Weekly Activism & Executive Moves Review (May 3)

• Increased board from 9 to 11
• Appointed Dave Guilmette and Coretha Rushing
• Annual meeting to be held no later than July 26, 2024

• Appointed Ella Benson, an employee of Oasis, to the Company’s Board of Directors

• Including Courtney R. Mather for election as a director at the 2024 shareholder meeting
• Appointed Julio C. Acero, an Investment Analyst of Vision One, as a board advisor

• Appointed John D. Harkey, Jr. to the board

• Activist withdrew nomination of 3 individuals to the board
• Agreed to add 1 new independent director that is agreeable to both parties and not associated to activist.

• Comscore agreed to place Matthew F. McLaughlin in their proxy thereby negating a need for 180 Degree Capital to run a proxy fight
• 180 Degree Capital also agreed not to propose a declassification of the Comscore board.

FIGHT SUMMARY

• Arkhouse had partnered with Brigade Capital to make a $5.8 billion takeover offer for Macy’s, which was subsequently rejected by the retailer. Arkhouse and Brigade subsuquently increased the bid from $21 per share to $24 per share.
• Given Macy’s (M) resistance, the investors have launched a proxy contest and nominated nine director candidates
• Macy’s new CEO, Tony Spring, started on February 4th, 2024 after heading Bloomingdale’s and Bluemercury

• Macy’s and Arkhouse entered a cooperation agreement before the shareholder meeting resulting in (a) Arkhouse selected directors joining the board and an uncontested proxy (see the Macy’s proxy statement)
• Richard Clark and Richard L. Markee were appointed to the board according to an April 10, 2024 cooperation agreement
• Clark and Markee also join the finance committee of the board
• The Board has delegated to the Finance Committee oversight of the evaluation, review and consideration of Arkhouse and Brigade Capital Management, LP’s non-binding proposal to acquire the Company

FIGHT SUMMARY

• Arkhouse had partnered with Brigade Capital to make a $5.8 billion takeover offer for Macy’s, which was subsequently rejected by the retailer. Arkhouse and Brigade subsuquently increased the bid from $21 per share to $24 per share.
• Given Macy’s (M) resistance, the investors have launched a proxy contest and nominated nine director candidates
• Macy’s new CEO, Tony Spring, started on February 4th, 2024 after heading Bloomingdale’s and Bluemercury

• Walt Disney and Bob Iger prevailed against both Trian / Nelson Peltz and Blackwell’s
• We’re still waiting on the 8-K 5.07 with full vote tallies, but Disney released a PR stating all twelve of their nominees were re-elected
• Disney closed down 2.6% for the week after the Wednesday day vote

Proxy Contest Summary Notes

• Trian owned ~$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
• 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.
• 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.

• Elanco (ELAN) and Ancora entered into a cooperation agreement (see above)

Proxy Fight Summary

• Ancora has built 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.

• MRC (MRC) and Engine Capital entered into a cooperation agreement (see above)

Proxy Fight Summary

• 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

• 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.

• Blackwell’s asking shareholders to vote against Monty J. Bennett, Amish Gupta, J. Robison Hays, III, Kamal Jafarnia, David W. Johnson, Frederick J. Kleisner, Sheri L. Pantermuehl, Davinder “Sonny” Sra and Alan L. Tallis
• Blackwell’s believes that Chair Monty Bennett is “largely responsible for the overall lack of accountability at Ashford Trust given the Company’s persistent underperformance”
• Blackwell’s is not proposing an alternative slate of directors
• Because it is “uncontested” by definition, incumbent directors that do not receive the affirmative vote of a majority of shareholders must resign according to AHT policy

• 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

• Crown Castle Inc. is facing a proxy battle initiated by its co-founder, Ted B. Miller, and his investment vehicle.
• Ted B. Miller criticized the Board’s actions, asserting that they wasted shareholder resources during a period of significant value destruction.
• Boots Capital called for immediate change, advocating for new independent directors and a fresh start.
• Miller points to Crown Castle’s board rewriting its cooperation agreement with Elliott Management as an admission that the initial process was tainted.
• The rewritten agreement still did not require Elliott to maintain an equity position in the company.
• Miller has filed a lawsuit to invalidate Crown Castle’s cooperation agreement with Elliott.

