The Shareholder Activism Report & Resource Portal

View Various Sections of the Report

NEW REPORT & WEBSITE!

Special Proxy Season Promotion

 $1,495

May & June Only!

Includes a copy of the 400+ page report and access to the online portal for one year

INVESTORS + PUBLIC COMPANIES + ADVISERS

ARE YOU PREPARED?

The current political and regulatory environment is encouraging activism;

Activists are attracting fresh capital and searching for new investments;

 A more robust M&A market will prompt the next wave of activist demands;

 All types of investors are submitting shareholder proposals on compensation, succession planning, risk management and sustainability. 

THE SHAREHOLDER ACTIVISM REPORT FEATURES 400+ PAGES ON...

• 29 recommendations from The Conference Board's Expert Committee on Shareholder Activism
• Analysis of the economic, political and regulatory environment in the context of shareholder activism
• In-depth review of how to Understand Shareholders, Assess Company Gaps & Exposures, and Manage Response & Defense Strategies
• Benchmark studies on board member and executive compensation
• Comprehensive directory of over 400 activist investors
• Top 50 activist investors profiled (view a sample profile)
• Detailed proxy contest case studies from 2009 (view a case study from the report)

THE SHAREHOLDER ACTIVISM RESOURCE PORTAL FEATURES REGULAR UPDATES ON...

• Every activist investment filed with the SEC
• Updated list of activist investors
• Profiles and current investment positions for the top 50 activist investors (view a sample profile)
• Analysis of every proxy contest in 2009 including activist demands, proxy advisory recommendations (i.e ISS and Glass Lewis), institutional shareholder votes, list of advisors to the company and activist during the campaign
• Over 500 proxy contest documents available to download,  These include: DE220 demand letters; letters to and from management/board/activist; shareholder proposals for director nomination; investor presentations and "fight letters"; settlement agreements, etc... (view a sample proxy contest document)
• Published articles relating to shareholder activism, including updates on regulatory and legal reforms during 2010 (view a recently published paper on shareholder activism)
• Proxy advisory firm voting policies and revisions

To download a brochure, click here

Contact Timothy Concannon at The Conference Board to learn more and to schedule a free webinar showcasing The Shareholder Activism Resource Portal

Timothy.concannon@conference-board.org

+1 212.339.0207

CEO Succession Planning & Shareholder Activism

"The paper is a must read for anyone interested in CEO succession and its implications for corporate governance and corporate performance."

- The Wall Street Transcript

In October 2009 the SEC effectively removed the ordinary business exclusion defense used by companies reluctant to disclose their CEO succession process to shareholders.  The policy change heralds a new wave of corporate governance scrutiny, as regulators and shareholders increasingly focus on CEO succession practices.

 

In its release the SEC reframes CEO succession as a risk management (and policy) issue and places its responsibility firmly in the boardroom. No longer can boards let management run CEO succession planning without tight oversight, including setting more specific standards and requirements, taking responsibility for results, and exercising discernable independence in the process.

 

Hedge Fund Solutions and Egon Zehnder International recently co-authored a report for The Conference Board that examines this issue and its implications in some depth. We invite you to download a complimentary copy and learn how to prepare for the inevitable governance and activist scrutiny ahead. The paper analyzes the practical impact of the new SEC guidance, explain what shareholders need to know and why, and provide a straightforward guide on how to set up and manage CEO succession practices that satisfy stakeholder needs. 

Download a complimentary copy
Examining the Impact of SEC Guidance Changes on CEO Succession Planning

Posted by Edward Ferris, a Partner with Hedge Fund Solutions

Improving Corporate Governance: A Memo to the Board

Jack Brennan, Chairman Emeritus and Senior Advisor, The Vanguard Group, Inc. gave a speech on March 23, 2010 at Drexel University's Center for Corporate Governance Director Dialogue 2010: Outside Stakeholder View on Risk.

(I was also a speaker at this event along with Scott Bauguess, Staff Economist, Securities & Exchange Commission Office of Economic Analysis; Pat McGurn, SVP US Corporate Governance Trends, RiskMetrics; James Dunigan, EVP and Managing Executive, PNC Financial Services Group; Don Chew, Executive Director, Morgan Stanley)

The speech was captured in a May 10 WSJ Opinion piece and is worth reading in it's entirety.

BY JOHN J. BRENNAN

It is corporate proxy season, and one can expect the usual spate of stories about excessive executive compensation, lax directors and the failure of institutional investors to exert their influence over boards and management.

As a participant in the corporate governance process for a large investment manager for more than 25 years, I will take a contrary view. Over the past quarter-century, the performance of corporate boards has improved markedly. Yet there's room to go.

