Weekly Activism & Executive Moves Review (Mar 22)

• Board to nominate James H. Gemmel for election to the board of directors
• Must maintain net long position of at least 8,100,000 shares
• Extends original cooperation agreement from January 2023

• Boardroom Allpha’s activist vulnerability score at 98 (very high) at time of announcement
• Board / Radoff to collaborate on finding new independent director
• Directors Cohen & Graff not re-nominated
• Board size locked at 9 before AGM; 7 after, until new ind director named
• Shareholders have been voting against Rose & Kelly

• Board adds 3 directors: A. Brent Windom, Gregory L. Smith and Thomas W. Seboldt
• Agreements in place until effective until the earlier of (i) 30 days prior to the deadline for the submission of stockholder nominations for the Company’s 2025 annual meeting of stockholders and (ii) 150 days prior to the anniversary of the 2024 Annual Meeting.

• All SBUX directors were re-elected
• The board received an average of 95.7% support
• Mellody Hobson (90.1% FOR) and Jørgen Vig Knudstorp (90.3% FOR) received the lowest support
• Ritch Allison (93.3% FOR), Andy Campion (95.7% FOR) and Jørgen Vig Knudstorp (90.3% FOR) were the “opposed” directors
• So, while the support is definitely lower than typical, it remained relatively high and most shareholders were unswayed by SOC’s push

Proxy Fight Summary

• 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.
• Institutional Shareholder Services (ISS) has recommended shareholders vote in favor of all Starbucks board nominees

March 11, 2024 — Choice abandons it’s takeover effort and proxy contest

BACKGROUND

• 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.

• Nominating four directors: Michael Cricenti, Jennifer M. Hill, Betsy L. McCoy and Steven J. Pully
• Proposal to remove “overreaching” advance notice bylaw provision
• Proposal to urge the Board to amend the Bylaws to preclude any current or former employee, director, officer, or control person of the Corporation or Ashford (as defined in the Proxy Statement) and Ashford’s affiliates from serving as the Corporation’s chairman of the Board
• Proposal to require the Board to disclose all extraordinary transaction proposals made by stockholders, affiliates and third parties during the two most recently completed calendar years and the terms of those proposed transactions
• Proposal to require the Board to disclose all compensation paid by the Corporation to members of the Bennett family, The Dallas Express and employees, directors or agents of The Dallas Express, including Louis Darrouzet

• 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.

Other Activity

• On February 29th, nine of Walt Disney’s grandchildren — including Abigail Disney and Roy Disney — put their weight behind Bob Iger and the current board. They forcefully rejected the idea that Trian and Nelson Peltz joining the board would be a positive for the company.

• The American Federation of Labor and Congress of Industrial Organizations and United Mine Workers of America are jointly working to run a proxy fight against Warrior Met Coal
• Proposal 1: Adopt a “poison pill” bylaw provision to require that any rights plan be submitted to a shareholder vote within one year of being adopted, extended or renewed by the Board of Directors.
• Proposal 2: Adopt a “proxy access” bylaw provision to require that the Company include shareholder-nominated candidates in the Company’s proxy materials for up to 20 percent of the seats on the Board of Directors so long as the nominating stockholder (or a group of up to 20 stockholders) has beneficially owned at least 3 percent of Company’s outstanding shares continuously for at least three years.
• Proposal 3: Adopt a “blank check” preferred stock amendment to the Company’s Certificate of Incorporation to prohibit the issuance of preferred stock without prior stockholder approval for any defensive or anti-takeover purpose or for the purpose of implementing any rights plan that has not been approved by stockholders within one year of adoption.
• Proposal 4: Adopt a “golden parachute” severance agreement policy to require that all adopted, extended or renewed severance agreements with the Company’s senior executives be submitted for stockholder approval.
• Proposal 5: Commission and oversee an independent, third-party assessment of the Company’s respect for the internationally recognized human rights of freedom of association and collective bargaining.

• 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.
• 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.

• 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.

• Nominating two directors to the board: Brad Favreau and Daniel Silvers
• Engine Capital believes that MRC is significantly underperforming, especially relative to DNOW Inc.
• Engine Capital believes that MRC’s inability to settle it’s ongoing dispute with Cornell Capital is preventing MRC from optimizing capital structure
• Engine Capital believes that MRC’s M&A strategy is flawed and that CEO Rob Saltiel does not have a successful track record in acquisitions or integrations

• 180 Degree Capital has nominated Matthew McLaughlin to the SCOR’s board

• Erez nominating two directors: Bruce Schanzer and Catherine Clark
• Letter to Whitestone REIT and WSR response to Erez

• Rubric Capital opposes 2 of the 5 directors up for re-election: Deborah S. Conrad and Thomas A. Lacey
• Rubric filed their first 13 D on January 23, 2024
• Rubric sent XPER board a letter on January 22, 2024 nominating their directors
• Xperi began trading as a separate company on Oct 1, 2022 after spinning out of Xperi Holding (no named Adeia Inc)
• Xperi is down nearly 30% since the spin-off
• Xperi has an elevated Boadroom Alpha Activist Vulnerability Score and C- average board rating
• CEO Kirchner was paid $9.9M in 2022 despite the significant shareholder losses
• Xperi powers the next generation of smart devices, automobiles and entertainment experiences of all kinds