Weekly Activism & Executive Moves Review (Feb 26 – Mar 1)

• Appointing  David Heath, Charles Liu and Michael Kvitko to the board at annual meeting (observers until then).
• 3 existing directors to retire at meeting: Brian Carney, Laurens Goff and Christina Francis

• BJs to create a “Shareholder Value Initiatives” committee
• Appoints C. Bradford Richmond to the board — previously CFO of Darden (DRI)

• Ronald Mitchell to continue on the board until the 2025 shareholder meeting

1. Organize an investor day promptly to clarify its Retail Media strategy and present a new mid-term plan.
2. Speed up the current share buyback through a significant self-tender of up to $150 million.
3. Initiate a comprehensive strategic review by no later than Q4 2024, exploring all ownership options.
4. Refresh the board of directors by adding independent candidates proposed by Petrus Advisers to enhance capital markets expertise and industry experience.

Criteo’s Response to Petrus Letter stated that:

• Criteo’s management engages with shareholders for input on enhancing shareholder value, including discussions with Petrus Advisers over three years.
• They are reviewing Petrus Advisers’ letter and aim to continue constructive engagement.
• Management focuses on executing Criteo’s strategy, with a track record of driving sustainable shareholder value.
• Strong growth seen in becoming the preferred AdTech partner for Commerce Media, achieving double-digit growth in 2023.
• Historic milestone reached in 2023 with over $1 billion in Contribution ex-TAC, with disciplined capital allocation and $125 million in share repurchases completed.
• Share buybacks accelerated under a new plan in Q1 2024, with $150 million added to repurchase authorization.
• Market share in Retail Media is increasing, surpassing $200 million in annual revenue.
• Record top-line performance and organic growth acceleration achieved in Q4 2023.
• The board comprises eight highly qualified and diverse directors, with continuous review of composition to align with the company’s plan, including recent appointment of Frederik van der Kooi.

• Trian owns ~$3 billion in DIS shares.
• Trian and Nelson Peltz are campaigning for 2 board seats, one for Mr. Peltz and one for former CFO of Disney James A. Rasulo.
• Trian and Peltz also have the backing of Ike Perlmutter, a former Disney employee that is one of the largest independent shareholders. Perlmutter had previously agitated for Peltz to be given a board seat in 2022.
• Trian launched an initial proxy battle in 2022 where he advocated for cutting costs, fixing the streaming business, and get executive succession right. He ended that fight early after Disney announced a restructuring that included over $5.5 billions in cuts.
• Trian has a site dedicated to the campaign called Restore The Magic

Activist / Blackwell’s Summary

• Blackwell’s also believes that Disney could unlock more value.
• Blackwell’s is against Trian / Peltz receiving any board membership.
• Blackwell’s only own’s approximately $15 million of DIS shares.
• Blackwell’s released a video making their case against Trian here and their own site, The Future of Disney.

• Norfolk Southern (NSC) has tried to fight back by “proactively” looking to refresh the board with two new directors: Richard Anderson, the former chief executive of Amtrak and Delta Airlines and former U.S. sentaor Mary Kathryn “Heidi” Heitkamp.
• As noted above, Ancora sent a scathing open letter to Chairwoman Amy Miles regarding CEO Shaw’s executive compensation increase.
• WSJ has a good summary of the fight here.

Activist / Ancora Summary

• Nominating 8 new directors to the board.
• Believes that CEO Alan Shaw must go.
• Wants to replace top executives and put Jim Barber Jr, former UPS COO, as CEO and Jamie Boychuck as COO.

• Choice Hotels made an unsolicited exchange offer to acquire all outstanding shares of Wyndham.
• Wyndham’s Board of Directors, after a comprehensive review, unanimously determined that the offer is not in the best interests of Wyndham and its shareholders.
• Choice disputes Wyndham’s antitrust claims and asserts that the offer is beneficial. They issued an investor presentation and infographic challenging Wyndham’s assertions.
• Choice, after failed negotiations, launched a hostile takeover bid for Wyndham.
• They also plan to challenge for seats on Wyndham’s Board of Directors at the next shareholder meeting.

• The Strategic Organizing Center (SOC), a coalition of unions, believes that Starbucks has implemented a flawed human capital management strategy in response to a prolonged union movement.
• Union Dispute: Baristas at almost 400 Starbucks-owned cafes have voted for organizing since late 2021, with the first successful unionization taking place in Buffalo. The unionization movement, primarily led by younger workers and intensified under former CEO Howard Schultz’s leadership, saw Schultz return as the union fight escalated before his departure last year, replaced by Laxman Narasimhan.
• The SOC seeks to replace three current Starbucks board members with its nominees.
• Starbucks defends its board, highlighting their expertise in driving current operations and future success. The company emphasizes its commitment to employees, citing investments in wage increases, training, and equipment. However, contract negotiations remain unresolved despite Starbucks’ expressed intent to resume talks in January.
• he Institutional Shareholder Services (ISS) has recommended shareholders vote in favor of all Starbucks board nominees

• Ancora has buitl a $250 million position in Elanco
• They believe Elanco’s “biggest barriers to success are the Company’s insular Board and unaccountable CEO.”
• Elanco’s board is staggered (a governance red flag at all times)
• Ancora argues that over any longer-term horizon, management has delivered negative shareholder return and, only when the market realized Ancora had become material investors and may create change, has the stock price begun to rise.
• Ancora is pushing for 4 board seats for: Kathy Turner, Craig Wallace, James Chadwick, and Andrew Clarke.