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Georgeson Monthly Roundup - September 2019
north america
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Georgeson's 2019 Proxy Season Review

Each year Georgeson publishes an annual review of the European AGM season, containing a comprehensive analysis of trends witnessed in the following major markets: UK, France, the Netherlands, Germany, Switzerland, Italy, Spain and Denmark. We are presenting a thorough analysis of the markets where Georgeson has a widespread client base, and where we are privileged to work closely with many of the leading issuers. Our local client support, thorough investor engagement and deep market expertise allow us to highlight the issues and trends which will be of interest to both companies and investors.

If you would like to download a copy, please follow this link: https://www.georgeson.com/uk/2019-season-review

he report was covered in the Financial Timeshttps://www.ft.com/content/f99c22fb-33be-3af5-927f-cf941a6d1f3f and in the Süddeutsche Zeitunghttps://www.sueddeutsche.de/wirtschaft/hauptversammlungen-wenn-aktionaere-die-revolte-proben-1.4602695.

Shareholder Activism
  • Bloomberg reports that EssilorLuxottica Is Said to Face Call for Governance Change: https://www.bloomberg.com/news/articles/2019-09-13/essilorluxottica-is-said-to-face-loeb-call-for-governance-change. “Activist investor Dan Loeb plans to call for governance changes at Ray-Ban maker EssilorLuxottica SA after building a stake in the company, according to people familiar with the matter.  Loeb’s Third Point has a more than 1.2% holding in the company and aims to help break a stalemate between its Italian and French owners, the people said, asking not to be identified because the matter is private. The two factions have been clashing over governance issues such as naming a chief executive officer.”

  • The Financial Times reports that Japan Inc wakes up to investor activism in its own backyard: https://www.ft.com/content/03c0caf0-c8a4-11e9-a1f4-3669401ba76f. “Recent hostile battles show how woefully unprepared companies are for insurgent shareholders.”  

  • Barron’s reports that An Activist Investor Called for AT&T to Make Big Changes. Its Stock Is Already Benefiting.: https://www.barrons.com/articles/att-stock-elliott-activist-51568415220. “AT&T ’s board got an unwelcome surprise this past Monday, when a well-known activist investor decided to question the company’s long-honed – and expensive – strategy. For investors, though, Elliott Management’s new focus on AT&T is likely to have positive long-term benefits. Elliott, the hedge fund run by Paul Singer, revealed a $3.2 billion stake in AT&T and published a letter to its board laying out its grievances about several costly acquisitions and the company’s management, while proposing strategies to cut costs and improve capital returns.”

  • The Wall Street Journal reports about Third Point’s Phony Battle with Sony: https://www.wsj.com/articles/third-points-phony-battle-with-sony-11568799624. “The Japanese conglomerate has rebuffed the activist hedge fund’s calls for spinoffs, but has rewarded shareholders in other ways.”

  • The Financial Times reports that Elliott prepares for downturn with new funding round: https://www.ft.com/content/3f33ad4e-dc7e-11e9-9743-db5a370481bc. “Paul Singer’s activist fund is building up a war chest as it expects market disruption.”

  • The Daily Telegraph reports that Barclays adds two big names to board in wake of investor pressure: https://www.telegraph.co.uk/business/2019/09/26/barclays-adds-two-big-names-board-wake-investor-pressure/. “Barclays chairman Nigel Higgins has shaken up the bank's board by hiring two well-known financiers following pressure from investors to bring in fresh faces. The bank has hired Dawn Fitzpatrick, the investment chief for billionaire George Soros’ fund management firm who oversees assets worth about $25bn, and Mohamed El-Erian, the chief economic adviser at Allianz and former boss of Pimco, as non-executive directors. […] The changes came after Mr Higgins, the Rothschild veteran who replaced John McFarlane in May, was told by Barclays’ biggest investors to dramatically change the make-up of the board.  The conversations happened just as activist investor Edward Bramson sought backing for a board seat, a boardroom siege that later failed.”
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  • The Investment Association has announced Align directors’ pensions to workforce by 2022 or face dissent, shareholders tell companies: https://www.theia.org/media/press-releases/align-directors-pensions-workforce-2022-or-face-dissent-shareholders-tell. “Companies must set a credible plan to pay all executive directors the same pension contributions as the majority of their workforce by the end of 2022 or risk further shareholder dissent, the Investment Association has warned. Under new guidelines published today ahead of next year’s AGM season, companies with existing directors who are paid more than 25% of salary as a pension contribution will be given a ‘red top’ - the highest level of warning by the IA’s Institutional Voting Information Service (IVIS) - unless they have set out a credible action plan to bring their contributions in line with the workforce by the end of 2022. This new guidance by the IA, which represents over 250 UK investment management firms who manage over £7.7 trillion of assets, follows changes to the UK Corporate Governance Code and the IA’s Principles of Remuneration last year to align executive pension contributions with the workforce. In February 2019 the IA’s guidance set out investors’ expectations to see executive directors paid pension contributions in line with the majority of the workforce, and this latest set of guidelines represent the next step in shareholder expectations on listed companies.”

