Activist Activities II Emerging Trends, Rising Influence
March 2017
Corporates U.S.A.
Activist Activities II: Emerging Trends, Rising Influence Nonfinancial U.S. Corporate Campaign Case Studies and Profiles of Notable Activists Special Report Emerging Trends, Rising Influence: In 2016, growth in public actions decelerated but stayed meaningful, assets managed declined and investment returns were mixed. Trends include the rise of first-time activists, fewer campaigns against large-cap firms, more settlements related to board seats, adding proxy access to bylaws and regulators blocking activist-led mergers. Fitch Ratings expects activism to stay prevalent, continuing to sway corporate behavior due to greater shareholder engagement and board representation by dissident investors. New Case Studies, Profiles: This year’s report includes case studies on Bristol-Myers Squibb Company (BMY), The Brink’s Company and Macy’s, Inc., which have all been pressured by activists on issues related to board composition, business strategy or asset monetization. Profiles on GAMCO Investors and Corvex Management LP are also included. Credit Impact Still Mixed: Ratings/Outlooks on 30% of the firms in Fitch’s case studies are higher than they were pre-campaign; 30% are lower and 40% are the same. Dow Chemical Co. and E.I. du Pont de Nemours and Co. are on Rating Watch on a proposed merger, but Staples, Inc.’s Rating Watch was removed after regulators halted its purchase of Office Depot, Inc.
Activist Case Studies — Campaign Checkup Current IDR and Outlook
Primary Activist
Activist(s) Successful/ Partially Successfula
BBB–/Stable
Pershing
No
Primary Activist Ownershipb
Activist On Board or Involved With Appointments
Rating/Outlook Change (Prior to, During, Post Campaign)
—
—
Negative Watch (During) Outlook Revised to Stable (During) Downgrade (Prior) No No Outlook Revised to Positive (Post) Downgrade (Prior)/Upgrade (Post) Positive Watch (Post) Negative Watch (Post) Downgrade (During) Outlook Revised to Positive (Post) Downgrade (Post) Outlook Revised to Positive (Post) Downgrade(Post) Outlook Revised to Stable (Post) No Downgrade (Post)
Related Research
Company Allergan, Inc.
Fitch: The Why? Forum - Why Shareholder Activism Is Here To Stay (June 2016)
Amgen Inc.
BBB/Stable
Third Point No
Exited
No
Baxter International Inc. The Brink’s Company Bristol-Myers Squibb Co. ConAgra Brands, Inc.
BBB+/Stable BBB–/Stable A–/Stable BBB–/Positive
Third Point Starboard JANA JANA
Yes Yes, Ongoing Yes, Ongoing Yes
Yes (8.5%) Yes (7.9%) Yes (< 1%) Yes (5.0%)
Yes (Involved) Yes (Activist) Yes (Involved) Yes (Activist)
Darden Restaurants, Inc.
BBB/Stable
Starboard
Yes
Exited
No
Fitch: UAL Avoids Proxy Fight, Negative Credit Impact Unlikely (April 2016) Fitch: Brink’s Agreement with (January 2016)
Co. Reaches Starboard Value
Dow Chemical Company BBB/RWP
Third Point Yes
Yes (1.5%)
Yes (Involved)
E.I. du Pont de Nemours and Co. eBay Inc.
A/RWN
Trian
No
Yes (1.7%)
No
BBB/Stable
Carl Icahn
Yes
Exited
No
General Motors Company BBB–/Positive Harry J. Wilson Hess Corporation BBB–/Stable Elliott Interpublic Group of BBB/Positive Elliott Companies, Inc. Macy’s Inc. BBB/Negative Starboard Mondelez BBB/Stable Trian International, Inc. PepsiCo, Inc. A/Stable Trian Staples, Inc. BB+/Stable Starboard
Yes
Yes (< 1%)
No
Yes Yes
Yes (5.9%) Exited
Yes (Involved) Yes (Involved)
Yes Yes
Yes (1.0%) Yes (2.9%)
Yes (Involved) Yes (Activist)
Yes Yes
Exited Exited
Yes (Involved) Yes (Involved)
Analysts Carla Norfleet Taylor, CFA +1 312 368-3195 carla.norfleettaylor@fitchratings.com Bill Densmore +1 312 368-3125 bill.densmore@fitchratings.com Dustin DeMaria +1 312 368-2071 dustin.demaria@fitchratings.com Zachary Schroeder +1 312 368-2056 zack.shroeder@fitchratings.com Diego Rodriguez-Guerrios +1 312 368-3164 diego.rodriguez-guerrios@fitchratings.com Nick Scarlatelli +1 212 908-0596 nick.scarlatelli@fitchratings.com
www.fitchratings.com
a
Success refers to specific proposal documented. However, Fitch views the situation with BMY as ongoing. bAs of March 7, 2017. IDR – Issuer Default Rating. RWP – Rating Watch Positive. RWN – Rating Watch Negative. Pershing – Pershing Square Capital Management. Third Point – Third Point Partners. JANA – JANA Partners LLC. Starboard – Starboard Value. Trian – Trian Fund Management, LP. Elliott – Elliott Management. Source: Activist Insight, Fitch Ratings.
March 9, 2017
Corporates Emerging Trends in Activism — U.S. Nonfinancial Corporations Decelerating but Still Meaningful Activity Public actions against nonfinancial U.S. corporates increased at a modestly slower pace in 2016, rising 9% to over 600, after posting double-digit growth since 2012. Numerous factors may have contributed to the slight deceleration in growth of new actions against U.S. nonfinancial corporations in 2016, including a shift toward activist campaigns against financial companies, a decline in hedge fund assets and political uncertainty in the U.S. Per Activist Insight, financials represented 21% of global public actions in 2016 versus 17% in 2013, while Pension & Investments magazine noted 59% of the hedge funds in its 7th Annual Hedge Fund Survey reported a decline in assets. Fitch attributes the slight slowdown to greater shareholder engagement, more internally motivated restructurings and increased remuneration, but expects select activity to continue.
Total Public Actions and Outcomes — U.S. Corporates Total Public Actions
Total Successful Public Actions
Linear (Total Public Actions )
(No. of Actions) 700 600 500 400 300 59%
200 100 0
69% 68%
60%
60% 58%
56%
2012 2010 2011 2013 2014 2015 2016 Note: Reflects resolved campaigns only. Includes partially successful compaigns. Excludes financials. Public action is defined as any demand made public via SEC filings, press realeses, etc. Source: Activist Insight, Fitch Ratings.
Success rates for actions launched remains high, but declined slightly to 58% in 2016 from 60% in 2015. Success rates have averaged just over 60% since 2010. Fitch defines success as including demands fully or partially adopted by management and compromises/settlements and views the lower success rate in 2016 as possibly due to the increase in first-time activists. This report’s appendices include a full list of activists’ campaigns against U.S. nonfinancial corporations since 2014, as captured by Activist Insight.
More First-Time Activists Despite the slight pace of deceleration in the growth of new U.S. nonfinancial campaigns, the number of first-time activists is increasing. Per Activist Insight, 259 activists launched public demands at U.S. companies, with 20% of them launching their first campaign.
Related Criteria Criteria for Rating Non-Financial Corporates (September 2016)
United Continental Holdings Inc.’s (UAL) April 2016 settlement regarding board representation with first-time activists Altimeter Capital Management and Par Capital Management was an example of a first-time activist making public demands against U.S. nonfinancial companies. Nonetheless, Fitch was not surprised by this settlement given executive management issues at UAL and an increased propensity for settlements in lieu of drawn-out proxy battles at U.S. corporations. The company’s credit profile has not deteriorated due to activist involvement. Fitch upgraded UAL’s Issuer Default Rating to ‘BB’ from ‘BB–’ in October 2016 due to improved credit metrics, expectations of meaningful FCF and continued cost control over the intermediate term, and better airline industry fundamentals.
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Corporates Activists Aiming for Smaller Targets Campaigns initiated in 2016 were aimed at more midsized companies as actions against large companies grew at a slower pace. Based on data from Activist Insight, the number of public actions against mid-cap nonfinancial U.S. corporations rose 54% to 108 in 2016, while those against large-cap companies increased 9% to 143. The number of actions against small-cap companies was flat versus the prior year at 382. Fitch views this trend as due in part to the increase in first-time activists, the ability to build larger positions in targeted firms with less capital and the potential ease of orchestrating mergers among smaller firms. Nonetheless, public actions against select large- and mega-cap companies are continuing. For instance, newly formed Mantle Ridge LP successfully pushed to gain board representation and appoint a new CEO at CSX Corporation, which has a market capitalization of over $40 billion. Moreover, although public demands are yet to be made, Trian Fund Management, LP disclosed a $3.5 billion investment in Procter & Gamble Co., which has a more than $230 billion market capitalization, and Carl Icahn disclosed a stake against BMY in early 2017.
Public Actions by Market Capitalization — U.S. Nonfinancial Corporations Large Cap (> $10 Billion) Small Cap (< $2 Billion)
Mid Cap ($2 Billion–$10 Billion)
(% Change) 150 100 50 0 (50) 2012
2013
2014
2015
2016
Source: Activist Insight, Fitch Ratings.
M&A Faces Regulatory Headwind M&A proposals remain prevalent given the slow-growth, low interest rate environment. However, regulators blocked two widely followed mergers spearheaded by activists — Staples, Inc. and Office Depot Inc. (Starboard Value), and Baker Hughes Inc. and Haliburton Co. (ValueAct Capital Partners) in 2016. The potential $130 billion merger of Dow and DuPont (Third Point Partners) is currently facing regulatory scrutiny, as is AT&T Inc.’s pending $85 billion acquisition of Time Warner Inc. According to data from Activist Insight, M&A proposals represented 17% of all U.S. nonfinancial public actions in 2016, down from 21% in 2015. Fitch believes the modest decline in M&A proposals could reflect activists’ perception that there is a risk that larger mergers may not pass regulatory approval and could explain dissident investors’ shift toward more smaller mid-cap targets.
Board Focus Continues — Proxy Access More Prevalent Board-related demands, including gaining board seats, the elimination of a staggered board and separating the CEO/chairman roles, represented 45%, or roughly 375 of the 630 public actions against nonfinancial U.S. corporations in 2016, which is flat versus 2015. More specifically, gaining board seats represented 175, or nearly half of board-related demands and continues to be one of the leading individual public actions waged against U.S. nonfinancial Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
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Corporates companies. Activists have experienced a success rate, inclusive of settlements, of over 70% when seeking board representation. Settlements related to board seats increased at a 14% CAGR since 2010. Proxy access, which allows shareholders to include their nominated directors in proxy materials, was a top governance-related demand in 2016, according to Factset. According to the data service, 191 companies in the S&P 1500 added proxy access in 2016, up from two in 2013. Fitch believes allowing proxy access, particularly at low thresholds of investor stock ownership, could increase a firm’s vulnerability to dissident investors. Macy’s and BMY were companies highlighted in Fitch’s case studies that added proxy access in 2016.
Public Demands for Board Representation — U.S. Nonfinancial Corporations Board Seat Activisim (LHS)
Board Seat Success Rate (RHS)
(No. of Campaigns)
(%) 100 90 80 70 60 50 40 30 20 10 0
200 180 160 140 120 100 80 60 40 20 0 2010
2011
2012
2013
2014
2015
2016
Note: Success rate include partially successful campaigns and settlements. Source: Activist Insight, Fitch Ratings.
About the Study This report provides a multisector view of activism and a framework to assess issuer vulnerability. Fitch evaluated 17 large investment-grade firms that faced activist campaigns since 2013 and profiled the 12 large notable activists. Campaign case studies contain a synopsis of events, a snapshot of activists’ proposals and outcomes, and a review of five factors Fitch identified as increasing issuer vulnerability. The factors include equity performance relative to peers, operating trends, the potential to leverage balance sheet, the presence of monetizable assets or divestible noncore businesses, and whether there were multiple corporate governance provisions viewed as inconsistent with best practices. The potential to leverage an issuer’s balance sheet considers whether an investor might consider the company as being underlevered or whether increased debt was not likely to result in a rating downgrade. Bond spreads for certain large liquid issuances are also included. Activist profiles discuss investment strategy, campaign history, investment returns and top holdings.
New Case Studies and Activist Profiles Bristol-Myers Squibb Company BMY’s encounters with activist investors began in early 2015 with the International Brotherhood of Electrical Workers Pension Fund (IBEW), followed with overtures by JANA Partners LLC at the end of 2016 and a subsequent investment by Carl Icahn in February 2017. Given ownership stakes of multiple high-profile activists that have investments in other healthcarerelated stocks and ongoing consolidation in the industry, speculation regarding potential M&A transactions involving BMY has surfaced.
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Corporates IBEW submitted in March 2015 a proposal as part of BMY’s 2015 proxy that would grant shareholders the right to act on matters of the company by written consent in lieu of a meeting. BMY successfully encouraged shareholders to vote against the proposal through a shareholder presentation highlighting the company’s corporate governance practices. JANA subsequently made an initial investment stake in BMY of less than 1% in late November 2016. BMY disclosed in a Feb. 22, 2017 press release that members of the board and management have engaged in discussions with JANA to better understand their views and that the appointment of three new independent directors will follow those discussions. The board size was temporarily expanded to 14 directors until the May 2017 annual meeting, at which time only 11 directors will stand for re-election. BMY also announced a $2 billion accelerated share repurchase (ASR) program. JANA praised both actions. On Feb. 22, 2017, the day of BMY’s press release, Carl Icahn simultaneously announced a stake in BMY, but has not made public his demands of the company. The size of the stake is unknown, but the investor also owns positions in other pharmaceutical-related firms, including Allergan Plc (previously Actavis Plc), Cadus Corp., Enzo Pharmaceuticals Inc., and Herbalife Ltd., fueling M&A speculation. Fitch believes increased involvement by activist shareholders raises the likelihood BMY will pursue transactions that have a negative effect on the balance sheet and credit profile, such as the recently announced $2 billion ASR. However, BMY’s still-decent fundamental operating outlook and Fitch’s estimated current pro forma leverage of 1.6x mitigate this risk. The firm maintains decent headroom under the 2.0x gross leverage Fitch considers appropriate for the ‘A–’ rating after incorporating the effect of a recently announced $2 billion ASR.
The Brink’s Company Starboard began its campaign against Brink’s in October 2015, highlighting the company’s weak operating results versus peers and proposing a substantial stand-alone restructuring or a strategic combination to improve performance and shareholder value. Suggestions on ways to increase revenue and margins included better customer service, improved technology and route logistics, reduced expenses and incentive-based employee compensation. Brink’s subsequently entered into a standstill agreement with Starboard to add three independent directors, including someone from Starboard to replace Brink’s CEO, and to amend bylaws to eliminate the executive committee. As a part of the agreement, Starboard agreed to no further proxy battles or aggressive measures until the 2017 board meeting, anticipated sometime in May. The agreement avoided a protracted proxy battle that might have distracted senior management from the turnaround process. Since the agreement, Brink’s made significant management changes, including a new CEO and CFO. Fitch expects ongoing restructuring improvements and organic growth to provide further benefits to the company’s long-term profitability, but believes risk of efforts to further increase shareholder returns could rise given Starboard’s involvement with the board and the pending expiration of the standstill agreement.
Macy’s, Inc. In July 2015, Starboard went public with view that Macy’s should spin off its real estate and create two companies. Macy’s indicated on its August 2015 earnings call that it constantly reviews options, inclusive of REIT structures, regarding its real estate. It has taken various actions related to these assets since that time.
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Corporates Starboard’s proposal included suggestions that Macy’s create two joint ventures (JVs) to isolate iconic urban stores from mall stores to attract different partners and make further cost reductions while maintaining control of real estate, leaving the operating company debt free and maintaining an investment-grade rating. Starboard’s presentation also suggested the property companies could issue up to $8 billion of debt with proceeds upstreamed to Macy’s to pay off debt and return cash to shareholders so adjusted leverage would be 3.5x. The activist also proposed selling stakes in the JV, using proceeds to support JV growth, and further monetization of JVs with IPOs. Lastly, the presentation included an illustration of how paying off debt would increase Macy’s equity value. Macy’s elected to pursue real estate initiatives using a three-pronged strategy of closing underperforming stores, managing its flagship assets and creating value from the remaining real estate portfolio in lieu of a REIT. The company continues to update investors on its progress while increasing share buybacks and dividends and planning to return leverage to the 2.5x–2.8x target, down from over 3.0x for the LTM. Nonetheless, Fitch downgraded Macy’s to ‘BBB’ from ‘BBB+’ in April 2016 due to lack of visibility into sales acceleration that would meaningfully improve profitability. The Outlook was revised to Negative in January 2017 due to reduced confidence in Macy’s ability to stabilize comparable store sales and grow EBITDA over the intermediate term, although the company’s subsequently announced intent to pay down with excess cash and suspend share buybacks in 2017 are credit positives. Fitch anticipates any change to Macy’s capital structure as it explores real estate opportunities will be credit neutral at best due to potential additional rent expense and the possibility sales proceeds would be deployed to shareholder-friendly activities. However, a potential leveraging transaction given recent media reports on interest from Hudson’s Bay is currently weighing on the credit.
GAMCO Investors GAMCO, founded by Mario Gabelli in 1976, manages nearly $40 billion of assets. Nearly 70% of GAMCO’s investments were in the services, technology and consumer goods sectors, and roughly 75% have market capitalizations of less than $2 billion. GAMCO launched 10 campaigns in 2016, including those against Viacom, Inc. to replace management. About 50% of the activist’s public demands since 2010 were board related, while the others varied. According to Activist Insight, GAMCO’s investments generally underperformed the S&P 500 for the period they were held. In addition to being long or having a current holding in Viacom, GAMCO also has investments in Brink’s and Time Warner, Inc. Time Warner is being acquired by AT&T, and the transaction is undergoing extensive regulatory review.
Corvex Management, LP Corvex, founded in 2010 by Keith A. Meister, the former CEO of Icahn Enterprises, manages roughly $12.5 billion of assets. About 85% of Corvex investments were in the services, financials and technology sectors, but unlike GAMCO, the activist mainly invests in mid-cap or large-cap companies. Corvex generally launched three to five campaigns per year since 2013, with nearly 70% being board or M&A related. Recent public actions include those against both Time Warner and Yum! Brands, Inc. to gain board representation and to spin off or sell businesses. Based on data from Activist Insight, Corvex investments performed relatively in line with the S&P 500 during the period they were held. The activist exited its position in Time Warner, but is one of Yum’s top five shareholders. It also currently has positions in The Williams Companies, Inc. and Signet Jewelers Limited. Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
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Corporates Sector Focus Activists are typically attracted to cash-rich sectors, those with participants that are slow to adjust to shifting consumer preferences or secular changes, and those with assets to monetize or restructure. Sectors with the biggest increase in the number of public actions during 2016 included Industrials; Basic Materials; Telecom, Media & Technology (TMT); and Utilities. Activity in Gaming, Lodging & Leisure declined; the Consumer sector experienced a slight increase in the number of first-time actions; and new Retail action was flat. To see sector trends in 2016, please refer to The Activist Playbook — Trends Across U.S. Corporates section on page 19. Actions against utilities generally represented less than 5% of U.S. nonfinancial corporation campaigns due to regulatory oversight within the industry. The majority of public actions recorded in 2016, such as California Public Employees’ Retirement System’s successful push for proxy access at WEC Energy Group, were made by nontraditional activists (institutional shareholders or governmental bodies) that make proposals and are one-off situations. Fitch currently estimates the activists — excluding CtW Investment Group, which mainly acts on behalf of pension funds — profiled in this report, which in aggregate manage more than $250 billion of assets, hold positions in less than 10% of Fitch’s publicly rated universe of investment-grade corporate issuers. To see names of these holdings, please refer to The Activist Playbook — Trends Across U.S. Corporates section on page 19.
Vulnerability Factors Equity performance, operating trends, restructuring opportunities, corporate governance and certain other factors may help assess the risk that an activist may emerge and agitate for change. Inclusive of Macy’s, Brink’s, and BMY, which are new additions to this year’s report, approximately 60% of the firms in Fitch’s case studies had underperforming equities, 60% had persistently negative operating trends and 75% had monetizable assets. Nearly all of them were viewed as having the potential to lever their balance sheets, while only about 25% had multiple corporate governance provisions that were inconsistent with best practices. To see names of these holdings, please refer to The Activist Playbook — Trends Across U.S. Corporates section on page 19.
Key Proposals, Success Rate Activist proposals typically seek to gain board seats to push for M&A or modification of business strategy or capital allocation. The success rate, inclusive of fully and partially successfully campaigns, for cases profiled was high at roughly 80%, versus an average success rate of roughly 50% for all activist campaigns since 2010. There is also a growing propensity for firms to enter settlement agreements with activists. Settlements may be driven by an aversion to proxy battles given the time and cost involved, and in some cases, pressure from multiple activists. Only two of the 16 case studies examined by Fitch — Darden Restaurants, Inc. and DuPont — involved a proxy battle. To see names of these holdings, please refer to The Activist Playbook — Trends Across U.S. Corporates section on page 19.
Covenants May Mitigate Damages Shareholder activism can face obstacles due to debt covenants, as the strength of restrictions can influence strategies deployed by activists. Issuers in nearly all of Fitch’s case studies were subject to change of control-triggering events and negative pledge provisions, while few had financial maintenance covenants. Limitations on liens and subsidiary guarantees could preActivist Activities II: Emerging Trends, Rising Influence March 9, 2017
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Corporates empt subordination resulting from potential leveraging transactions. During its 2014 proxy battle with Starboard, Darden adopted a resolution approving and nominating the Starboard nominees to avoid a potential event of default and acceleration of debt related to a turnover of the majority of its board prior to its annual meeting.
Classifying Key Activist Proposals Proposals were classified into five groups: those related to the board; modification of business strategy; balance sheet or capital allocation; M&A, which includes divestitures and spinoffs; and nonboard corporate governance. To see trends over time, please refer to The Activist Playbook — Trends Across U.S. Corporates section on page 19. Nearly all the companies examined were presented with two to three proposals aimed at enhancing shareholder value. The vast majority of proposals focused on gaining board representation or modifying business strategy by restructuring and making more aggressive cost reductions. Others were specific calls to increase dividends and/or share repurchases (General Motors Company), to monetize assets (Darden and Macy’s), to merge with or acquire another company (Allergan, Inc. and Staples), to modify business strategy (Brink’s) or to make outright corporate governance changes (Hess Corporation).
Campaign Case Studies — High Success Rates The success rate for the campaigns studied remained high, with nearly 80% of the proposals fully or partially accepted. This is higher than an average success rate of roughly 50% for a broader universe of nonfinancial corporate public actions tracked by Activist Insight since 2010 (see the Total Public Actions and Outcomes — U.S. Corporates chart on page 2). Fitch attributes the high success rate for the campaigns profiled to the issuers’ high vulnerability at campaign launch and the activists’ ability to garner large shareholder support. Multiple activists agitating a single issuer also increased the likelihood of success, although this was only the case in four of the case studies Fitch evaluated: Darden; Mondelez International, Inc.; Hess and BMY. When settlements were reached with activists, activists were typically awarded one or more board seats that enabled dissident investors to effect change from the boardroom. Standstill agreements, which may or may not be part of a settlement, were less common, but nonetheless occurred in at least one-third of the situations highlighted. The agreements, which have limited duration, allow issuers to proceed with their strategies without disruption from the activist in exchange for board representation or some other type of concession, and may place caps on the activist’s ownership. Baxter International Inc.; ConAgra Brands, Inc.; eBay Inc.; Interpublic Group of Companies, Inc. (IPG); Dow; and Brink’s all entered standstill agreements with the dissident shareholder. In the case of ConAgra and JANA Partners LLC, the agreement remains in place until the activist no longer owns shares or has representation on the board, while others were one year in duration or until the next board meeting. During 2016, Third Point criticized Dow’s decision to merge with DuPont right before the end of its standstill agreement. Meanwhile, Brink’s standstill agreement with Starboard could expire at the time of Brink’s May 2017 board meeting. Proxy battles occurred in only two of the 16 cases examined. Proxy fights are major, costly distractions to management. Companies’ aversions to proxy battles are also becoming more apparent as more firms amend bylaws to allow proxy access to large shareholders. For example, Mondelez and McDonald’s Corp., which experienced public criticism regarding margins and operating performance, adopted proxy access in October 2015. Proxy access Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
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Corporates Activist Case Studies — Campaign Proposals, Outcomes and Rating Impactsa
Company c Allergan, Inc. Amgen Inc.
Current IDR/ Outlook
Primary Activist
BBB–/Stable BBB/Stable
Pershing April 2014 No Third Point October 2014 No
X
X X
Baxter International Inc. BBB+/Stable The Brink’s Company BBB–/Stable
Date of Campaign
Activist Successful/ Partially Successful
Key Activist Proposal(s) Balance Sheet/ Modification Capital Nonboard Board of Business Allocation/ Corporate b Related Strategy Real Estate M&A Governance X X
Bristol-Myers Squibb Company ConAgra Brands, Inc.
A–/Stable BBB–/Positive
Third Point August 2015 Yes Starboard October 2015 Yes, Ongoing JANA November Yes, 2016 Ongoing JANA June 2015 Yes
Darden Restaurants, Inc. Dow Chemical Company E.I. du Pont de Nemours and Co. eBay Inc. General Motors Company Hess Corporation
BBB/Stable
Starboard
October 2013 Yes
X
BBB/RWP
Third Point January 2014 Yes
X
X
A/RWN
Trian
BBB/Stable BBB–/Positive
X
X
X X
Negative Watch During Outlook Revised to Stable During Downgrade Prior None None
X
X X
No
X
X
Yes Yes
X X
X
BBB–/Stable
Icahn Harry J. Wilson Elliott
September 2014 January 2014 February 2015 January 2013
Yes
X
X
Interpublic Group of Companies, Inc. Macy’s Inc.
BBB/Positive
Elliott
August 2014
Yes
X
BBB/Negative
Starboard
July 2015
Yes
Mondelez International, Inc.
BBB/Stable
Trian
June 2012
Yes
X
X
X
PepsiCo, Inc. Staples, Inc.
A/Stable BB+/Stable
Trian Starboard
July 2013 Yes January 2015 Yes
X
X
X X
a
X
X
Rating or Outlook Change (Prior to, During or Post Campaign)
X X
X X
X
b
Outlook Revised to Negative Prior and to Positive Post Downgrade Prior/ Upgrade Post None During/Positive Watch Post None During/Negative Watch Post Downgrade During Upgrade and Positive Outlook After None During/Downgrade Post None During/Outlook Revised to Positive Post Downgraded and Outlook Revised to Negative After Placed on Negative Watch During/Outlook Revisions Post None Negative Outlook Prior/Downgrade and Negative Watch During c
Success refers to specific proposals documented in case study. X denotes type of proposal presented by activist. Includes divestiture and spinoffs. Allergan, Inc. was acquired by Actavis plc, which is rated ‘BBB–/Stable’. IDR – Issuer Default Rating. RWP – Rating Watch Positive. RWN – Rating Watch Negative. Pershing – Pershing Square Capital Management. Third Point – Third Point Partners. JANA – JANA Partners LLC. Starboard – Starboard Value. Trian – Trian Fund Management, LP. Icahn – Carl Icahn. Elliott – Elliott Management. Source: Activist Insight, Fitch Ratings.
enables eligible shareholders to nominate directors to the board. Fitch believes this could shift more power to activist investors over time. DuPont publicly predicted costs associated with its proxy fight with Trian Fund Management, LP in 2015 would exceed $15 million. Fitch generally views the odds of success with proxy fights as 50/50, as they are often dependent on the parties’ ability to sway large shareholders and can be influenced by endorsements of proxy firms, such as Institutional Shareholder Services, Inc. (ISS) and Glass Lewis & Co., LLC. Starboard was victorious in turning over Darden’s entire board, while DuPont successfully defeated Trian, with shareholders re-electing all 12 of the company’s nominees.
Rating Actions Not Solely Driven by Activist Involvement Activist campaigns are a distraction to management and raise event risk for creditors because proposals could result in an increase in leverage to reward shareholders. The ultimate impact Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
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Corporates to ratings, if any, is typically not obvious at the outset of a campaign. These situations evolve slowly and may never gain enough momentum to result in a successful campaign from the activist’s perspective. At the early stages of a campaign, described as stages 1 and 2 in the How Fitch Incorporates Activism into the Rating Process table below, Fitch is unlikely to take an explicit rating action, but may publish its opinion of proposals, discuss the expectations currently factored into ratings, and engage in scenario analysis to assess the potential impact on ratings.
How Fitch Incorporates Activism into the Rating Process Stage 1 Stage 2
Stage 3
Situation
Fitch Commentary/Action
Activist announces investment, but demands are not made public. Activist announces investment and demands. Rumors and speculation regarding potential corporate action(s) escalate. Issuer announces new plans, change in strategy, or other corporate actions in response to or in conjunction with activist(s) demands.
Possible comment, potentially capturing other similar recent announcements. Comment focuses on expectations for the issuer’s ratings. A potential scenario analysis, including any public information available, may be included. Appropriate rating action would occur.
Source: Fitch Ratings.
Fitch took negative rating actions on approximately two-thirds (10 of the 16) of the issuers targeted in the activist campaigns and highlighted in this report. Four of these actions (Darden, ConAgra, Staples and Baxter) occurred less than a year prior to the activist announcing ownership or initial demands, as they were driven by weak operating trends, corporate actions or shareholder-friendly initiatives that could have been put in place to avoid being targeted by an activist. Negative actions on the other six, as seen in the Negative Rating Actions — Prior to, During or Post Activist Campaign table on the next page, occurred after activist involvement. Macy’s downgrade was driven by weak operating performance, while the others occurred due to corporate actions or structural changes that may or may not have been motivated by the activist’s campaign. Despite the negative rating actions, ratings or Outlooks on 30% of the issuers (ConAgra, Darden, DOW, GM and IPG) are currently higher than they were pre-campaign. About 40% (Amgen, Inc.; PepsiCo, Inc.; BMY; Mondelez; Baxter and Brink’s) remained unchanged. Ratings or Outlooks on roughly 30% (DuPont, eBay, Hess, Macy’s and Staples) are lower. One firm (Allergan) was acquired. Darden was upgraded to ‘BBB’ from ‘BBB–’ in April 2016 due to reduced leverage and improved sales. GM was upgraded to ‘BBB–’ from ‘BB+’ in June 2015 and the Rating Outlook was revised to Positive in June 2016 due to improvement in the company’s core business, credit metrics and liquidity, despite the significant level of cash being returned to shareholders. IPG’s Outlook was revised to Positive in July 2016 due to credit metrics being strong for the ‘BBB’ rating and Fitch’s view that improvement in the company’s credit profile will continue.
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Corporates Negative Rating Actions — Prior to, During or Post Activist Campaign Issuer Allergan, Inc.
Campaign Date April 2014
Baxter International Inc. August 2015 ConAgra Brands, Inc.
June 2015
Darden Restaurants, Inc. October 2013
E.I. du Pont de Nemours September and Company 2014 eBay Inc.
January 2014
Hess Corporation
January 2013
Macy’s, Inc.
July 2015
Mondelez International, Inc.
June 2012
Staples, Inc.
January 2015
Drivers of Negative Rating Action Placed on Negative Watch due to Valeant Pharmaceuticals International, Inc.’s unsolicited offer to acquire the company in April 2014. Ratings were downgraded to ‘BBB/Stable’ from ‘A+/RWN’ due to Actavis plc.’s acquisition of Allergan in March 2015. Downgraded two notches to ‘BBB+/Stable’ in May 2015 on the planned spinoff of its biosciences business and expectations that Baxter would remain acquisitive. Outlook on ‘BBB’ rating was revised to Negative in March 2015 due to volume declines and slower than expected deleveraging following the acquisition of Ralcorp Holdings, Inc. However, the Rating Outlook was subsequently revised to Stable in November 2015, due to the planned sale of its Private Brands business and use of proceeds mainly for debt reduction, and to Positive in November 2016 due to ConAgra’s business model evolution and the potential for low single-digit organic revenue growth, midteens margins and Fitch’s view that sales will stabilize in the fiscal year ending May 2018. Downgraded to ‘BBB–’ from ‘BBB’ in October 2013 due to persistently weak same-restaurant sales at Olive Garden, increased leverage and negative FCF. Ratings were placed on Negative Watch in December 2013 upon the announcement of strategic actions including the sale of Red Lobster and revised to Stable in May 2014 due to plans to use sales proceeds for debt reduction. The Rating Outlook was revised to Positive in May 2015 and ratings were upgraded to ‘BBB’ from ‘BBB–’ in April 2016 due to reduced leverage and improved sales trends at Olive Garden. ‘A/Stable’ rating unchanged during activist campaign but placed on Watch Negative in December 2015 due to its proposed merger with Dow Chemical Company, the uncertainty as to the capital structure of the successor company and the risk of downgrade while still structuring the successor to remain investment grade. Downgraded in October 2014 to ‘A–/RWN’ from ‘A/Stable’ on the planned spinoff of PayPal and the potential for a more aggressive capital structure. It was then downgraded to ‘BBB/Stable’ in July 2015 on transaction closing. Rating Outlook revised to Negative in January 2016 and ratings subsequently downgraded to ‘BBB–’ from ‘BBB’ in December 2016. The negative actions were due to projected outspending on growth projects in 2016 that meaningfully reduced the company’s liquidity, the loss of diversification due to asset sales and limited production growth prospects in the near to medium term, which are expected to keep projected credit metrics weak for the ‘BBB’ category. Downgraded to ‘BBB’ from ‘BBB+’ in April 2016 due to lack of visibility into sales acceleration that would meaningfully improve profitability. Fitch believes midmarket apparel sector weakness and online migration would limit comparable stores sales (comps) growth over the next two to three years. Fitch revised Macy’s outlook to Negative in January 2017 due to reduced confidence in its ability to stabilize comps and grow EBITDA over the intermediate term. Placed on Negative Watch in May 2014 due to financial strategy uncertainty post its coffee joint venture and restructuring announcement. Ratings were affirmed at ‘BBB’ with a Negative Outlook in May 2015 as the deal approached closure, but concerns regarding increased shareholder-friendly activity and potentially slow operating improvement remained. Fitch revised the Rating Outlook to Stable in September 2016 due to increased confidence in Mondelez’s ability to improve EBIT margins to the targeted 17%–18% range in 2018 from 14.7% in 2015 on 2%–3% annual organic revenue growth and to improve FCF. Downgraded to ‘BBB–/Negative’ from ‘BBB/Negative’ due to weak sales and margin trends in May 2014, and placed on Watch Negative on the planned buyout of Office Depot, Inc. in February 2015. Fitch downgraded Staples’ ratings to ‘BB+/Stable’ in April 2016 due to secular headwinds and competitive challenges in the office products category, and removed ratings from Negative Watch following the termination of its proposed Office Depot acquisition.