As one of the largest index fund providers in the world, Vanguard is, at a minimum, a 2% owner of just about every public company ...

...a few suggestions to keep corporate board improvement continuing:

1. Know that you are the shareholders' first line of defense.
2. Build value through mutual respect.
3. Communicate.
4. Measure your success
5. Compensate yourselves in equity.
6. Share your metrics.
7. Hold yourselves accountable
8. Establish an "owner's relations committee."

The article is available here. 

Posted by Damien Park, Hedge Fund Solutions

The Institutional Investor Summit - June 3-4

(Invitation-Only; Limited Seating Available)  
Contact Chris Skroupa and reference Hedge Fund Solutions for complimentary access.

Recovery Risks & Returns: A Summit on Corporate Governance for Institutional Investors 
June 3-4, 2010 
The Intercontinental Barclay
111 East 48th St
New York, NY 10017
(212) 755-5900 

Click Here For More Information 

About The Summit: Recovery Risks & Returns:
A Summit on Corporate Governance for Institutional Investors is designed for pension funds, hedge fund activists and select fund managers seeking to address risk and enhance long term value through governance based solutions.

From 2007 forward, investors have experienced unprecedented losses and have begun to ask the important questions on how to best approach risk and its role in creating long term shareholder value.

As Wall Street emerges from the Great Recession, how will institutional investors create value through corporate governance?

Confirmed Speakers: 

Richard Mourdock, Treasurer
State of Indiana 

Jim Hood, Attorney General
State of Mississippi 

Richard Cordray, Attorney General
State of Ohio 

Kelly L. Schmidt, Treasurer
State of North Dakota 

Greg Zoeller, Attorney General
State of Indiana 

Mario Gabelli, Chairman & CEO
Gabelli Asset Management Company 

Bill Ackman, Founder & Managing Partner 
Pershing Square Capital Management, LP 

Inga van Eysden, Chief of the Pensions Division
New York City Department of Law 

Gregory P. Taxin, Co-founder & Managing Director
Spotlight Advisors 

George W. Neville, Special Assistant Attorney General  
State of Mississippi 

Vineeta Anand, Chief Research Analyst
AFL-CIO 

Tord Carnlof, Co-founder & Senior Advisor
Ethix SRI Advisors 

Hans-Christoph Hirt, Director
Hermes Equity Ownership Services Limited 

Michael Garland, Director of Value Strategy
CTW Investment Group 

Dennis Johnson, (formerly with Shamrock Activist Value Fund)

Jody Olson, Chairman
State of Idaho Retirement Board 

Stephen L. Brown, Director & Associate General Counsel, Corporate Governance
TIAA-CREF 

Damien Park, Managing Partner
Hedge Fund Solutions, Inc. 

William J. Kelley, Jr., General Counsel
Retirement Systems of Alabama 

Pat McGurn, Special Counsel, Corporate Governance
Riskmetrics 

Kil Huh, Director of Research
Pew Center on the States 

Douglas A. Love, Chairman Investment Policy Committee
New Jersey Investment Council 

William Fornia, Senior Vice President
Aon Consulting 

Cas Sydorowitz, CEO, Corporate Advisory
Georgeson 

Ruth Ryerson, Executive Director/CIO
Fort Worth Employees' Retirement Fund 

Greg Kinczewski, Vice President/General Counsel
Marco Consulting 

Timothy Schoolmaster, President & Trustee
Evanston Police Pension Fund 

Carol Nolan Drake, J.D., Chief External Affairs Officer
Ohio Public Employees Retirement System 

Andrew Shapiro, President
Lawndale Capital Management LLC 

Michael D. Underhill, Chief Investment Officer
Capital Innovations, LLC 

Tom Gray, General Counsel
Teachers’ Retirement System of the State of Illinois 

Lisa Lindsley, Director
Capital Strategies AFSCME 

Timothy E. Brog, Managing Director
Locksmith Capital Management 

Jaeson Dubrovay CPA, CAIA, Partner
Advisory Aksia LLC 

Scott Zdrazil, Director of Corporate Governance
Amalgamated Bank, Long View Funds 

Tracey C. Rembert, Sustainability Analyst and Governance Advocate
Pax World Management LLC 

Ossian Ekdahl, Head of Communication and ESG
First Swedish National Pension Fund (AP1) 

Thomas Kirchner, President & Portfolio Manager
Pennsylvania Avenue Funds 

Ric Marshall, Chief Analyst
The Corporate Library 

Jared L. Landaw, COO & General Counsel
Barington Capital Group 

Brian L. Schorr, Chief Legal Officer
Trian Fund Management 

Peter Skjødt, Executive Director, Economic Affairs
Danish Insurance Association

10 Ways a Company is Vulnerable to an Activist Shareholder

Wall Street Lawyer recently published an article on shareholder activism written by Keith Gottfreid and Barry Genkin, Partners with the law firm Blank Rome LLP.

