Tuesday, December 29, 2009

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.

Thursday, December 17, 2009

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.


Subscribe To Receive FREE Weekly Research



Email:




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

Wednesday, December 16, 2009

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.

Monday, December 14, 2009

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.

Tuesday, December 1, 2009

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

Tuesday, November 24, 2009

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.

Friday, November 20, 2009

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.

Thursday, November 12, 2009

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

Monday, November 2, 2009

Steel Partners Wins By Written Consent

Steel Partners announced today that they have delivered the requisite number of written consents (more than 50% of outstanding shares) to pass all the proposals they made under their consent solicitation. The proposals included the removal of Adaptec's CEO and one other member from the board of directors and the reduction in the size of the board from 9 to 7 members. Steel now effectively controls 4 of 7 board seats.

Read the press release here.