RWN – Rating Watch Negative. Source: Fitch Ratings.
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Corporates Assessing Issuer Vulnerability — A Bondholder’s View Weak operating trends, lagging equities, underlevered balance sheets, and monetizable assets or restructuring opportunities are factors that make firms vulnerable to being approached by activists. Moreover, corporate governance practices viewed as inconsistent with best practices by shareholders — particularly as they relate to poison pills, supermajority voting requirements or a lack of board independence — provide further support for the activist’s platform. Inclusive of Macy’s, Brink’s and BMY, which are new additions to this year’s report, approximately 65% of the firms in Fitch’s case studies had underperforming equities, nearly 50% had persistently negative operating trends and roughly 70% had monetizable assets or divestible business lines. Nearly 70% were viewed as having the potential to leverage their balance sheets with the use of excess cash or by incurring incremental debt. Only 25% had corporate governance provisions inconsistent with best practices. Fitch does not view beneficial ownership, defined as 5% or more by the SEC, as a necessary threshold for shareholders to agitate for change, but some skin in the game is a prerequisite. See the Issuer Vulnerability Factors at Campaign Launch and Risk of Further Action table on page 14.
Debt Terms and Covenants Could Mitigate Damages An examination of pertinent debt terms is crucial in assessing the potential impact of activistdriven event risk. Strong covenants could prompt refinancing or amending the underlying issuance, whereas weak ones put existing creditors at risk of subordination. Fitch examined for financial maintenance covenants, change of control, negative pledge provisions and limitations on subsidiary debt for the largest issuances for the firms in its case studies. Few had financial maintenance covenants, nearly all had change of control-triggering event and negative pledge clauses, and only two placed limits on subsidiary debt.
Financial Covenants Financial covenants rank the most important by far, but issuances protected by financial covenants are usually refinanced or renegotiated in the event of a leveraging transaction. While such limitations are possible in bank loans, they are rare in bond indentures for investment-grade issuers.
Change-of-Control Provisions Change-of-control clauses trigger a default in bank loan agreements and a put option with bond indentures. Investment-grade change-of-control provisions often include a rating or triggering event, stipulating a change of control has to happen and has to effectuate a rating downgrade before a default or a put option are deemed to have occurred. Depending on the exact language in the triggering or rating event clauses, some clauses require the causal relationship between the downgrade and the change of control, while others only require coexistence but not concurrence. Darden provides a good example of how covenants come into play. During its 2014 proxy battle with Starboard, Darden adopted a resolution approving and nominating the Starboard nominees to avoid a potential event of default and acceleration of debt related to a turnover of the majority of its board prior to its annual meeting. Darden also recently amended the size of its REIT spin to ensure covenant compliance after certain bondholders failed to give consent.
Negative Pledge Clauses Negative pledge clauses, sometimes called equal and ratable sharing clauses, could be an impediment to pledging additional assets for leveraging deals. Like any covenant clause, negative pledges apply only to the restricted group of subsidiaries defined in a credit Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
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Corporates agreement or indenture. Hence, a thorough understanding of what subsidiaries constitute the restricted group and of how the group can be recomposed can give creditors a clearer picture of how much of the targeted issuer’s assets are unrestricted and free to be collateralized. Although equal and ratable sharing clauses are often referred to interchangeably with negative pledge, they differ in scope. These clauses customarily apply only to the borrower and its domestic subsidiaries, and encompass only principal property, leaving out mostly receivables, inventories and intangible assets. Conversely, negative pledge clauses apply to the entire borrowing group, domestic and nondomestic subsidiaries, and encompass most assets.
Limitation on Subsidiary Guarantees Debtholders can negotiate stronger terms on limitation on subsidiary guarantees and liens to pre-empt potential subordination resulting from leveraging deals. The limitation on guarantees can be embodied in either limitation on debt incurrence or limitation on investments, depending on whether guarantees are defined as debt or investments. Issuers can push for a clause called limitation on subsidiary guarantor’s liability to pre-empt future fraudulent conveyance suits. In this clause, subsidiary guarantors relinquish the right to contest fraudulent conveyance on both the federal and state levels. In return, the issuer agrees to not allow subsidiary guarantors to take on guarantees that will put them in an insolvable state.
Corporate Governance — Often a Key Activist Platform Four of the firms in the case studies Fitch provided had corporate governance practices that could be challenged by an activist. Hess amended its charter to eliminate supermajority voting for mergers after reaching an agreement with Elliott Management. Another example is Darden, which in addition to the changes mentioned previously, separated the CEO and chairman positions after its CEO resigned. Examining board composition, voting standards and takeover defenses can help ascertain if certain governance provisions are inconsistent with what shareholders view as best practices. Certain of these topics are discussed below.
Board Independence In some cases, governance changes viewed as being in the best interest of shareholders may be less beneficial to creditors. However, the separation of the CEO and chairman positions, which results in concentration of power, and director independence are elements of governance that should also be advantageous for creditors. According to proxy firm ISS, calls for independent board chairs were the most prevalent type of shareholder proposal offered for consideration at U.S. companies’ annual meetings in 2014. Moreover, government regulation stemming from the Sarbanes-Oxley Act of 2002, the Dodd-Frank Act of 2010 and stock exchange listing rules advocated for director independence.
Classified Boards Classified boards, also known as staggered boards, serve as an antitakeover measure. The board is made up of different classes of directors serving different term lengths. Director elections are held annually, with shareholders voting to fill expiring terms. Conversely, with a declassified board, all directors are elected annually, leaving boards vulnerable to complete turnover and infiltration by activist investors, as was the case with Starboard’s proxy battle against Darden. The percentage of S&P 500 companies with classified boards declined significantly and is only about 10%, according to FactSet. The data provider indicates about 31% of companies in the S&P 1500 have classified boards.
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Corporates Issuer Vulnerability Factors at Campaign Launch and Risk of Further Action
Company
Issuer Vulnerability Factors at Activist Campaign Launch Monetizable Corporate Equity Persistently Potential to Assets/ Governance UnderWeak Leverage Divestible Provisions performing Operating Balance Business Inconsistent with a Peers/Market Trends Sheet Lines Best Practices
Allergan, Inc. Amgen Inc.
X
Baxter International Inc.
X
The Brink’s Company
X
Bristol-Myers Squibb Company
X
ConAgra Brands, Inc.
X
X
Darden Restaurants, Inc.
X
X
X
X
X
eBay Inc.
General Motors Company
X
Hess Corporation
X
Interpublic Group of Companies, Inc. Macy’s, Inc.
X
X
X
X
Dow Chemical Company
E.I. du Pont de Nemours and Co.
X X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X X
Mondelez International, Inc.
X
X
X
X
X
X
X
PepsiCo, Inc.
X
X
X
Staples, Inc.
X
X
X
X
b
Risk of Further Activist Pressure
Not applicable, acquired by Actavis, plc. Low: Amgen’s operational performance has improved, the firm is already returning more cash to shareholders and Third Point has exited. Medium: Third Point’s standstill remains in place, but the activist has a significant stake and the company recently declassified its board. Medium: Starboard has board representation and its standstill agreement is near expiration. Medium: Multiple activists hold shares of company, including JANA and Carl Icahn. Low: The standstill agreement with JANA remains in place. Moreover, ConAgra has reduced costs and monetized noncore businesses. Low: Darden has reduced costs, completed its REIT spinoff, improved performance and made corporate governance changes. Moreover, Starboard has exited its position in the company. Low: Third Point has board representation, but Dow has already taken steps to enhance shareholder value and is in the process of merging with DuPont. Low: Trian continues to own shares, but company is in process of merging with Dow. Low: Fitch views risk of additional actions as low, given spinoff of PayPal and that Icahn has exited his position in the company. Medium: Fitch views risk of additional shareholder activism as medium due to a lagging stock price and the lack of a controlling family in the shareholder base. Low: Due to limited surplus cash flow to fund distributions and completion of an exhaustive activist-led restructuring. Low: Elliott exited position in February 2017 and standstill agreement has expired. Medium: Macy’s efforts to maximize the value of its real estate continue. However, operating trends remain weak and Starboard influenced the appointment of William Lenehan to Macy’s board. Medium: Reflects Pershing’s sizeable ownership, Trian’s board representation and the company’s firm’s unsolicited bid for Hershey in 2016. Low: Trian has exited its position in PepsiCo, which continues to return cash to shareholders. Low: Starboard has exited its position and the merger with Office Depot has been called off.
a
Equity underperformance prior to activist disclosing stake over three- or five-year horizon. bFitch’s current assessment. Third Point – Third Point Partners. Starboard – Starboard Value. JANA – JANA Partners LLC. Trian – Trian Fund Management, LP. Elliott – Elliott Management. Pershing – Pershing Square Capital Management. Note: Information presented is historical, with vulnerability factors reflecting the situation at the time of the activist campaign. Source: Fitch Ratings.
Third Point’s campaign against Baxter during 2015 resulted in an agreement to add two new directors, including a partner from Third Point. The agreement includes standstill and voting provisions, and a commitment to declassify the company’s board. The agreement, which remains in place as long as Third Point owns a material stake in the company, stipulated
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Corporates Baxter would work to transition to annual election of the company’s directors beginning at the 2016 annual meeting.
Shareholder Rights Plans Antitakeover provisions, such as shareholder rights plans or poison pills, are viewed as inconsistent with best practices, but could provide protection from such leveraging events for bondholders. Shareholder rights plans provide shareholders the right to additional shares at deep discounts if beneficial ownership increases beyond a certain threshold — typically 10%–20% — to dilute an acquirer’s position. While intended to protect against a hostile takeover, shareholders view these provisions as potentially limiting returns on their investments. The number of public companies having poison pills in place declined significantly over time because proxy firms, activist investors and other institutional investors pushed to eliminate them. According to Factset, just fewer than 5% of U.S. companies in the S&P 1500 had poison pills in place at the end of 2016, compared with just over 6% at the end of 2015. FactSet has a proprietary Bullet Proof Rating system that quantifies relative defense protection on a scale of 0–10, where low ratings indicate minimal protection. Fitch provided insight on that rating for the issuers profiled in this report.
Voting Standards Moves toward majority instead of plurality voting for director elections and eliminating supermajority requirements for proposals, such as mergers or for shareholders to call special meetings, are trends in corporate governance. These mandates are often perceived as best practices. Cumulative voting and universal ballots are types of voting systems that may help strengthen the ability of minority or dissident shareholders to elect a director. Cumulative voting allows shareholders to cast all their votes for a single nominee for the board of directors when the company has multiple openings on its board. A universal ballot would list board nominees for both management and a dissident shareholder on the same ballot, enabling effective vote splitting on the election of directors. Trian pushed for a universal ballot in its board fight against DuPont, but the chemical company rejected the request.
Profiled Activists — Impressive Scorecard Fitch’s definition of success includes settlements and demands fully or partially adopted by management. This report’s appendices include a full list of the respective activists’ campaigns going back to 2012, as captured by Activist Insight. Since 2010, success rates for the activists profiled by Fitch were higher than average, as seen in the Public Action Success Rates for Profiled Activists — Nonfinancial U.S. Corporates chart on the next page. The average success rate for public actions launched against nonfinancial U.S. corporates since 2010 was just over 60%, but was 70% for the activists profiled by Fitch. This could be explained by the fact that they are more well-known and established investors. Activists with the highest success rate were JANA and ValueAct, at 87% and 88%, respectively, since 2010. JANA launched 46 campaigns, including those against Apache Corp., ConAgra and PetSmart Inc., while ValueAct launched 25, including those against Microsoft Corp., The Hillshire Brands Company and CR Bard, Inc. during that time.
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Corporates Public Action Success Rates for Profiled Activists — Nonfinancial U.S. Corporates (2010–2016) Activist's Objectives Unsuccessful
Activist's Objectives Successful
All Activist Success Rate
(%) 100% 100 80 80% 60 60% 40 40% 20% 20 0%0
Source: Activist Insight, Fitch Ratings.
Fitch currently estimates the activists profiled in this report, which in aggregate manage more than $150 billion of assets, hold positions in under 10% of Fitch’s publicly rated universe of investment-grade corporate issuers. A snapshot of those holdings is on the Profiled Activists’ Positions in Fitch-Rated Investment-Grade Entities — February 2016 table. Investors have 10 days to file a Schedule 13D disclosure with the SEC after reaching the 5% beneficial owner threshold. However, it can be difficult for U.S. companies to have advance notice on whether activists are accumulating ownership due to the use of derivative positions. Ongoing campaigns by profiled activists, as noted by Activist Insight, involving Fitch-rated entities not included in Fitch’s case studies are listed in the table below.
Select Fitch-Rated Entities with Ongoing Activist Campaignsa — As of February 2017 Company Name
IDR
Sector
Activist
Proposal
Viacom Inc. Marathon Petroleum Corp. General Electric Company Rockwell Collins, Inc.
BBB/Negative BBB/RWN AA–/Stable A–/RWN
Technology, Media, Telecom Basic Materials, Energy Industrials Industrials
GAMCO Elliott Management Trian Fund Management Starboard
Spinoff/Sale of Business Division Sell Assets/Spin Off Division Share Repurchases, Cost Cutting M&A
a
As documented by Activist Insight. IDR – Issuer Default Rating. RWN – Rating Watch Negative. Source: Activist Insight, Fitch Ratings.
With Viacom, the company announced during August 2016 a leadership transition, creation of an expanded board of directors and the settlement of the litigation related to corporate governance issues after being pressured by activists SpringOwl Asset Management and GAMCO. Viacom also announced plans to explore a strategic investment partnership for its subsidiary Paramount Pictures in February 2016 after comments by GAMCO. SpringOwl exited its position in Viacom and GAMCO significantly reduced its 10% stake to less than 1%, so further pressure from these activists is viewed as less likely. With Marathon Petroleum Corp., Fitch placed the company’s ‘BBB’ rating on Negative Watch in January 2017 following the firm’s announcement regarding a number of strategic actions to enhance shareholder value. Elliott, which owns 4% of the company, sent a letter to Marathon in Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
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Corporates Profiled Activists’ Positions in Fitch-Rated Investment-Grade Entities — February 2017 Activist
Company
Sector
IDR
Public Action
Carl Icahn
PayPal Holdings, Inc. Freeport-McMoRan Copper & Gold Inc. Xerox Corporation Bristol-Myers Squibb Company Caterpillar Inc. Hewlett Packard McDonald’s Corp. McKesson Corp. Oracle Southern Company Wal-Mart Stores Inc. Hess The Brink’s Company National Fuel Gas Company Time Warner Inc. Viacom Inc. Computer Sciences Corporation Bristol-Myers Squibb Company ConAgra Foods, Inc. Tiffany & Co. Harris Corporation Marathon Petroleum Mondelez International (Formerly Kraft Foods) Brink’s Co. Baxter International Inc. Macy’s, Inc. Hewlett Packard Rockwell Collins Inc. ConAgra Brands, Inc. Baxter International Inc. General Dynamics Corp. Dow Chemical Co. Mohawk Industries Inc. Sherwin-Williams Company Monsanto Company DuPont E I De Nemours & Co. General Electric Co. Mondelez International Microsoft Corp. Seagate Technology Public Limited Company Twenty-Century Fox Inc.
TMT Utilities TMT Healthcare Industrials TMT Consumer HealthCare TMT Utilities Retail Energy (Oil & Gas) Industrials Utilities TMT TMT TMT Healthcare Consumer Retail TMT Basic Materials Consumer Industrials HealthCare Retail TMT Industrials Consumer HealthCare Industrials Industrials Industrials Industrials Industrials Industrials Industrials Consumer TMT TMT TMT
BBB+ BBB– BBB– A– A A– BBB BBB+ A+ A– AA BBB– BBB– BBB BBB+ BBB BBB A– BBB– BBB+ BBB– BBB BBB BBB– BBB– BBB+ BBB– A– BBB– BBB+ A BBB BBB A– A– A AA– BBB AA+ BBB– BBB+
No Yes Yes No No Yes Yes Yes Yes No No Yes No No No Yes No Yes Yes Yes Yes Yes Yes Yes No Yes No Yes No Yes No Yes No No No Yes Yes Yes Yes No Yes
CtW Investment Group
Elliott Management GAMCO Investors
JANA Partners LLC
Pershing Square Capital Management Starboard Value
Third Point Partners
Trian Fund Management, LP
ValueAct Capital Partners
Current % of Total Shares Outstanding 2.8 7.2 9.8 a N.A. N.A.a N.A.a a N.A. 0.5 0.3 a N.A. N.A.a 6.2 5.1 7.8 0.4 0.6 3.4 < 1.0 5.0 5.1 2.0 0.8 6.4 9.2 0.3 0.9 0.3 N.A. 1.0 9.6 0.4 1.8 1.2 1.0 0.9 2.0 0.8 3.1 0.5 3.2 2.7
a
N.A. means not available or no direct ownership in the case of CtW. CtW Investment Group is not named fiduciary for any pension or other fund or plan, nor does it render investment advice. Members of CtW affiliates participate in Taft-Hartley plans with over $200 billion in assets. IDR – Issuer Default Rating. N.A. – Not available. TMT – Telecom, Media & Technology. Source: Activist Insight, Bloomberg.
November 2016 highlighting a $14 billion–$19 billion value creation opportunity, with recommendations including immediate dropdown of master limited partnership qualifying assets and a full strategic review to reassess the company’s current cost structure. Marathon has not publicly responded to Elliott’s overtures. With General Electric Co. (GE), Trian made a less than 1% investment in the company in October 2015. In conjunction, it filed a public presentation titled GE, Transformation Underway but Nobody Cares. The paper stated the company is undervalued and suggested a path to increase margins, increase leverage to return cash to shareholders and more efficiently allocate capital. GE engaged the activist positively.
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Corporates Starboard is opposing Rockwell Collins Inc.’s $6.4 billion acquisition of B/E Aerospace, Inc. Fitch placed Rockwell’s ratings on Negative Watch in October 2016 after the company’s announcement, given the transaction will be partially financed with incremental debt. Rockwell and B/E intend to convene a special meeting of stockholders on March 9, 2017 to vote on the proposed merger. Instead of acquiring B/E, Starboard wants Rockwell to consider alternative options, including a sale. At least three other major shareholders support Starboard’s plan.
Assets Under Management and Investment Performance Assets under management by primary focus activists grew at a 17% CAGR from 2012 to 2015 to nearly $200 billion. Fitch attributes the rapid growth in assets dedicated to activist activity over time to the low interest rate environment and search for higher returns. However in 2016, assets under management fell 9% to $176 billion. Assets under management by primary focus activists is defined by Activist Insight as those that dedicated most, if not all, assets to activist positions.
Assets Under Management — Primary Focus Activistsa Global Total (LHS)
U.S. Total (LHS)
($ Mil.) 250,000 200,000
Three-Year CAGR: 10%
150,000 100,000 50,000 0 2012
2013
2014
2015
2016
aPrimary
focus activists are defined as fund or individuals that dedicate most, if not all of their assets to activist positions. Source: Activist Insight.
In terms of investment performance, Activist Insight’s global index outperformed the MSCI World Index seven of the past eight years and the S&P 500 in only five of the past eight years, as seen in the Performance Summary chart below. However, relative outperformance of both indices has moderated since 2013. For instance, high-profile activists Carl Icahn and Pershing Square Capital Management (Pershing) experienced a difficult year in 2016. Barron’s, which gathered information from a regulatory filing in conjunction with a bond offering by Icahn Enterprises, reported Icahn’s hedge fund lost 20% of its value in 2016, after declining 18% in 2015.
Performance Summary MSCI World Index
(%) 60
S&P
AI Activist Index
50 40 30 20 10 0 (10) (20) 2009
2010
2011
2012
2013
2014
2015
2016
Source: Activist Insight, Fitch Ratings.
For the full year 2016, Pershing Square Holdings, Ltd. (Pershing Square Holdings) reported negative 13.5%, versus positive 11.9% for the S&P 500. A meaningful contributor to Pershing’s weaker 2016 performance was its investment in Valeant Pharmaceuticals International Inc., Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
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Corporates while contributors to Icahn include investments in Hertz Global Holdings Inc. and Voltari Corp. Given mixed returns, many activists used 2016 to rebalance portfolio holdings. Activists in Fitch’s case studies have liquidated positions in 40% of the firms highlighted, but hold board seats or influence board composition at 60%.
The Activist Playbook — Trends Across U.S. Corporates Activists’ tactics typically begin with accumulating ownership and private discussions with management. If these prove unsuccessful, public campaigns are launched to build further shareholder support, and board representation is sought. A proxy contest, typically the option of last resort given the high cost involved, may be waged absent an amicable settlement. Starboard’s 2014 victory at turning over Darden’s entire 12-person board during its proxy battle is viewed as historic, and DuPont’s ability to defeat Trian in its 2015 proxy fight was equally momentous. There were approximately 633 public demands made by activists against nonfinancial U.S. corporates during 2016. Similar to Fitch’s 16 case studies, board-related demands dominated, representing nearly half of all public actions. Other governance-related items such as proxy access increased to 25% of all public actions in 2016, from 11% in 2015, while M&A-related demands fell to 17% of all actions from 21% in 2015. Balance sheet activism and modification of business strategy declines both declined to just over 5% in 2016 from about 10% of all demands in 2015. Fitch attributes fewer demands related to the balance sheet and business strategy to companies increasing cash returned to shareholders, cutting costs, etc. to avoid being targeted by an activist.
Key Activist Proposals Over Time Balance Sheet Activism
Board-Related Activism
Business Strategy
M&A Activism
Other Governance
(No. of Public Actions) 700 600 25%
11% 500
16%
21%
18% 400
19%
15% 300 11% 28% 2% 49% 10%
8% 25% 4% 54% 9%
200 100 0 2010
2011
2012
14% 2013
48%
46%
43%
43% 11%
6%
10%
10%
13% 26% 8%
17%
10%
9% 2014
45%
10% 2015
7% 2016
Note: Percentages may not add due to rounding. Source: Activist Insight, Fitch Ratings.
Success rates for the broader group of public actions launched against nonfinancial U.S. corporates peaked at 70% in 2012, but averaged just over 50% since 2010 based on data gathered from Activist Insight. FactSet, which manages SharkRepellent — a similar activismbased database — quoted activists’ success rate at electing directors as over 70%.
Sector-Level Highlights It is common among several of the largest activists to be attracted to cash-rich sectors, those with participants experiencing business model issues, and those with assets to monetize or Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
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Corporates restructure. Sectors with the biggest increase in the number of public actions in 2016 include Industrials, Basic Materials (inclusive of Energy) and TMT. Past examples of activists being Public Actions by Sector — U.S. Corporates attracted to a particular sector include (2016) Starboard’s efforts to consolidate the Utilities Basic office supply sector, and Trian’s and 3% Materials 11% Pershing’s efforts in the Consumer sector or packaged food. Activist Consumer investors are also keen at identifying 18% TMT 35% financial structuring opportunities that Gaming, could unlock value across industries. Lodging & Prime examples are monetizing real Leisure 1% estate in Retail (Macy’s and Darden) and selling restaurants to franchisees Healthcare Retail 11% in the restaurant industry (Corvex). 7% Industrials Trends in activist involvement across 14% TMT – Telecom, Media & Technology. various sectors are discussed below. Source: Activist Insight, Fitch Ratings.
U.S. Corporates (Nonfinancials) Public Actions by Sector — 2015 Versus 2016 2015: 583 Public Actions
(No.) 450 400 350 300 250 200 150 100 50 0
2016: 633 Public Actions
220
115 72 53 Basic Materials
110
3 16
Consumer
Gaming, Lodging & Leisure TMT – Telecom, Media & Technology. Source: Activist Insight, Fitch Ratings.
70
89
74
69
45 45
Healthcare
Industrials
Retail
207 19 9 TMT
Utilities
Telecom, Media & Technology TMT represented 35% of the 633 public actions against nonfinancial U.S. corporates documented by Activist Insight in 2016. Of the activist profiled in this report, Elliott and Starboard maintained more than 30% of its investments in technology while Pershing rarely invested in technology, according to Activist Insight. Activists agitated for change at a wide range of technology companies across all market capitalizations. For instance, Starboard’s partially successful push to gain board representation, spin off or sell divisions, force share repurchases, and modify business strategy at Yahoo! was a highly followed campaign during 2016. Carl Icahn successfully gained three seats on the board of Xerox Corporation. The activist held a 9.8% stake of one of the two publicly traded companies for which Xerox split into in February 2017. Within media, Corvex is recorded by Activist Insight as having initiated a campaign to push Time Warner to spin off its HBO business or to sell itself in 2016, but the situation remains unresolved. Fitch believes this could be due in part to AT&T being in the process of acquiring Time Warner. Verizon Communications Inc. defeated Kenneth Steiner, who submitted a proposal requiring an independent chairman at the company’s 2016 annual meeting. Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
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Corporates Retail and Consumer The Retail and Consumer sector as a group ranked second in terms of the number of public actions in 2016, representing 25% of all public demands against U.S. nonfinancial corporations. Activists common to these sectors include Trian, Starboard, JANA and Pershing. Consumer goods and service-related companies constituted over 60% of Trian’s investments over time. The activist’s top 10 holdings included Wendy’s Co., Sysco Corp. and Mondelez as of January 2017. Starboard liquidated several large holdings in the sector, including Darden and Office Depot in 2016, but maintained a near 1% stake in Macy’s, which is in the process of monetizing some of its real estate. JANA maintains a large position in ConAgra, while Pershing has meaningful ownership stakes in Chipotle Mexican Grill Inc. and Mondelez. Barington Capital Group’s campaign against apparel company Chico’s FAS Inc. in 2016 included demands related to board representation, remuneration and cost cutting. The activist launched a proxy fight against Chico’s but withdrew its slate of nominees after proxy advisory firms ISS and Glass Lewis backed the company’s slate. Barington was also unsuccessful with its push for increased share buybacks, but Chico’s engaged the activist positively regarding proposals surrounding cost cutting. JANA successfully pushed Tiffany & Co. to elect a director in February 2017. The activist reached a settlement with the company to add three new board members. JANA owns a 5% stake in the company, which had been searching for a new CEO. Less known activists were also present in the Retail and Consumer sector during 2016. Ampera Capital LLC urged the board of The WhiteWave Foods Company to obtain a higher offer price from Danone Food Company, which acquired WhiteWave for $12.5 billion. However, shareholders approved the transaction in October 2016.
Basic Materials and Energy Basic Materials, inclusive of the oil and gas industry, represented the third-largest sector for activist activity, with 19% of all nonfinancial U.S. public actions in 2016. Activists common to the sector include JANA and Third Point, which both invested over 20% of their assets in Basic Materials companies. During 2016, activist Jonathan Kalodimos, an investor focused on corporate governance, was unsuccessful with his push to force PPG Industries, Inc. to amend its bylaws to adopt and issue a general payout policy that gives preference to share repurchases (relative to cash dividends) as a method to return capital to shareholders. PPG’s board indicated it considered the shareholder proposal and believed it would limit PPG’s ability to strategically and flexibly deploy cash. The firm gave several reasons for not supporting the proposal, including PPG’s share repurchases have sometimes exceeded cash dividends and PPG’s history of increasing its annual dividend to remain competitive against peers. Shareholders did not vote in favor of the activist. Public actions in the Energy sector during 2016 include Elliott’s value creation demands against Marathon Petroleum and Corvex’s push to gain board representation and remove the entire 10-person board of Williams Companies. Corvex’s proxy contest was unique because the investor planned to nominate a slate solely composed of its employees, which if elected, would resign to make away for new independent directors. The activist withdrew its proxy contest against Williams after the energy pipeline company settled and appointed two new independent directors to its board. Despite the actions discussed above, Fitch believes the risk of shareholder activism in the energy sector remains relatively low given significant activist pressure in 2012/2013 and limited FCF due to the negative impact of low oil prices. Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
21
Corporates Industrials The industrials sector ranked fourth behind the Basic Materials sector, representing nearly 15% of U.S. nonfinancial campaigns in 2016. Of the activists profiled, Relational Investors had the highest exposure to industrials, representing about 20% of the firm’s investments over time. Notable campaigns against industrial companies in 2016 include Altimeter Capital Management and PAR Capital Management’s successful push to gain board representation at United Continental, and Starboard’s settlement with Brink’s, which also awarded the activist board seats. Fitch views the settlement agreement between Brink’s and Starboard positively, given the parties were able to avoid a protracted proxy battle that might have distracted management from the turnaround process. At the end of 2016, Starboard also began pushing defense contractor Rockwell Collins to reconsider its $6.4 billion deal to acquire B/E Aerospace in favor of other alternatives, including a sale, according to Bloomberg News. Rockwell is moving forward with the transaction, setting a date for a special shareholder meeting to vote on the merger in March 2017.
Healthcare Healthcare represented about 10% of the approximately 630 public actions against nonfinancial U.S. companies in 2016. One of the most notable actions includes Artisan Partners’ letter to Johnson & Johnson (JNJ, AAA/Stable) calling for the company to stop its expensive acquisition policy, review its management compensation practices and consider a spinoff of its medical devices and consumer businesses. Artisan Partners is a global investment management company with over $95 billion of assets under management, while JNJ has a market capitalization of over $320 billion. Activist Insights recorded the campaign as ongoing. Fitch affirmed its rating on JNJ in January 2017 following JNJ’s announcement that it will acquire Actelion Ltd. for $30 billion cash, given it will be funded with cash and is strategically sound. Profiled activists with the biggest exposure to Healthcare include Carl Icahn at about 18% of his investments, followed by ValueAct at 15% and Pershing at 14%. Carl Icahn established a position in BMY in February 2017 while Valeant continued to be one of Pershing’s top 10 positions at the end of January, even though the activist’s return on the investment was a loss of roughly 90% through mid-February 2017. Pershing successfully gained board representation at Valeant, but the value of its investment, which peaked at 9% in 2016, declined precipitously. Fitch rates Pershing Square Holdings, a permanent capital vehicle managed by Pershing, ‘BBB+’ and maintained the rating despite a significant decline in its holding in Valeant due to its low leverage. Several factors could contribute to an increase in activist investors within the industry given they can meaningfully weigh on a firm’s equity valuation. For instance, disappointing results from a clinical study of a commercially significant or potentially significant drug or device that adversely affects the operating prospects of drug and medical device developers. Fitch believes this has driven activists’ interest in BMY. Adverse legal rulings on intellectual property disputes, serious product liability revelations and disruptive technological advancements can also be factors because they can adversely affect the viability of a product that highly affects a company’s competitive position.
Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
22
Corporates Allergan, Inc.a — Acquired Market Capitalization: N.A. Fitch Synopsis and Opinion
Sector: Healthcare
• Holding a 9% stake in Allergan, Inc., Pershing Square Capital Management (Pershing) begins pushing buyout offer from Valeant Pharmaceuticals International (Valeant) in April 2014. • Allergan rejects Valeant’s offer in May 2014 but Pershing and Valeant turn to other shareholders and push for a special shareholder meeting to force Allergan to negotiate. • Valeant takes position in Allergan to gain shareholder access and raises buyout offer 21% to $180/share, while Pershing urges independent directors to review offer. • After seeking to address perceived governance failures, Pershing files proxy seeking for a special meeting to unseat six of Allergan’s directors. • Allergan rejects revised offer in June 2014, saying it undervalued firm, but some shareholders support $180/share offer. Activist Paulson & Co. takes stake to back offer. • Pershing continues to push for merger, hires Credit Suisse to aid campaign, while Glass Lewis & Co., LLC recommends Allergan allow special meeting demanded by Pershing. • Allergan considers $10 billion purchase of Salix Pharmaceuticals (Salix), pursues insider trading case against Pershing and sets a December 2014 date for special shareholder meeting. • Pershing threatens lawsuit if Allergan buys Salix and sues Allergan for improperly soliciting Valeant shareholders while Valeant raises offer again to $60 billion. • Allergan weighs bid from Actavis plc in October 2014, after two firms hold informal merger talks, and formally accepts Actavis’ $219/share, or $66 billion, offer in November 2014. Valeant’s collaboration with Pershing to takeover Allergan was a high-profile battle. While its proposals were unsuccessful, Pershing received $219/share with Actavis’ buyout of Allergan, roughly 54% above Allergan’s share price at the start of its campaign. Actavis completes the buyout of Allergan on March 17, 2015.