From the article:

According to data collected by FactSet SharkRepellent, there were 137 proxy fights in 2009 compared to 125 proxy fights in 2008 and 108 proxy fights in 2007. Of the 137 proxy fights in 2009, 46 made it to a meeting or shareholder vote. In addition, in 2009, activist shareholders secured board seats at 26 companies, either as a result of a proxy fight or other form of activist campaign.

The article continues by addressing the top ten criticisms the authors have seen most often lodged against a board of directors, without regard to any ranking in frequency or importance, that relate to the board's composition, leadership, compensation and governance:

1. Insufficient Level of Industry Expertise;
2. Absence of Core or Necessary Competencies Among Board Members;
3. Insufficient Level of Board Independence;
4. Little or No Stock Ownership;
5. Excessive Board Compensation;
6. No Separation of the Chairman and Chief Executive Officer (CEO) Roles;
7. Low Turnover Among Board Members;
8. Failure to Heed the Will of Shareholders;
9. Record of Supporting or Facilitating Its Own Entrenchment; and
10. Failure to Hold Management Accountable.

Read the full article

CHECK OUT THE SHAREHOLDER ACTIVISM WEBINAR 

Hosted by BLANK ROME and THE ALTMAN GROUP
Wednesday May 12, 2010 2:00PM (EST)

Summary: Each proxy season brings new shareholder activism trends that are important for every IRO and legal counsel to understand. Hear from a panel of experts on current issues and trends for this proxy season and beyond. In addition, hear about real life examples of shareholder activist situations from a leading proxy solicitation group executive and activism attorney and know what you can do to prepare your company in advance. The presentation is scheduled begin at 2.00pm to 3.00pm Eastern Time with a Question & Answer session to follow.

Click Here to Register

Webinar March 11; 1:00-2:00 EST - Shareholder Activism: Realizing Abnormal Stock Returns

Haven Financial Services invites you to join a 60 minute interactive webcast discussion with Hedge Fund Solutions and Jon Lukomnik from Sinclair Capital to discuss:

Shareholder Activism: Realizing Abnormal Stock Returns

Date/Time: March 11, 2010; 1:00 - 2:00 PM EST

More Information: Click here to download more information about the webinar

Register for the Event: Register here

Additional Information:
Contact Haven Financial Research Department
212-293-3144
research@hfs-llc.com

1 Year Later: SPAC Returns

Last January we (Hedge Fund Solutions) wrote an article for TheStreet.com's RealMoney that discussed the no-downside risk of investing in Special Purpose Acquisition Companies - SPACs.  In the piece we highlighted 19 SPACs trading at an average 5% discount to their trust value.  All 19 companies needed to buy an operating company within 12 months.

(quick recap: Funds for SPACs - commonly known as blank check companies - are raised through an IPO.  Proceeds are held in interest-bearing trust accounts until a target company is identified.  If a deal is not consummated, usually within 24 months of the IPO, shareholders are entitled to get back the trust value + interest.  If a deal is consummated, but the shareholder doesn't like the looks of it, they are still entitled to redeem their shares for the entire trust value + interest. i.e. no-downside risk.)

Since we focus our investment research exclusively on activist investments, we analyzed each SPAC where we knew an activist investor had taken a sizable ownership position.

(additional recap: If more than 20-30% of shareholders vote against the deal, the SPAC is usually liquidated.  Hence the activist investing angle.  Activists looking for a faster return would buy a blocking position in a SPAC trading at a significant discount to trust and demand the fund liquidate sooner rather than later.)

Here are the summarized results for the 19 SPACs we highlighted in the article: 

December 2008
Average number of days to liquidation: 260
Average discount to trust: 5%

December 2009
# Deals Completed: 4
# SPACs liquidated: 13
# Still Pending: 2

Average return on investment: 7.6%
Annualized return on investment: 9.7%
Return on investment where activists held positions: 7.0%
Annualized return on investment where activists held positions: 9.0%

Conclusion:  Who knew the market (SPY) was going to return 28% in 2009?  Although the SPACs we highlighted didn't fare as well, only returning an annualized 9.7%, since there was zero downside risk associated with making the investment, the return - adjusted for risk (i.e. 0) still looks pretty appealing! 
Download the summary analysis here.

Ian Manchel, who was an analyst with HFS in 2008 & 2009, provided the analysis for this update.