Resurgence of Activism Could Have Impact on M&A in 2010

LONDON — Shareholders in Europe are getting more demanding, a sign they have regained their moxie after a bruising downturn.

In two recent cases here, shareholders have spurned company-backed takeover offers. In another, they agreed to sell a company against its board's wishes. And in a purer example of so-called shareholder activism, hedge fund Jana Partners LLC built a stake in TNT NV and now plans to push for major changes at the big Dutch mail company.  Earlier this month, public investors in Dragon Oil PLC voted down an offer for their shares from an Arab suitor, even though the ...

Full Article at The Wall Street Journal

Activist Conference Update

DealFlow Media has updated their agenda and speaker list for the January 21-22 activist conference in NYC.
Click here to review.

November Activist Investments - 47 Companies Targeted

Below is a summary list of 47 companies targeted by 49 shareholder activists during November.

This information was extracted from Hedge Fund Solutions' Catalyst Equity Research Report(TM), a free in-depth weekly research on activist investments.

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This report is sponsored by a number of firms with expertise in the activist investing space.

Investment Banking:
SSG Capital Advisors

Legal Advisers:
Olshan Grundman Frome Rosenzweig & Wolosky
Schulte Roth & Zabel
Lowenstein Sandler

Proxy Solicitors:
Georgeson
Innisfree M&A
MacKenzie Partners
Laurel Hill Advisory Group
The Altman Group

Ticker	Company	Investor
ADPT	Adaptec. Inc.	Steel Partners
AEPI	AEP Industries	KSA Capital
AGYS	Agilysys Inc	MAK Capital One
BKS	Barnes & Noble Inc	Ronald Burkle
CITZ	CFS Bancorp Inc.	Financial Edge Fund LP
CLCT	Collectors Universe	Marlin Sams Fund
CNO	Conseco Inc.	Paulson & Co
COBR	Cobra Electronics Corp	Timothy Stabosz
CWLZ	Cowlitz Bancorporation	Crescent Capital
DEST	Destination Maternity Corporation	Crescendo Partners
DGTC.OB	Del Global Technologies	Steel Partners
DVD	Dover Motorsports	Marathon Partners
EDAC	Edac Technologies Corp	Resilience Capital
EQS	Equus Total Return, Inc.	Sam Douglass
FCM	First Trust/Four Corners Senior Floating Rate Income Fund	Bulldog Investors
FFHS	First Franklin Corp	Lenox Wealth Management
FGF	SunAmerica Focused Alpha Growth Inc	Bulldog Investors
FGF	SunAmerica Focused Alpha Growth Fund, Inc.	Bulldog Investors
FGI	SunAmerica Focused Alpha Large-Cap Fund, Inc.	Bulldog Investors
GLA	Clark Holdings, Inc.	Cherokee Capital Management
GRNB	Green Bankshares, Inc.	Scott Niswonger
GSIG.PK	GSI Group	Stephen Bershad
GSIG.PK	GSI Group	JEC II Associates LLC
IMMR	Immersion Corp	Ramius Capital
IPCS	iPCS, Inc.	Greywolf Capital Management
JTX	Jackson Hewitt Tax Service Inc.	Discovery Capital
KONA	Kona Grill Inc	BBS Capital Management
LEGC	Legacy Bancorp Inc.	Sandler O'Neill Asset Management
LNY	Landry's Restaurants Inc.	Pershing Square Capital
MACE	Mace Security International Inc	Lawndale Capital
MEG	Media General Inc	GAMCO Investors
MGYR	Magyar Bancorp Inc.	Financial Edge Fund
MYE	Myers Industries Inc	GAMCO Investors
OMPI	Obagi Medical Products	Discovery Group
ORCC	Online Resources Corp	Tennenbaum Capital Partners
OSTE	Osteotech Inc.	Kairos Partners
PLFE	Presidential Life Corp	Herbert Kurz
PTEC	Phoenix Technologies	Ramius Capital
PTFC.PK	Penn Traffic Co	Foxhill Opportunity Fund
SONA	Southern National Bancorp of Virginia Inc	Patriot Financial Partners
SRO	DWS Rreef Real Estate Fund, Inc	Susan Ciciora Trust
SSTI	Silicon Storage Technology Inc	Lloyd Miller
TICC	TICC Capital Corp	Raging Capital Management
TRA	Terra Industries Inc	CF Industries Holdings
TXCC	Transwitch Corp	Brener International Group
UAHC	United American Healthcare Corp.	Strategic Turnaround Equity Partners
UAHC	United American Healthcare Corp	John Fife
USAT	USA Technologies Inc.	Brad Tirpak; Craig Thomas
WWVY	Warwick Valley Telephone Co	Santa Monica Partners

SEC Votes to Expand Disclosure on Risk, Compensation and Governance

In particular, the new SEC rules require disclosures in proxy and information statements about:

• The relationship of a company's compensation policies and practices to risk management.
• The background and qualifications of directors and nominees.
• Legal actions involving a company's executive officers, directors and nominees.
• The consideration of diversity in the process by which candidates for director are considered for nomination.
• Board leadership structure and the board's role in risk oversight.
• Stock and option awards to company executives and directors.
• Potential conflicts of interests of compensation consultants.

The new rules, which will be effective Feb. 28, 2010, also require quicker reporting of shareholder voting results.
Click here to read the SEC's press release and to watch a video of Chairman Schapiro discussing the proxy enhancements.

Click here to download the Final Rule: Proxy Disclosure Enhancements (.pdf format)

Roy Disney, co-founder of Shamrock Activist Value Fund, Dies at 79

Roy Disney, Chairman of Shamrock Holdings dies at 79.  Click here to read the NY Times article.

About Shamrock Activist Value Fund
The Shamrock Activist Value Fund is one of five investment funds managed by Shamrock Capital Advisors, which has approximately $1.5 billion in capital in funds that specialize in private equity, real estate, and public equities. The Shamrock Activist Value Fund is a deep-value oriented fund that focuses shareholder activism through taking a meaningful stake in companies that would allow it to promote best corporate governance practices as well as strategic, structural, financial and operational improvements. The fund tends to be relatively concentrated, with 9-12 holdings at a time. As of September 30, 2009, Shamrock Capital Advisors had approximately $537 million invested in 10 publicly traded equities.

Board-Shareholder Communications: Sharon Merrill Assoc.

Earlier this month Maureen Wolff-Reid, President & Partner at IR consulting firm Sharon Merrill Associates, wrote an interesting piece on Board-Shareholder communications.

Excerpt from the posting:
At a minimum, companies need to develop a board-shareholder communications policy and method for flagging the inbound shareholder inquiries that should be elevated to the directors themselves. The screening process usually involves two key questions: Does the investor have a significant position in the stock? And, is the matter more appropriate to be handled by the investor relations officer or another member of management?

To read the complete post, go to Sharon Merrill's blog, The Podium.

Wachtell Lipton issues annual client memo "Some Thoughts for Boards of Directors in 2010"

WLRK has issued their annual thought piece of issues and challenges for boards to consider in the upcoming year. The comprehensive client memo titled, "Some Thoughts for Boards of Directors in 2010" is authored this year by Marty Lipton, Steven Rosenblum and Karessa Cain.

Excerpts from the publication:

While corporate governance activists have been agitating for a number of years - in many cases with substantial success - these efforts have exponentially multiplied and accelerated. Reform proposals have recently been advanced across a full spectrum of legal avenues, including new and proposed federal legislation and regulations, SEC rule-making, amendments to state corporation laws and stock exchange rules, court decisions, policy recommendations from non-governmental organizations and shareholder proposals. Initiatives range from advocating enhanced disclosure obligations to calling for more fundamental changes in the structure and authority of the board, and address topics that include shareholder proxy access, majority voting, discretionary broker voting in director elections, risk management, say-on-pay and other executive compensation policies, the separation of chairman and CEO roles, annual director elections and disclosures about the company's board and leadership structure.

Within the note the authors pointed to ten Key Issues Facing Boards in 2010.
They include:

1. Executive Compensation
2. CEO Succession Planning
3. Risk Management
4. Long-Term Value v. Short-Term Gain
5. Takeover Defense
6. Separation of Chairman & CEO Positions
7. Director Elections
8. Communications with Shareholders
9. Shareholder Proposals
10.Competition in the Global Market

The full memorandum is available for download on the Harvard Law School Forum on Corporate Governance and Financial Regulation Blog.

Links to some previous thoughts...
Some Thoughts for Boards of Directors in 2009
Some Thoughts for Board of Directors in 2008

The Activist Investor Conference: NYC January 21-22, 2010

Shareholder activism has intensified due to highly publicized corporate failures and controversy over executive compensation in light of poor corporate performance. Newly proposed rules to facilitate shareholder participation in board decisions will ensure that the trend continues. All stakeholders in corporate performance should attend this informative and timely event to learn about the latest trends, strategies and outcomes of shareholder activism.

Corporate managers, investors, proxy advisors and legal representatives from all sides will present a 360 degree view of activist investment strategies and their impact on corporate performance and returns. The event examines topics vital to both investors and corporate boards. In addition, the conference will provide plenty of opportunity for networking with peers and experts.

AGENDA & CONFIRMED SPEAKERS INCLUDE:

Thursday January 21, 2010

Managing the Impact of the Economic Climate on Investor Relations
Elizabeth Saunders, FD

The Purpose of the Proxy Access Initiative
David Rosewater, Schulte Roth & Zabel
Phil Goldstein, Bulldog Investors
Anne Sheehan, CalSTRS
Chris Young, RiskMetrics

Case Studies of Sucessful Corporate Defenses
David Katz, Wachtell, Lipton, Rosen & Katz

The Activists' Toolkit
Steve Wolosky, Olshan Grundman Frome Rosenzweig & Wolosky
Mark Harnett, MacKenzie Partners
Eric Rosenfeld, Crescendo Partners

Case Study: The First-Time Activist - Dialectic Capital's Sucessful Proxy Campaign at California Micro Devices
John Fichthorn, Dialectic Capital
Bryant Riley, Riley Investment Management

Assessing the Vulnerability of a Board of Directors
Keith Gottfried, Blank Rome
Bob Butler, Veritas Communications
Jared Landaw, Barington Capital
Paul Schulman, The Altman Group

What do Proxy Contests Achieve? Evaluating the Effectiveness of Hybrid Boards
Chris Cernich, Proxy Governance

Defining Corporate Governance
Steve Davidoff, The New York Times DealBook
Timothy Brog, Locksmith Capital
Frode Jensen, Holland & KNight
Rachel Posner, Georgeson

Friday January 22, 2010

The Changing Regulatory Landscape
Jeffrey Morgan, National Investor Relations Institute
John Glenn Grau, Investorcom
Richard Swanson, Arnold & Porter

Executive Compensation Strategies - Balancing Corporate Management Goals and Investor Concerns
Justin Levis, Council of Institutional Investors
Hye-Won Choi, TIAA-CREF
Paul Hodgson, The Corporate Library
Matthew Lepore, Pfizer

Case Study: Shamrock Capital Advisors' Successful Proxy Campaign at Texas Industries
Dennis Johnson, Shamrock Capital Advisors

Strategies and Tactics for Responding to Investor Activism
Steve Balet, Okapi Partners
Sara Antol, Tollgrade Communications
Jeffrey Shapiro, Lowenstein Sandler
Matthew Sherman, Joele Frank Wilkinson Brimmer Katcher

Case Study: The Successful Defense by Target Corporation against the Proxy Campaign by Pershing Square
Capital Management
Mark Harnett, MacKenzie Partners
Joele Frank, Joele Frank Wilkinson Brimmer Katcher

For additional information about the conference and to register click here.

Legislative & Regulatory Reform Impacting Corporations and Activist Investors

Federal and State legislators have teamed up with financial regulators in an attempt to advance shareholders rights, improve corporate and investment management transparency, reduce systemic financial risk, and better align executive compensation with shareholder expectations.

Below, Hedge Fund Solutions provides a comprehensive summary, with references, of the status of the various legislative and regulatory developments that will affect corporations during 2010 - and will likely make activist investing a more efficient process in the future.

Issue	Brief Description	Status	Comment
Proxy Access
Federal Legislation	SEC proposed to allow certain shareholders to nominate director candidates, and include nominees in the company’s proxy materials.	SEC promulgated draft regulations, and received over 500 comment letters. SEC has postponed final ruling until it has reviewed all comments thoroughly, with action likely in early 2010.
	Rep. Waters proposed language affirming that the SEC will have the authority to promulgate rules and regulations concerning proxy access.	House Committee on Financial Services approved language, and sent H.R. 3817 to full House on November 4, 2009.	Terms allow SEC rules and regulations to preempt state corporation law on proxy access.
State Legislation (Delaware)	Legislature amended DGCL to allow corporations to amend their bylaws to provide proxy access to shareholders, and to reimburse shareholders for board election expenses.	Governor Markell signed the bill into law in April 2009. HealthSouth became the first Delaware corporation to amend bylaws pursuant to the DGCL amendments.	See blog post for comments about the DGCL amendments.
Say-on-Pay
Legislation & Regulatory Impact to Banks	SEC proposed that TARP recipients must allow shareholders to approve executive compensation.	SEC promulgated draft regulations, and received approximately 80 comment letters. SEC has not indicated when it will issue final regulations.
Legislation Impact to Corporations	Rep. Barney Frank proposed a comprehensive say-on-pay law applying to all US public companies.	H.R. 3269 passed House of Representatives in July 2009, referred to Senate Banking Committee. Senate has not indicated when it will schedule hearings or debate.	Several corporations, including Microsoft, have amended bylaws to provide for say-on-pay.
	Sen. Dick Durbin proposed a law requiring supermajority approval of excessive executive compensation	S. 1006 introduced in Senate in May 2009, referred to Senate Banking Committee. Senate has not indicated when it will schedule hearings or debate.
	Sen. Christopher Dodd proposed legislation including comprehensive say-on-pay provisions	Sen. Dodd has not yet introduced bill into Senate.	Similar to H.R. 2861
	Rep. Gary Peters proposed the “Shareholder Empowerment Act of 2009” with various say-on-pay provisions	Rep. Peters introduced H.R. 2861 in June 2009, referred to House Committee on Financial Services.	Similar to Sen. Dodd’s proposed bill
Broker Voting
Regulatory Impact to Corporations	SEC amended rules about how corporations can count votes from brokers holding shares in Street Name.	SEC approved the final rule in July 2009, effective January 2010.	Director elections will change, particularly for Companies with high proportion of "retail" investors.
Compensation & Governance Disclosure
Regulatory Impact to Corporations	SEC has proposed more detailed compensation disclosures, and clarified some recent issues about proxy solicitation.	SEC promulgated draft regulations, and received approximately 150 comment letters. SEC has indicated it will issue final regulations in time for annual meetings in 2010.
Legislation Impact to Corporations	Sen. Charles Schumer proposed a comprehensive law called the Shareholder Bill of Rights addressing executive compensation, proxy access, and board of director governance and elections.	S. 1074 introduced in Senate in May 2009, referred to Senate Banking Committee. Senate has not indicated when it will schedule hearings or debate.	See blog post for comments about the proposals.
CEO Succession; Risk Management
Regulatory Impact to Corporations	SEC will no longer automatically issue “no action” letters in conjunction with shareholder proposals relating to risk management and CEO succession planning	See SEC Staff Legal Bulletin 14E, issued October 27, 2009.	See blog post for comments about the change in the SEC’s policy
Electronic Proxy Solicitation
Regulatory Impact to Corporations	SEC has proposed updated rules on electronic proxy solicitation.	Comments are due to the SEC by November 20, 2009.

SEC Staff Clarifies 13D Filings

The SEC has updated their rules relating to 13D filings to clarify that "for the purposes of calculating the 10-day time period, the first calendar day after the trade date counts as day number one."

Schedule 13D is a SEC filing that must be submitted to the US Securities and Exchange Commission within 10 days, by anyone who acquires beneficial ownership of 5% or more of any class of publicly-traded securities in a public company. 13D filings are of particular interest to corporations and to other investors since the filer must disclose the "purpose" of their investment. e.g. intention to obtain a controlling interest, demand for board representation, or simply because they believe the security is undervalued.

Schulte Roth & Zabel issued a client alert on this which can be downloaded here.

The High-Performance Director Conference - 10% Discount to Activist Blog Readers

NASDAQ OMX, Dow Jones cordially invite
you to attend a one-day seminar designed to help Directors stay on top of the most challenging issues facing corporate Board members in 2010.

The High-Performance Director: Navigating 2010

Friday, December 11, 2009

The Metropolitan Club
1 East 60th Street
New York, NY
7:00 a.m. – Registration
7:30 a.m. – Breakfast
8:00 a.m. to 4:45 p.m. – Panel Discussions

Our high-level agenda was developed in collaboration with leading
regulators, government officials, corporate executives and top scholars
who will host panel discussions, compelling debates and keynote interviews on:

• Washington in 2010: an update on current legislation and what it means for Board members
• Globalization: what it takes to successfully govern an international company
• Compensation: what Board members should and should not be doing in terms of dealing with compensation and bonus issues
• Activism: how Boards should be reacting to activists

Speakers include*:

Ram Charan, Business Advisor and Author, Owning Up, The Game Changer, Leadership in the Era of Economic Uncertainty, Leaders At All Levels
Glenn H. Hutchins, Co-Founder and Co-Chief Executive, Silver Lake
Martin Lipton, Founding Partner, Wachtell, Lipton, Rosen & Katz
Ivan Seidenberg, Chairman and CEO, Verizon Communications
Warren S. de Wied, Partner, Wilson Sonsini Goodrich & Rosati

* For a complete list of speakers, visit the program web site

Register Now!

To receive a 10% discount on the standard registration fee please enter ACTIVIST when registering

In addition, Directors can earn Corporate Governance Quotient (CGQ)
credits from the ISS/Risk Metrics Group.

To register and learn more about the seminar go to www.nasdaq.net/directoreducation.

We look forward to seeing you at this exclusive and timely event.

October Activist Investments - 37 Companies Targeted

Below is a summary list of 37 companies targeted by 37 shareholder activists during October.

This information was extracted from Hedge Fund Solutions' Catalyst Equity Research Report(TM), a free in-depth weekly research on activist investments.

Click Here to subscribe to the FREE report.

This report is sponsored by a number of firms with expertise in the activist investing space.



Investment Banking:
SSG Capital Advisors

Legal Advisers:
Olshan Grundman Frome Rosenzweig & Wolosky
Schulte Roth & Zabel
Lowenstein Sandler

Proxy Solicitors:
Georgeson
Innisfree M&A
MacKenzie Partners
Laurel Hill Advisory Group
The Altman Group

Ticker	Company	Investor
ADPT	Adaptec Inc.	Steel Partners
ARGL.OB	Argyle Security, Inc.	Mezzanine Management
ASCMA	Ascent Media	GAMCO Investors
ASPM	Aspect Medical Systems	Covidien plc
BARE	Bare Escentuals	Sandler Capital Management
BASI	Bioanalytical Systems Inc	Thomas Harenburg
BLDR	Builders FirstSource Inc.	Stadium Capital Management
BLUD	Immucor Inc.	VA Partners
COHM.PK	Coachmen Industries Inc.	GAMCO Investors
DVD	Dover Motorsports	Marathon Partners
FFHS	First Franklin Corp	Lenox Wealth Management, Inc
FMMH.OB	Fremont Michigan Insuracorp Inc.	Steak & Shake Co
GMXR	GMX Resources	Centennial Energy Partners
GRNB	Green Bankshares, Inc.	Scott Niswonger
HPOL	Harris Interactive Inc.	Mill Road Capital
IMMR	Immersion Corp	Ramius Capital
IPCS	iPCS, Inc.	Greywolf Capital Management
ITP	Intertape Polymer Group Inc.	KSA Capital Management
KANA.OB	Kana Software	KVO Capital Management
LDIS	Leadis Technology Inc	Dialectic Capital Management
LM	Legg Mason Inc.	Nelson Peltz
MEG	Media General Inc.	GAMCO Investors
MGYR	Magyar Bancorp Inc.	Financial Edge Fund
MYE	Myers Industries, Inc.	GAMCO Investors
OPTV	OpenTV Corp	Kudelski SA
PLFE	Presidential Life Corp	Herbert Kurz
RSG	Republic Services inc	Cascade Investment
RUBO	Rubios Restaurant	Alex Meruelo
SURG	Synergetics USA Inc	Steven Becker
TBTC.OB	Table Trac Inc.	Doucet Asset Management
TGY	Tremisis Energy Acquisition Corp	Bulldog Investors
TMEN.PK	Thermoenergy Corp	Quercus Trust
TRMA	Trico Marine	Kistefos AS
VII	Vicon Industries Inc.	Anita Zucker
VXGN.OB	VaxGen Inc.	Steven Bronson
XOHO.OB	XO Holdings Inc.	Carl Icahn
YORW	The York Water Co.	GAMCO Investors