Vulnerability Factors Present at Campaign Launch Equity Underperforming Peers and/or Market Persistently Weak Operating Trends Potential to Leverage Balance Sheet Monetizable Assets/Divestible Businesses Lines Multiple Corporate Governance Provisions Inconsistent with Best Practices
Activist Proposal
Yes/No No No Yes Yes No
Shareholder Baseb
Equity Performance/Relative Valuation (%, As of March 17, 2015) Return on Invested Capital (ROIC) Total Return +/– Relative Performance (S&P 500) +/– Relative Performance (S&P 500 Healthcare) Enterprise Value (EV)/EBITDA Multiple (x) Peer Median EV/EBITDA Multiplec (x)
One-Year 18.3 85.1 71.2 45.3 26.9 19.0
Three-Year 19.7 159.6 102.2 50.3 16.0 14.3
Five-Year 16.6 280.5 182.9 129.1 15.8 13.2
2012 5,806.1 7.1 2,007.0 34.6 1,599.9 (157.2) (60.4) 1,382.3 (347.4) (662.6)
2013 6,300.4 8.5 2,193.5 34.8 1,695.4 (183.7) (59.4) 1,452.3 (848.9) (471.4)
2014 7,237.9 14.9 2,662.1 36.8 1,927.8 (262.9) (59.6) 1,605.3 (65.2) (318.2)
Financial Highlights ($ Mil., Unless Otherwise Noted) Revenue Revenue Growth (%) EBITDA EBITDA Margin (%) Cash Flow from Operations Capex Dividends FCF Net Acquisitions and Divestitures Net Share Repurchases
Outcome Withdrawn N.A. N.A. Unsuccessful Settlement Unresolved
Board-Related Changes Modification of Business Strategy Balance Sheet/Capital Allocation Changes Merger and Acquisition Proposal Nonboard Corporate Governance Changes (Poison Pill) Other (Amend Bylaws)
Beneficial Owners Pershing Square Capital Management, L. P. T.Rowe Price Associates, Inc. BlackRock, Inc. The Vanguard Group
(%) 8.9 6.1 5.7 5.4
Commentary N.A.
Corporate Governance Highlights 2011 5,419.4 10.2 1,733.1 32.0 1,081.9 (129.8) (61.1) 891.0 (100.2) (197.7)
Provision Classified/Staggered Board CEO/Chairman Role Combined Supermajority Voting for Mergers Shareholders Can Call Special Meeting Cumulative Voting Poison Pill In Force Expiration of Shareholder Rights Plan
No Yes No Yes No Yes 4/22/15
Balance Sheet Highlightsd
Creditor Protection/Bond Provisions
($ Mil.) Fitch Rating Outlook/Watch Total Debt Total Debt/EBITDA (x) Total Adj. Debt/EBITDAR (x) Cash and Equivalents
2.35% Large Debt Issuances 2018 Financial Maintenance Covenants No Change of Control Trigger Event Provision Yes Negative Pledge Yes Limitation on Subsidiary Debt No Commentary: N.A.
2011 A Stable 1,553.9 0.9 1.1 2,406.1
2012 A+ Stable 1,518.8 0.8 1.0 2,701.8
2013 A+ Stable 2,125.6 1.0 1.2 3,046.1
2014 A+ Stable 2,142.1 0.8 1.0 4,911.4
Commentary Allergan amended its bylaws in November 2012 to ease the ability of shareholders to call a special meeting. Allergan had already instituted a poison pill with a 10% threshold in April 2014
3.00% 2020 No Yes Yes No
3.45% 2022 No Yes Yes No
3.80% 2025 No Yes Yes No
TL 2017– 2019 Yes Yes Yes Yes
a
Data reflective of Allergan, Inc., which was acquired by Actavis plc in March 2015. bAs of Jan. 22, 2015 SEC filing. cPeers include Amgen, Inc.; Celgene Corp, Gilead Sciences, Shire PLC. Allergan was downgraded to ‘BBB–’ in March 2015, when it was acquired by Actavis plc. NR – Not rated. N.A. – Not applicable. TL – Term loan. Source: Fitch Ratings, SEC filings, Bloomberg, Factset.
d
Bond Prices/Relative Value
Option-Adjusted Spreads — Allergan Versus U.S. Large Cap Bond Index 2.800% Allergan Notes due 2023
(bps) 300
U.S. Corp. Non-Financial Large Cap Index
200 100 0 1/12
7/12
1/13
7/13
1/14
7/14
1/15
7/15
1/16
7/16
1/17
Source: BoA Merrill Lynch Global Reserach, used with permission, Bloomberg,
Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
23
Corporates Amgen Inc. (AMGN) Market Capitalizationa: $124.1 Billion Fitch Synopsis and Opinion
Sector: Healthcare
• Amgen Inc. announces a restructuring in July 2014 to eliminate 2,400–2,900 staff positions and reduce operating expenses by approximately $700 million, with most of the savings being reinvested to support new product launches. Amgen also announces the company would evaluate additional efficiency initiatives. • During October 2014, Third Point Partners (Third Point) publicly discloses its ownership position and urges Amgen to consider separating its cash-generating mature business from its fast-growing R&D business. Amgen releases a statement on Oct. 21, 2014 indicating it maintains an active and engaged dialogue with all shareholders, including Third Point. • While Third Point applauds Amgen’s initial restructuring actions, the activist advocates for additional strategic actions, including more focus on R&D cost reduction efforts, a longterm commitment to improving margin guidance targets, and greater clarity on additional shareholder returns after questionable capital allocation decision on past acquisitions. • At the end of October 2014, Amgen announces an expansion of its restructuring plan, with a series of initiatives aimed at improving shareholder return. Initiatives included a 30% increase in the dividend, $2 billion in share repurchases beginning in first-quarter 2015, a 15-point operating margin increase by 2018 and additional staff reductions. • In November 2015, Third Point suggests Amgen and Allergan merge, but subsequently exits its position in Amgen during the second quarter of 2016. Increasing growth rates and margins are driving improved operating performance. Fitch expects Amgen to deploy its increased cash flow to shareholder-friendly activities and targeted acquisitions. This will likely continue to pressure U.S. cash balances and result in gross leverage within the 2.5x–3.0x range. Amgen had cash and short-term investments of $34.5 billion on Sept. 30, 2016, the vast majority of which resides outside of the U.S. At 3.1x gross debt to EBITDA, Amgen’s gross debt leverage is at the high end of the range for its ‘BBB’ rating. Gross debt leverage maintained durably above 3.0x would likely result in a Negative Outlook or a one-notch downgrade.
Vulnerability Factors Present at Campaign Launch Equity Underperforming Peers and/or Market (Over Three or Five Years) Persistently Weak Operating Trends Potential to Leverage Balance Sheet Monetizable Assets/Divestible Noncore or Underperforming Businesses Lines Multiple Corporate Governance Provisions Inconsistent with Best Practices
Yes/No No No No Yes No
Equity Performance/Relative Valuationb (%, As of Feb. 9, 2017) Return on Invested Capital (ROIC) Total Return +/– Relative Performance (S&P 500) +/– Relative Performance (S&P 500 Healthcare) Enterprise Value (EV)/EBITDA Multiple (x) Peer Median EV/EBITDA Multiplec (x)
Outcome N.A. Unsuccessful N.A. N.A. N.A. N.A.
Board-Related Changes Modification of Business Strategy Balance Sheet/Capital Allocation Changes M&A Proposal Other Corporate Governance Changes Other
Shareholder Base (Excludes Derivatives)b One-Year Three-Year 13.8 13.6 5.3 40.6 (14.7) 4.4 (22.4) 8.5 8.6 13.8 10.3 21.4
Five-Year 14.9 155.5 62.4 39.9 9.7 11.8
Financial Highlights
Top Equity Holders Capital Group Company Blackrock Vanguard Group FMR LLC State Street Corp.
(%) 11.0 6.7 6.5 4.9 4.6
Commentary Amgen’s top 10 Institutional holders own about 43% of the company. Per Bloomberg, hedge funds own less than 4%. Third Point Partners exited its position in the second quarter of 2016.
Corporate Governance Highlights 2012 2013 2014 2015 LTM 9/16 17,265.0 18,676.0 20,063.0 21,662.0 22,562.0 10.8 8.2 7.4 8.0 4.2 7,322.0 7,771.0 9,891.0 11,014.0 11,680.0 42.4 41.6 49.3 50.8 51.8 5,882.0 6,291.0 8,555.0 9,077.0 9,314.0 (689.0) (693.0) (718.0) (594.0) (716.0) (1,118.0) (1,415.0) (1,851.0) (2,396.0) (2,847.0) 4,075.0 4,183.0 5,986.0 6,087.0 5,751.0 (2,390.0) (9,434.0) (165.0) (359.0) (359.0) (3,319.0) (536.0) 48.0 (1,785.0) (764.0)
($ Mil., Unless Otherwise Noted) Revenue Revenue Growth (%) EBITDA EBITDA Margin (%) Cash Flow from Operations Capex Dividends FCF Net Acquisitions and Divestitures Net Share Repurchases
Balance Sheet Highlights ($ Mil., Fiscal Year May) Fitch Rating Outlook/Watch Total Debt Total Debt/EBITDA (x) Total Adj. Debt/EBITDAR (x) Cash and Equivalents
Activist Proposal
Provision Classified/Staggered Board CEO/Chairman Role Combined Supermajority Voting for Mergers Shareholders Can Call Special Meeting Cumulative Voting Poison Pill In Force Expiration of Shareholder Rights Plan
No Yes No Yes No No Expired on 7/31/06
Commentary Amgen’s corporate governance policy provides for stockholder approval for any future stockholder rights plan, either prior to or within 12 months of adoption. Combined CEO/Chairman role is only provision viewed as inconsistent with best practices.
Creditor Protection/Bond Provisions 2012 BBB Stable 26,587.0 3.6 3.7 3,257.0
2013 BBB Negative 32,176.0 4.1 4.2 3,805.0
2014 BBB Negative 30,768.0 3.1 3.2 3,731.0
2015 BBB Stable 31,618.0 2.9 2.9 4,144.0
LTM 9/16 BBB Stable 36,265.0 3.1 3.2 3,485.0
Large Debt Issuances Financial Maintenance Covenants Change of Control Triggering Event Provision Negative Pledge Limitation on Subsidiary Debt
2.200% 2019 No Yes Yes No
3.875% 2021 No Yes Yes No
3.625% 2024 No Yes Yes No
5.150% 2041 No Yes Yes No
Commentary: Financial maintenance covenant for the term loan due 2018 includes a total debt-tocapitalization ratio test that cannot exceed 0.65x.
a As of Feb. 9, 2017. bPer Bloomberg, as of Feb. 9, 2017. cPeers include Celgene Corp., Gilead Sciences and Biogen Inc. N.A. – Not applicable. Source: Fitch Ratings, SEC filings, Bloomberg, Factset.
Bond Prices/Relative Value
Option-Adjusted Spreads — Amgen Versus U.S. Large Cap Bond Index (bps) 250 200 150 100 50 0 1/12
5.700% Amgen Notes due 2023
5/12
9/12
1/13
5/13
9/13
1/14
U.S. Corp. Non-Financial Large Cap Index
5/14
9/14
1/15
5/15
9/15
1/16
5/16
9/16
1/17
Source: BoA Merrill Lynch Global Reserach, used with permission, Bloomberg.
Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
24
Corporates Baxter International Inc. (BAX) Market Capitalizationa: $26.0 Billion Fitch Synopsis and Opinion
Sector: Healthcare
• In August 2015, Third Point Partners disclosed a 7% ownership stake in Baxter International Inc., making the activist Baxter’s largest shareholder. Third Point increases stake in Baxter to 9.6% just one day after the activist first disclosed a 7% holding in the company. • Third Point proposes nomination of two members to the board, provides feedback on governance, including the elimination of the current staggered board provision, corporate strategy and capital allocation, and assisting in the selection of the new CEO. • Third Point meets with the company’s lead director, Thomas Stallkamp, over two seats on the board and praises Baxter’s recent moves, including spinning off biopharmaceutical arm Baxalta and enacting a CEO succession plan. • On Sept. 30, 2015, Third Point reaches an agreement with Baxter to appoint one of its researchers, Munib Islam, to the board of directors. Baxter increased the board size, adding another independent board member in October. Baxter’s agreement with Third Point also includes standstill and voting provisions, and a commitment to declassify the company’s board. The agreement stipulates that Baxter will work to transition to annual elections of directors beginning at the 2016 annual meeting. • In March 2016, activist investor John Chevedden requests the board appoint an independent Chairman. In August 2016, Baxter declassifies its boards. In May 2015, Fitch downgraded Baxter two notches to ‘BBB+’, reflecting the planned spinoff of the company’s biosciences business. While the bioscience spin decreased Baxter’s scale and product breadth, the narrower focus of legacy Baxter will help to drive improved operational efficiencies and optimal capital allocation over the longer term. Moreover, the split makes strategic sense as the two business segments focus on different end markets. Following the spinoff, Baxter used a $4 billion cash distribution received from Baxalta and the disposition of its roughly 19.5% equity stake to reduce leverage post spin from a pro forma 6.0x to below 2.0x. Additionally, on May 6, 2016, the company contributed roughly 17 million Baxalta shares to its U.S. qualified pension plan (shares since sold for cash), reducing the unfunded liability of the benefit obligation.
Vulnerability Factors Present at Campaign Launch Equity Underperforming Peers and/or Market (Over Three or Five Years) Persistently Weak Operating Trends Potential to Leverage Balance Sheet (Utilize Cash) Monetizable Assets/Divestible Noncore or Underperforming Businesses Lines Multiple Corporate Governance Provisions Inconsistent with Best Practices
Activist Proposal
Yes/No Yes No Yes No Yes
Board-Related Changes (Board Representation/Declassification) Modification of Business Strategy Balance Sheet/Capital Allocation Changes M&A Proposal Nonboard-Related Corporate Governance Changes Other Proposals
Equity Performance/Relative Valuationb
Shareholder Base (Excludes Derivatives)b One-Year 8.5 32.4 12.4 4.7 18.9 18.0
(%, As of Feb. 9, 2016) Return on Invested Capital (ROIC) Total Return +/– Relative Performance (S&P 500) +/– Relative Performance (S&P 500 Healthcare) Enterprise Value (EV)/EBITDA Multiple (x) Peer Median EV/EBITDA Multiplec (x)
Three-Year 9.7 37.3 1.1 5.2 12.0 12.7
Five-Year 16.8 78.6 (14.6) (37.0) 9.7 9.1
Financial Highlights
Top Equity Holders Third Point LLC Blackrock Vanguard Group State Street Corp. State Farm Insurance Company Invesco LTD
(%) 9.5 9.0 5.8 4.6 2.3 1.8
Commentary BAX’s top 10 Institutional Holders own approximately 40% of the company. Hedge funds own about 15%. Third Point is the only known activist investor.
Corporate Governance Highlights 2012 14,190.0 2.1 3,663.0 25.8 3,106.0 (1,161.0) (804.0) 1,141.0 (515.0) (1,480.0)
($ Mil., Unless Otherwise Noted) Revenue Revenue Growth (%) EBITDA EBITDA Margin (%) Cash Flow from Operations Capex Dividends FCF Net Acquisitions and Divestitures Net Share Repurchases
2013 2014 15,259.0 16,671.0 7.5 9.3 3,641.0 3,871.0 23.9 23.2 3,198.0 3,215.0 (1,525.0) (1,898.0) (1,023.0) (1,095.0) 650.0 222.0 (3,851.0) (409.0) (405.0) (181.0)
2015 LTM 9/16 9,968.0 10,121.0 (40.2) 1.5 1,464.0 1,764.0 14.7 17.4 1,129.0 1,434.0 (911.0) (772.0) (910.0) (260.0) (174.0) 633.0 50.0 (9.0) 200.0 46.0
Balance Sheet Highlights ($ Mil., Fiscal Year May) Fitch Rating Outlook/Watch Total Debt Total Debt/EBITDA (x) Total Adj. Debt/EBITDAR (x) Cash and Equivalents
Outcome Successful N.A. N.A. N.A. N.A. N.A.
Provision Classified/Staggered Board CEO/Chairman Role Combined Supermajority Voting for Mergers Shareholders Can Call Special Meeting Cumulative Voting Poison Pill In Force Expiration of Poison Pill
No Yes No Yes No No Expired 3/23/09
Commentary Board declassified on Aug. 1, 2016, which is consistent with best practices. However, Baxter’s combined CEO/chairman role is not. Baxter’s bylaws were amended and restated in March 2015 to remove the mandatory director retirement age, and in December 2015 to add proxy access. Baxter’s Bullet Proof Rating, which measures takeover defenses, is 4.75 on a scale of 0–10 per Factset, mainly in line with peers.
Creditor Protection/Bond Provisions 2012 A RWN 5,930.0 1.6 1.9 3,270.0
2013 A Negative 9,109.0 2.5 2.8 2,733.0
2014 A RWN 9,208.0 2.3 2.7 2,925.0
2015 LTM 9/16 BBB+ BBB+ Stable Stable 6,488.0 2,840.0 4.4 1.6 4.8 2.2 2,213.0 2,597.0
3.50% 1.70% 2.60% 3.50% Large Debt Issuances 2017 2021 2026 2046 Financial Maintenance Covenants No No No No Change of Control Triggering Event Provision Yes Yes Yes Yes Negative Pledge Yes Yes Yes Yes Limitation on Subsidiary Guarantee No No No No Commentary: Negative pledge allows for lien up to 15% of consolidated net tangible assets.
a
As of Feb. 9, 2017. bPer Bloomberg, as of Feb. 9, 2017. cPeers include CR Bard Inc., Becton Dickinson, ResMed Inc. and Steris Corp. N.A. – Not applicable. RWN – Rating Watch Negative. Source: Fitch Ratings, SEC filings, Bloomberg, Factset.
Bond Prices/Relative Value
Option-Adjusted Spreads — Baxter Versus U.S. Large Cap Bond Index (bps) 300
6.250% Baxter Notes due 2037
U.S. Corp. Non-Financial Large Cap Index
200 100 0 1/12
6/12
11/12
4/13
9/13
2/14
7/14
12/14
5/15
10/15
3/16
8/16
1/17
Source: BoA Merrill Lynch Global Reserach, used with permission, Bloomberg.
Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
25
Corporates The Brink’s Company (BCO) Market Capitalizationa: $2.5 Billion Fitch Synopsis and Opinion
Sector: Services
• Starboard Value LP disclosed an 8.2% stake in The Brink’s Co. in May 2015, after taking an initial 4.3% position in March 2015, and continued to increase its stake to a high of 12.4% in October 2015. In a regulatory filing, Starboard revealed plans to engage with Brink’s board and management on a range of issues, including potential business combinations. • In October 2015, Jeffrey C. Smith of Starboard sent a letter to Brink’s board of directors highlighting the company’s disappointing margins and history of operating performance. The activist’s proposed a substantial stand-alone restructuring or a strategic combination to improve performance and shareholder value. Suggestions on ways to increase revenue and margins included better customer service, improved technology and route logistics, reduced expenses and incentive-based employee compensation. • In January 2016, Brink’s entered an agreement with Starboard to add three independent directors, inclusive of someone from Starboard, to replace Brink’s CEO, and to amend by laws to eliminate the executive committee. As a part of the standstill agreement, Starboard agreed to no further proxy battles or aggressive measures until the 2017 board meeting. • From May 2016 to July 2016, Brink’s announced management changes, including naming Doug Pertz, who led the turnaround, IPO and buyout of his previous firm, as CEO. A new CFO and CIO, who previously worked with Mr. Pertz, were also appointed. Starboard’s efforts to modify Brink’s business strategy and potentially negotiate a sale of the firm are ongoing. Fitch views the agreement between Brink’s and Starboard positively, given the parties were able to avoid a protracted proxy battle that might have distracted senior management from the turnaround process. Fitch expects Brink’s to focus on EBITDA margin improvement rather than a major acquisition or share repurchases in the near term to drive shareholder value. Ratings reflect Brink’s leading market share in nearly all its markets, sound operating profile, solid financial flexibility and moderate leverage, but consider that a substantial portion of Brink’s liquidity is held outside the U.S., its low North America margins and weak FCF generation.
Vulnerability Factors Present at Campaign Launch Equity Underperforming Peers and/or Market (Over 3–5 Years) Persistently Weak Operating Trends (Versus Peers) Potential to Leverage Balance Sheet Monetizable Assets/Divestible Noncore or Underperforming Businesses Lines Multiple Corporate Governance Provisions Inconsistent with Best Practices
Yes/No Yes Yes Yes Yes No
Equity Performance/Relative Valuationb (%, As of Aug. 30, 2015) Return on Invested Capital (ROIC) Total Return +/– S&P 500 +/– S&P Peer Index (S&P 500 Industrials) Enterprise Value (EV)/EBITDA Multiple (x) Peer Mean EV/EBITDA Multiple (x)c
One-Year 6.4 53.2 33.2 5.4 8.7 85.0
Three-Year 4.8 46.2 10.0 11.2 5.4 54.6
Five-Year 14.3 68.9 (24.3) (26.7) 4.2 62.5
Outcome Successful Ongoing N.A. Ongoing N.A. N.A.
Top Equity Holders Blackrock Starboard Value LP Vanguard Group T. Rowe Price Group GAMCO Southernsun Asset MA
(%) 10.2 9.2 8.9 6.1 5.1 5.0
Commentary Beneficial owners combined hold more than 57% ownership. Starboard initially invested in Brink’s in March 2015, and progressively increased its stake to 12.4% by October 2015. Starboard’s stake in BCO has declined, but the activist remains Brink’s largest shareholder.
Corporate Governance Highlights 2012 3,577.6 (7.9) 307.4 8.6 216.6 (170.9) (19.0) 47.6 (26.6) 1.4
2013 3,778.6 5.6 348.3 9.2 178.5 (172.9) (19.2) 3.4 (49.4) 6.7
2014 3,562.3 (5.7) 232.7 6.5 127.2 (136.1) (19.4) (22.8) (4.6) 0.4
2015 LTM 9/16 3,061.4 2,982.9 (14.1) (2.6) 280.0 273.4 9.1 9.2 205.5 155.4 (101.1) (112.3) (19.5) (19.7) 82.9 19.0 (12.7) (8.3) 3.8 7.9
Balance Sheet Highlights ($ Mil., Fiscal Year May) Fitch Rating Outlook/Watch Total Debt Total Debt/EBITDA (x) Total Adj. Debt/EBITDAR (x) Cash and Equivalents
Board-Related Changes (Board Representation/Declassification) Modification of Business Strategy Balance Sheet/Capital Allocation Changes M&A Proposal Nonboard-Related Corporate Governance Changes Other Proposals
Shareholder Base (Excludes Derivatives)b
Financial Highlights ($ Mil., Unless Otherwise Noted) Revenue Revenue Growth (%) EBITDA EBITDA Margin (%) Cash Flow from Operations Capex Dividends FCF Net Acquisitions and Divestitures Net Share Repurchases
Activist Proposal
Provision Classified/Staggered Board No CEO/Chairman Role Combined No Supermajority Voting for Mergers No Shareholders Can Call Special Meeting Yes Cumulative Voting No Poison Pill In Force No Expiration of Shareholder Rights Plan 9/25/07
Commentary In May 2015, bylaws were amended to declassify the board, making Brink’s more susceptible to takeovers. In March 2016, the bylaws were further amended to require a majority vote as opposed to a plurality to elect directors. In January 2017, bylaws were amended to allow shareholders to call special meetings. According to Factset, Brink’s Bullet Proof Rating, which measures takeover defense provisions, is a 2.5 on a scale of 0– 10, lower than industry peers at 3.6.
Creditor Protection/Bond Provisions 2011 — — 389.3 1.3 2.9 157.7
2012 — — 436.0 1.3 2.8 224.2
2013 BBB– Stable 466.8 2.0 3.8 176.2
2014 LTM 9/16 BBB– BBB– Stable Stable 430.8 493.2 1.5 1.8 3.1 3.4 198.3 191.5
5.20% 4.57% Term Loan Large Debt Issuances 2021 2021 2022 Financial Maintenance Covenants Yes Yes Yes Change of Control Triggering Event Provision Yes Yes Yes Negative Pledge Yes Yes Yes Limitation on Subsidiary Guarantee Yes Yes Yes Commentary: The notes agreements contain a maximum leverage ratio of 60% debt to capitalization and a minimum interest coverage ratio of 3.0x.
a
As of Feb. 9, 2017. bPer Bloomberg, as of Feb. 9, 2017. cPeers include G4S PLC, LOOMIS, Securitas and Prosegur. N.A. – Not applicable. Source: Fitch Ratings, SEC filings, Bloomberg, Factset.
Bond Prices/Relative Value
Equity Performance — Brinks Versus S&P 500 ($ Price/Share) 50 40 30 20 10 0 1/12
Brink's
7/12
1/13
7/13
1/14
(bps) 250 200 150 100 50 0
S&P 500
7/14
1/15
7/15
1/16
7/16
1/17
Source: BoA Merrill Lynch Global Reserach, used with permission, Bloomberg.
Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
26
Corporates Bristol-Myers Squibb Company (BMY) Market Capitalizationa: $86 Billion Fitch Synopsis and Opinion
Sector: Healthcare
• In March 2015, International Brotherhood of Electrical Workers Pension Fund (IBEW), which occasionally files shareholder proposals on board independence and executive compensation, and holds a stake in Bristol-Myers Squibb Company (BMY), submitted a board proposal to permit shareholders the right to act by written consent in lieu of a meeting. • In April 2015, BMY files a presentation highlighting the company’s executive compensation and governance practices as supplemental proxy materials. The presentation’s goal is to demonstrate that its current governance structure provides shareholders strong rights resulting in no need for written consent. Shareholders vote against IBEW’s proposal. • In November 2016, JANA Partners LLC makes initial investment in BMY. In a 13F filing in February 2017, the activist disclosed a less than 1% stake. • In February 2017, BMY discloses in a press release that members of the board and management have engaged in discussions with JANA to better understand their views and that the appointment of three new independent directors follows those discussions. The board size was temporarily expanded to 14 directors until the May 2017 annual meeting, at which time only 11 directors will stand for re-election. BMY also announces a $2 billion accelerated share repurchase (ASR) program. JANA praised both actions. • Carl Icahn simultaneously announces a stake in BMY, but has not made public demands of the company. The size of the stake is unknown, but the investor also owns positions in other pharmaceutical-related firms, including Allergan Plc (previously Actavis Plc), Cadus Corp., Enzo Pharmaceuticals Inc., and Herbalife Ltd., fueling M&A speculation. Fitch believes increased involvement by activist shareholders raises the likelihood BMY will pursue transactions that have a negative effect on the balance sheet and credit profile, such as the recently announced $2 billion ASR. However, BMY’s still-decent fundamental operating outlook and Fitch’s estimated current pro forma leverage of 1.6x mitigate this risk. The company maintains decent headroom under the 2.0x gross leverage level Fitch considers appropriate for the ‘A–’ rating after incorporating the effect of a recently announced $2 billion ASR.
Vulnerability Factors Present at Campaign Launch Equity Underperforming Peers and/or Market (Over 3–5 Years) Persistently Weak Operating Trends Potential to Leverage Balance Sheet (Utilize Cash) Monetizable Assets/Divestible Noncore or Underperforming Businesses Lines Multiple Corporate Governance Provisions Inconsistent with Best Practices
Activist Proposal
Yes/No Yes No Yes No No
Board-Related Changes (Board Representation/Declassification)b Modification of Business Strategy Balance Sheet/Capital Allocation Changes M&A Proposalc Nonboard-Related Corporate Governance Changes Other Proposals
Equity Performance/Relative Valuationd
Shareholder Base (Excludes Derivatives)e One-Year 11.9 (13.5) (25.4) (22.8) 18.1 17.1
(%, As of Feb. 9, 2016) Return on Invested Capital (ROIC) Total Return +/– Relative Performance (S&P 500) +/– Relative Performance (S&P 500 Healthcare) Enterprise Value (EV)/EBITDA Multiple (x) Peer Median EV/EBITDA Multiplec (x)
Three-Year 13.3 17.8 (11.2) (12.6) 22.6 12.1
Five-Year 15.2 92.6 (5.5) (24.8) 7.2 7.2
Financial Highlights
Top Equity Holders Wellington Management Group LLP The Vanguard Group, Inc. Blackrock Fund Advisors State Street Corp. Capital Group Companies Inc.
(%) 8.9 6.9 6.0 4.1 3.2
Commentary BMY’s top 10 institutional shareholders own roughly 36% of its stock.
Corporate Governance Highlights 2012 17,621.0 (17.054) 4,925.0 28.0 6,941.0 (548.0) (2,286.0) 4,107.0 (7,530.0) (1,940.0)
($ Mil., Unless Otherwise Noted) Revenue Revenue Growth (%) EBITDA EBITDA Margin (%) Cash Flow from Operations Capex Dividends FCF Net Acquisitions and Divestitures Net Share Repurchases
2013 16,385.0 (7.014) 4.050.0 24.7 3,545.0 (537.0) (2,309.0) 699.0 — 131.0
2014 15,879.0 (3.088) 3,988.0 25.1 3,148.0 (526.0) (2,398.0) 224.0 (219.0) 288.0
2015 16,560.0 4.289 3,978.0 24.0 1,832.0 (820.0) (2,477.0) (1.465.0) (403.0) 266.0
2016 19,427.0 17.313 5,217.0 26.9 2,850.0 (1,215.0) (2,547.0) (912.0) 975.0 (50.0)
2015 A– Stable 6,478 1.628 1.845 2,385
2016 A– Stable 6,504 1.247 1.429 4,237
Balance Sheet Highlights ($ Mil., Fiscal Year May) Fitch Rating Outlook/Watch Total Debt Total Debt/EBITDA (x) Total Adj. Debt/EBITDAR (x) Cash and Equivalents
Outcome Successful N.A. N.A. N.A. N.A. N.A.
Provision Classified/Staggered Board CEO/Chairman Role Combined Supermajority Voting for Mergers Shareholders Can Call Special Meeting Cumulative Voting Poison Pill In Force Expiration of Poison Pill
No No No Yes No No 12/18/97
Commentary BMY’s board amended the company’s bylaws on Feb. 12, 2016 to add proxy access. BMY’s Bullet Proof Rating, which measures takeover defenses, is low at 1.25, versus 3.70 for the industry, per Factset.
Creditor Protection/Bond Provisions 2012 A Negative 6,793 1.379 1.565 1,656
2013 A– Negative 7,925 1.957 2.164 3,586
2014 A– Stable 7,394 1.854 2.058 5,571
Large Debt Issuances Financial Maintenance Covenants Change of Control Triggering Event Provision Negative Pledge Limitation on Subsidiary Guarantee Commentary: —
2017 No Yes Yes No
2019 No No Yes No
2022 No Yes Yes No
2025 No No Yes No
a
As of Feb. 9, 2017. bRelates to demands made by JANA Partners. cNo official public demand made yet, but speculation exists due to recent Carl Icahn stake. dPer Bloomberg, as of Feb. 9, 2017. cPeers include Eli Lilly and Company and Merck & Co., Inc. N.A. – Not applicable. Source: Fitch Ratings, SEC filings, Bloomberg, Factset.
Bond Prices/Relative Value
Option Adjusted Spreads — Bristol-Myers Squibb Versus U.S. Large Cap Bond Index 2% 2022 Bristol-Myers Squibb Notes due 2023 (LHS)
(bps) 150
U.S. Corp. Non-Financial Large Cap Index (RHS)
100 50 0 2012
2013
2013
2014
2014
2015
2015
2016
2016
Source: BoA Merrill Lynch Global Reserach, used with permission, Bloomberg.
Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
27
Corporates Conagra Brands, Inc. (CAG) Market Capitalizationa: $17.2 Billion Fitch Synopsis and Opinion
Sector: Food
• In June 2015, JANA Partners LLC discloses a 7.2% stake in ConAgra Foods, Inc.; later critiques CAG’s performance after its 2013 acquisition of Ralcorp Holdings; demands CAG review its strategy, corporate structure and capital allocation policies, and proposes three board nominees: hedge fund founder Barry Rosenstein and two industry executives. Following JANA’s regulatory filing, CAG issues a statement saying it looks forward to opening discussions with JANA post its fourth-quarter earnings announcement. • In June 2015, in conjunction with fourth-quarter results, CAG announces plans to exit its Private Brands operations (acquired in January 2013), and that it will share plans about cost reductions, growing consumer brands (Consumer Foods) and Lamb Weston Holdings, Inc. (in the Commercial Foods segment), and balanced capital allocation in fall 2015. • CAG later enters a standstill/settlement agreement with JANA, agreeing to add two JANA nominees to the board. The agreement included, among other things, a 9.9% ownership cap for JANA; provisions that limit JANA’s ability to effect any merger, recapitalization or reorganization involving CAG; and provisions limiting public slander. • In October 2015, CAG reveals plan to cut costs by $300 million in three years, and in February 2016, completes the sale to TreeHouse Foods Inc. for $2.6 billion in cash with the majority of proceeds used to pay down debt. In May 2016, JANA obtains third seat on CAG’s board and the standstill agreement is amended and restated. • CAG gets roughly $488 million in net proceeds from July 2016 sales of Spicetec Flavors & Seasonings and JM Swank, and in November 2016, completes the separation of ConAgra Foods into two publicly traded firms: CAG and Lamb Weston. CAG retires $1.44 billion in debt and receives cash of $823.5 million, with leverage further declining to 2.2x. With Sean Connolly becoming CEO in April 2015, the decision to exit Private Brands was likely considered prior to JANA’s equity stake. Fitch revised CAG’s Outlook to Stable from Negative in November 2015 after CAG announced a definitive agreement to sell its private-label operations to TreeHouse Foods and plans to use proceeds mainly for debt paydown. Fitch revised the Outlook to Positive in November 2016 to recognize CAG’s evolution to a pure-play packaged food firm with potential for low single-digit organic growth and a midteens operating margin. Positive rating momentum would occur upon evidence of stabilizing sales and increasing operating margin from the current 13% level, with leverage around 3.0x.
Vulnerability Factors Present at Campaign Launch Equity Underperforming Peers and/or Market (Over Three or Five Years) Persistently Weak Operating Trends Potential to Leverage Balance Sheet Monetizable Assets/Divestible Noncore or Underperforming Businesses Lines Multiple Corporate Governance Provisions Inconsistent with Best Practices
Activist Proposal
Yes/No Yes Yes Yes Yes No
Equity Performance/Relative Valuationb (%, As of Feb. 9, 2017) Return on Invested Capital (ROIC) Total Return +/– Relative Performance (S&P 500) +/– Relative Performance (S&P Consumer Staples) Enterprise Value (EV)/EBITDA Multiple Peer Mean EV/EBITDA Multiplec
Shareholder Base (Excludes Derivatives)b One-Year Three-Year 8.3 6.2 22.3 70.6 2.2 34.4 (4.0) 31.0 14.5 12.6 15.6 14.2
Five-Year 9.1 116.2 24.8 29.8 7.1 10.9
Financial Highlights (Fiscal Year Ended May) LTM 11/16 10,512.3 (9.7) 1,928.8 18.3 1,661.1 (490.0) (436.9) 853.2 542.8 (69.7)
Balance Sheet Highlights ($ Mil., Fiscal Year May) Fitch Rating Outlook/Watch Total Debt Total Debt/EBITDA (x) Total Adj. Debt/EBITDAR (x) Cash and Equivalents
Top Equity Holders Vanguard Group Blackrock State Street Corp. JANA Partners LLC Capital Group Company TIAA-CREF
(%) 10.2 6.0 5.0 4.1 3.5 2.2
Commentary CAG’s top 10 institutional investors own approximately 37% of the firm. BlackRock and State Street have been beneficial owners for several years while JANA invested in June 2015.
Corporate Governance Highlights
2013 2014 2015 2016 15,491.4 17,702.6 15,832.4 11,642.9 16.8 14.3 (10.6) (26.5) 2,112.6 2,395.1 2,184.5 1,980.8 13.6 13.5 13.8 17.0 1,412.2 1,551.6 1,473.7 1,045.3 (458.7) (602.4) (471.9) (440.2) (400.7) (420.9) (425.2) (432.5) 552.8 527.9 583.5 334.7 (5,018.8) (39.9) (95.7) 42.4 298.4 3.7 103.8 268.8
($ Mil., Unless Otherwise Noted) Revenue Revenue Growth (%) EBITDA EBITDA Margin (%) Cash Flow from Operations Capex Dividends FCF Net Acquisitions and Divestitures Net Share Repurchases
Outcome Successful Successful N.A. N.A. N.A. N.A.
Board-Related Changes Modification of Business Strategy Balance Sheet/Capital Allocation Changes M&A Proposal Nonboard Corporate Governance Changes Other
Provision Classified/Staggered Board CEO/Chairman Role Combined Supermajority Voting for Mergers Shareholders Can Call Special Meeting Cumulative Voting Poison Pill In Force Expiration of Shareholder Rights Plan
No No No No No No 5/14/04
Commentary CAG has limited takeover defenses, per Factset, CAG’s Bullet Proof rating is 2 on a scale of 0–10. CAG’s board consists of two JANA designees as a result of its 2015 standstill agreement, which was amended and restated in May 2016. The agreement terminates if JANA’s designees are no longer on the board.
Creditor Protection/Bond Provisions 2013 BBB– Stable 9,589.8 4.5 4.8 183.9
2014 BBB– Stable 8,993.6 3.8 4.1 183.1
2015 BBB– Negative 7,904.8 3.6 3.9 183.1
2016 LTM 11/16 BBB– BBB– Stable Positive 5,477.2 3,429.5 3.5 1.8 3.9 2.2 834.5 1,442.5
Large Debt Issuances Financial Maintenance Covenants Change of Control Triggering Event Provision Negative Pledge Limitation on Subsidiary Guarantee
1.90% 2018 No Yes Yes No
3.20% 2023 No Yes Yes No
4.65% 2043 No Yes No No
Commentary: Change of control triggering event includes a change of control that causes the rating to be below investment grade. Limitations on subsidiary guarantees are included with negative pledge.
a As of Feb. 9, 2017. bPer Bloomberg, as of Feb. 9, 2017. cPeers include but are not limited to Mondelez International, Inc. and TreeHouse Foods, Inc. N.A. – Not applicable. Source: Fitch Ratings, SEC filings, Bloomberg, Factset.
Bond Prices/Relative Value
Option-Adjusted Spreads — ConAgra Versus U.S. Large Cap Bond Index 7.000% ConAgra Notes due 2019
(bps) 300
U.S. Corp. Non-Financial Large Cap Index
200 100 0 1/12
7/12
1/13
7/13
1/14
7/14
1/15
7/15
1/16
7/16
1/17
Source: BoA Merrill Lynch Global Reserach, used with permission, Bloomberg.
Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
28
Corporates Darden Restaurants, Inc. (DRI) Market Capitalizationa: $9 Billion Fitch Synopsis and Opinion
Sector: Restaurants
• Barington Capital Group and Starboard Value launch public proposals for Darden Restaurants, Inc. to split up the company and monetize its real estate assets in October 2013. • DRI announces plans to separate Red Lobster in December 2013, causing Starboard to threaten a proxy battle and Barington to seek separation of the role of CEO and chairman. • Starboard appeals to shareholders, seeks special meeting, hires advisors and releases white paper as DRI completes sale of chain for $2.1 billion in July 2014. • Starboard, angered by the divestiture, increases its ownership stake to just over 9% and launches a proxy contest nominating a slate of 12 directors to overturn the entire board. • DRI’s CEO resigns in July 2014, post widespread claims that Red Lobster was sold below fair value, position of chairman and CEO are separated, and Barington drops campaign. • DRI announces a $500 million accelerated share repurchase program, delays annual meeting and tries to settle with Starboard (offered activist four seats), but Starboard refuses. • Starboard releases turnaround plan for DRI, claiming stock would rise to up to $86/share from $46/share at that time. Proxy firms recommend support for Starboard in proxy fight. • Starboard wins proxy fight in October 2014, replacing DRI’s entire board. Starboard’s CEO is appointed DRI’s chairman and states intent to maintain DRI’s investment-grade rating. • DRI announces governance changes, appoints new CEO and proceeds to monetize real estate via sale leasebacks and public REIT spinoff, with proceeds to pay off $1 billion of debt. • Starboard begins reducing stake in DRI in early 2016, leaves DRI’s board in April 2016 and exits completely in August 2016. Starboard nominated a qualified slate of directors and rallied DRI’s shareholders, stating it would preserve DRI’s dividend and maintain its investment-grade rating. The proxy battle was historic, providing lessons on corporate governance as DRI did not have a staggered board, the CEO and chairman position were combined, and the board alienated shareholders with a controversial sale of Red Lobster. Fitch upgraded DRI to ‘BBB’ from ‘BBB–’ in April 2016 due improved operating performance and significant debt paydown.
Activism Vulnerability Factors Present at Campaign Launch Yes/No
Activist Proposal
Equity Underperforming Peers and/or Market Persistently Weak Operating Trends Potential to Leverage Balance Sheet Monetizable Assets/Divestible Noncore or Underperforming Business Lines Multiple Corporate Governance Provisions Inconsistent with Best Practices
Board-Related Changes Modification of Business Strategy Balance Sheet/Capital Allocation Changes (Real Estate Monetization) M&A Proposal Nonboard Corporate Governance Changes Other
Yes Yes No Yes Yes
Equity Performance/Relative Valuationb
Shareholder Base (Excludes Derivatives)b
One-Year 17.6 19.7 (0.4) (16.3) 10.1 8.7
(%, As of Feb. 9, 2017) Return on Invested Capital (ROIC) Total Return +/– Relative Performance (S&P 500) +/– Rel. Perf. (S&P Consumer Discretion) Enterprise Value (EV)/EBITDA Multiple (x) Peer Median EV/EBITDA Multiple (x)c
Three-Year 14.1 84.5 48.4 42.7 9.7 10.8
Five-Year 14.5 111.0 19.5 (11.8) 7.8 7.2
Financial Highlights (Fiscal Year Ended May)d
Top Equity Holders The Vanguard Group, Inc. Blackrock Fund Advisors State Street Corp. Invesco Ltd. BNY Mellon Ameriprise Financial Group
(%) 11.1 8.7 4.6 4.0 3.3 2.9
Commentary DRI’s top 10 institutional shareholders own approximately 42% of the company. Starboard’s position has held steady since October 2014. Blackrock and Vanguard are longtime investors.
Corporate Governance Highlights
($ Mil., Unless Otherwise Noted, Continuing Operations Only) Revenue Revenue Growth (%) EBITDA EBITDA Margin (%) Cash Flow from Operations Capex
2013 8,551.9 6.9 1,147.7 14.4 948.8 (685.6)
2014 6,285.6 (26.5) 1,104.7 12.9 555.4 (414.8)
2015 6,764.0 7.6 670.3 10.7 874.3 (296.5)
2016 6,933.5 2.5 955.5 13.8 820.4 (251.6)
LTM 11/16 6,994.6 0.9 982.6 14.0 924.1 (278.1)
Dividends FCF Net Acquisitions and Divestitures Net Share Repurchases
(258.2) 5.9 (577.4) 12.0
(288.3) 67.0 — 57.6
(278.9) (104.4) — (342.6)
(268.2) 258.2 325.2 (85.5)
(267.1) 357.7 332.1 23.6
Balance Sheet Highlights ($ Mil., Fiscal Year May) Fitch Rating Outlook/Watch Total Debt Total Debt/EBITDA (x) Total Adj. Debt/EBITDAR (x) Cash and Equivalents
Outcome Successful Successful Successful Unsuccessful Successful N.A.
Provision Classified/Staggered Board CEO/Chairman Role Combined Supermajority Voting for Mergers Shareholders Can Call Special Meeting Cumulative Voting Poison Pill In Force Expiration of Shareholder Rights Plan
No No No Yes No No 11/10/1 5
Commentary DRIs new board made governance changes, including termination of DRI’s poison pill and majority versus plurality voting for director elections. A shareholder rights plan was temporarily re-adopted to affect a pro rata dividend of REIT shares for the monetization of DRI’s real estate. The plan expires the earlier of the closing of the REIT transaction or June 2016.
Creditor Protection/Bond Provisions 2013 BBB Negative 2,713.2 2.5 3.3 88.2
2014 BBB– Stable 2,756.0 4.1 5.0 98.3
2015 BBB– Positive 1,467.3 1.8 3.0 535.9
2016 BBB Stable 440.0 0.5 0.5 274.8
LTM 11/16 BBB Stable 450.0 0.5 2.1 116.8
Large Debt Issuances Financial Maintenance Covenants Change of Control Triggering Event Provision Negative Pledge Limitation on Subsidiary Debt
6.0% 2035 No No Yes No
6.8% 2037 No Yes Yes No
Commentary: Limitations on subsidiary guarantees included with negative pledge. a
As of Feb.9, 2017. bPer Bloomberg, as of Feb. 9, 2017. CPeers include Brinker Intl, Inc. and Texas Roadhouse, Inc. dFCF was negative $148 million in 2014 and $299 million in 2015, excluding nonrecurring cash flow. $1.6 billion of after-tax proceeds from Red Lobster sale was classified as cash from discontinued operations. N.A. – Not applicable. Source: Fitch Ratings, SEC filings, Bloomberg, Factset.
Bond Prices/Relative Value
Option-Adjusted Spreads — Darden Versus U.S. Large Cap Bond Index 6.800% Darden Notes due 2037
(bps) 600
U.S. Corp. Non-Financial Large Cap Index
400 200 0 1/12
6/12
11/12
4/13
9/13
2/14
7/14
12/14
5/15
10/15
3/16
8/16
1/17
Source: BoA Merrill Lynch Global Reserach, used with permission, Bloomberg.
Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
29
Corporates Dow Chemical Company (DOW) Market Capitalizationa: $72.8 Billion Fitch Synopsis and Opinion
Sector: Chemicals
• • • • • • • •
Third Point LLC reveals 0.6% stake in Dow Chemical Co. in January 2014 calling for strategic review, and stock rises 7%. Activist’s investment increases to roughly 2.5% by September 2014. DOW triples share-buyback plan to $9.5 billion and increases dividend 15% after better earnings, stating the action had long been considered given balance sheet progress. DOW rejects request to split petrochemicals from specialty chemicals, stating a business separation would not result in productivity or capital allocation improvements. DOW executes and exceeds target of $4.5 billion–$6.0 billion of asset sales. CEO meets with Third Point regularly, but maintains commitment to petrochemical business. Third Point increases pressure with campaign website and advisory board, and calls for new board. Highlights DOW’s failed goals over past 10 years and 64% dividend cut in 2009. In a joint release, DOW agrees to expand board, adding three Third Point nominees in January 2015 and a fourth in May 2015, and Third Point enters one-year standstill agreement. In March 2015, DOW plans to separate the $5 billion chlor-alkali business via Reverse Morris Trust merger transaction and appoint three Third Point nominees to new entity’s board. In December 2015, DOW and E.I. du Pont de Nemours and Company (DuPont) announce proposed merger worth $130 billion. Third Point questions timing due to pending expiration of its standstill agreement, and pressures DOW’s CEO to resign. CEO announces plan to step down by mid-June 2017. DOW acquires remaining 50% stake in Dow Corning in June 2016. • Shareholders inclusive of Third Point and Trian Fund Management, which had launched a campaign against DuPont in 2014 and remains a shareholder, approve merger in July 2016, but the closing date is delayed due to regulators’ global antitrust concerns. Subsequent to the merger, the entity is expected to be split into three investment-grade separate companies. Fitch maintained its ratings on DOW through the confrontation, focusing on business fundamentals, cash flow and leverage, while indicating that capital allocation was favoring shareholders. However, Fitch placed the ‘BBB’ ratings of the DOW on Positive Watch, reflecting Fitch’s view that a downgrade is unlikely and the succeeding entity will have total debt/EBITDA less than 2.5x, and the ‘A’ ratings of DuPont on Negative Watch following the merger announcement recognizing the risk of a downgrade while structuring the successor to be investment grade. Fitch believes the merger and subsequent breakup should create market leading focused businesses benefiting from cost savings and synergies.
Vulnerability Factors Present at Campaign Launch
Activist Proposal
Yes/No No No Yes Yes No
Equity Underperforming Peers and/or Market (Over Three or Five Years) Persistently Weak Operating Trends Potential to Leverage Balance Sheet Monetizable Assets/Divestible Businesses Lines Multiple Corporate Governance Provisions Inconsistent with Best Practices
Equity Performance/Relative Valuationb (%, As of Feb. 9, 2017) Return on Invested Capital (ROIC) Total Return +/– Relative Performance (S&P 500) +/– Relative Performance (S&P 500 Materials) Enterprise Value (EV)/EBITDA Multiple (x) Peer Median EV/EBITDA Multiplec (x)
Shareholder Base (Excludes Derivatives)b
One-Year 10.7 47.0 27.0 (9.5) 12.5 10.3
Three-Year 11.0 45.7 10.4 21.1 10.2 9.5
Five-Year 10.1 112.0 18.8 56.6 8.0 5.6
Financial Highlights
Top Equity Holders Vanguard Group Blackrock State Street Corp. Capital Group Company Wellington Management Franklin Resources
(%) 6.2 6.1 4.1 4.0 2.6 2.0
Commentary DOW’s top 10 institutional shareholders own 31% of its stock. Third Point gradually increased its investment from an initial 0.6% in January 2014 to a high of 2.5% in September 2014, down to 2.0% currently.
Corporate Governance Highlights 2012 56,786.0 (5.3) 6,645.0 11.7 3,793.0 (2,614.0) (1,710.0) (324.0) 295.0 295.0
($ Mil., Unless Otherwise Noted) Revenue Revenue Growth (%) EBITDA EBITDA Margin (%) Cash Flow from Operations Capex Dividends FCF Net Acquisitions and Divestitures Net Share Repurchases
2013 57,080.0 0.5 6,935.0 12.2 7,532.0 (2,302.0) (1,139.0) (158.0) 79.0 79.0
2014 58,167.0 1.9 8,261.0 14.2 6,176.0 (3,620.0) (1,680.0) (275.0) (3,245.0) (3,245.0)
2015 LTM 9/16 48,778.0 46,600 (16.1) (4.5) 8,475.0 8,191.0 17.4 17.6 7,081.0 6,054.0 (3,703.0) (3,763.0) (2,253.0) (2,516.0) (123.0) (225.0) (658.0) 1,019.0 (658.0) (330.0)
Balance Sheet Highlights ($ Mil.) Fitch Rating Outlook/Watch Total Debt Total Debt/EBITDA (x) Total Adj. Debt/EBITDAR (x) Cash and Equivalents
Outcome Successful Successful Successful N.A. N.A. N.A.
Board-Related Changes Modification of Business Strategy Balance Sheet/Capital Allocation Changes M&A Proposal Nonboard Corporate Governance Changes Other
Provision Classified/Staggered Board CEO/Chairman Role Combined Supermajority Voting for Mergers Shareholders Can Call Special Meeting Cumulative Voting Poison Pill In Force Expiration of Shareholder Rights Plan
No Yes No Yes No No N.A.
Commentary DOW’s board consists of a diverse range of executives with an average age of 62. Annual elections of directors and a combined CEO/chairman role leave DOW vulnerable to activists in potential proxy contests. DOW’s Bullet Proof Rating according to Factset is 1.25 on a scale of 0–10, versus 3.22 for comparable firms, indicating low takeover defenses.
Creditor Protection/Bond Provisions 2012 BBB Stable 25,390.0 3.8 3.1 4,022.3
2013 BBB Stable 22,296.0 3.2 2.6 5,229.5
2014 BBB Stable 24,133.0 2.9 2.5 4,382.4
2015 BBB RWP 21,615.0 2.6 2.1 8,577.0
LTM 9/16 BBB RWP 25,674.0 3.1 2.5 7,032.0
8.550% 4.250% 4.125% 3.000% 4.375% Large Debt Issuances 2019 2020 2021 2022 2042 Financial Maintenance Covenants No No No No No Change of Control Trigger Event Provision Yes Yes Yes Yes Yes Negative Pledge Yes Yes Yes Yes Yes Limitation on Subsidiary Debt No No No No No Commentary: For all issuances: Limitations on subsidiary guarantees are included with negative pledge.
a
As of Feb. 9, 2017. bPer Bloomberg, as of Feb. 9, 2017. cPeers include but are not limited to WestLake Chemical and Olin Corp. N.A. – Not applicable. RWP – Rating Watch Positive. Source: Fitch Ratings, SEC filings, Bloomberg, Factset.
Bond Prices/Relative Value
Option-Adjusted Spreads — Darden Versus U.S. Large Cap Bond Index 6.800% Darden Notes due 2037
(bps) 600
U.S. Corp. Non-Financial Large Cap Index
400 200 0 1/12
6/12
11/12
4/13
9/13
2/14
7/14
12/14
5/15
10/15
3/16
8/16
1/17
Source: BoA Merrill Lynch Global Reserach, used with permission, Bloomberg.
Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
30
Corporates E.I. du Pont de Nemours and Company (DD) Market Capitalizationa: $65.7 Billion Fitch Synopsis and Opinion
Sector: Chemicals
• Trian Fund Management calls for E.I. du Pont de Nemours and Co. to split up in September 2014 after a year of private talks, despite the spinoff of two units and a $5 billion share buyback plan. • DuPont sends letter to shareholders ruling out breakup, but support is mixed; California State Teachers Retirement System and a DuPont executive back Trian. • In early 2015, Trian reveals plan to seek four seats on DuPont’s board. DuPont lowers outlook, increases stock buyback by $4 billion, and increases cost cuts by $300 million–$1.3 billion. • Battle escalates. Trian issues 95-page white paper. DuPont rejects Trian’s universal ballot proposal, sending letters to shareholders warning of Trian’s intent for a contest at any cost. • Trian uses its DuPontCanBeGreat.com website for nominee testimonials. DuPont rejects proposed settlement entailing two seats on DuPont’s board and two on a spun off entity. • Fidelity, a major DuPont shareholder, calls on Trian and DuPont to come to a truce, after DuPont predicts the cost of the contested solicitation would exceed $15 million. • Trian sends open letter to DuPont’s employees. Proxy firms all endorse some portion of Trian slate, but California Public Employees’ Retirement System throws support behind DuPont. • In May 2015, shareholders re-elect all 12 of DuPont’s nominees and Trian is defeated, but CEO Ellen Kullman retires and Trian continues to push breakup proposal. • DuPont continues restructuring efforts but announces a merger with Dow Chemical Company (DOW) in December 2015, with shareholders approving in July 2016. Trian’s proxy fight and call for DuPont to split into three businesses (agriculture/nutrition, industrial material, performance chemicals) failed, but the activist was still able to affect change by prodding DuPont to increase share buybacks, divest/spin off numerous businesses, scale back spending and eventually merge. Fitch views CEO Kullman’s communication with shareholders as a key factor in DuPont’s successful proxy battle. Yet Fitch placed DuPont’s ‘A’ ratings on Negative Watch after the merger announcement due to the risk that leverage could be elevated following the merger and through the subsequent spinoff, and due to lack of clarity concerning the company’s pension obligations and how they will be treated in a spinoff. DOW’s ‘BBB’ ratings were placed on Positive Watch, reflecting Fitch’s view that a downgrade is unlikely and the succeeding entity will have total debt/EBITDA less than 2.5x. Fitch expects the merger and subsequent breakup will create market leading focused businesses benefiting from cost savings and synergies.
Vulnerability Factors Present at Campaign Launch Equity Underperforming Peers and/or Market (Over Three or Five Years) Persistently Weak Operating Trends Potential to Leverage Balance Sheet Monetizable Assets/Divestible Noncore or Underperforming Businesses Lines Multiple Corporate Governance Provisions Inconsistent with Best Practices
Activist Proposal
Yes/No Yes No Yes Yes No
Equity Performance/Relative Valuationb (%, As of Feb. 9, 2017) Return on Invested Capital (ROIC) Total Return +/– Relative Performance (S&P 500) +/– Relative Performance (S&P 500 Materials) Enterprise Value (EV)/EBITDA Multiple (x) Peer Median EV/EBITDA Multiplec (x)
Shareholder Base (Excludes Derivatives)b
One-Year 17.8 46.5 26.4 (10.1) 14.0 12.8
Three-Year 17.9 40.7 4.5 15.4 12.5 13.3
Five-Year 20.5 80.3 (12.9) 25.0 9.8 9.5
Financial Highlights
Top Equity Holders Capital Group Company The Vanguard Group, Inc. Blackrock State Street Corp. FMR LLC T. Rowe Price Group
(%) 11.3 6.8 6.6 4.9 3.1 2.0
Commentary DuPont’s top 10 shareholders own approximately 41% of its stock. Trian first invested on May 2013 with an initial investment of less than 1%.
Corporate Governance Highlights 2012 2013 2014 2015 35,043.0 35,935.0 34,906.0 25,268.0 (8.8) 2.5 (2.9) (27.6) 5,518.0 5,797.0 6,132.0 4,650.0 15.7 16.1 17.6 18.4 4,778.0 3,157.0 3,696.0 2,305.0 (1,793.0) (1,882.0) (2,020.0) (1,629.0) (1,584.0) (1,651.0) (1,695.0) (1,536.0) 1,401.0 (376.0) (19.0) (860.0) (18.0) 4,708.0 1,058.0 (152.0) 150.0 (464.0) (1,673.0) (2,079.0)
($ Mil., Unless Otherwise Noted) Revenue Revenue Growth (%) EBITDA EBITDA Margin (%) Cash Flow from Operation Capex Dividends FCF Net Acquisitions and Divestitures Net Share Repurchases
LTM 9/16 22,021.0 (12.9) 4,602.0 20.9 3,093.0 (1,097.0) (1,347.0) 649.0 104.0 (364.0)
Balance Sheet Highlights ($ Mil., Fiscal Year May) Fitch Rating Outlook/Watch Total Debt Total Debt/EBITDA (x) Total Adj. Debt/EBITDAR (x) Cash and Equivalents
Outcome Unsuccessful Unsuccessful N.A. N.A. N.A. N.A.
Board-Related Changes Modification of Business Strategy Balance Sheet/Capital Allocation Changes M&A Proposal Nonboard Corporate Governance Changes Other
Provision Classified/Staggered Board CEO/Chairman Role Combined Supermajority Voting for Mergers Shareholders Can Call Special Meeting Cumulative Voting Poison Pill In Force Expiration of Shareholder Rights Plan
Commentary DuPont’s Bullet Proof Rating, which quantifies relative defense protection from a takeover, is 1.25 on a scale of 0–10, according to Factset. DuPont indicates strong corporate governance is an integral part of its core values. The firm’s board is mainly independent and consists of executives from major industrial and consumer companies.
No No Yes Yes No No N.A.
Creditor Protection/Bond Provisions 2012 A Stable 11,977.0 2.2 2.4 3,284.0
2013 A Stable 12,699.0 2.2 2.4 7,941.0
2014 A Stable 10,931.0 1.8 2.1 5,910.0
2015 LTM 9/16 A A RWN RWN 9,076.0 11,593.0 2.0 2.5 2.2 2.8 5,300.0 4,452.0
2.800% 6.000% 3.625% 4.625% 4.150% Large Debt Issuances 2023 2018 2021 2020 2043 Financial Maintenance Covenants No No No No No Change of Control Triggering Event Provision Yes Yes Yes Yes Yes Negative Pledge Yes Yes Yes Yes Yes Limitation on Subsidiary Debt No No No No No Commentary: For all issuances: Includes negative pledge with exception of mortgage up to 10% of consolidated assets; limitations on subsidiary guarantees included in negative pledge.
a
As of Feb. 9, 2017. bPer Bloomberg, as of Feb. 9, 2017. cPeers include PPG Industries, Inc.; Monsanto Co.; The Sherwin Williams Co. and Air Products. N.A. – Not applicable. RWN – Rating Watch Negative. Source: Fitch Ratings, SEC filings, Bloomberg, Factset.
Bond Prices/Relative Value
Option-Adjusted Spreads — DuPont Versus U.S. Large Cap Bond Index (bps) 250 200 150 100 50 0 1/12
6.000% Dupont Notes due 2018
7/12
1/13
7/13
1/14
U.S. Corp. Non-Financial Large Cap Index
7/14
1/15
7/15
1/16
7/16
1/17
Source: BoA Merrill Lynch Global Reserach, used with permission, Bloomberg.
Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
31
Corporates eBay Inc. (EBAY) Market Capitalizationa: $36.1 Billion Fitch Synopsis and Opinion
Sector: Technology
• • • •
In January 2014, eBay Inc. discloses Carl Icahn requested two board seats and for the spinoff of PayPal. Icahn takes 2.2% ownership position (27.8 million shares) in EBAY. Icahn and EBAY engage in a public dispute over allegations of board conflicts and improper corporate governance practices due to the Skype sale, which EBAY strongly defends. In April 2014, Icahn drops proxy battle and withdraws board nominees and spinoff proposal ahead of EBAY’s annual meeting due to a settlement to appoint a new board member. Following a strategic review in September 2014, EBAY announces that keeping EBAY and PayPal together beyond 2015 clearly becomes less strategically and competitively advantageous to each business because the industry landscape is changing, and each business faces different competitive opportunities and challenges. • Third Point Partners takes a position in EBAY in September 2014, stating belief that EBAY should be well positioned to buy back roughly one-third of its float in next two and a half years. • EBAY appoints an Icahn representative to its board of directors in January 2015 as part of a standstill agreement. At the time of the initial proposal from Icahn to separate PayPal from the remaining business, Fitch believed splitting off PayPal could lead management to take a more aggressive approach to the capital structure as a means of boosting shareholder returns. Fitch downgraded EBAY to ‘A–’ when the proposed separation was announced, reflecting Fitch’s expectations for weakened credit protection measures pro forma for the transaction and decline in business diversity. The Negative Watch reflected the strong likelihood of EBAY adopting a more aggressive capital structure post separation, given the lack of strategic rationale to maintain strong investment-grade ratings. Fitch downgraded EBAY to ‘BBB’ in July 2015 based on expectations for total leverage in the 2.0x–3.0x range due to intensified share repurchases through the intermediate term, given EBAY’s significant cash balances and FCF, as well as slowing top-line growth.
Vulnerability Factors Present at Campaign Launch Equity Underperforming Peers and/or Market (Over Three or Five Years) Persistently Weak Operating Trends Potential to Leverage Balance Sheet Monetizable Assets/Divestible Noncore or Underperforming Businesses Lines Multiple Corporate Governance Provisions Inconsistent with Best Practices
Activist Proposal
Yes/No No Yes No
Board-Related Changes Modification of Business Strategy Balance Sheet/Capital Allocation Changes M&A Proposal
Outcome Successful Compromise/Settlement N.A. N.A.
Nonboard-Related Corporate Governance Changes Other Proposals
N.A. N.A.
Yes
Equity Performance/Relative Valuationb
Shareholder Baseb One-Year Three-Year Five-Year 27.2 18.4 19.8 35.7 42.2 139.4 15.7 6.0 46.2 (9.3) (13.0) 32.1 11.3 13.9 10.6 36.4 40.9 29.7
(%, As of Feb. 9, 2017) Return on Invested Capital (ROIC) Total Return +/– Relative Performance (S&P 500) +/– Relative Performance (S&P 500 Info Tech) Enterprise Value (EV)/EBITDA Multiple (x) Peer Median EV/EBITDA Multiplec (x)
Top Equity Holders Pierre M. Omidyar Vanguard Group Blackrock State Street Corp. Magellan Asset Management Invesco LTD
Financial Highlights
Commentary EBAY’s top 10 institutional holders own approximately 40% of the company. Activists including Icahn have exited positions in EBAY.
Corporate Governance Highlights 2012 14,072.0 0.0 4,576.0 32.5 0.0 (1,257.0) 0.0 2,581.0 1.0 (415.0)
($ Mil., Unless Otherwise Noted) Revenue Revenue Growth (%) EBITDA EBITDA Margin (%) Cash Flow from Operations Capex Dividends FCF Net Acquisitions and Divestitures Net Share Repurchases
2013 2014 2015 LTM 9/16 8,257.0 8,790.0 8,592.0 8,906.0 (41.3) 6.5 (2.3) 3.7 3,412.0 3,502.0 3,238.0. 3,385.0 41.3 39.8 377.0 38.0 3,721.0 4,139.0 2,655.0 3,111.0 (678.0) (622.0) (668.0) (619.0) — — 0.0 0.0 4,317.0 5,055.0 3,365.0 2,627.0 (138.0) (55.0) (24.0) (201.0) (906.0) (4,358.0) (1,928.0) (486.0)
Balance Sheet Highlights ($ Mil., Fiscal Year May) Fitch Rating Outlook/Watch Total Debt Total Debt/EBITDA (x) Total Adj. Debt/EBITDAR (x) Cash and Equivalents
(%) 6.5 6.2 5.6 4.0 3.9 3.3
Provision Classified/Staggered Board CEO/Chairman Role Combined Supermajority Voting for Mergers Shareholders Can Call Special Meeting Cumulative Voting Poison Pill In Force Expiration of Shareholder Rights Plan
No No No Yes No No N.A.
Commentary In January 2015, EBAY modified its bylaws regarding a stockholder’s duty to update notice of business or director nomination proposals brought to an annual meeting (ensures notice is true and correct) 10 business days before meeting. EBAY’s Factset Bullet Proof Rating is low versus peers at 1.75 on a scale of 0–10, indicating low takeover defenses.
Creditor Protection/Bond Provisions 2012 A Stable 4,519.0 1.0 1.2 9,408.0
2013 A Stable 4,134.0 1.2 1.4 6,328.0
2014 A– RWN 7,641.0 2.2 2.3 6,328.0
2015 LTM 9/16 BBB BBB Stable Stable 6,750.0 9,099.0 2.1 2.7 2.2 2.8 1,832.0 1,753.0
1.350% 2.200% Large Debt Issuances 2017 2019 Financial Maintenance Covenants No No Change of Control Triggering Event Provision No No Negative Pledge Yes Yes Limitation on Subsidiary Debt No No Commentary: For all issuances: Lien restriction if total debt exceeds consolidated net tangible assets or $500 million.
2.875% 2021 No No Yes No
2.600% 2022 No No Yes No
3.450% 2024 No No Yes No
the greater of 20% of
a As of Feb. 9, 2017. bPer Bloomberg, as of Feb. 9, 2017. cPeers include Alibaba Group, Amazon.com and Mercadolibre Inc. cAs of Aug. 30, 2016. N.A. – Not applicable. RWN – Rating Watch Negative. Source: Fitch Ratings, SEC filings, Bloomberg, Factset.
Bond Prices/Relative Value
Option-Adjusted Spreads — eBay Versus U.S. Large Cap Bond Index 1.350% eBay Notes due 2017 (bps) 250 200 150 100 50 0 1/13 7/13 1/14 7/14 Source: BoA Merrill Lynch Global Reserach, used with permission, Bloomberg.
Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
U.S. Corp. Non-Financial Large Cap Index
1/15
7/15
1/16
7/16
1/17
32
Corporates General Motors Company (GM) Market Capitalizationa: $52.64 Billion Fitch Synopsis and Opinion
Sector: Automotive
• In February 2015, Harry J. Wilson publicly pressures General Motors Co., indicating GM has not been successful in creating shareholder value, proposing his own nomination to the company’s board, and stating the car manufacturer should buy back $8 billion worth of shares by mid-2016. • Four activist-oriented investment firms that owned a combined 2.1% stake in GM support Wilson as a board nominee along with his proposal. • GM announces a 20% dividend increase in February. Although faced with activist pressure, GM previously made vague references to increasing its dividend. • GM hires advisors to assist in a response to shareholder group. Warren Buffet, owning about 2% of GM, endorses GM’s CEO and is against the stock buyback for short-term price gain. • In March 2015, GM announces a settlement that includes a $5 billion share buyback to be completed before year-end 2016 and the withdrawal of activist demands. When combined with the increased dividend, GM would return approximately $10 billion in capital to shareholders by the end of 2016. • CEO of Fiat Chrysler Automobiles N.V. seeks support from investors for a takeover of GM in June 2015, claiming combination would yield substantial R&D and capital spending benefits. GM has thus far rebuffed the overtures and there has been little public support for the proposed combination by GM’s shareholders. • In February 2017, GM and PSA Group announced that various strategic initiatives were being considered, including the potential sale of GM’s Opel Vauxhall unit to PSA. A sale of GM’s European operations to PSA could result in increased shareholder pressure to reconsider other business combinations. Fitch expects GM’s cash liquidity to remain adequate despite its intention to return a significant level of cash to shareholders. For creditors, a key piece of GM’s announcement is the company’s goal to maintain an automotive cash target of $20 billion, compared with an actual automotive cash balance of $25.2 billion at year-end 2014. Fitch has previously stressed the importance of GM maintaining an automotive cash balance of at least $20 billion to provide a sufficient liquidity cushion in the event of a severe downturn. Fitch does not expect any change to GM’s ratings due to the plan. In June 2015, Fitch upgraded GM’s ratings to ‘BBB–’, reflecting the fundamental improvement in its core business over the past few years.
Vulnerability Factors Present at Campaign Launch Equity Underperforming Peers and/or Market (Over Three or Five Years) Persistently Weak Operating Trends Potential to Leverage Balance Sheet Monetizable Assets/Divestible Noncore or Underperforming Businesses Lines Multiple Corporate Governance Provisions Inconsistent with Best Practices
Activist Proposal
Yes/No Yes No Yes No No
Board-Related Changes Modification of Business Strategy Balance Sheet/Capital Allocation Changes M&A Proposal Nonboard-Related Corporate Governance Changes Other Proposals
Equity Performance/Relative Valuationb
Shareholder Base (Excludes Derivatives)b
One-Year (%, As of Feb. 9, 2017) Return on Invested Capital (ROIC) 6.5 Total Return 29.6 +/– Relative Performance (S&P 500) 9.5 +/– Relative Performance (S&P 500 Consumer Discr.) (6.9) Enterprise Value (EV)/EBITDA Multiple (x) 2.1 Peer Median EV/EBITDA Multiplec (x)
3.3
Three-Year Five-Year 4.9 9.5 14.8 72.4 (21.4) (20.8) (27.1) (51.1) 3.0 1.3 3.6
1.9
Financial Highlights
Top Equity Holders UAW Retiree Medical The Vanguard Group, Inc. Blackrock Fund Advisors Harris Associates LP State Street Corp.
(%) 9.4 6.0 5.2 4.6 3.9
Commentary GM’s top 10 institutional shareholders own about 43% of the firm. Per Bloomberg, hedge funds own 8.8%. Known activist investors with 1% or less ownership each include Appaloosa Management 3.3 and Taconic Capital Advisors.
Berkshire Hathaway
Corporate Governance Highlights 2012 2013 2014 2015 LTM 9/16 150,295.0 152,092.0 151,092.0 145,922.0 153,366.0 1.0 1.2 (0.7) (3.4) 5.1 10,091.0 12,754.0 9,379.0 13,115.0 14,822.0 6.7 8.4 6.2 9.0 9.7 8,692.0 10,070.0 8,895.0 9,995.0 12,256.0 (8,055.0) (7,549.0) (7,039.0) (7,784.0) (9,359.0) — — (1,928.0) (2,242.0) (2,346.0) 637.0 2,521.0 (72.0) (31.0) 551.0 (26.0) 896.0 (7.0) (4.0) (804.0) (5,094.0) (3,900.0) (3,277.0) (3,520.0) (1,201.0)
($ Mil., Unless Otherwise Noted) Revenue Revenue Growth (%) EBITDA EBITDA Margin (%) Cash Flow from Operations Capex Dividends FCF Net Acquisitions and Divestitures Net Share Repurchases
Balance Sheet Highlights ($ Mil.) Fitch Rating Outlook/Watch Total Debt Total Debt/EBITDA (x) Total Adj. Debt/EBITDAR (x) Cash and Equivalents
Outcome Unsuccessful N.A. Successful N.A. N.A. N.A.
Provision Classified/Staggered Board CEO/Chairman Role Combined Supermajority Voting for Mergers Shareholders Can Call Special Meeting Cumulative Voting Poison Pill In Force Expiration of Shareholder Rights Plan
No No No Yes No No N.A.
Commentary In 2010, GM’s bylaws were amended to decrease difficulty removing directors by providing for removal with or without cause. Per Factset, GM’s Bullet Proof Rating, which measures takeover defense provisions, is 1.25 on a scale of 0–10 and is lower than industry peers at 3.6.
Creditor Protection/Bond Provisions 2012 BB+ Stable 15,608.0 1.5 1.8 17,133.0
2013 BB+ Positive 10,246.0 0.8 1.1 18,947.0
2014 BB+ Positive 10,091.0 1.1 1.4 15,980.0
2015 BBB– Stable 9,314.0 0.7 0.9 12,177.0
LTM 9/16 BBB– Positive 11,301.0 0.8 0.9 13,344.0
3.500% 3.200% 4.875% 6.250% 5.200% Large Debt Issuances 2018 2020 2023 2043 2045 Financial Maintenance Covenants No No No No No Change of Control Triggering Event Provision No No No No No Negative Pledge Yes Yes Yes Yes Yes Limitation on Subsidiary Debt No No No No No Commentary: Limitation on subsidiary guarantees for the 3.200% 2020 notes applies if a restricted subsidiary issues or guarantees $100 million or more of debt, in which case the subsidiary must execute a subsidiary guarantee to the parent debt.
a As of Feb. 9, 2017. bPer Bloomberg, as of Feb. 9, 2017. cPeers include Tesla Motors, Ford Motor Co. and Daimler AG. N.A. – Not applicable. Source: Fitch Ratings, SEC filings, Bloomberg, Factset.
Bond Prices/Relative Value
Option-Adjusted Spreads — General Motors Versus U.S. Large Cap Bond Index 4.875% General Motors Notes ue 2023
(bps) 400
U.S. Corp. Non-Financial Large Cap Index
300 200 100 0 1/15 2/15
3/15 4/15
5/15 6/15
7/15
8/15 9/15 10/15 11/15 12/15 1/16 2/16
3/16 4/16
5/16 6/16
7/16
8/16 9/16 10/16 11/16 12/16
Source: BoA Merrill Lynch Global Reserach, used with permission, Bloomberg.
Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
33
Corporates Hess Corporation (HES) Market Capitalizationa: $16.3 Billion Fitch Synopsis and Opinion
Sector: Oil & Gas
• • • •
In January 2013, Elliott Management attacks Hess Corp. publicly for an unfocused portfolio, execution problems, lack of independent board experience and poor capital discipline. Hess announces restructuring plans and increased shareholder returns. Elliott criticizes Hess for its performance and proposes five new board candidates. Elliott increases the stock ownership in Hess to 4.4% and appeals to Hess shareholders to vote for its board nominees and corporate governance reform proposals. Elliott wins support from Relational Investors and proxy advisors Glass Lewis & Co., LLC and Institutional Shareholder Services Inc. that a change in the composition of Hess’s board is necessary to hold management accountable. • In May 2013, Elliott and Hess reach last-minute agreement that Elliott will add three of its own directors to the board and support Hess’s plan for five new directors. • Hess reaches agreement in July 2013 to sell its gas marketing business for $1 billion, bringing YTD asset sales to $4.5 billion. • During the next year, Hess reaches agreements to divest its storage and terminals business for $850 million; its gas station, trucking network and pipeline access for $2.9 billion; and a 50% stake in its global energy trading venture. Activists’ efforts were highly successful in forcing Hess to reconstitute the board, strengthen corporate governance measures and sell off assets to focus on becoming a pure play production and exploration company. Shareholder-friendly initiatives included increasing the dividend by 150% and share repurchases up to $4 billion. Fitch views the overall impact of Hess’s plan on credit quality as mixed. Rating downsides for Hess included the loss of scale, lower production and reduced diversification associated with the sale of downstream and retail assets; some loss of size in the upstream. In December 2016, Fitch downgraded Hess to ‘BBB–’ reflecting the loss in size and diversification due to asset sales including the most recent sale of 50% stake in Hess Infrastructure partners, YTD negative FCF and limited production growth prospects in the near to medium-term.
Vulnerability Factors Present at Campaign Launch Equity Underperforming Peers and/or Market (Over Three or Five Years) Persistently Weak Operating Trends Potential to Leverage Balance Sheet Monetizable Assets/Divestible Noncore or Underperforming Businesses Lines Multiple Corporate Governance Provisions Inconsistent with Best Practices
Activist Proposal
Yes/No Yes Yes Yes Yes Yes
Equity Performance/Relative Valuationb (%, As of Feb. 9, 2017) Return on Invested Capital (ROIC) Total Return +/– Relative Performance (S&P 500) +/– Relative Performance (S&P 500 Energy) Enterprise Value (EV)/EBITDA Multiple (x)
Shareholder Base (Excludes Derivatives)b
One-Year (15.8) 29.9 9.8 (16.8) (90.7)
Three-Year (9.1) (24.7) (60.9) (20.1) 4.0
Five-Year (2.1) 2.6 (90.6) (12.5) 4.3
32.1
5.7
4.4
Peer Median EV/EBITDA Multiplec (x)
Financial Highlights
Top Equity Holders Blackrock T. Rowe Price Group Elliott Management Vanguard Group State Street Corp.
(%) 8.8 6.1 5.9 5.6 5.5
Wellington Management
4.9
Commentary Hess’s top 10 institutional holders own approximately 49% of the company. Hedge funds own 12.6% of its stock, according to Bloomberg. Activist investors include Elliott, Relational Investors and Third Point Partners.
Corporate Governance Highlights 2012 37,691.0 (2.0) 8,191.0 21.7 5,660.0 (7,795.0) (171.0) (2,306.0) — 11.0
($ Mil., Unless Otherwise Noted) Revenue Revenue Growth (%) EBITDA EBITDA Margin (%) Cash Flow from Operations Capex Dividends FCF Net Acquisitions and Divestitures Net Share Repurchases
2013 22,284.0 (40.9) 6,912.0 31.0 3,589.0 (5,840.0) (235.0) (1,205.0) — (1,365.0)
2014 2015 LTM 9/16 10,737.0 6,636.0 4,848.0 (51.8) (38.2) (26.9) 6,208.0 2,707.0 1,567.0 57.8 40.8 32.3 5,193.0 1,968.0 1,115.0 (5,274.0) (4,321.0) (2,699.0) (303.0) (287.0) (332.0) (1,113.0) (2,627.0) (1,912.0) — — 80.0 (3,533.0) (130.0) —
Balance Sheet Highlights ($ Mil., Fiscal Year May) Fitch Rating Outlook/Watch Total Debt Total Debt/EBITDA (x) Total Adj. Debt/EBITDAR (x) Cash and Equivalents
Outcome Compromise/Settlement Successful Successful N.A Successful N.A
Board-Related Changes Modification of Business Strategy Utilization of Balance Sheet M&A Proposal Other Corporate Governance Changes Other
Provision Classified/Staggered Board CEO/Chairman Role Combined Supermajority Voting for Mergers Shareholders Can Call Special Meeting Cumulative Voting Poison Pill In Force Expiration of Shareholder Rights Plan
Commentary In May 2013, eight new members were added to the board. In May 2014, the charter was amended to eliminate a supermajority vote requirement for mergers and to eliminate a fair price provision. Per Factset, Hess’s Bullet Proof Rating, which measures takeover defense measures, is 2 on a scale of 0–10, and is roughly in line with peers.
No No No No No No N.A.
Creditor Protection/Bond Provisions 2012 BBB Stable 8,111.0 1.0 1.3 642.0
2013 BBB Stable 5,798.0 0.8 1.2 1,814.0
2014 BBB Stable 5,987.0 1.0 1.2 2,444.0
2015 LTM 9/16 BBB BBB– Stable Stable 6,599.0 7,414.0 2.4 4.7 2.8 5.0 2,716.0 3,529.0
8.125% 7.875% 7.300% Large Debt Issuances 2019 2029 2031 Financial Maintenance Covenants No No No Change of Control Triggering Event Provision No No No Negative Pledge Yes Yes Yes Limitation on Subsidiary Debt No No No Commentary: Hess’s debt issuances provide limited bondholder protection.
6.000% 2040 No No Yes No
5.600% 2041 No No Yes No
a As of Feb. 9, 2017. bPer Bloomberg as of Feb. 9, 2017. cPeers include Occidental Petroleum Corp., Apache Corp., Noble Energy Inc., Marathon Oil Corp., ConocoPhillips and Anadarko Petroleum Corp. N.A. – Not applicable. Source: Fitch Ratings, SEC filings, Bloomberg, Factset.
Bond Prices/Relative Value
Option-Adjusted Spreads — Hess Versus U.S. Large Cap Bond Index (bps) 800
8.125% Hess Notes due 2019
U.S. Corp. Non-Financial Large Cap Index
600 400 200 0 1/12
7/12
1/13
7/13
1/14
7/14
1/15
7/15
1/16
7/16
1/17
Source: BoA Merrill Lynch Global Reserach, used with permission, Bloomberg.
Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
34
Corporates Interpublic Group of Companies, Inc. (IPG) Market Capitalizationa: $9.2 Billion Fitch Synopsis and Opinion
Sector: Media
• In July 2014, Elliot Management reveals 6.7% stake and Interpublic Group of Companies, Inc. prepares response as activist is rumored to want the company to sell itself. • In August 2014, Harris Associates acquires 2.60% of IPG as the firm is pressured by Elliott. Harris has influence in the industry, but is reportedly content with management. • In November 2014, Elliott indicates the desire to engage with IPG on ways to maximize value, stating all options (i.e. improved operating profitability and a sale of firm) are on the table. • The Wall Street Journal reports Elliott is preparing for a proxy contest with IPG. Per Activist Insight, Elliott has been unsuccessful with one of its four proxy contests since 2010. • IPG avoids a proxy fight by expanding board size to 10, awarding Elliott three seats, and forming a finance committee consisting of Elliott’s three nominees in February 2015. • Finance committee is mandated to advise on financial strategy and transactions, hire advisors as needed, and evaluate budget, performance targets and capital structure. • Settlement includes standstill agreement until next window for board nominations in January 2016 and an apparent 9.9% ownership cap for Elliott. • In February 2016, IPG announces $300 million of share buybacks and upped its dividend 25%. Elliott has reduced its stake to less than 3% from nearly 7% in February 2015. • In February 2017, Elliott discloses that it sold its stake in IPG. The board approved a new share repurchase program for up to $300 million and upped its dividend 20% in 2017 Elliott has a history of success with proxy contests, according to data from Activist Insight, only losing one out of seven fights. Consequently, IPG’s settlement seemed to be a wise one. The dissident’s appointees represent one-third of IPG’s current board, but IPG was involved in the interviewing process. IPG is one of the largest global advertising holding companies in the world in a consolidation in the industry. Fitch evaluated IPG’s event risk, citing risk across a spectrum of items including LBO, financial policy and corporate governance risk as medium to low, but noted the company’s relatively low enterprise value and strong FCF made it an attractive LBO candidate. Also, with a prominent activist now having meaningful board representation, event risk could become increasingly elevated. However, Fitch revised IPG’s Rating Outlook to Positive in July 2016 given the view that IPG’s credit protection metrics and credit profile are strong for the ‘BBB’ rating. IPG’s operating results have shown marked improvement since fiscal 2012.
Vulnerability Factors Present at Campaign Launch Equity Underperforming Peers and/or Market (Over Three or Five Years) Persistently Weak Operating Trends Potential to Leverage Balance Sheet Monetizable Assets/Divestible Noncore or Underperforming Businesses Lines Corporate Governance Provisions Inconsistent with Best Practices
Activist Proposal
Yes/No No No No No No
Equity Performance/Relative Valuationb
Shareholder Base (Excludes Derivatives)b
One-Year (%, As of Feb. 9, 2017) Return on Invested Capital (ROIC) 16.6 Total Return 7.6 +/– Relative Performance (S&P 500) (12.4) +/– Relative Performance (Omnicom Group, Inc.) (4.8) Enterprise Value (EV)/EBITDA Multiple (x) 9.4 c Peer Median EV/EBITDA Multiple (x) 10.0
Three-Year 15.6 54.4 18.2 26.7 9.4 10.5
Five-Year 15.9 154.4 61.2 39.6 4.8 7.2
Financial Highlights
Top Equity Holders The Vanguard Group, Inc. Blackrock Fund Advisors FMR LLC Boston Partners State Street Corp. Harris Associates LP
(%) 9.1 8.5 7.8 5.3 4.4 4.0
Commentary Elliott’s stake peaked at 6.9% in February 2015, but the investor has exited as of February 2017
Corporate Governance Highlights 2012 6,956.2 (0.8) 870.5 12.5 328.6 (169.2) (103.4) 56.0 (145.5) (350.5)
($ Mil., Unless Otherwise Noted) Revenue Revenue Growth (%) EBITDA EBITDA Margin (%) Cash Flow from Operations Capex Dividends FCF Net Acquisitions and Divestitures Net Share Repurchases
2013 7,122.3 2.4 859.4 12.1 566.4 (173.0) (126.0) 267.4 (61.5) (434.4)
2014 7,537.1 5.8 1,005.9 13.3 652.5 (148.7) (159.0) 344.8 (67.8) (255.0)
2015 LTM 9/16 7,613.8 7,778.3 1.0 2.2 1,098.4 1,146.3 14.4 14.7 658.1 881.3 (161.1) (194.9) (195.5) (227.9) 301.5 458.5 (28.6) (70.6) (271.7) (294.3)
Balance Sheet Highlights ($ Mil.) Fitch Rating Outlook/Watch Total Debt Total Debt/EBITDA (x) Total Adj. Debt/EBITDAR (x) Cash and Equivalents
Outcome Successful N.A. N.A. Withdrew Demand N.A. N.A.
Board-Related Changes Modification of Business Strategy Balance Sheet/Capital Allocation Changes M&A Proposal Nonboard Corporate Governance Changes Other
Provision Classified/Staggered Board CEO/Chairman Role Combined Supermajority Voting for Mergers Shareholders Can Call Special Meeting Cumulative Voting Poison Pill In Force Expiration of Poison Pill
No Yes No Yes No No Expired 7/18/99
Commentary IPG’s board is mainly independent, but a combined CEO/chairman role is inconsistent with best practices. IPG’s Bullet Proof Rating is very low at 0.25 on a scale of 0–10, versus 3.00 for advertising agencies in general, indicating low takeover defenses. IPG has not reinstituted a poison pill and has no supermajority voting requirements.
Creditor Protection/Bond Provisions 2012 BBB Stable 2,671.0 3.1 4.3 2,574.8
2013 BBB Stable 1,662.5 1.9 3.7 1,636.8
2014 BBB Stable 1,737.6 1.7 3.4 1,660.6
2015 BBB Stable 1,775.3 1.6 3.1 1,502.9
LTM 9/16 BBB Positive 1,752.1 1.5 3.0 891.6
2.25% 4.00% Large Debt Issuances 2017 2022 Financial Maintenance Covenants No No Change of Control Trigger Event Provision Yes Yes Negative Pledge Yes Yes Limitation on Subsidiary Debt No No Commentary: For all issuances: Limitation on subsidiary guarantee allowed up tangible assets.
3.75% 2023 No Yes Yes No
4.20% 2024 No Yes Yes No
to 15% of total net
a
As of Feb. 9, 2017. bPer Bloomberg, as of Feb. 9, 2017. cPeers Group includes Omnicom Group. N.A. – Not applicable. Source: Fitch Ratings, SEC filings, Bloomberg, Factset.
Bond Prices/Relative Value
Option-Adjusted Spreads — Interpublic Group of Companies Versus U.S. Large Cap Bond Index (bps) 300
3.750% Interpublic Group of Companies Notes due 2023
U.S. Corp. Non-Financial Large Cap Index
200 100 0 1/13 7/13 1/14 7/14 Source: BoA Merrill Lynch Global Reserach, used with permission, Bloomberg.
Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
1/15
7/15
1/16
7/16
1/17
35
Corporates Macy’s, Inc. (M) Market Capitalizationa: $9.9 Billion Fitch Synopsis and Opinion
Sector: Retail
• In July 2015, Jeff Smith of Starboard Value publicizes view that Macy’s, Inc. should spin off its real estate, stating it’s worth $21 billion, and create two companies while maintaining its dividend. M says on its second-quarter 2015 earnings call that it continually looks at real estate options, including REIT structures. U.S. bill nullifies tax-free status of new REIT in fall of 2015. • In November 2015, M says it is exploring sale-leasebacks and a joint venture (JV) in lieu of a REIT. It noted a REIT would be highly leveraging, taking it outside its targeted leverage range. M goes on to announce cost-efficiency initiatives, with $400 million of expense reductions, and provides update on previously announced store closures and real estate efforts in January 2016. • In January 2016, Starboard proposes M create two JVs that isolate iconic urban stores from mall stores to attract different partners and make further cost reductions. Says M can maintain control of real estate, leave operating company debt free and maintain an investment-grade rating. In early 2016, M updates JV progress, and plans to increase share buybacks and dividends while returning leverage to 2.5x–2.8x target. M goes on to name William Lenehan, president/CEO of Four Corners REIT with ties to Starboard, to board. • In summer 2016, M announces CEO succession, further measures to enhance profits and more effectively use real estate, with a three-pronged strategy that entails flagship assets, the closing 100 of its over 800 stores and creating value from its remaining real estate. In fall 2016, M forms a two-year strategic alliance with Brookfield Asset Management to create increased value for its real estate. In January 2017, M increases cost savings goal to over $500 million and provides an update on its store closings and real estate. Fitch downgraded M to ‘BBB’ from ‘BBB+’ in April 2016 due to lack of visibility into sales acceleration to meaningfully improve profitability. Fitch believes midmarket apparel sector weakness and online migration would limit comparable stores sales (comps) growth over the next 2–3 years. Fitch revised M’s outlook to Negative in January 2017 due to reduced confidence in its ability to stabilize comps and grow EBITDA over the intermediate term, although M subsequently announced intent to pay down debt with excess cash and suspended share buybacks in 2017 are credit positives. Fitch anticipates any change to M’s capital structure as it explores real estate opportunities will be credit neutral at best due to potential additional rent expense and the possibility sales proceeds would be deployed to shareholder-friendly activities. A potential leveraging transaction is currently weighing on the credit given recent media reports on interest from Hudson’s Bay.
Vulnerability Factors Present at Campaign Launch Equity Underperforming Peers and/or Market Persistently Weak Operating Trends Potential to Leverage Balance Sheet Monetizable Assets/Divestible Noncore or Underperforming Business Lines Multiple Corporate Governance Provisions Inconsistent with Best Practices
Activist Proposal
Yes/No Yes Yes Yes Yes No
Equity Performance/Relative Valuationb (%, As of Feb. 9, 2017) Return on Invested Capital (ROIC) Total Return +/– Relative Performance (S&P 500) +/– Relative Performance (S&P Retail) Enterprise Value (EV)/EBITDA Multiple (x) Peer Median EV/EBITDA Multiplec (x)
Shareholder Baseb
One-Year 10.2 (23.9) (44.0) (62.0) 7.2 8.5
Three-Year 12.3 (39.5) (75.7) (105.1) 6.1 6.1
Five-Year 15.3 (0.4) (93.6) (165.9) 5.7 7.9
Financial Highlights (Fiscal Year Ends January)
Top Equity Holders Vanguard Group Inc. Blackrock State Street Corp. BNY Mellon FMR LLC Capital Group Company
(%) 9.3 6.5 4.7 4.3 2.4 2.2
Commentary Starboard disclosed a 0.87% initial stake in June 2015. Ownership peaked at 1.97% in December 2015 and then declined to 0.76% as of June 2016. Directors and officers as a group owned 1.7% as of latest proxy filing.
Corporate Governance Highlights
2012 2013 2014 2015 26,405.0 27,686.0 27,931.0 28,105.0 5.6 4.9 0.9 0.6 3,541.0 3,776.0 3,848.0 3,996.0 13.4 13.6 13.8 14.2 2,093.0 2,261.0 2,549.0 2,709.0 (764.0) (942.0) (863.0) (1,068.0) (148.0) (324.0) (359.0) (421.0) 1,181.0 995.0 1,327.0 1,220.0 — — — — (340.0) (1,163.0) (1,256.0) (1,643.0)
($ Mil., Unless Otherwise Noted) Revenue Revenue Growth (%) EBITDA EBITDA Margin (%) Cash Flow from Operations Capex Dividends FCF Net Acquisitions and Divestitures Net Share Repurchases
Outcome N.A. N.A. N.A. N.A. N.A. Partially Successful
Board-Related Changes Modification of Business Strategy Balance Sheet/Capital Allocation Changes M&A Proposal Nonboard Corporate Governance Changes Other (Real Estate Monetization)
LTM 10/16 26,132.0 (7.0) 2,846.0 10.9 2,018.0 (954.0) (456.0) 608.0 138.0 (96.0)
Balance Sheet Highlights
Provision Classified/Staggered Board CEO/Chairman Role Combined Supermajority Voting for Mergers Shareholders Can Call Special Meeting Cumulative Voting Poison Pill In Force Expiration of Shareholder Rights Plan
No Yes No Yes No No 12/19/04
Commentary Plans to split the Chairman and CEO role are announced in June 2016. M amends by-laws to add proxy access in February 2016. M’s Factset Bullet Proof anti-takeover rating, which measures takeover defense measures, is 1.25 on a scale of 1 (low) to 10 (high), versus 2.07 for the department store index.
Creditor Protection/Bond Provisions
($ Mil., Fiscal Year May) Fitch Rating Outlook/Watch Total Debt Total Debt/EBITDA (x) Total Adj. Debt/EBITDAR (x)
2012 BBB– Stable 7,758.0 2.2 2.6
2013 BBB Stable 6,930.0 1.8 2.3
2014 BBB Stable 7,191.0 1.9 2.3
2015 BBB+ Stable 7,341.0 1.8 2.3
LTM 10/16 BBB Negative 7,426.9 2.6 3.2
Cash and Equivalents
2,827.0
1,836.0
2,273.0
2,246.0
457.0
3.450% 3.875% 2.875% 6.900% 4.500% Large Debt Issuances 2021 2022 2023 2029 2034 Financial Maintenance Covenants No No No No No Change of Control Triggering Event Yes Yes Yes No Yes Negative Pledge Yes Yes Yes Yes Yes Limitation on Subsidiary Debt No No No No No Commentary: In addition to the change of control, certain notes contain limits on sale-leasebacks to the extent proceeds must be reinvested or used for debt paydown.
a
As of Feb. 9, 2017. bPer Bloomberg, as of Feb. 9, 2017. cPeers Group includes Kohls Corp., Nordstrom Inc. and J. C. Penney Co. N.A. – Not applicable. Source: Fitch Ratings, SEC filings, Bloomberg, Factset.
Bond Prices/Relative Value
Option-Adjusted Spreads — Macy's Versus U.S. Large Cap Bond Index 2.875% Macys Notes due 2023
(bps) 400
U.S. Corp. Non-Financial Large Cap Index
300 200 100 0 1/13
7/13
1/14
7/14
1/15
7/15
1/16
7/16
1/17
Source: BoA Merrill Lynch Global Reserach, used with permission, Bloomberg.
Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
36
Corporates Mondelez International, Inc. (MDLZ) Market Capitalizationa: $69.7 Billion Fitch Synopsis and Opinion
Sector: Food
• • • • •
In June 2012, Trian Fund Management disclosed a 0.59% stake in Mondelez International, Inc. Trian then pushes for the merger of PepsiCo, Inc. and Mondelez. In July 2013, Mondelez disclosed plans to redesign the company’s supply chain, which is expected to deliver gross productivity savings of $3 billion over the next three years. After further public pressure in fall 2013, Mondelez announces Nelson Peltz of Trian as the 12th member of Mondelez’s board, rather than face a distracting proxy contest. Relational Investors’ Ralph Whitworth indicates in April 2014 that Mondelez has limited time to improve operating results and is assembling proposals to reinvigorate the business. Responding to activist criticisms, Mondelez announced plans in May 2014 to separate its coffee operations to create a pure-play coffee company. Mondelez also announces a $3.5 billion restructuring program and plans in July 2014 to separate its European cheese and grocery businesses to provide appropriate long-term focus and enhance flexibility. • Pershing Square Capital Management announces a 7.5%, or $5.5 billion, stake in August 2015, stating Mondelez has the greatest cost saving opportunity among peers. Mondelez’s weak operating margins and 3G Capital’s success at The Kraft Heinz Co. with benchmark cost reductions placed Mondelez at the eye of the storm, as activists believed the company had not adopted aggressive enough cost measures to improve margins and reinvest back into the business. Fitch believes Mondelez can now achieve its target to improve EBIT margins to 17%–18% in 2018 from 14.7% in 2015, with debt/EBITDA expected to trend toward 3.0x by 2018 from an expected 3.5x in 2016 on EBITDA growth. However, the potential for debt financed M&A activity plus share repurchases that keeps leverage high remains a concern as further M&A is likely in the packaged food sector as companies optimize product portfolio and geographic exposure, and seek cost-reduction opportunities. Mondelez’s failed attempt to take over The Hershey Co. would have been a transformative event for the company.
Vulnerability Factors Present at Campaign Launch Equity Underperforming Peers and/or Market (Over Three or Five Years) Persistently Weak Operating Trends Potential to Leverage Balance Sheet Monetizable Assets/Divestible Noncore or Underperforming Businesses Lines Multiple Corporate Governance Provisions Inconsistent with Best Practices
Activist Proposal
Yes/No No Yes Yes Yes No
Equity Performance/Relative Valuationb (%, As of Feb. 9, 2017) Return on Invested Capital (ROIC) Total Return +/– Relative Performance (S&P 500) +/– Relative Performance (S&P 500 Consumer Staples) Enterprise Value (EV)/EBITDA Multiple (x) Peer Median EV/EBITDA Multiplec (x)
Shareholder Base (Excludes Derivatives)b One-Year Three-Year 12.0 10.4 4.5 41.9 (15.5) 5.7 (22.0) 2.3 24.8 14.8 15.1 15.3
Five-Year 9.6 94.0 0.8 6.2 12.2 11.1
Financial Highlights
Top Equity Holders Pershing Square Capital Management Vanguard Group Blackrock State Street Corp. Wellington Management Trian Fund Management
(%) 6.4 6.1 5.7 4.3 3.2 2.9
Commentary Pershing Square Capital Management and Trian together own nearly 10% of Mondelez shares.
Corporate Governance Highlights 2012 2013 2014 2015 LTM 9/16 35,015.0 35,299.0 34,244.0 29,636.0 26,517.0 (35.6) 0.8 (3.0) (13.5) (10.5) 5,827.0 5,472.0 5,616.0 5,255.0 4,956.0 16.6 15.5 16.4 17.7 18.7 3,923.0 6,410.0 3,562.0 3,728.0 3,454.0 (1,610.0) (1,622.0) (1,642.0) (2,058.0) (1,245.0) (2,058.0) (943.0) (964.0) (1,008.0) (1,073.0) 255.0 3,845.0 956.0 1,206.0 1,136.0 60.0 (4.0) (7.0) (527.0) (4,744.0) 0.0 (2,900.0) (1,700.0) (3,622.0) (415.0)
($ Mil., Unless Otherwise Noted) Revenue Revenue Growth (%) EBITDA EBITDA Margin (%) Cash Flow from Operations Capex Dividends FCF Net Acquisitions and Divestitures Net Share Repurchases
Balance Sheet Highlights ($ Mil., Fiscal Year May) Fitch Rating Outlook/Watch Total Debt Total Debt/EBITDA (x) Total Adj. Debt/EBITDAR (x) Cash and Equivalents
Outcome Successful Not Successful N.A. Not Successful N.A. N.A.
Board-Related Changes Modification of Business Strategy Balance Sheet/Capital Allocation Changes M&A Proposal Nonboard-Related Corporate Governance Changes Other Proposals
Provision Classified/Staggered Board CEO/Chairman Role Combined Supermajority Voting for Mergers Shareholders Can Call Special Meeting Cumulative Voting Poison Pill In Force Expiration of Shareholder Rights Plan
No Yes No Yes No No N.A.
Commentary Mondelez’s combined CEO/chairman role is viewed as inconsistent with best practices. The firm has not made any recent changes to its corporate governance provisions. Mondelez’s Bullet Proof Rating which indicates the anti-takeover defenses, according to Factset, is 1.25 on a scale of 0–10, in line with peers.
Creditor Protection/Bond Provisions 2012 BBB Stable 19,425.0 3.3 3.6 4,475.0
2013 BBB Stable 17,121.0 3.1 3.4 2,664.0
2014 BBB RWN 16,700.0 3.0 3.3 1,631.0
2015 BBB Negative 15,398.0 2.9 3.2 1,870.0
LTM 9/16 BBB Stable 17,052.4 3.4 3.7 1,686.0
2.250% 2.375% 4.000% 2.375% Large Debt Issuances 2019 2021 2024 2035 Financial Maintenance Covenants No No No No Change of Control Triggering Event Provision Yes Yes Yes Yes Negative Pledge Yes Yes Yes Yes Limitation on Subsidiary Debt No No No No Commentary: For all issuances: change of control triggering event includes a change of control that causes the rating to be below investment grade; liens allowed up to the greater of 10% of consolidated net tangible assets or 10% of consolidated capitalization, and sale leaseback is included in the calculation; limitations on subsidiary guarantees are included with negative pledge.
a As of Feb. 9, 2017. bPer Bloomberg, as of Feb. 9, 2017. cPeers include The Hershey Co.; Kellogg Co.; General Mills, Inc.; Pinnacle Foods Inc.; and Kraft Heinz. N.A. – Not applicable. RWN – Rating Watch Negative. Source: Fitch Ratings, SEC filings, Bloomberg, Factset.
Bond Prices/Relative Value
Option-Adjusted Spreads — Mondelez Versus U.S. Large Cap Bond Index (bps) 250 200 150 100 50 0 1/12
6.125% Mondelez Notes due 2018
7/12
1/13
7/13
1/14
U.S. Corp. Non-Financial Large Cap Index
7/14
1/15
7/15
1/16
7/16
1/17
Source: BoA Merrill Lynch Global Reserach, used with permission, Bloomberg.
Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
37
Corporates PepsiCo, Inc. (PEP) Market Capitalizationa: $151.6 Billion Fitch Synopsis and Opinion
Sector: Beverage
• In early 2013, PepsiCo, Inc. announced the exploration of potential structural alternatives to improve profitability and returns to drive increased shareholder value. • PepsiCo disclosed in April 2013 the company met with Trian Fund Management to discuss their considerations as part of the company’s ongoing strategic evaluation. • Trian publishes a white paper in July 2013 calling for a merger with Mondelez International Inc. to create a global snack powerhouse, while separating the beverage segment. • Following months of continued discussions and internal evaluations, PepsiCo announced in February 2014 it would not make any structural changes. • In response to activism pressure, PepsiCo increased shareholder-friendly initiatives during 2014 by more than $2 billion (dividends and buybacks) to $8.7 billion, or about 35% from 2013. • Trian rereleases white paper advocating a separation of PepsiCo’s global snacks and beverages into two independent public companies. • Trian pursues discussions with more than 100 PepsiCo shareholders and receives public support from California State Teachers’ Retirement System. • In January 2015, PepsiCo and Trian reach a settlement agreement to elect William Johnson as an independent member of the board to avoid a proxy contest. Fitch believes Trian’s push to revamp product portfolios, sharpen innovation, improve cost structure, address corporate governance reform and accelerate other structural changes was beneficial to PepsiCo’s operations and long-term cash flow. However, increased shareholder-based initiatives during the past couple of years attributed in part to activist pressure, has increased leverage and is a rating concern. Fitch expects net supplemental leverage to stay in the mid-2.5x range, which is acceptable but high for the rating. Fitch views PepsiCo’s long-term midsingle-digit profit before-tax growth target as doable, providing it sufficient flexibility to absorb higher debt while maintaining stable leverage metrics.
Vulnerability Factors Present at Campaign Launch Equity Underperforming Peers and/or Market (Over Three or Five Years) Persistently Weak Operating Trends Potential to Leverage Balance Sheet Monetizable Assets/Divestible Noncore or Underperforming Businesses Lines Multiple Corporate Governance Provisions Inconsistent with Best Practices
Activist Proposal
Yes/No Yes Yes Yes Yes Yes
Board-Related Changes Modification of Business Strategy Balance Sheet/Capital Allocation Changes M&A Proposal Nonboard-Related Corporate Governance Changes Other Proposals
Equity Performance/Relative Valuationb (%, As of Feb. 9, 2017) Return on Invested Capital (ROIC) Total Return +/– Relative Performance (S&P 500) +/– Relative Performance (S&P 500 Consumer Staples) Enterprise Value (EV)/EBITDA Multiple (x) Peer Mean EV/EBITDA Multiplec(x)
Shareholder Base (Excludes Derivatives)b One-Year Three-Year 14.3 15.6 7.9 40.7 (12.2) 4.6 (18.4) 1.1 14.6 11.6 15.0 10.1
Five-Year 18.1 80.7 (10.7) (5.7) 10.1 9.1
Financial Highlights
Top Equity Holders The Vanguard Group, Inc. Blackrock Fund Advisors State Street Corp. Bank of America Corp. Wellington Management T. Rowe Price Group
(%) 7.2 5.9 4.4 2.0 1.9 1.5
Commentary Trian sold all of its PepsiCo shares on May 13, 2016. About 4% of PepsiCo’s shareholders are hedge funds.
Corporate Governance Highlights 2012 65,492.0 (1.5) 12,374.0 18.9 8,479.0 (2,714.0) (3,305.0) 2,460.0 (32.0) (2,104.0)
($ Mil., Unless Otherwise Noted) Revenue Revenue Growth (%) EBITDA EBITDA Margin (%) Cash Flow from Operations Capex Dividends FCF Net Acquisitions and Divestitures Net Share Repurchases
2013 66,415.0 1.4 12,955.0 19.5 9,688.0 (2,795.0) (3,434.0) 3,459.0 133.0 (1,885.0)
2014 66,683.0 0.4 13,026.0 19.5 10,506.0 (2,859.0) (3,730.0) 3,917.0 203.0 (4,267.0)
2015 63,056.0 (5.4) 12,653.0 20.1 10,580.0 (2,758.0) (4,040.0) 3,782.0 76.0 (4,501.0)
LTM 8/16 61,869.0 (1.9) 12,952.0 20.9 10,437.0 (2,861.0) (4,176.0) 3,400.0 120.0 (629.0)
Balance Sheet Highlights ($ Mil.) Fitch Rating Outlook/Watch Total Debt Total Debt/EBITDA (x) Total Adj. Debt/EBITDAR (x) Cash and Equivalents
Outcome Successful Not Successful N.A. Not Successful N.A. N.A.
Provision Classified/Staggered Board CEO/Chairman Role Combined Supermajority Voting for Mergers Shareholders Can Call Special Meeting Cumulative Voting Poison Pill In Force Expiration of Shareholder Rights Plan
Commentary The combined CEO/chairman role is inconsistent with best practices. PepsiCo has not made any recent changes to its governance provisions. PepsiCo’s Bullet Proof Rating per Factset is 1.5 on a scale of 0–10, versus 2.6 for peers, indicating low takeover defenses.
No Yes Yes Yes No No N.A.
Creditor Protection/Bond Provisions 2012 A Stable 28,236.0 2.3 2.6 6,297.0
2013 A Stable 29,509.0 2.3 2.6 9,375.0
2014 A Stable 28,757.0 2.2 2.5 6,134.0
2015 A Stable 33,139.0 2.6 2.9 9,096.0
LTM 8/16 A Stable 35,458.0 2.7 3.0 10,256.0
5.00% 7.90% 2.75% 2.75% 3.60% Large Debt Issuances 2018 2018 2022 2023 2024 Financial Maintenance Covenants No No No No No Change of Control Triggering Event Provision No No No No No Negative Pledge Yes Yes Yes Yes Yes Limitation on Subsidiary Debt No No No No No Commentary: For all issuances: lien allowed up to 15% of total assets; limitations on subsidiary guarantees are included with negative pledge. However, the parent can freely transfer assets to unrestricted subsidiaries, which have no limit on incurring debt
a
As of Feb. 9, 2017. bPer Bloomberg as of Feb 9, 2017. cPeers include The Coca-Cola Co., Coca-Cola Enterprises, Dr. Pepper Snapple, Cott Corp., Keurig Green Mountain and Monster Beverage. N.A. – Not applicable. Source: Fitch Ratings, SEC filings, Bloomberg, Factset.
Bond Prices/Relative Value
Option-Adjusted Spreads — PepsiCo Versus U.S. Large Cap Bond Index (pbs) 250 200 150 100 50 0 1/12
5.000% PepsiCo Notes due 2018
7/12
1/13
7/13
U.S. Corp. Non-Financial Large Cap Index
1/14
7/14
1/15
7/15
1/16
7/16
1/17
Source: BoA Merrill Lynch Global Reserach, used with permission, Bloomberg.
Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
38
Corporates Staples, Inc. (SPLS) Market Capitalizationa: $5.8 Billion Fitch Synopsis and Opinion
Sector: Retail
• In January 2015, Starboard Value, 5.1% owner of Staples, Inc. and 9.5% owner of Office Depot, Inc., sends letter to Staples advocating a merger with Office Depot. • Staples immediately responds to Starboard saying it carefully considers all actions that would enhance shareholder value and welcomes dialogue with Starboard. • Staples reshuffles board by adding former executives from Dell, Inc. and Google, Inc., and replaces its lead independent director. Staples’ CEO declines pay raise prior to annual meeting. • In February 2015, Staples announces it would acquire Office Depot, after beginning discussions in September 2014, for $6.3 billion, with the deal backed by both firms’ boards. • Starboard praises action, but sends letter to Staples in March 2015 about board composition and merger oversight regarding the Office Depot transaction, threatening a proxy fight. • In April 2015, Staples and Starboard agree to appoint Kunai Kamlani to board and Starboard predicts $2 billion of Staples/Office Depot synergies, well above Staples’ $1 billion target. • The FTC blocked the proposed merger in May 2016, after blocking a similar proposal in 1997, and both Staples’ and Office Depot’s CEOs resign in the following months. Starboard had mixed results on its goal of consolidating the retail office supply industry. In September 2012, Starboard began pushing for changes at Office Depot. In an effort to remain independent and avoid a proxy fight, Office Depot introduces a poison pill, enters a settlement agreement with Starboard, and completes a merger with OfficeMax in November 2013. The settlement added Jeffrey Smith and two other Starboard nominees to Office Depot’s board. Starboard maintains a meaningful stake in Office Depot, but resigns from the board in September 2014. In December 2014, with a 5% stake in Staples, Starboard begins to publicly push Staples to merge with Office Depot. Fitch downgrades Staples in April 2016 due to secular headwinds and competitive challenges in the office products category, and removes ratings from Negative Watch following the termination of its proposed Office Depot acquisition.
Vulnerability Factors Present at Campaign Launch Equity Underperforming Peers and/or Market (Over Three or Five Years) Persistently Weak Operating Trends Potential to Leverage Balance Sheet (Pending Acquisition of Office Depot) Monetizable Assets/Divestible Businesses Lines Corporate Governance Provisions Inconsistent with Best Practices
Activist Proposal
Yes/No Yes Yes Yes No No
Equity Performance/Relative Valuationb (%, As of Feb. 9, 2017) Return on Invested Capital (ROIC) Total Return +/– Relative Performance (S&P 500) +/– Relative Performance (S&P 500 Consumer Discretionary) Enterprise Value (EV)/EBITDA Multiple (x) Peer Median EV/EBITDA Multiplec (x)
Shareholder Base (Excludes Derivatives)b One-Year (2.6) 8.6 (11.4)
Three-Year 0.9 (20.7) (56.9)
Five-Year 2.6 (23.8) (117.0)
(27.9) 30.1 7.0
(62.5) 6.9 11.4
(147.2) 5.5 8.7
Financial Highlights ($ Mil., Unless Otherwise Noted) Revenue Revenue Growth (%) EBITDA EBITDA Margin (%) Cash Flow from Operations Capex Dividends FCF Net Acquisitions and Divestitures Net Share Repurchases
Top Equity Holders The Vanguard Group Inc. Blackrock BNY Mellon Pzena Investment FMR LLC State Street Corp.
(%) 9.2 7.1 5.9 5.0 4.6 4.5
Commentary Staples’ top 10 institutional shareholders own about 43% of the firm. Hedge funds own 15% and insiders own less than 1%. Starboard gradually reduced its stake from 5.1% in December 2014 to approximately 2.5% as of the date of this report.
Corporate Governance Highlights 2013 24,380.5 (2.6) 2,133.2 8.8 1,219.2 (349.6) (294.1) 575.5 (1.9) (422.9)
2014 23,114.3 (5.2) 1,780.4 7.7 1,108.3 (371.2) (312.5) 424.5 (87.4) (259.2)
2015 22,492.4 (2.7) 1,489.6 6.6 1,042.9 (360.9) (307.0) 375.1 (77.8) (159.2)
2016 21,059.0 (6.4) 1,405.0 6.7 978.0 (381.0) (308.0) 289.0 7.0 17.0
LTM 10/16 20,475.0 (2.8) 1,390.0 6.8 905.0 (324.0) (310.0) 271.0 113.0 (2.0)
2016 BBB– RWN 1,035.0 0.7 3.1 825.0
LTM 10/16 BB+ Stable 1,051.0 0.8 3.2 1,076.0
Balance Sheet Highlights ($ Mil., Fiscal Year Ended January) Fitch Rating Outlook/Watch Total Debt Total Debt/EBITDA (x) Total Adj. Debt/EBITDAR (x) Cash and Equivalents
Outcome N.A. N.A. N.A. Successful N.A. N.A.
Board-Related Changes Modification of Business Strategy Balance Sheet/Capital Allocation Changes M&A Proposal Nonboard Corporate Governance Changes Other
Provision Classified/Staggered Board CEO/Chairman Role Combined Supermajority Voting for Mergers Shareholders Can Call Special Meeting Cumulative Voting Poison Pill In Force Expiration of Shareholder Rights Plan
No No No Yes No No 2/04
Commentary Staples has limited takeover defenses and a Bullet Proof score of less than 1, according to Factset. Staples instituted an Independent Chair policy in January 2015, which took effect in 2017. Staples also added proxy access in 2015, and adjusted its executive compensation structure in response to shareholder feedback in 2016.
Creditor Protection/Bond Provisions 2013 BBB Stable 1,989.1 0.9 2.9 1,334.3
2014 BBB Negative 1,104.2 0.6 2.9 492.5
2015 BBB– Negative 1,115.7 0.7 3.2 627.2
2.750% 4.375% Large Debt Issuances 2018 2023 Financial Maintenance Covenants No No Change of Control Trigger Event Provision Yes Yes Negative Pledge Yes Yes Limitation on Subsidiary Debt No No Commentary: For both issuances: change of control triggering event includes a change of control that causes the rating to be below investment grade; negative pledge, with the exception of 15% of consolidated net total assets.
a
As of Feb. 9, 2017. bPer Bloomberg, as of Feb. 9, 2017. cPeers include Office Depot Inc.; Best Buy; The Michaels Company; GNC Holdings Inc. and Vitamin Shoppe Inc. N.A. – Not applicable. Source: Fitch Ratings, SEC filings, Bloomberg, Factset.
Bond Prices/Relative Value
Option-Adjusted Spreads — Staples Versus U.S. Large Cap Bond Index (bps) 400
4.375% Staples Notes due 2023
U.S. Corp. Non-Financial Large Cap Index
300 200 100 0 1/13
7/13
1/14
7/14
1/15
7/15
1/16
7/16
1/17
Source: BoA Merrill Lynch Global Reserach, used with permission, Bloomberg.
Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
39
Corporates Carl Icahn Assets Manageda: $33.1 Billion Investments (Jan. 20, 2017): 25
Carl Icahn — Chairman of the Board Overview
Carl Icahn is a U.S. activist investor who has historically invested in public equities and debt through a number of investment vehicles. Prior to March 2011, Icahn invested the capital of U.S. investors through his hedge fund Icahn Partners and the capital of non-U.S. investors through the Cayman Islands limited liability company, Icahn Fund Limited. Carl Icahn is also the major shareholder in the NYSE-listed, diversified holding company Icahn Enterprises LP. Carl Icahn is known for his ability to make multibillion-dollar investments from his own personal fortune in large-cap companies he believes need changes in governance or direction. Icahn prefers to work alone rather than cooperating with other activist investors and his approach is viewed as confrontational. Once he has acquired a significant shareholding, he may seek board representation, enter into proxy contests or make tender offers and will typically push for share buybacks, spinoffs or general cost cutting. He tends to focus more on financial engineering and strategic direction than on operational activities. Icahn does not seek to micro-manage operations and instead emphasizes putting into place strong executives whose interests are aligned with those of the shareholder.
Investment Strategy Carl Icahn strives to be the catalyst for change in companies that trade at discounts to their inherent value in the Graham & Dodd tradition. Icahn does not restrict his investments geographically, but non-U.S. investments typically compose no greater than 20% of his investment portfolio. Icahn’s investments over time have been relatively balanced in terms of sector and market capitalizations, but industrial goods and micro-cap and nano-cap companies have made up a small portion of his investments. Icahn maintains a relatively concentrated investment portfolio, with 3–5 core positions representing about 50%–75% of the portfolio. Icahn is not averse to using leverage in the acquisition of a company’s shares and may hedge his positions at times if he is concerned about the specific industry or overall market conditions. Icahn typically holds equity positions for 2–3 years and credit positions for three years, although these holding periods are subject to variation given his investments are dealt with on an individual basis. Icahn will exit an investment once the company’s stock reaches what is deemed to be fair value. Exit strategies may include go-private transactions, selling into a tender offer, block trades or the sale of shares on the open market.
Market Capitalization — All Investments
Sector Focus — All Investments Industrial Goods Utilities 1% 1% Healthcare Technology 18% 20%
Financial 12%
Nano Cap 14% Large Cap 28%
Micro Cap 1%
Services 20%
Small Cap 22%
Consumer Goods 13%
Mid Cap 35%
Basic Materials Note: May not add due to rounding. 14% Source: Activist Insight. Campaign History (Number of Actions/Proposals)
Source: Activist Insight. Returnsb
Carl Icahn’s campaigns have varied from seeking board representation to advocating for a sale of the company or the enactment of simple operational efficiencies, such as cost cutting. Through Aug. 30, 2016, Carl Icahn has made seven actions/proposals related to three companies, including American International Group, Inc., Xerox Corp. and Herc Holdings, Inc. (previously Hertz Holdings, Inc.). Mr. Icahn has successfully gained board representation on each of these firms.
Investment Type No. of Investments Outperforming S&P No. of Investments Underperforming S&P
All
Current
Exited
17 31
2 15
15 16
Comparative Returnsa
Campaign History (No. ) 25 20 15 10 5 0
(%)
Average Annualized Return
Average Return
S&P 500 Exited Investments Current Investments All Investments 2010
2011
2012
2013
2014
2015
YTD 2016
Source: Activist Insight. Top 10 Ownership Positionsb Company Federal-Mogul Holding Corp. CVR Energy Viskase Companies Inc. Tropicana Entertainment Inc. Cadus Corp. American Railcar Industries, Inc. Voltari Corp. Hertz Global Holdings Inc. Herbalife Navistar International Corp.
(10) of Jan. 20, 2017. Source: Activist Insight.
0
10
20
30
40
50
aAs
% Ownership 82.0 81.9 71.4 68.8 67.8 61.3 52.7 35.3 24.2 19.9
Date Notified 1/08 1/12 N.A. 3/10 4/02 1/06 2/11 5/16 1/13 10/11
Price When Notified ($) 23.6 23.1 N.A. N.A. 1.2 29.9 170.5 N.A. 43.5 38.7
Date Notified
Exit Date
% Return
10/12 5/10 6/11
6/15 9/13 7/14
1,028.8 274.7 137.9
12/04 1/08 1/07
4/10 10/09 10/08
(98.0) (97.7) (96.1)
Proposal Summary Restructure Debt Buyout/Sell Co./Board Seat N.A. Board Seats/Operational N.A. N.A. N.A. N.A. Board Seats Board Seats/Cost Cutting
Outcome Successful Mixed N.A. Successful N.A. N.A. N.A. N.A. Successful Mixed
Proposal
Exit Method
Sale of Company Board Seats Removal of CEO/Board Seats
Sold Shares Sold Shares Merger
N.A. N.A. N.A.
N.A. N.A. N.A.
Exited Investmentsb Company Top Performing Netflix Inc. Hain Celestial Group Inc. Forest Laboratories Worst Performing Blockbuster LLC Guaranty Financial Group Inc. Telik Inc.
a As of Sept. 30, 2016. bAs of Jan. 20, 2017. N.A – Not applicable. Source: Activist Insight, Fitch Ratings.
Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
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Corporates Corvex Management LP Assets Manageda: $12.6 Billion Investments (Jan. 20, 2017): 5
Keith A. Meister — Founder, Managing Partner Overview
Corvex Management LP (Corvex) is a U.S.-based hedge fund that uses a combined approach of fundamental credit and market analysis with event-driven decisions. Corvex was founded in 2011 by Keith A. Meister, who was previously the CEO of Icahn Enterprises from 2006 to 2010. The firm’s approach is both friendly and confrontational. The average holding period for investments is 1.1 years. Corvex has two funds named Corvex Master Fund LP and Corvex Offshore II Ltd. Corvex Master Fund has approximately $1 billion of assets and has a global focus. The fund is domiciled in the Cayman Islands and has a minimum investment requirement of $5 million.
Investment Strategy Corvex’s investment strategy uses a fundamental and event-driven process based on business fundamentals, credit, and market and structure analysis. The firm works with portfolio companies to create value and investment returns. Corvex generates proprietary internal financial analysis of target companies when making investment decisions. Analyses are derived from annual reports, prospectuses, public filings, inspections of corporate activities, conversations with the firm, industry and market experts, financial publications and other sources. Corvex also utilizes research materials prepared by others in making an investment decision. It uses a team approach in developing views and an understanding of market expectations for a specific situation. Corvex often seeks board representation and pushes for share repurchases at the companies for which it invests.
Sector Focus — All Investments
Market Capitalization — All Investments Technology 20%
Financials 27%
Large Cap 40% Basic Materials 7%
Mid Cap 60% Services 40%
Consumer Goods 6%
Source: Activist Insight. Campaign History (Number of Actions/Proposals)
Source: Activist Insight. Returnsb Investment Type
Corvex was decreasingly active at launching campaigns up until 2016. Since 2012, over 40% of the investor’s campaigns have been board related, roughly 25% M&A related, about 20% related to capital allocation and approximately 15% related to business strategy demands. The manager’s success rate for its public actions against companies has been above average at over 70%. Examples of past campaigns for which the manager was successful include Yum! Brands, Inc. and Ralcorp Holdings, where it pushed for a sale/spin of business and/or board seats. Current campaigns include those against Williams Companies, Inc. and Time Warner Inc.
No. of Investments Outperforming S&P No. of Investments Underperforming S&P
Campaign History
Comparative Returnsa
(No.) 8
(%)
All 6 7
Current 2 3
Average Annualized Return
Exited 4 4
Average Return
S&P 500 Exited Investments Current Investments All Investments
6 4 2 0 2012
2013
2014
2015
2016
Source: Activist Insight. Top 10 Ownership Positionsb Company Yum Brands Inc. Pandora Media Inc. Signet Jewelers Limited Fidelity National Financial Williams Companies
0 of Jan. 20, 2017. Source: Activist Insight. aAs
% Ownership 5.4 5.0 5.0 3.2 2.5
Date Notified 5/15 5/16 1/14 10/13 12/13
Price When Notified ($) 65.4 10.0 74.5 23.2 35.3
Date Notified
Exit Date
% Return
4/12 12/11 8/12
5/13 7/12 1/13
62.8 38.1 28.9
12/12 2/14 2/13
2/14 2/16 5/16
(28.4) 4.9 16.0
5
10
15
20
25
Proposal Summary Multiple Sale of Company N.A. Growth Strategies Board Seats
Outcome Successful Ongoing N.A. Successful Successful
Proposal
Exit Method
Business Restructuring Board Seats Multiple Activist
Sold Shares Acquired Acquired
Multiple Activist Spin/Sale of Business Multiple
Sold Shares Sold Shares Sold Shares
30
Exited Investmentsb Company Top Performing Corrections Corp. of America Abovenet Inc. Ralcorp Holdings Worst Performing ADT Corporation Time Warner Inc. Equity Commonwealth
a As of April 11, 2016. All returns exclude dividends. bAs of Jan. 20, 2017. Return information not available for all investments N.A. – Not applicable. Source: Activist Insight, Fitch Ratings.
Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
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Corporates CtW Investment Group Assets Manageda: $250 Billion Investments (Jan. 20, 2017): 25
William Patterson and Dieter Waizenegger — Executive Directors Overview
The CtW Investment Group, founded in 2006, works with pension funds sponsored by unions affiliated with Change to Win to enhance long-term shareholder returns through active ownership. Members of CtW affiliates participate in Taft-Hartley plans with over $200 billion in assets. The CtW Investment Group responds to challenges related to the long-term health of pension plans and conflicts of interest on Wall Street, and in the boardroom by organizing workers’ capital into an effective voice for corporate accountability and retirement security. The investment manager’s approach is typically confrontational. The CtW Investment Group is not named fiduciary for any pension or other fund or plan, nor does it render investment advice.
Investment Strategy CtW works with pension funds sponsored by Change to Win affiliates and public pension funds in which members of CtW affiliates participate, and other funds and interested groups on active ownership programs aiming to ensure independent and accountable directors, reasonable executive compensation, and sound environmental, human resource and other business policies. The CtW Investment Group’s campaigns are entirely focused within the U.S., half of which target large market-cap companies above $10 billion. The majority of campaigns are concentrated in the service sector. CtW has sought changes in executives’ remuneration on a number of occasions, and is also looking to make changes to companies’ boards, such as removing board members and pushing for board independence.
Market Capitalization — All Investments
Sector Focus — All Investments Conglomerates 3%
Utilities 3%
Small Cap 4%
Technology 14%
Financials 17%
Nano Cap 3%
Mid Cap 31%
Consumer Goods 7%
Large Cap 62%
Services 52%
Basic Materials 4%
Source: Activist Insight. Returnsb
Source: Activist Insight. Campaign History (Number of Actions/Proposals) CtW has become more active with campaigns against companies over the past couple of years. The majority of these campaigns were to remove CEOs or other board members, or related to executive renumeration. Current ongoing campaigns include those with Tesla Motors (board composition and separate CEO/Chairman position); Nabors Industries Ltd. (remove CEO or other board member); and McDonald’s Corp.’s largest franchisee, Arcos Dorados Holdings, Inc. (remove CEO or other board member).
Investment Type All Current 10 10 7 7
No. of Investments Outperforming S&P No. of Investments Underperforming S&P
Exited 0 0
Comparative Returnsa
Campaign History
Average Annualized Return
(No.) 15
Average Return
S&P 500 Exited Investments Current Investments All Investments
10 5 0
(100) 2010
2011
2012
2013
2014
2015
2016
Source: Activist Insight. Top Ownership Positionsb Company McKesson Corp. Oracle Corporation Wells Fargo Yahoo! Inc. Chipotle Mexican Grill Inc. JP Morgan Chase & Co. Tesla Motors
(80)
(60)
(40)
(20)
0
20
40
60
aAs
of Jan. 20, 2017. Source: Activist Insight.
% Ownership 0.5 0.3 0.3 0.2 0.2 0.2 0.1
Date Notified 7/13 9/13 N.A. 2/14 4/14 4/13 N.A.
Price When Notified ($) 116.2 33.9 N.A. 35.5 N.A. 47.9 N.A.
Date Notified 4/14 12/13 4/14
Exit Date 12/14 12/14 4/14
% Return 37.9 35.8 (4.9)
Proposal Summary Board Seats, Renumeration Board Changes, Renumeration Renumeration, Board Changes Renumeration Multiple Remove CEO/Board Member Board Changes
Outcome Successful Mixed Ongoing Unsuccessful Ongoing Successful Ongoing
Proposal Board Related Board Changes, Amend Bylaws Block Merger
Exit Method Merger Merger Taken Private
Exited Investments Company Burger King Worldwide, Inc. Walgreens Co. KKR Financial Holdings
a As of May 2013. bJan. 30, 2017. Return information not available for all investments N.A. – Not available or not applicable. Note: All returns exclude dividends. Source: Activist Insight.
Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
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Corporates Elliott Management Assets Manageda: $45.2 Billion Investments (Jan. 20, 2017): 45
Jon Pollock and Gordon Singer — Co-Chief Investment Officers Overview
Elliott Management is a hedge fund manager that takes an activist approach to investing. The firm was founded in 1977 by Paul Singer and is headquartered in New York. The firm’s approach is both friendly and confrontational. The firm’s average holding period for investments is 1.6 years. Elliott has three funds, including the Elliott International Ltd., Liverpool Limited Partnership and Elliott Associates L.P. Elliott International Ltd. has approximately $18.8 billion of assets and has a global focus. The fund has the principal objective of generating a return that is as high as is consistent with a goal of minimizing losses during adverse financial market periods. The fund was formed in 1994 for offshore and U.S. tax-exempt investors. Liverpool Limited Partnership is a Bermuda-domiciled fund that was formed in 1989 and is managed by Elliott Associates. Elliott Associates L.P. has roughly $11 billion of under management and was launched in 1977. The fund’s strategies are contrarian, opportunistic and based on bottom-up fundamental research. A significant portion of the firm’s positions include activist or control activities that involve complex situations.
Investment Strategy Elliott is a multistrategy firm active in debt, equities, commodities, currencies and various other asset classes across a range of industries. The firm sees investing in the technology sector as one of its most effective areas, where it is keen to develop strategies to streamline operations, grow revenue and create value. Elliott Associates is the fund Elliott uses to handle and manage activist investments. Elliott has launched campaigns with stakes of over $1 billion in companies and is known for its preference for privacy within investments. Elliott will identify and pursue situations in which value can be created though an activist approach. When actively engaging in a company, Elliott is known for seeking board seats to secure influence and exercising its voting power. In distressed investing, this means serving at times on official or unofficial creditors’ committees. In closed-end fund trading, it means encouraging or attempting to force fund managers to take steps to narrow the discounts at which the funds trade. In event arbitrage, it could mean taking steps to attempt to influence the outcome or structure of a transaction, including by direct approaches to the issuer or principals. Elliott is known for taking advantage of convertible arbitrage, the technique of exploiting the price difference between convertible debt and share prices. Elliott is known for launching large and aggressive campaigns and a legalistic approach to activist investing.
Sector Focus — All Investments Industrial Goods 10%
Market Capitalization — All Investments
Utilities 2% Micro Cap 7%
Technology 32%
Healthcare 10%
Mid Cap 41%
Source: Activist Insight. Returnsb
Elliott has been increasingly active at launching campaigns. About 47% have been M&A related, 25% board related, 12% business strategy, 11% capital allocation related and 5% other, such as the removal of management. The manager’s success rate has been notably high. Examples of past campaigns for which the manager was successful include Interpublic Group of Companies, Inc. (IPG) and Hess, where it gained board seats and pushed for a sale/spin of a business. Elliott is currently pushing for a sale of IPG.
Investment Type All 34 39
No. of Investments Outperforming S&P No. of Investments Underperforming S&P
Current 15 19
Exited 19 20
Comparative Returnsa
Campaign History (No.) 40 30 20 10 0 2011
Large Cap 19%
Small Cap 29%
Financials 13% Consumer Goods 4% Services Basic Materials 17% 12% Source: Activist Insight. Campaign History (Number of Actions/Proposals)
2010
Nano Cap 4%
2012
2013
2014
2015
2016
Source: Activist Insight. Top 10 Ownership Positionsb Company Avnel Gold Mining Limited Avocet Mining PLC Immobiliare Dinamico Alpha Immobiliare Fund Ansaldo STS SLM Solutions Group B. Riley Financial, Inc. Alliance Trust Polis Fondi Immobiliari DMG Mori Seiki AG
(%) S&P 500 Exited Investments Current Investments All Investments
Average Annualized Return
Average Return
0 of Jan. 20, 2017. Source: Activist Insight.
5
25
10
15
20
30
35
aAs
% Ownership 70.9 27.7 24.8 24.8 21.9 20.0 19.6 19.2 16.1 15.1
Date Notified 7/14 3/11 8/16 8/16 1/16 9/16 8/09 11/12 6/16 1/15
Price When Notified ($) N.A. 24.4 75.8 1,272.0 9.9 42.1 N.A. 3.7 1,050.0 28.5
Date Notified
Exit Date
% Return
4/06 11/10 8/12
8/11 11/14 1/14
11/10 2/11 8/11
12/12 5/11 11/12
Proposal Summary None Business Strategy None None Board Seats, Oppose Takeover Terms Multiple None Board Seats None None
Outcome N.A. Ongoing N.A. N.A. Partially Successful Successful/Ongoing N.A. Compromise N.A. N.A.
Proposal
Exit Method
133.9 126.2 70.0
Multiple Activist Business Restructuring Multiple Activist
Sold Shares Sold Shares Acquired
(89.2) (80.0) (74.1)
None Oppose Takeover Terms None
Acquired Acquired Acquired
Exited Investments Company Top Performing Endologix Inc. Iron Mountain Incorporated Invensys PLC Worst Performing Torquay Oil Corp. Danisco Flagstone Reinsurance Holdings, S.A. a
As of Jan. 15, 2016. bAs of Jan. 30, 2017. Return information not available for all investments N.A. – Not available or not applicable. Note: All returns exclude dividends. Source: Activist Insight, Fitch Ratings.
Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
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Corporates GAMCO Investors Assets Managed: $ 39.6 Billiona Investments (Jan. 20, 2017): 41
Mario Gabelli — CEO and CIO Overview
GAMCO Investors (GAMCO) is an asset-management company that was founded in 1976 by Mario Gabelli. The company started as an institutional research firm and has kept its research roots, demonstrated through fundamental bottom-up research and a consistent process. GAMCO primarily operates through its subsidiary GAMCO Asset Management Inc., which manages separate accounts for various investors and manages a family of mutual funds. The company has 19 funds with multiple investment strategies that invest in various asset classes throughout the world.
Investment Strategy GAMCO utilizes a research-driven and value-oriented style to investing, modeled after famous investors Benjamin Graham and David Dodd. Their style is to invest in undervalued companies that have a high probability of achieving intrinsic value over time, usually done using a bottom-up approach to security selection. The firm’s policy is to fully understand a company, its business model and prospects for development before investing in the security. The goal is to identify a potential catalyst that will unlock value. The firm’s average holding period is 2.9 years. GAMCO is focus is on sectors it knows best, such as Technology, Industrials and Services. Once invested in a company, GAMCO will often meet with management to understand the allocation of cash flow, and to convey ideas about the enhancement of corporate governance. GAMCO is often an activist, particularly in respect to corporate governance issues, such as poison pills. The company is also against supermajority voting rights and is typically supportive of other activists.
Market Capitalization — All Investments
Sector Focus — All Investments Financials 4%
Utilities 4%
Nano Cap 7%
Conglomerates 1%
Basic Materials 5%
Technology 20%
Mid Cap 16%
Consumer Goods 20%
Micro Cap 34%
Healthcare 1% Industrials 16%
Services 29%
Small Cap 35% Source: Activist Insight. Returnsb
Source: Activist Insight. Campaign History (Number of Actions/Proposals)
Investment Type
The number of campaigns launched by GAMCO peaked in 2014. Nearly 50% of GAMCO’s campaigns have been board related, while the remaining were related to M&A, capital allocation, business strategy or other demands, such as amending bylaws or amending/redeeming a poison pill. The manager’s success rate for public actions has been below average. Examples of past campaigns for which the manager was successful include Myers Industries, Inc. and The Eastern Company, where it gained board seats. Recent unsuccessful campaigns include Telephone & Data Systems Inc. and Journal Media Group.
No. of Investments Outperforming S&P No. of Investments Underperforming S&P
Campaign History
Comparative Returnsa
(No.) 15 10 5 0
0 2011
2012
2013
2014
2015
2016
Source: Activist Insight. Top 10 Ownership Positionsb Company Trans Lux Corp. Bel Fuse Inc. Griffin Industrial Realty Myers Industries Inc. Edgewater Technology Inc. The Eastern Company Tredegar Corp. Ferro Corp. Ampco Pittsburgh Corp. Sevcon, Inc.
10
20
30
Current 3 19
Exited 11 11
Average Return
40
50
60
aAs
of Jan. 20, 2017. Source: Activist Insight.
Date Notified 5/92 6/07 7/97 10/06 3/01 2/15 11/07 5/98 8/88 7/05
Price When Notified ($) 112.8 N.A. N.A. 15.3 N.A. 20.4 N.A. 20.6 N.A. N.A.
Date Notified
Exit Date
% Return
11/98 12/01 6/08
6/16 6/13 12/10
12/08 5/13 3/07
3/11 10/15 9/13
% Ownership 37.7 23.2 20.5 16.9 16.9 16.6 14.4 14.1 13.1 13.1
All 14 30
Average Annualized Return
(%) S&P 500 Exited Investments Current Investments All Investments 2010
Large Cap 8%
Proposal Summary None Oppose Merging of Shares Multiple Board Seats Board Seats Board Seats Poison Pill Amendment None Board Seats Board Seats
Outcome N.A. Ongoing Unsuccessful Successful Withdrew Successful Successful N.A. Successful Successful
Proposal
Exit Method
282.2 200.1 181.4
None None None
Acquired Acquired Acquired
(89.1) (57.3) (55.8)
Board Seats None None
Delisted Acquired Acquired
Exited Investmentsb Company Top Performing SL Industries Inc. CH Energy Group Inc. Hawk Corp. Worst Performing All American Group Blyth Inc. Intermec, Inc.
a As of Sept. 30, 2016, GAMCO Investors (gabelli.com). bAs of Jan. 20, 2017. All returns exclude dividends. Return information not available for all investments. N.A – Not applicable. Source: Activist Insight, Fitch Ratings.
Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
44
Corporates JANA Partners LLC Assets Manageda: $11.6 Billion Investments (Jan. 20, 2017): 11
Barry Rosenstein — Managing Partner Overview
JANA Partners LLC is an investment manager specializing in event-driven investing founded in 2001 by Barry Rosenstein, JANA’s managing partner and co-portfolio manager. JANA typically applies a fundamental value discipline to identify undervalued companies that have one or more specific catalysts to unlock value. In certain cases, JANA can be the instrument for value creation by becoming an actively engaged shareholder. JANA invests both long and short, and across the capital structure, including equity and debt. JANA manages approximately $11 billion in investments and commitments, and is located in New York.
Investment Strategy JANA primarily employs a long/short value plus catalyst strategy to identify attractive investment opportunities over the full cycle of market and economic conditions. The firm primarily seeks investments that can be made at discounts to its estimates of intrinsic value, as determined by fundamental analysis, and where there are one or more identifiable catalysts. JANA prefers to invest in firms that do not have substantial institutional ownership. Its positions are concentrated, with up to 75% of its capital spent in its portfolio’s top 20 positions, and its approach is confrontational. JANA tends to invest in mispriced basic industry companies going through transitional phases. Its targets will have recurrent cash flow characteristics that are inexpensive compared with after-tax FCF, where there is a margin of safety at the level invested in. It will identify companies where the sell side is generally negative. JANA will go about its work quickly to make the most of the delay between an event and the stock price reflecting this change. The firm tends not to take short-term or extremely long-term positions in its portfolio companies, instead choosing a period that demonstrates the risk/reward can be high, if it sticks to its original value plus catalyst discipline. Activism is seen as a tool among many, and one that JANA will use when needed in particular investments.
Sector Focus — All Investments Healthcare 5%
Market Capitalization — All Investments
Basic Materials 22%
Small Cap 14%
Industrial Goods 5%
Large Cap 43%
Consumer Goods 6% Financial 5%
Services 35% Mid Cap 43%
Technology 22%
Source: Activist Insight. Returnsb
Source: Activist Insight. Campaign History (Number of Actions/Proposals) JANA’s campaigns have generally been related to board representation, sale or spinoff of a business division, and/or share repurchases. While Jana has few active investments, the firm became increasingly active in 2014. Through Aug. 30, 2016, campaigns have been against Harris Corporation (board seats) and TeamHealth Holdings, Inc. (board seats).
Investment Type All Current 15 5 16 5
No. of Investments Outperforming S&P No. of Investments Underperforming S&P
Exited 10 11
Comparative Returnsa
Campaign Action History (No.) 20
(%)
Average Annualized Return
Average Return
S&P 500 Exited Investments Current Investments All Investments
15 10 5 0 2010
2011
2012
2013
2014
2015
2016
Source: Activist Insight. Top 10 Ownership Positionsb Company TeamHoldings, Inc. Time Inc. ConAgra Brands, Inc. HD Supply Holdings Inc. PostNL TNT Express Computer Sciences Corporation Harris Corporation Marathon Petroleum
0 of Jan. 20, 2017. Source: Activist Insight.
10
20
30
40
50
aAs
% Ownership 7.9 5.0 5.0 4.9 4.8 4.5 3.4 2.0 0.8
Date Notified 2/16 5/16 6/15 10/15 12/09 5/11 2/15 8/16 11/11
Price When Notified ($) 44.5 14.0 39.1 32.9 N.A. N.A. 30.2 88.0 18.0
Date Notified
Exit Date
% Return
11/11 7/08 9/13
2/13 11/14 3/14
6/14 11/14 10/13
12/14 2/16 10/14
Proposal Summary Board Seats Acquisition Board Seats N.A. N.A. Sale of Company/Board Seats Business Focus Board Seats Spinoff of Division/Share Repurchases
Outcome Successful Ongoing Successful N.A. N.A. Mixed Successful Successful Successful
Proposal
Exit Method
119.7 66.0 44.2
N.A. Spinoff/Sale Business Division Spinoff/Share Repurchase
Sold Shares Sold Shares Taken Private
(81) (30.8) (29.6)
Board Seats Multiple Board Seats/Spinoff
Sold Shares Sold Shares Sold Shares
Exited Investments Company Top Performing Netflix Inc. Convergys Safeway Inc. Worst Performing Civeo Corp. Qualcomm QEP Resources, Inc. a
As of March 30, 2016. bAs of Jan. 20, 2017. Return information not available for all investments N.A. – Not applicable. Note: All returns exclude dividends. Source: Activist Insight.
Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
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Corporates Pershing Square Capital Management Assets Manageda: $12.6 Billion Investments (Jan. 20, 2017): 13
Bill Ackman — Founder and Portfolio Manager Overview
Pershing Square Capital Management is a New York-based activist hedge fund manager, founded by Bill Ackman in 2004. Pershing seeks to buy stock not only at a discount to its intrinsic value should the business be run more effectively, but also at a discount to the intrinsic value of the business in its existing condition. Pershing utilizes many approaches, which may include a partnership with an undisclosed company to push for a takeover similar to what played out with Allergan, Inc., Pershing only invests in companies in which it is pursuing an activist campaign or building an initial toe-hold position. Some cash is maintained to meet redemptions in open-end funds, but the majority of assets are composed of activist stakes. Pershing has created six funds, sometimes to solely invest in a corporation. Current funds include Pershing Square Holdings, Ltd., Pershing Square I, Pershing Square II and Pershing Square International. Pershing Square I and Pershing Square II are deep-value hedge funds launched in 2004 and 2005, respectively, which seek to identify stocks that exhibit significant value discrepancies between their trading price and intrinsic business value. The research process is bottom-up and highly intensive. Pershing Square International is similar in nature and was started in 2005.
Investment Strategy The firm focuses its investments predominately in larger, high-quality businesses based in North America. With regards to target sectors, Pershing’s holdings vary across sectors. While Pershing is comfortable making investments in a wide range of industries and asset classes, it prefers investments in simple businesses or assets that generate cash flow streams that can be estimated within a reasonable range over the long term. When taking an activist position, Pershing has been known to invest heavily in concentrated public stakes, adopting both long and short stances. Pershing seeks to be a catalyst to realize value from an investment by taking an active role in effecting corporate change, either working alone or with other investors. These activist techniques may include working with management or other more aggressive steps, such as acquiring substantial public stakes in issuers, proposing a restructuring, recapitalization, sale, engaging in proxy contests and changing management. Pershing will short when it believes a firm has regulatory, accounting or legal issues, and not on valuation, as in the case of Herbalife International.
Sector Focus — Current Investments
Market Capitalization — Current Investments Nano Cap 5%
Services 31%
Financials 40%
Small Cap 21% Large Cap 47%
Conglomerates 3%
Basic Materials 3% Consumer Goods 9%
Mid Cap 27%
Healthcare 14%
Source: Activist Insight. Campaign History (Number of Actions/Proposals)
Source: Activist Insight. Returnsb
Pershing’s campaign approach is typically confrontational, as the firm pushed its targeted company to merge with a third party three times in 2014. Pershing’s campaigns have ranged from gaining board seats, increasing dividends and removing CEO/board members, to advocating a sale to a third party. While Pershing may not achieve success with its targeted campaign, if the business either improves on its own or gets sold, it views its efforts positively. With Allergan, Pershing netted a profit of more than $2.5 billion.
Investment Type All Current
(No.) 12 10 8 6 4 2 0
(%) S&P 500 Exited Investments Current Investments All Investments (10) 2011
Exited
4 6
9 8
Comparative Returnsa
Campaign History
2010
13 14
No. of Investments Outperforming S&P No. of Investments Underperforming S&P
2012
2013
2014
2015
2016
Source: Activist Insight. Top 10 Ownership Positionsb Company NoMad Foods Platform Specialty Products Federal National Mortgage Association Chipotle Mexican Grill Inc. FHLM Corp. Howard Hughes Corp. Valeant Pharmaceuticals Air Products & Chemicals, Inc. Mondelez International, Inc.
Average Annualized Return
0
10
20
Average Return
30
40
50
aAs
of Jan. 20, 2017. Note: All returns exclude dividends. Source: Activist Insight.
% Ownership 21.7 14.5 10.0 10.0 9.8 9.0 7.8 1.9 1.5
Date Notified 6/15 5/13 11/13 9/16 11/13 11/10 3/15 7/13 11/12
Price When Notified ($) 12.1 N.A. 3.3 414.1 3.1 42.2 197.0 108.6 46.3
Date Notified
Exit Date
% Return
8/12 10/11 10/10
12/14 8/16 4/14
10/07 10/09 10/10
2/11 10/10 8/13
Proposal Summary Push for Acquisition Board Seats Dividend Board Seats Dividend N.A. Board Seats, Push for Acquisition Proxy, Board, CEO Cost Cutting
Outcome Successful Successful Unsuccessful Successful Unsuccessful N.A. Successful Successful Successful
Proposal
Exit Method
463.8 137.4 76.7
N.A. Multiple Proposals N.A.
Merger Sold Shares Acquired
(98.7) (58.5) (57.5)
N.A. Dividend Cut Multiple Proposals
Bankruptcy N.A. Sold Shares
Exited Investments Company Top Performing Burger King Worldwide Inc. Canadian Pacific Railway Beam Inc. Worst Performing Borders Group Inc. Realty Income Corporation J. C. Penney Company, Inc. a
As of March 30, 2016. bAs of Jan. 20, 2017. Return information not available for all investments. N.A. – Not available or not applicable. Note: All returns exclude dividends. Source: Activist Insight.
Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
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Corporates Relational Investors Assets Manageda: $6.3 Billion Investments (Jan. 20, 2017): 1
David Batchelder — Founder, Principal and Investment Committee Member Overview
Relational Investors is a San Diego-based, privately owned asset-management firm founded in 1996. Relational invests in and strives to create long-term growth in publicly traded, underperforming companies it believes are undervalued in the marketplace. Relational implements its investment strategy across two separate portfolios, a large-cap portfolio and a mid-cap portfolio. Each portfolio typically consists of 10–14 investments in equity securities at any given time. A full investment requires around 8%–10% of the fund’s capital. Relational has no fixed guidelines for diversification of investments among companies or industries.
Investment Strategy Relational employs an active approach to share ownership, acquiring a significant percentage of a company’s outstanding shares through open-market purchases, building up to this amount in three or four stages based on its confidence of the company’s valuation. A full investment requires around 8%–10% of the fund’s capital. Once invested, Relational aims to communicate early and often. The firm focuses its initiatives on business strategy, capital allocation, capital structure, corporate governance, executive compensation and corporate communication. Relational typically looks for companies underperforming against both its peers and its own history, and then identifies the situations in which the cause for the underperformance is a concern of the market. Firms targeted typically exhibit poor corporate governance. In cases of persistent underperformance or where factors warrant (e.g. nonresponsive management or board), Relational employs certain strategies, such as talking to the press, sponsoring shareholder proposals or seeking board representation. These circumstances typically arise when the firm has exhausted other less-intrusive measures. Relational aims to avoid proxy contests.
Market Capitalization — All Investments
Sector Focus — All Investments Financials 14%
Utilities 2%
Technology 11%
Nano Cap 2% Small Cap 18%
Services 14%
Basic Materials 16%
Large Cap 46% Industrial Goods 21%
Consumer Goods 9%
Mid Cap 34%
Healthcare 13%
Source: Activist Insights. Returnsb
Source: Activist Insight. Campaign History (Number of Actions/Proposals)
Investment Type
Relational has not initiated any new campaigns for 2015 and 2016, but previous campaigns have been mostly successful and over the past 2–3 years included the following. In 2014, against Manitowoc, Inc. (spinoff/sale business and share repurchases), B/E Aerospace (focus on growth strategies) and SPX Corp. (board representation). In 2013, against Hewlett Packard (change board composition), Illinois Tool Works (sale to third party and share repurchases), and PMC-Sierra Inc. (board representation).
No. of Investments Outperforming S&P No. of Investments Underperforming S&P
Campaign History
Comparative Returnsa (%)
(No.) 8 6 4 2 0
All 24 22
Current 1 0
Average Annualized Return
Exited 23 22
Average Return
S&P 500 Exited Investments Current Investments All Investments 2010
2011
2012
2013
2014
2015
2016
Source: Activist Insight. Top 10 Ownership Positionsb Company SPDR S&P MidCap 400
0 of Jan. 20, 2017. Source: Activist Insight.
10
20
30
40
50
aAs
% Ownership 0.1
Date Notified 8/14
Price When Notified ($) 244.9
Date Notified
Exit Date
% Return
4/09 3/03 2/09
5/14 3/11 2/12
2/14 5/05 6/11
8/15 1/09 8/11
Proposal Summary N.A.
Outcome N.A.
Proposal
Exit Method
582.3 207.7 148.5
Multiple N.A. N.A.
Sold Shares Merger Sold Shares
(88.5) (88.3) (18.9)
N.A. N.A. Spinoff/Sale of Business Division
Sold Shares Merger Sold Shares
Exited Investmentsb Company Top Performing Harman International Industries Inc. National Semiconductor Corp. Intuit Inc. Worst Performing Magnum Hunter Resources Corp. Sovereign Bancorp Inc. L 3 Communications Holdings Inc.
a As of Aug. 31, 2015. All returns exclude dividends. bAs of Jan. 20, 2017. Return information not available for all investments. N.A – Not applicable. Source: Activist Insight, Fitch Ratings.
Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
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Corporates Starboard Value Assets Manageda: $4.6 Billion Investments (Jan. 20, 2017): 20
Jeffrey Smith — Managing Member, CEO and CIO Overview
Starboard Value is a New York-based investment advisor that manages money from clients such as state government entities and pooled investment vehicles. Starboard was formed in March 2011, following a spinoff from Ramius LLC. The investment team previously founded and managed the Ramius small-cap value and opportunity platform, beginning in 2005. Starboard’s CEO Jeff Smith describes the firm’s mantra as “plan, path and value,” indicating the manner in which it assesses opportunities. Starboard has two funds; the Starboard Value and Opportunity Master Fund and Starboard Value and Opportunity S LLC, both of which were launched in 2011. Numerous pension and state-run funds invest in Starboard’s Value and Opportunity Fund, including California State Teachers’ Retirement System ($100 million), Florida State Board of Administration ($125 million), State of New Jersey Division of Investment ($75 million) and Teachers’ Retirement System of Texas ($150 million).
Investment Strategy Starboard invests in companies it feels are deeply undervalued and actively engages with management to improve operations or affect a change in ownership, corporate direction, management or corporate governance. Starboard targets companies based on certain criteria, such as relative profitability and underperforming growth initiatives, and attempts to refocus efforts on the core business, cash flow improvement and increased levels of financial discipline. Upon making an investment, Starboard will identify a maximum risk using the downside price as a benchmark. A majority of Starboard’s research time will focus on the sustainability of the company. If necessary, Starboard will engage in proxy contests with the boards of its target companies to gain board representation so its approach is both friendly and confrontational. The activist may use investment techniques such as futures, forward contracts, options, swaps, short sales and leverage to help it achieve its initial goal. Nearly 75% of Starboard’s investments are in the technology and services sectors, and more than 50% have a market capitalization of less than $2 billion. The average holding period of exited investments as of August 2015 was 1.2 years.
Sector Focus — All Investments Basic Materials 8% Technology 35%
Market Capitalization — All Investments Micro Cap 9%
Consumer Goods 11%
Nano Cap 1%
Large Cap 16%
Financial 4% Healthcare 10%
Mid Cap 25%
Industrial Goods 4%
Small Cap 49%
Services 28%
Source: Activist Insight. Campaign History (Number of Actions/Proposals)
Source: Activist Insight. Returnsb Investment Type
Starboard’s campaigns have generally been board related, where the activist seeks board representation, demands a change in board composition, seeks to separate the position of CEO and chairman, or advocates for the elimination of staggered terms. In 2013, one of the most active years in recent history, Starboard more actively pushed to return cash to directly shareholders via share repurchases and dividends. During 2013, Starboard also advocated for more recapitalizations, spinoffs, restructurings and outright sales of companies.
No. of Investments Outperforming S&P No. of Investments Underperforming S&P
Campaign History
Comparative Returnsa
(No.) 40 30 20 10 0
All 65 43
Average Annualized Return
(%)
Current 9 9
Exited 56 34
Average Return
S&P 500 Exited Investments Current Investments All Investments 2010
2011
2012
2013
2014
2015
2016
aAs
of Jan. 20, 2017. Source: Activist Insight.
Source: Activist Insight. Top 10 Ownership Positionsb Company Quantum Corporation Stewart Information Services Corporation Depomed Inc. Brink’s Co. Marvell Technology Group Perrigo Company Insperity, Inc. Advance Auto Parts, Inc. Tronc Inc. (Previously Tribune Publishing) Pinnacle Entertainment Inc.
% Ownership 10.0 9.9 9.8 9.2 6.6 6.2 4.8 3.8 2.6 2.5
Date Notified 10/12 8/16 4/16 5/15 2/16 9/16 1/15 9/15 8/16 5/15
Price When Notified ($) 1.2 46.4 15.0 30.6 9.3 95.2 36.3 170.5 15.6 N.A.
0
20
40
60
Proposal Summary Board Seats N.A. Multiple Multiple Multiple Multiple Board Seats Multiple N.A. N.A.
Outcome Mixed N.A. Mixed Mixed Mixed Mixed Compromise Mixed N.A. N.A.
Proposal
Exit Method
80
Exited Investmentsb Company Top Performing Integrated Device Technology Inc. AOL Inc. Tessera Technologies, Inc. Worst Performing LSB Industries Great Elm Capital Group, Inc. (Previously Unwired Planet) Aviat Networks Inc.
Date Notified
Exit Date
% Return
4/12 2/12 11/12
2/15 2/15 11/15
193.7 149.6 131.5
Board Seats Multiple Board Seats, Dividend, Cost Cutting
Sold Shares Sold Shares Sold Shares
11/13 5/11 7/10
11/15 8/15 8/12
(77.5) (67.1) (36.3)
Board Seats, Business Focus Board Seats Board Seats, Business Focus
Sold Shares Sold Shares Sold Shares
a
As of April 11, 2016. bAs of Jan. 20, 2017. All returns exclude dividends. Return information not available for all investments. N.A – Not applicable. Source: Activist Insight, Fitch Ratings.
Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
48
Corporates Third Point Partners Assets Manageda: $22.5 Billion Investments (Jan. 20, 2017): 43
Daniel S. Loeb — Founder and CEO Overview
Third Point Partners is listed as an investment advisor headquartered in New York. Third Point was founded in 1995 by CEO Daniel S. Loeb, who is actively involved in all investments. Daniel Loeb has three decades of experience in the financial markets, with particular emphasis on special situation equities, distressed debt and risk arbitrage. Third Point focuses on event-driven, value-oriented investing. Mr. Loeb has become known for his strong, criticizing letters to chief executives about governance and company strategy. Third Point has multiple funds, including Third Point Opportunities Master Fund (launched in 2008), Third Point Offshore Investors Ltd. (launched in 2007), Third Point Partners Qualified LP (launched in 2005), Third Point Ultra Ltd. (launched in 1997), Third Point Ultra Master Fund LP (launched in 1997), Third Point Offshore Master Fund (launched in 1996) and Third Point Partners LP (launched in 1995).
Investment Strategy Third Point employs an event-driven, value-oriented investment style that spans across a broad range of industries, geographies and asset classes. Once invested, Third Point Partners will hold discussions with boards and management to identify key processes and changes that can increase shareholder value. Third Point has taken stakes in large global companies pushing for major changes, usually in the form of spinoffs and sales of business divisions. Once invested, Third Point Partners will hold discussions with boards and management to identify key processes and changes that can increase shareholder value. Third Point will also engage in proxy contests with the boards of these companies if necessary and vote shares in annual meetings. Third Point investments are usually characterized by media coverage and open dialogue between the company and the activist. These open campaigns support a strategy of placing pressure on executives to adopt Third Point’s ideas. Third Point will also engage in proxy contests with the boards of these companies if necessary and vote shares in annual meetings.
Sector Focus — All Investments Technology 16%
Utilities 2%
Market Capitalization — All Investments Micro Cap Nano Cap 4% 3%
Basic Materials 20%
Small Cap 11%
Conglomerates 2% Consumer Goods 11%
Services 19% Industrial Goods 7%
Healthcare 12%
Large Cap 58%
Mid Cap 24%
Financial 11%
Source: Activist Insight. Returnsb
Source: Activist Insight. Campaign History (Number of Actions/Proposals) Campaign activity for Third Point peaked in 2013. Public demands were waged against nine companies, according to Activist Insight. Companies targeted included Sony Corp. (spinoff/sale of business and board representation); Yahoo!, Inc. (general cost cutting); CF Industries Holdings, Inc. (use of excess cash); Sotheby’s (remove CEO/board member, separate Chairman/CEO role, board representation and remuneration); and Nokia Corp. (use of excess cash). Outcomes were mixed.
Investment Type All 66 65
No. of Investments Outperforming S&P No. of Investments Underperforming S&P
Current 13 24
Exited 53 41
Comparative Returnsa
Campaign History (No.) 10 8 6 4 2 0
Average Annualized Return
(%)
Average Return
S&P 500 Exited Investments Current Investments All Investments 2011
2012
2013
2014
2015
2016
Source: Activist Insight. Top 10 Ownership Positionsb Company Dolphin Capital Investors Limited Green Brick Partners (Biofuel Energy Corp.) Sotheby’s Enphase Energy Baxter International Inc. Nomad Foods Technicolor SA Royal DSM Koninklijke DSM TransDigm Group Inc.
% Ownership 20.2 16.5 12.1 11.2 9.5 8.2 4.9 3.0 3.0 2.1
Date Notified 10/12 6/07 8/13 4/12 8/15 6/15 3/11 7/14 N.A. 2/16
0
10
20
30
40
50
60
70
aAs
of Jan. 20, 2017. Source: Activist Insight. Price When Notified ($) 0.3 10.3 47.2 7.0 42.1 12.1 5.1 52.1 N.A. 205.2
Proposal Summary N.A. Reverse Merger with BioFuel Multiple Board Seats Board Seats and Eliminate Staggered Board N.A. Spinoff/Sale of Business Spinoff/Sale of Business N.A. N.A.
Outcome N.A. Successful Mixed Successful Ongoing N.A. Unsuccessful Successful N.A. N.A.
Proposal
Exit Method
Sale of Business N.A. Board Seats and Removal of CEO
Sold Shares Sold Shares Sold Shares
N.A. Board Seats N.A.
Sold Shares Sold Shares Sold Shares
Exited Investmentsb Company Top Performing Entertainment Distribution Co Inc. Targa Resources Yahoo! Worst Performing MPG Office Trust TXCO Resources Inc. Clayton Williams Energy Inc.
Date Notified
Exit Date
% Return
5/07 2/16 9/11
1/08 5/16 4/14
214.8 156.4 131.7
4/08 11/07 3/05
7/09 3/09 2/16
(96.2) (95.4) (83.95)
a
As of March 28, 2016. bAs of Jan. 20, 2017. All returns exclude dividends. Return information not available for all investments. N.A – Not applicable. Source: Activist Insight, Fitch Ratings.
Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
49
Corporates Trian Fund Management, LP Assets Manageda: $13.8 Billion Investments (Jan. 20, 2017): 7
Nelson Peltz — CEO and Founding Partner Overview
Trian Fund Management, LP is a New York-based alternative investment management firm, founded in November 2005 by principals Nelson Peltz, Peter May and Edward Garden. Trian takes an activist stance to investment, seeking returns in value from companies believed to be trading at a lower price than their intrinsic values. Trian typically invests in large public companies with attractive business models that have issues with operating underperformance and/or undermanagement. Trian has developed strong partnerships being with large, institutional public equity investors that have supported its past efforts. Trian operates four funds: Trian Partners Strategic Investment Fund LP, Trian Partners Strategic Investment Fund II LP, Trian Partners LP and Trian Partners Master Fund LP. The Trian Partners Strategic Investment Fund LP and Trian Strategic Investment Fund II LP are longonly, six- to eight-year duration, private equity-style funds launched in 2010 and 2012, respectively. The Trian Partners LP and Trian Partners Master Fund LP funds were launched in 2005 and invest primarily in publicly traded equity securities. Generally, the funds do not invest in companies they believe are subject to high exogenous risk factors, including obsolescence (e.g. technology and biotechnology), commodities exposure and substantial government regulation.
Investment Strategy The investment strategy is to build a highly concentrated, long-only portfolio of 7–10 positions, held typically over a medium-term investment horizon. Trian primarily invests in mature companies of larger market capitalization between $2 billion and $20 billion, and in the consumer, services and financial sectors, as the firm believes there is a significant risk/reward benefit of investing in the mega-cap companies. A core competency of Trian is its ability to optimize the profitability of the companies in which it invests by working constructively with management and the board of directors to execute Trian’s operational and strategic initiatives. It does this by analyzing a company’s income statement and identifying opportunities that can improve business returns. Particular criteria Trian will often focus on includes revenue trends, opportunities for aggressive cost cutting and boosting earnings per share. Trian will often focus on applying those savings into more aggressive marketing, and plant and product expansion to improve top-line results. Through becoming a company’s largest shareholder, Trian aims to implement operational enhancements and believes to have earned reputational capital through successful campaigns in building and improving companies. Trian will often seek a board seat, which may encompass both a friendly and confrontational approach, on the companies in which it invests, believing this is the best way to assert its beliefs to increase the company’s overall value.
Market Capitalization — All Investments
Sector Focus — All Investments Basic Materials 8% Services 36%
Small Cap 4%
Consumer Goods 28%
Mid Cap 36% Large Cap 60%
Industrial Goods Financial 12% 16% Source: Activist Insight. Campaign History (Number of Actions/Proposals)
Source: Activist Insight. Returnsb
Trian generally seeks board representation or a change in board composition. Trian was particularly active in 2014–2015 through 14 campaigns, with Trian pushing for board representation as the primary demand six times. The confrontational campaign against DuPont was one of the few times Trian was not able to gain a board seat. Prior to DuPont, Trian had faced only one proxy battle and won. Trian has not ruled out another proxy campaign against DuPont, which is currently experiencing weaker operating performance.
Investment Type All 15 6
No. of Investments Outperforming S&P No. of Investments Underperforming S&P
Current 4 2
Exited 11 4
Comparative Returnsa
Campaign History (No.) 15
Average Annualized Return
(%)
Average Return
S&P 500 Exited Investments Current Investments All Investments
10 5 0
0 2011
2012
2013
2014
2015
2016
Source: Activist Insight. Top 10 Ownership Positionsb Company Wendy’s Co. Sysco Corp. Pentair plc Mondelez International (Formerly Kraft Foods) The Bank of New York Mellon Corp. (BNY Mellon) DuPont E I De Nemours & Co. General Electric
% Ownership 23.6 8.0 7.9 3.1 3.1 2.0 0.8
Date Notified 12/05 8/15 6/15 5/12 3/14 5/13 5/15
10
20
40
30
50
60
aAs
of Jan. 20, 2017. Note: All returns exclude dividends. Source: Activist Insight. Price When Notified ($) 14.6 41.4 68.8 38.8 35.3 52.8 27.8
Proposal Summary N.A. Multiple Objectives Multiple Objectives Multiple Objectives Board Multiple Objectives Multiple Objectives
Outcome N.A. Successful Ongoing Mixed Successful Unsuccessful Ongoing
Proposal
Exit Method
Exited Investmentsb Company Top Performing H.J. Heinz Family Dollar Stores Inc. Tiffany & Co. Worst Performing Chemours Co. GNC Holdings Inc. Legg Mason
Date Notified
Exit Date
% Return
4/06 7/10 2/07
6/13 7/15 5/16
168.9 102.0 85.8
N.A. Takeover, Merger, Board N.A.
Purchased Purchased Sold Shares
8/15 5/13 12/09
11/15 5/14 5/16
(44.5) (16.5) 12.9
N.A. N.A. Multiple
Sold Shares Sold Shares Sold Shares
a
As of March 29, 2016. bAs of Jan. 20, 2017. Return information not available for all investments. N.A – Not applicable. Source: Activist Insight, Fitch Ratings.
Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
50
Corporates ValueAct Capital Partners Assets Manageda: $17.5 Billion Investments (Jan. 20, 2017): 14
Jeffrey Ubben — Founder and Managing Partner Overview
ValueAct Capital Partners is a San Francisco-based hedge fund manager founded in June 2000 to manage the capital of its three founders, Jeffrey Ubben, George Hamel Jr. and Peter Kamin, together with that of a small number of outside investors. Today, ValueAct has a well-diversified base of clients, including endowments, foundations, high-net-worth individuals and families, corporate clients and funds-of-funds. The firm is majority owned by 11 partners and at 8% of net asset value, ValueAct’s employees are collectively one of the fund’s largest investors. ValueAct mainly takes an active approach to public market investing, combining its expertise in finding fundamentally undervalued companies with a successful record of working positively with its portfolio companies to implement value-enhancing strategies. ValueAct seeks to build constructive, long-term relationships with management teams or boards to implement positive changes to unlock shareholder value.
Investment Strategy ValueAct adopts an active, constructive involvement in fundamentally good companies it believes are undervalued. The hedge fund manager maintains a concentrated portfolio of between 10 and 20 significant shareholdings at any one time, typically making three to four new investments in a year, with a holding period averaging three years. ValueAct believes in adopting a long-term position in its investments, and chooses high-quality businesses in which to invest. The firm acquires stakes of between $50 million and $500 million in value on the open-market or through negotiated transactions. Its target companies rarely exceed $15 billion in market capitalization, but it primarily focuses on those between $1 billion and $8 billion, as the risk involved within this bracket is reduced. The hedge fund manager focuses its investments in slowly evolving industries, with a small number of primary players. In the reviewing process, ValueAct will target companies that are underperforming relative to peers in that market. Its goal is to identify earnings streams that are defensible in both good times and bad, and those that demonstrate secular growth.
Sector Focus — All Investments Utilities 1% Technology 26%
Market Capitalization — All Investments
Basic Materials 12%
Small Cap 21%
Consumer Goods 4% Financial 10%
Large Cap 32%
Healthcare 15%
Services 18%
Micro Cap 8%
Mid Cap 39%
Industrial Goods 14%
Source: Activist Insight. b Returns
Source: Activist Insight. Campaign History (Number of Actions/Proposals)
The majority of ValueAct’s campaigns have been to gain board representation, but it prefers to avoid proxy contest. The firm’s only current public action is against MSCI, Inc., where the activist is pushing for the split up of the company. ValueAct successfully gained board representation within a month of its January 2015 proposal. Past campaigns include successfully pushing for board seats at Valeant Pharmaceuticals, Inc. and Microsoft Corp.
Investment Type All 36 20
No. of Investments Outperforming S&P No. of Investments Underperforming S&P
Current 8 4
Exited 28 16
Comparative Returnsa
Campaign History (No.) 12 10 8 6 4 2 0
Average Annualized Return
(%)
Average Return
S&P 500 Exited Investments Current Investments All Investments 2010
2011
2012
2013
2014
2015
2016
Source: Activist Insight. Top 10 Ownership Positionsb Company Armstrong World Industries, Inc. Armstrong Flooring, Inc. CBRE Group Rolls-Royce Holdings Plc Trinity Industries Inc. Alliance Data Systems Corp. Baker Hughes Inc. Allison Transmission Holdings Inc. Willis Towers Watson PLC (Previously Willis Group Holdings) Valeant Pharmaceutical International
% Ownership 16.6 16.6 12.1 10.8 9.8 8.5 7.0 6.4 4.5 4.3
0
10
20
30
40
50
60
70
aAs
of Jan. 20, 2017. Source: Activist Insight.
Date Notified 8/14 4/16 12/11 7/15 7/16 7/08 11/14 8/13 9/10 9/10
Price When Notified ($) 53.0 13.5 15.3 7.9 23.2 54.5 57.0 22.3 — 26.0
Proposal Summary Board Seats Board Seats Board Seats Board Seats N.A. N.A. Multiple Board Seats Board Seats Multiple
Outcome Successful Successful Successful Successful N.A. N.A. Mixed Successful Successful Mixed
Proposal
Exit Method
Exited Investmentsb Company Top Performing Per Se Technologies Inc. Gartner Inc. Adobe Systems Incorporated Worst Performing Sealy Corp. Gevity HR Inc. Chimera Investment Corp.
Date Notified
Exit Date
% Return
12/00 4/01 12/11
1/07 11/11 5/16
738.3 441.3 241.2
N.A. Share Buybacks Board Seats and Growth Strategies
Acquired Sold Shares Sold Shares
1/08 5/06 4/08
2/09 3/09 11/08
(88.2) (85.3) (75.0)
N.A. N.A. N.A.
Sold Shares Acquired Sold Shares
a
As of April 20, 2016. bAs of Jan. 20, 2017. Returns not available for all investments. N.A – Not applicable. Source: Activist Insight, Fitch Ratings.
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Corporates Appendix A Profiled Activists — Campaign Outcomes: Nonfinancial U.S. Corporates Only Company Carl Icahn American International Group (AIG) American International Group (AIG) American International Group (AIG) American International Group (AIG) American International Group (AIG) American International Group (AIG) Amylin Pharmaceuticals Apple Inc. Apple Inc. Cheniere Energy Inc. Cheniere Energy Inc. Cheniere Energy Inc. Chesapeake Energy Corporation Chesapeake Energy Corporation CVR Energy CVR Energy CVR Energy CVR Energy CVR Refining LP Dell Inc. Dell Inc. Dell Inc. Dell Inc. Dell Inc. eBay Inc. eBay Inc. eBay Inc. Enzon Pharmaceuticals Inc. Family Dollar Stores Inc. Federal-Mogul Holdings Corp. Forest Laboratories Forest Laboratories Forest Laboratories Forest Laboratories Freeport-McMoRan Inc. Freeport-McMoRan Inc. Freeport-McMoRan Inc. Greenbrier Companies Inc. Herbalife Ltd. Herbalife Ltd. Herc Holdings Inc. (Formerly Hertz Holdings Inc.) Herc Holdings Inc. (Formerly Hertz Holdings Inc.) Herc Holdings Inc. (Formerly Hertz Holdings Inc.) Hologic Inc. Mentor Graphics Corp. Motorola Solutions Navistar International Corp. Navistar International Corp. Navistar International Corp. Navistar International Corp.
Campaign Year Action Group 2015 2016 2016 2016 2016 2016
M&A Activism Balance Sheet Activism Board-Related Activism Business Strategy Business Strategy Other Governance
2012 2013 2014 2015 2015 2015 2012 2012 2012 2012 2012 2012 2014 2013 2013 2013 2013 2013 2014 2014 2015 2012 2014 2012 2012 2012 2013 2013 2015 2015 2015 2012 2013 2014
M&A Activism Balance Sheet Activism Balance Sheet Activism Board-Related Activism Business Strategy Other Board-Related Activism Board-Related Activism Board-Related Activism M&A Activism M&A Activism M&A Activism Board-Related Activism Balance Sheet Activism Balance Sheet Activism Board-Related Activism M&A Activism M&A Activism Board-Related Activism M&A Activism Board-Related Activism Board-Related Activism M&A Activism Balance Sheet Activism Board-Related Activism Board-Related Activism Board-Related Activism Board-Related Activism Board-Related Activism Business Strategy Other M&A Activism Board-Related Activism Board-Related Activism
Action
Outcome
Push for Company Division Sell/Retain Assets Gain Board Representation Business Focus Operational Efficiency Lack Of/Inaccurate Information from Company Push for Sale of Company to Third Party Share Repurchase Share Repurchase Gain Board Representation Operational Efficiency Remuneration Gain Board Representation Removal of CEO or Other Board Member Gain Board Representation Take Over Company Take Over Company Push for Sale of Company to Third Party Gain Board Representation Share Repurchase Dividends Gain Board Representation Take Over Company Take Over Company Gain Board Representation Spinoff/Sale of Business Division Gain Board Representation Gain Board Representation Push for Sale of Company to Third Party Restructure Debt Gain Board Representation Removal of CEO or Other Board Member Removal of CEO or Other Board Member Gain Board Representation Gain Board Representation General Cost Cutting Remuneration Push for Merger of Company with Third Party Gain Board Representation Gain Board Representation
Activist’s Objectives Unsuccessful Ongoing Activist’s Objectives Successful Ongoing Ongoing Ongoing Activist’s Objectives Successful Withdrew Demands Activist’s Objectives Successful Activist’s Objectives Successful Ongoing Ongoing Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Partially Successful Withdrew Demands Activist’s Objectives Partially Successful Withdrew Demands Activist’s Objectives Successful Activist’s Objectives Unsuccessful Withdrew Demands Withdrew Board Nominations Activist’s Objectives Unsuccessful Withdrew Demands Compromise/Settlement Compromise/Settlement Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Partially Successful Activist’s Objectives Unsuccessful Activist’s Objectives Successful Compromise/Settlement Activist’s Objectives Successful Activist’s Objectives Successful Ongoing Activist’s Objectives Unsuccessful Activist’s Objectives Successful Activist’s Objectives Successful
2014 Board-Related Activism Gain Board Representation
Activist’s Objectives Successful
2014 Business Strategy
Operational Efficiency
Activist’s Objectives Successful
2016 2013 2012 2012 2012 2012 2012 2013
Gain Board Representation Gain Board Representation Redemption/Amendment of Poison Pill Share Repurchase Gain Board Representation General Cost Cutting Business Restructuring Redemption/Amendment of Poison Pill
Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Partially Successful Activist’s Objectives Successful Activist’s Objectives Partially Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Partially Successful
Board-Related Activism Board-Related Activism Other Governance Balance Sheet Activism Board-Related Activism Business Strategy Business Strategy Other Governance
Continued on next page. Source: Activist Insight.
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Corporates Profiled Activists — Campaign Outcomes: Nonfinancial U.S. Corporates Only (Continued) Company Carl Icahn (Continued) Netflix Inc. Netflix Inc. Nuance Communications, Inc. Oshkosh Corp. Oshkosh Corp. Oshkosh Corp. Oshkosh Corp. Pep Boys - Manny, Moe & Jack TEGNA Inc. (Formerly Gannett Co.) TEGNA Inc. (Formerly Gannett Co.) The Manitowoc Company Inc. The Manitowoc Company Inc. Tropicana Entertainment Inc. Tropicana Entertainment Inc. WebMD Health Corp. WebMD Health Corp. Xerox Corporation Xerox Corporation Corvex Management LP AboveNet Inc. ADT Corporation ADT Corporation Corrections Corp. of America Crown Castle International Corp. Equity Commonwealth (Formerly CommonWealth REIT) Equity Commonwealth (Formerly CommonWealth REIT) Equity Commonwealth (Formerly CommonWealth REIT) Fidelity National Financial Pandora Media Inc. Ralcorp Holdings Ralcorp Holdings Ralcorp Holdings Time Warner Inc. tw telecom Inc. VEREIT Inc. (American Realty Capital Properties) VEREIT Inc. (American Realty Capital Properties) Walgreens Co. (Walgreens Boots Alliance Inc.) Williams Companies, Inc. Williams Companies, Inc. Williams Companies, Inc. Yum Brands Inc. Yum Brands Inc. CtW Investment Group Allegiant Travel Co. Allegiant Travel Co. Bank of America Corp Chipotle Mexican Grill Inc. Chipotle Mexican Grill Inc. Chipotle Mexican Grill Inc. Chipotle Mexican Grill Inc.
Campaign Year Action Group
Action
Outcome
2012 2012 2013 2012 2012 2012 2012 2015 2014 2015 2014 2015 2014 2014 2012 2013 2016 2016
M&A Activism Other Governance Board-Related Activism Board-Related Activism Board-Related Activism M&A Activism M&A Activism M&A Activism M&A Activism Board-Related Activism Business Strategy Board-Related Activism Board-Related Activism Business Strategy Board-Related Activism Board-Related Activism Board-Related Activism Board-Related Activism
Push for Sale of Company to Third Party Redemption/Amendment of Poison Pill Gain Board Representation Gain Board Representation Removal of CEO or Other Board Member Take Over Company Spinoff/Sale of Business Division Take Over Company Push for Company Division Gain Board Representation Business Restructuring Gain Board Representation Gain Board Representation General Cost Cutting Gain Board Representation Gain Board Representation Gain Board Representation Gain Board Representation
Withdrew Demands Activist’s Objectives Unsuccessful Activist’s Objectives Successful Activist’s Objectives Unsuccessful Activist’s Objectives Unsuccessful Activist’s Objectives Unsuccessful Activist’s Objectives Unsuccessful Activist’s Objectives Successful Activist’s Objectives Successful Withdrew Board Nominations Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful
2012 2012 2012 2012 2014
Board-Related Activism Balance Sheet Activism Board-Related Activism Business Strategy Balance Sheet Activism
Gain Board Representation Share Repurchase Gain Board Representation Business Restructuring Dividends
Withdrew Board Nominations Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Partially Successful
2014 Board-Related Activism
Gain Board Representation
Activist’s Objectives Successful
2013 Board-Related Activism
Removal of CEO or Other Board Member
Activist’s Objectives Successful
2013 2013 2016 2012 2012 2012 2016 2013
Take Over Company Focus on Growth Strategies Push for Sale of Company to Third Party Gain Board Representation Spinoff/Sale of Business Division Push for Sale of Company to Third Party Spinoff/Sale of Business Division Share Repurchase
Activist’s Objectives Unsuccessful Activist’s Objectives Successful Ongoing Activist’s Objectives Successful Withdrew Demands Activist’s Objectives Successful Unresolved Activist’s Objectives Successful
2015 Balance Sheet Activism
Dividends
Activist’s Objectives Successful
2014 Board-Related Activism
Gain Board Representation
Withdrew Board Nominations
2014 2016 2016 2013 2015 2015
Business Strategy Board-Related Activism Board-Related Activism Board-Related Activism Board-Related Activism M&A Activism
Business Restructuring Gain Board Representation Removal of CEO or Other Board Member Gain Board Representation Gain Board Representation Spinoff/Sale of Business Division
Activist’s Objectives Unsuccessful Withdrew Board Nominations Activist’s Objectives Partially Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful
2016 2015 2015 2016 2016 2016 2014
Board-Related Activism Board-Related Activism Board-Related Activism Board-Related Activism Board-Related Activism Board-Related Activism Other
Board Independence Removal of CEO or Other Board Member Separate Chairman and CEO Change Board Composition Separate Chairman and CEO Board Independence Remuneration
Ongoing Activist’s Objectives Unsuccessful Activist’s Objectives Unsuccessful Ongoing Ongoing Activist’s Objectives Successful Activist’s Objectives Successful
M&A Activism Business Strategy M&A Activism Board-Related Activism M&A Activism M&A Activism M&A Activism Balance Sheet Activism
Continued on next page. Source: Activist Insight.
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Corporates Profiled Activists — Campaign Outcomes: Nonfinancial U.S. Corporates Only (Continued) Company CtW Investment Group (Continued) Discovery Communications Domino’s Pizza Inc. HP Inc. (Formerly Hewlett Packard Company) HP Inc. (Formerly Hewlett Packard Company) ITT Educational Services JP Morgan Chase & Co. McDonald’s Corp. McKesson Corp. McKesson Corp. Nabors Industries Ltd. Netflix Inc. Oracle Rite Aid Service Corp. International Skechers USA Inc. Starwood Property Trust Tesla Motors Tesla Motors T-Mobile US, Inc. Walgreens Co. (Walgreens Boots Alliance Inc.) Walgreens Co. (Walgreens Boots Alliance Inc.) Wells Fargo Wells Fargo Yahoo! Elliott Management American Capital, Ltd. American Capital, Ltd. American Capital, Ltd. Arconic Inc. (Formerly Alcoa Inc.) Arconic Inc. (Formerly Alcoa Inc.) BMC Software BMC Software BMC Software BMC Software Cabela’s Inc. Cabela’s Inc. Cabela’s Inc. CDK Global CDK Global CDK Global Citrix Systems Inc. Citrix Systems Inc. Citrix Systems Inc. Citrix Systems Inc. Citrix Systems Inc. Cognizant Technology Solutions Corporation Compuware Corp. Compuware Corp. CorMedix, Inc. CSS Industries, Inc.
Campaign Year Action Group
Action
Outcome
2016 Board-Related Activism Removal of CEO or Other Board Member 2015 Other Remuneration
Activist’s Objectives Unsuccessful Activist’s Objectives Unsuccessful
2013 Board-Related Activism Removal of CEO or Other Board Member
Activist’s Objectives Unsuccessful
2013 2015 2013 2015 2013 2013 2016 2016 2013 2015 2015 2014 2014 2016 2016 2016
Unresolved Activist’s Objectives Unsuccessful Activist’s Objectives Successful Activist’s Objectives Unsuccessful Activist’s Objectives Unsuccessful Activist’s Objectives Partially Successful Activist’s Objectives Unsuccessful Activist’s Objectives Unsuccessful Activist’s Objectives Partially Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Unsuccessful Activist’s Objectives Unsuccessful Ongoing Ongoing Ongoing
Other Governance Board-Related Activism Board-Related Activism Board-Related Activism Board-Related Activism Other Board-Related Activism Board-Related Activism Other Other Other Board-Related Activism Board-Related Activism Board-Related Activism Board-Related Activism Other Governance
Replace Auditor Removal of CEO or Other Board Member Removal of CEO or Other Board Member Change Board Composition Removal of CEO or Other Board Member Remuneration Removal of CEO or Other Board Member Removal of CEO or Other Board Member Remuneration Remuneration Remuneration Change Board Composition Removal of CEO or Other Board Member Change Board Composition Separate Chairman and CEO Lack Of/Inaccurate Information from Company
2013 Board-Related Activism Board Independence
Activist’s Objectives Successful
2013 2016 2016 2014
Other Governance Board-Related Activism Other Other
Amend Bylaw Elect Director Remuneration Remuneration
Activist’s Objectives Unsuccessful Ongoing Ongoing Activist’s Objectives Unsuccessful
2015 2015 2015 2015 2016 2012 2012 2012 2013 2015 2015 2015 2016 2016 2016 2015 2015 2015 2015 2015
Balance Sheet Activism Board-Related Activism Business Strategy M&A Activism Board-Related Activism Balance Sheet Activism Board-Related Activism M&A Activism M&A Activism Balance Sheet Activism Business Strategy M&A Activism Balance Sheet Activism Board-Related Activism Business Strategy Balance Sheet Activism Board-Related Activism Business Strategy Business Strategy M&A Activism
Sell/Retain Assets Change Board Composition General Cost Cutting Spinoff/Sale of Business Division Gain Board Representation Share Repurchase Gain Board Representation Push for Sale of Company to Third Party Push for Merger of Company with Third Party Sell/Retain Assets Operational Efficiency Push for Sale of Company to Third Party Share Repurchase Gain Board Representation Operational Efficiency Share Repurchase Gain Board Representation Operational Efficiency Replace Management Spinoff/Sale of Business Division
Activist’s Objectives Successful Activist’s Objectives Successful Ongoing Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Partially Successful Activist’s Objectives Successful Activist’s Objectives Successful Ongoing Ongoing Ongoing Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Partially Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful
2016 2012 2014 2015 2014
Balance Sheet Activism M&A Activism Board-Related Activism Business Strategy M&A Activism
Return Cash to Shareholders Take Over Company Gain Board Representation Business Focus Push for Merger of Company with Third Party
Ongoing Activist’s Objectives Unsuccessful Compromise/Settlement Ongoing Ongoing
Continued on next page. Source: Activist Insight.
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Corporates Profiled Activists — Campaign Outcomes: Nonfinancial U.S. Corporates Only (Continued) Company Elliott Management (Continued) EMC Corp. EMC Corp. EMC Corp. Emulex Corporation Emulex Corporation Emulex Corporation Emulex Corporation Emulex Corporation Family Dollar Stores Inc. Hess Hess Hess Informatica Corporation Interpublic Group of Companies, Inc. Interpublic Group of Companies, Inc. Iron Mountain Juniper Networks Inc. Juniper Networks Inc. Juniper Networks Inc. Juniper Networks Inc. Marathon Petroleum Marathon Petroleum Mentor Graphics Corp. Mentor Graphics Corp. NetApp Inc. NetApp Inc. Polycom, Inc. PulteGroup Inc. Riverbed Technology, Inc. Riverbed Technology, Inc. Riverbed Technology, Inc. GAMCO Investors Alteva Inc. (Formerly Warwick Valley Telephone Company) Ampco Pittsburgh Corp. Ascent Capital Group Ascent Capital Group Diebold Inc. Dover Motorsports Inc. Edgewater Technology Inc. Federal-Mogul Holdings Corp. Fisher Communications Fisher Communications Griffin Industrial Realty (Griffin Land & Nurseries) Griffin Industrial Realty (Griffin Land & Nurseries) Griffin Industrial Realty (Griffin Land & Nurseries) Journal Media Group Layne Christensen Materion Corp. Media General Inc. Myers Industries Inc. Myers Industries Inc. Myers Industries Inc. Myers Industries Inc. Myers Industries Inc.
Campaign Year Action Group
Action
Outcome Activist’s Objectives Successful Activist’s Objectives Unsuccessful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Unsuccessful Unresolved Activist’s Objectives Successful Compromise/Settlement Activist’s Objectives Successful Activist’s Objectives Successful Withdrew Demands Activist’s Objectives Successful Activist’s Objectives Successful Compromise/Settlement Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Ongoing Ongoing Ongoing Ongoing Activist’s Objectives Successful Activist’s Objectives Unsuccessful Activist’s Objectives Unsuccessful
2014 2014 2015 2013 2013 2013 2013 2013 2014 2013 2013 2013 2015 2014 2015 2012 2014 2014 2014 2014 2016 2016 2016 2016 2013 2013 2015
M&A Activism M&A Activism Board-Related Activism Balance Sheet Activism Board-Related Activism Board-Related Activism Business Strategy M&A Activism Board-Related Activism Board-Related Activism Board-Related Activism M&A Activism M&A Activism M&A Activism Board-Related Activism Business Strategy Balance Sheet Activism Balance Sheet Activism Board-Related Activism Business Strategy Balance Sheet Activism M&A Activism Business Strategy Business Strategy Balance Sheet Activism Board-Related Activism M&A Activism
2016 2013 2013 2014
Board-Related Activism Balance Sheet Activism Business Strategy M&A Activism
Push for Sale of Company to Third Party Spinoff/Sale of Business Division Gain Board Representation Share Repurchase Change Board Composition Gain Board Representation General Cost Cutting Oppose Acquisition of Third Party Gain Board Representation Gain Board Representation Gain Board Representation Spinoff/Sale of Business Division Push for Sale of Company to Third Party Push for Sale of Company to Third Party Gain Board Representation Business Restructuring Sell/Retain Assets Share Repurchase Change Board Composition General Cost Cutting Sell/Retain Assets Spinoff/Sale of Business Division Business Focus Operational Efficiency Return Cash to Shareholders Change Board Composition Push for Merger of Company with Third Party Gain Board Representation Recapitalization Operational Efficiency Take Over Company
2014 2014 2012 2014 2013 2014 2015 2016 2012 2013
Other Governance Board-Related Activism Other Governance Other Board-Related Activism Other Governance Board-Related Activism M&A Activism Balance Sheet Activism Board-Related Activism
Redemption/Amendment of Poison Pill Gain Board Representation Redemption/Amendment of Poison Pill Push For/Oppose Merging of Shares Gain Board Representation Redemption/Amendment of Poison Pill Gain Board Representation Oppose Terms of Merger Restructure Debt Gain Board Representation
Unresolved Activist’s Objectives Successful Activist’s Objectives Unsuccessful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Unsuccessful Withdrew Demands Ongoing Withdrew Demands Withdrew Demands
2013 Business Strategy
Business Restructuring
Activist’s Objectives Unsuccessful
2014 Balance Sheet Activism
Share Repurchase
Unresolved
2014 2016 2015 2014 2013 2013 2013 2013 2015 2016
Gain Board Representation Oppose Terms of Merger Oppose Equity Issuance Gain Board Representation Removal of CEO or Other Board Member Gain Board Representation Removal of CEO or Other Board Member Gain Board Representation Gain Board Representation Gain Board Representation
Activist’s Objectives Unsuccessful Activist’s Objectives Unsuccessful Activist’s Objectives Unsuccessful Activist’s Objectives Partially Successful Activist’s Objectives Unsuccessful Activist’s Objectives Successful Activist’s Objectives Unsuccessful Compromise/Settlement Activist’s Objectives Successful Activist’s Objectives Successful
Board-Related Activism M&A Activism Balance Sheet Activism Board-Related Activism Board-Related Activism Board-Related Activism Board-Related Activism Board-Related Activism Board-Related Activism Board-Related Activism
Activist’s Objectives Successful Activist’s Objectives Unsuccessful Activist’s Objectives Unsuccessful Activist’s Objectives Unsuccessful
Continued on next page. Source: Activist Insight.
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Corporates Profiled Activists — Campaign Outcomes: Nonfinancial U.S. Corporates Only (Continued) Company GAMCO Investors (Continued) National Fuel Gas National Fuel Gas Navistar International Corp. Pep Boys - Manny, Moe & Jack Pep Boys - Manny, Moe & Jack Ryman Hospitality Properties (Formerly Gaylord Entertainment Company) Ryman Hospitality Properties (Formerly Gaylord Entertainment Company) Sevcon, Inc. Sevcon, Inc. Starrett L S Co. Starrett L S Co. Steel Excel Inc. Superior Industries International Inc. Superior Industries International Inc. Superior Industries International Inc. Superior Industries International Inc. Superior Industries International Inc. Superior Industries International Inc. Telephone & Data Systems Inc. Telephone & Data Systems Inc. Telephone & Data Systems Inc. Telephone & Data Systems Inc. The Eastern Company Tredegar Corp. Twin Disc Inc. United States Cellular Corporation Viacom Inc. Viacom Inc. Viacom Inc. Viacom Inc. Wausau Paper Wells Fargo JANA Partners Apache Corp. Apache Corp. Apache Corp. Ashland Inc. Ashland Inc. Ashland Inc. Ashland Inc. Cameron International Corporation Cameron International Corporation Civeo Corp. Computer Sciences Corporation (CSC) Conga Brands, Inc. Conga Brands, Inc. Conga Brands, Inc. Convergys Harris Corporation Herc Holdings Inc. (Formerly Hertz Holdings Inc.) Juniper Networks Inc. Juniper Networks Inc. Juniper Networks Inc.
Campaign Year Action Group
Action
Outcome
Spinoff/Sale of Business Division Gain Board Representation Redemption/Amendment of Poison Pill Gain Board Representation Gain Board Representation
Activist’s Objectives Unsuccessful Withdrew Board Nominations Compromise/Settlement Activist’s Objectives Partially Successful Compromise/Settlement
2012 Business Strategy
REIT/MLP Conversion
Activist’s Objectives Unsuccessful
2012 2013 2015 2012 2012 2016 2012 2013 2014 2015 2016 2016 2013 2013 2014 2015 2016 2013 2012 2012 2015 2015 2016 2016 2014 2016
Other Governance Board-Related Activism Board-Related Activism Other Governance Other Governance M&A Activism Board-Related Activism Balance Sheet Activism Board-Related Activism Board-Related Activism Board-Related Activism Other Governance Board-Related Activism Board-Related Activism Other Board-Related Activism Board-Related Activism Other Governance Other Governance Business Strategy M&A Activism M&A Activism Business Strategy Business Strategy Other Governance Board-Related Activism
Redemption/Amendment of Poison Pill Gain Board Representation Gain Board Representation Redemption/Amendment of Poison Pill Redemption/Amendment of Poison Pill Oppose Takeover Terms Gain Board Representation Share Repurchase Gain Board Representation Gain Board Representation Gain Board Representation Amend Bylaw Gain Board Representation Gain Board Representation Remuneration Gain Board Representation Gain Board Representation Redemption/Amendment of Poison Pill Redemption/Amendment of Poison Pill Business Restructuring Spinoff/Sale of Business Division Spinoff/Sale of Business Division Replace Management Replace Management Redemption/Amendment of Poison Pill Elect Director
Activist’s Objectives Successful Compromise/Settlement Activist’s Objectives Successful Activist’s Objectives Unsuccessful Unresolved Activist’s Objectives Successful Activist’s Objectives Unsuccessful Withdrew Demands Activist’s Objectives Unsuccessful Activist’s Objectives Unsuccessful Activist’s Objectives Unsuccessful Ongoing Activist’s Objectives Unsuccessful Activist’s Objectives Unsuccessful Activist’s Objectives Unsuccessful Activist’s Objectives Unsuccessful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Ongoing Ongoing Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Ongoing
2014 2014 2014 2013 2013 2013 2013 2014 2014 2014
Balance Sheet Activism Business Strategy Business Strategy Board-Related Activism Business Strategy Business Strategy M&A Activism Balance Sheet Activism Balance Sheet Activism Board-Related Activism
Sell/Retain Assets Business Restructuring Focus on Growth Strategies Eliminate Staggered Board Business Restructuring Operational Efficiency Spinoff/Sale of Business Division Sell/Retain Assets Share Repurchase Gain Board Representation
Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful
2015 2015 2015 2015 2012 2016
Business Strategy Board-Related Activism Business Strategy Business Strategy M&A Activism Board-Related Activism
Business Focus Gain Board Representation Business Focus Operational Efficiency Spinoff/Sale of Business Division Gain Board Representation
Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful
2015 2014 2014 2014
Balance Sheet Activism Balance Sheet Activism Board-Related Activism Other
Share Repurchase Dividends Change Board Composition Remuneration
Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Unresolved
2014 2016 2012 2015 2015
M&A Activism Board-Related Activism Other Governance Board-Related Activism Board-Related Activism
Continued on next page. Source: Activist Insight.
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Corporates Profiled Activists — Campaign Outcomes: Nonfinancial U.S. Corporates Only (Continued) Company JANA Partners (Continued) Marathon Petroleum Marathon Petroleum Microsoft Corp. Oil States International Inc. Outerwall Inc. (Coinstar Inc.) Outerwall Inc. (Coinstar Inc.) PetSmart Inc. PetSmart Inc. QEP Resources, Inc. QEP Resources, Inc. Qualcomm Qualcomm Qualcomm Qualcomm Qualcomm Rockwood Holdings, Inc. S&P Global Inc. (Formerly McGraw-Hill) S&P Global Inc. (Formerly McGraw-Hill) Safeway Inc. Safeway Inc. Safeway Inc.
Campaign Year Action Group
TeamHealth Holdings, Inc. Time Inc. URS Corporation Walgreens Co. (Walgreens Boots Alliance Inc.) Walgreens Co. (Walgreens Boots Alliance Inc.) Pershing Square Capital Management Herbalife Ltd. Procter & Gamble J. C. Penney General Growth Properties, Inc. Platform Specialty Products (Formerly Platform Acquisition Holdings) Air Products and Chemicals Air Products and Chemicals Air Products and Chemicals J. C. Penney Platform Specialty Products (Formerly Platform Acquisition Holdings) Platform Specialty Products (Formerly Platform Acquisition Holdings) Platform Specialty Products (Formerly Platform Acquisition Holdings) Federal Home Loan Mortgage Corporation Federal National Mortgage Association Allergan Inc. (Premerger with Actavis Plc) Allergan Inc. (Premerger with Actavis Plc) Zoetis Inc. Burger King Holdings Inc.
Action
Outcome
Share Repurchase Spinoff/Sale of Business Division General Cost Cutting Business Restructuring Excess Cash General Cost Cutting Excess Cash Push for Sale of Company to Third Party Spinoff/Sale of Business Division Gain Board Representation Share Repurchase Gain Board Representation General Cost Cutting Spinoff/Sale of Business Division Remuneration Push for Sale of Company to Third Party
Activist’s Objectives Successful Activist’s Objectives Successful Unresolved Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Unsuccessful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Unsuccessful Activist’s Objectives Successful Unresolved
2012 Business Strategy
Business Restructuring
Activist’s Objectives Successful
2012 2013 2013 2013
Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful
2016 Board-Related Activism 2016 M&A Activism 2014 Board-Related Activism
Spinoff/Sale of Business Division Share Repurchase Spinoff/Sale of Business Division Lack Of/Inaccurate Information from Company Gain Board Representation Push for Acquisition of Third Party Gain Board Representation
2014 Board-Related Activism
Gain Board Representation
Activist’s Objectives Successful
2014 Business Strategy
Business Restructuring
Activist’s Objectives Unsuccessful
2012 2012 2012 2012
Other Board-Related Activism Business Strategy M&A Activism
Pyramid Scheme Removal of CEO or Other Board Member Business Restructuring Push for Sale of Company to Third Party
Ongoing Activist’s Objectives Successful Activist’s Objectives Successful Withdrew Demands
2013 2013 2013 2013 2013
Board-Related Activism Board-Related Activism Board-Related Activism Board-Related Activism Board-Related Activism
Gain Board Representation Change Board Composition Gain Board Representation Removal of CEO or Other Board Member Removal of CEO or Other Board Member
Activist’s Objectives Successful Activist’s Objectives Successful Compromise/Settlement Activist’s Objectives Successful Activist’s Objectives Unsuccessful
2013 M&A Activism
Push for Acquisition of Third Party
Activist’s Objectives Successful
2013 M&A Activism
Push for Acquisition of Third Party
Activist’s Objectives Successful
2013 M&A Activism
Push for Acquisition of Third Party
Activist’s Objectives Successful
2014 Balance Sheet Activism
Dividends
Activist’s Objectives Unsuccessful
2014 Balance Sheet Activism
Dividends
Activist’s Objectives Unsuccessful
2014 Board-Related Activism
Gain Board Representation
Withdrew Demands
2014 Board-Related Activism 2014 M&A Activism 2014 M&A Activism
Removal of CEO or Other Board Member Push for Sale of Company to Third Party Push for Acquisition of Third Party
Withdrew Board Nominations Unresolved Activist’s Objectives Successful
2012 2012 2015 2013 2013 2013 2014 2014 2013 2014 2015 2015 2015 2015 2015 2013
Balance Sheet Activism M&A Activism Business Strategy Business Strategy Balance Sheet Activism Business Strategy Balance Sheet Activism M&A Activism M&A Activism Board-Related Activism Balance Sheet Activism Board-Related Activism Business Strategy M&A Activism Other M&A Activism
M&A Activism Balance Sheet Activism M&A Activism Other Governance
Activist’s Objectives Successful Ongoing Activist’s Objectives Successful
Continued on next page. Source: Activist Insight.
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Corporates Profiled Activists — Campaign Outcomes: Nonfinancial U.S. Corporates Only (Continued) Campaign Company Year Action Group Pershing Square Capital Management (Continued) Allergan Inc. (Premerger with Actavis Plc) 2014 M&A Activism Allergan Inc. (Premerger with Actavis Plc) 2014 Other Governance Allergan Inc. (Premerger with Actavis Plc) 2014 Other Governance Zoetis Inc. 2015 Board-Related Activism Mondelez International (Formerly Kraft Foods) 2015 Business Strategy Chipotle Mexican Grill Inc. 2016 Board-Related Activism Relational Investors Abercrombie & Fitch Co. B/E Aerospace Esterline Technologies Corporation Esterline Technologies Corporation Flowserve Corp. Hologic Inc. Hologic Inc. HP Inc. Formerly Hewlett Packard Company) Illinois Tool Works Inc. Illinois Tool Works Inc. Illinois Tool Works Inc. Par Pharmaceuticals PMC-Sierra Inc. SPX Corporation SPX Corporation The Manitowoc Company Inc. The Manitowoc Company Inc. Timken Co. Starboard Value Aaron’s Inc. