lots of cash but sits on the second section of the Tokyo Stock Exchange partly because of a $5.4 billion share issue and $17.7 billion sale of its memory business. The November 2017 share issuance enabled hedge funds to buy themselves relatively cheaply onto Toshiba's shareholder registry. About 40 hedge funds are betting that Toshiba must carry out the buyback program quickly as a matter of governance-driven honor but also to enrich them handsomely. Foreign investors now hold upwards of 70% of Toshiba shares. Failure to initiate the buyback plan by the start of next year could lead the funds to act in concert on removing Toshiba's entire board. Several funds on the register have enough shares needed to call an extraordinary general meeting.

Women, on average, are paid substantially less than men, and the key differentiator appears to be that more women are hired into lower-paying jobs, according to new research from the ADP Research Institute. Researchers tracked the compensation of approximately 11,000 people who were hired into exempt salaried positions during the third quarter of 2010 and continuously worked for the same company through 2016. The average annual growth in base compensation was marginally higher for women over the six years, but it was inconsequential in closing the salary gap. Women's average base salary was 82% that of men's base at the outset of the study, and was still only 84% of men's at the end. For positions in the $20,000 to $40,000 salary range, 121 women were hired for every 100 men; an equal proportion of men and women were hired in the $40,000 to $60,000 range; but for higher-paying positions, far more men were hired than women. In total compensation, women were further behind, at 81% of what men made. Researchers also found no difference in the rate at which the respective genders leave employers.

Carl Icahn, who fought against the original Dell (DVMT) buyout in 2013, recently disclosed that he owns 8.3% of Dell's tracking stock, DVMT, and will vote against Dell's proposed deal to swap the DVMT tracking stock into regular common shares of Dell. He dismisses the possibility that if shareholders vote no, Dell might continue with the status quo or push through an initial public offering. According to Bloomberg Opinion columnist Brooke Sutherland, "Icahn isn't just going to vote against the deal; he's also contemplating a partial bid for DVMT stock in the event of a raised offer that's more modest that what he believes is warranted. This would provide liquidity for those holders that need to exit while allowing those who want to fight to do so." Meanwhile, Bloomberg Opinion columnist Matt Levine notes that Icahn says DVMT shareholders approached him for help and that the massive undervaluation of DVMT is obvious. Levine writes, "Your fear is overdone, Icahn tells DVMT investors; you really can get much more out of Dell than they're currently offering. But, he quickly goes on, it will take a strong stomach and a lot of patience—'strong activism combined with litigation'—and if you don't have the appetite for that, Icahn will do it for you. You can just sell to him at close to Dell's price so that he can push for his price. He will take a cut for his service. Arguably he's worth it."

Mergers and acquisitions in 2018 already have exceeded last year's record level of activity. However, with broader financial markets becoming jittery, those who remember the heady, pre-crisis days of 2007 are wondering whether the M&A market is heading for a downturn—or checks and balances in the system are working better this time. Transactions in the third quarter have started to slide, and a few mega-deals are distorting overall statistics. Corporate boards are still very risk averse and directors are wary of deals that could raise regulatory or competitive concerns, but investors today have gotten better at punishing bad transactions. A quarter of the deals announced since January 2017, totaling $1.5 trillion, have failed to cross the finish line. The much greater role played by activist investors is a key difference between now and 1999 or 2007. Nearly half of campaigns aimed at opposing a deal since 2013 have been successful, according to research firm Activist Insight.

CEO pay ratios seem to be more influenced by median employee pay than CEO pay, according to an analysis of proxy filings of 2,005 public companies as of the end of the second quarter of 2018 by Pearl Meyer and Main Data Group. They were not as high as anticipated (144:1 on average), and median employee pay was not nearly as low as anticipated (approximately $81,000 on average). Pay ratios were correlated with industry, revenues, and employee population, while median employee pay was inversely correlated with revenues and employee population. Prior to the 2018 proxy season, the biggest shareholder advisory services indicated that they would not take into account pay ratio disclosure in issuing their recommendations. Not one institutional investor admitted to using the CEO pay ratio outcomes in their voting decisions thus far, writes Deb Lifshey, managing director of Pearl Meyer. "Based on this first year, it is likely that from a disclosure standpoint, most companies will aim for consistency and keep CEO pay ratio narratives short, sweet, and buried," according to Lifshey. Ultimately, companies should take the groundswell of public debate on pay seriously, she writes.

Some of Asia's biggest financial centers are playing catch-up with Western markets by encouraging listed companies to recruit more female board members.  Some of the steps involve mandates, while others are optional. For example, the Monetary Authority of Singapore recently approved changes to its corporate governance code calling for listed companies to disclose their board diversity policies and progress made in achieving those policies.  But there's still a long way to go in Asia's major financial hubs. Women comprise 14.7% of board membership at Singapore's top 100 listed companies and 13.8% of the 50 members of Hong Kong's Hang Seng Index, Singapore's Diversity Action Committee notes. That's compared with 22% for the S&P 500 and 42% for the CAC 40 in France.  At the bottom of the list, women accounted for 4.9% of board members among Japan's Nikkei 225.

Hedge funds still value basic sell-side research, but they no longer view Wall Street analysts as having the inside scoop on the companies they cover like they did in the 1980s. Today, information is available to everyone at the same time thanks to technology, and most companies provide a volume of detail when they release earnings. New rules enacted in the United States after the dot-com bubble burst have established clear walls between the sell side's research and investment banking departments. And public companies can no longer selectively disclose material information to analysts. In general, hedge funds view the research of the sell-side as a supplement, not a replacement, for the work their own analysts do in-house. Hedge funds now view the sell-side as providing the most value to hedge funds through corporate access—the meetings with corporate executives, field trips to see firm operations, and non-deal roadshows organized by sell-side firms on behalf of buy-side investors. The very best sell-side analysts also provide new and differentiated insights into the companies and industries they cover, according to hedge funds.

Demand for investments in companies pursuing environmentally and socially responsible goals is ramping up, according to Joe McGrath, global head of banking at Barclays. He says the growth of environmental, social, and governance (ESG) concerns in business has become a “phenomenon” in recent years. ESG investing is becoming “truly a commercially viable strategy with the interest level and the financial resources that are being dedicated to it,” McGrath says. Money is entering the space from venture capital and private equity funds, he says. The British bank has teamed up with Colorado-based Unreasonable Group, a firm which focuses on scaling up potentially world-changing companies, on its Unreasonable Impact partnership. The 71 firms in the Unreasonable Impact program have so far raised more than $1.3 billion in financing and have made $1 billion in revenues. The program focuses on “companies that are not only doing well, but doing good for society,” McGrath says.

Asian regulators have been slow to increase gender diversity on corporate boards, but as issues related to corporate governance and women's empowerment gain more attention, authorities are taking steps to encourage listed companies to recruit female directors. “We call on all listed companies to appoint more females as their board members,' Carrie Lam, head of the Hong Kong government, said in her annual policy speech Wednesday. There is still a long way to go: women made up 14.7% of board membership at Singapore's top 100 listed companies, 13.8% for the 50 members of Hong Kong's Hang Seng Index, and just 4.9% of board members Japan's Nikkei 225, according to a July report from Singapore's Diversity Action Committee. Now, regulators and politicians are responding to calls for greater diversity. The Monetary Authority of Singapore in August approved changes to the corporate governance code calling for listed companies to disclose their board diversity policies and progress made in achieving those policies. India’s markets regulator this year mandated that companies have at least one independent female director, thus eliminating the ability to appoint executives' relatives. In Japan, the Tokyo Stock Exchange published a revision to its corporate governance code for boards of directors in June, for the first time including a reference to gender. Meanwhile, Hong Kong's stock exchange will mandate that companies publish statements about their diversity policies beginning next year.

Developments in shareholder activism over the last year indicate that we are reaching a new inflection point in corporate governance. For example, activism is becoming increasingly global, deal-related activism is prevalent, and “short” activists are growing more aggressive in both the equity and corporate debt markets. These investors continue to achieve extensive coverage in the media, including a lengthy profile of Paul Singer and Elliott Management in an August New Yorker article. Meanwhile, momentum for enhanced ESG disclosures is growing. And earlier this month, two prominent business law professors, backed by investors and other entities with over $5 trillion in assets under management, filed a petition for rulemaking calling for the Securities and Exchange Commission to “develop a comprehensive framework requiring issuers to disclose identified environmental, social, and governance (ESG) aspects of each public-reporting company's operations.” In turn, activists have worked to enhance their profile among governance professionals, passive institutional investors and ESG-oriented investors, such as JANA Partners' “impact investing” fund which has partnered with CalSTRS to request that Apple address overuse of its devices among youth. Gender diversity has also become a growing priority, with California recently enacting legislation instituting gender quotas for boards of directors of public companies headquartered in the state. It is unlikely that today's enhanced level of activism will be limited by legislation, regulation, or market forces in the near future. Companies will have to follow closely activist developments and the opinions of their top shareholders. Companies should also maintain their engagement activities and work toward developing policies to promote equality in the workplace and ensure appropriate disclosure and shareholder engagement in that regard.