• Undavia Group seeking to get Nilesh Undavia elected to the board
• Undavia Group contends the board / company have made “egregious” mistakes including:
  • Failing to identify and appoint stable executive leadership as the Company has endured three different CEOs since 2019;
  • Failing to create and execute a comprehensive strategy to repair customer relationships damaged by the imposition and enforcement of long-term purchase agreements on the customer base amid the peak pricing environment of 2017-2018;
  • Mismanaging environmental risk along with the associated regulatory compliance and government relations resulting in a temporary suspension of one of the Company’s primary operating facilities in Mexico, which significantly impacted production and sales in 2023;
  • Failing to develop a CEO succession plan, which resulted in the search for a CEO for six months, only to appoint the former CFO as the CEO in March 2024; and
  • Rewarding directors by increasing their pay despite poor financial and share price performance.

• GK Investor / George Economou has provided notice that it is nominating 2 directors: Randee Day and Robert M. Pons
• George Economou: “As a significant Genco shareholder, I strongly believe in the Company’s potential to deliver improved value for shareholders. Both Randee and Robert have highly relevant backgrounds that would, in my view, be additive in the boardroom and would help address Genco’s lagging performance. I believe the entire Board would benefit from their fresh perspectives and collective knowledge of the maritime and technology sectors and experience in finance, corporate strategy and governance.”

• 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.

• Politan Capital, owning ~9% of MASI, has nominated two directors to the board of Masimo
• Politan Capital previously won two board seats at last year’s shareholder meeting
• Politan has nominated William Jellison, former CFO of Stryker and Darlene Solomon, former CTO of Agilent Technologies
• Politan paints a picture (see their filings) of MASI being uncooperative and freezing their board members out
• Masimo (see their filings) refutes Politan’s claims

• ZimCal looking to add Stephen Hodges and Judd Deppisch to the board
• ZimCal flags long-term underperformance with Medallion down 40% over the last 10 years and heightened near-term risk from subprime exposure
• ZimCal has published a site supporting its case at: https://restoretheshine.com/

• 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.

• Shah Capital Management intends to vote against Novavax directors Richard H. Douglas, Margaret G. McGlynn, and David Mott
• Shah Capital Management believes that Novavax is undervalued and continues to suffer from poor profitability, despite the substantial value to be unlocked in the Company’s Matrix-M adjuvant platform and non-mRNA protein vaccine portfolio.
• Shah Capital Management met with management and the board multiple times over the course of 2023 and 2024, but believes Novavax has been unresponsive to their suggestions.

• SilverBow Resources has rejected multiple offers, over the past two years, by Kimmeridge Energy Management — the latest offer valued SBW at $2.1 billion
• SilverBow believes the offer substantially undervalues the company
• Kimmeridge holds a 12.9% stake in SilverBow, along with Riposte Capital, the second-largest shareholder
• Kimmeridge is also attempting to get 3 directors onto the board
• SilverBow has rejected the three nominees citing concerns over their independence and representation of all shareholders’ interests

• Clayton Partners, JSCC Family Trust, and Jason Stankowski are contesting the proxy
• Clayton is nominating Jason Stankowski and Clara Nagy McBane to the board
• Clayton believes the company is not being managed to the benefit of its shareholders — believes “Spruce is, at worst, a break-even business and has significant opportunities for positive cash flow generation going forward”
• Clayton disagrees with the company not buying back any stock despite trading at a 25% discount to the estimated value of the stock

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

• ETFS Capital owns approximately 10% of Wisdom Tree (WT) and believes “immediate action to unlock significant value for all stockholders and halt further value destruction.”
• Puts a focus on WT’s strategy of transitioning to a decentralized finance (DeFi) business and believes that it resulted in poor management of the core, profitable ETF business.
• Believes the company’s true value lies in its ETF business, which suffers from poor profitability despite record assets under management.
• Believes its attempts to be collaborative have been met with ” a public and bafflingly hostile response.”
• Seeking

• 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