  • The Guardian reports that A third of Sports Direct investors vote against re-electing Mike Ashley: https://www.theguardian.com/business/2019/sep/11/sports-direct-mike-ashley-a-third-investors-vote-against-re-electing-mike-ashley. “Nearly a third of independent investors have voted against Mike Ashley continuing as chief executive of Sports Direct amid criticism of the company’s poor corporate governance. Ashley controls 62% of the company but 31% of the other shareholders who voted at the company’s annual meeting on Wednesday cast their votes against him. The vote came as Sports Direct admitted it no longer has an auditor after the incumbent, Grant Thornton, resigned at the retailer’s sparsely attended shareholder meeting in London. The retailer has so far been unable to persuade any other auditing firm to take on the job.”

  • The Times reports that Investors revolt over executive pay at De La Rue: https://www.thetimes.co.uk/article/investors-revolt-over-pay-at-banknote-printer-de-la-rue-6x3r87tws. “De La Rue suffered a revolt yesterday, with almost half of voting shareholders rebelling over directors’ pay.  Just over 48 per cent opposed the banknote and passport printer’s remuneration report at a heated annual meeting in Basingstoke.”

  • The Financial Times reports that Battle brews over influence of shareholder advisers: https://www.ft.com/content/0927edb4-c342-11e9-a8e9-296ca66511c9. “Proxy groups have been at forefront of battles between companies and investors.”
  • The Daily Telegraph reports that Ryanair investors revolt against Michael O’Leary’s giant pay package: https://www.telegraph.co.uk/business/2019/09/19/ryanair-investors-revolt-against-michael-olearys-giant-pay-package/. “Almost half of Ryanair shareholders voted against the airline’s plan to hand Michael O’Leary a bonus package that could earn him up to €99m (£87m). The remuneration scheme, which requires the long-serving chief executive to either double profits or share price of the low-cost carrier within five years, was approved by just 50.5pc of votes.”
  • The AMF has announced that it is launching a public consultation on the conditions for implementing squeeze-outs and fairness opinions in the context of public offers: https://www.amf-france.org/en_US/Actualites/Communiques-de-presse/AMF/annee-2019?docId=workspace%3A%2F%2FSpacesStore%2F22449408-941b-436e-bca5-de8100725c45. “The AMF is publishing the findings of the working group on conditions for implementing squeeze-outs and fairness opinions in the context of public offers and is holding a consultation on proposals for changes to its regulations. Further to the PACTE Law, whose provisions have resulted in lowering the threshold for implementing squeeze-outs, the AMF set up a working group comprising the various stakeholders, for the purpose of improving the regulations applicable to squeeze-outs and fairness opinions.”
  • Bloomberg reports that Credit Suisse Tabloid Scandal Explodes Into Threat to CEO Thiam: https://www.bloomberg.com/news/articles/2019-09-25/credit-suisse-spy-probe-is-set-to-decide-fate-of-top-executives. “What started as an embarrassing tabloid scandal at Credit Suisse Group AG has suddenly emerged as a very real threat to the bank’s top executives, including Chief Executive Officer Tidjane Thiam. Outside investigators are reporting directly to Chairman Urs Rohner, who will move swiftly to take punitive action against the institution’s senior officials if they’re found to be responsible, a person familiar with the situation said, asking not to be identified because of the sensitivity of the matter.”
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North America
United States
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  • Cyril Amarchand Mangaldas reports about Decriminalising Companies Act Offences – Striking a Balance Between Ease of Doing Business and Corporate Governance: https://corporate.cyrilamarchandblogs.com/2019/09/decriminalising-companies-act-offences-ease-of-doing-business-and-corporate-governance/. “Decriminalisation of compoundable offences that are technical or procedural in nature is inherently beneficial to all stakeholders involved. Imposition of penalties by the Adjudicating Officer do not require them to establish the element of mens rea, making the process of imposition of penalties faster than a criminal prosecution. This move also helps direct the NCLT’s focus and resources only on defaults involving elements of public interest. At the same time, the company or officer in default involved is not made subject to a criminal proceeding for a technical or procedural lapse. Decriminalisation of such offences also promotes the ease of doing business for corporates and makes them more attractive to any potential investors.”
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South America
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Daniele Vitale
Corporate Governance Manager > Corporate Advisory
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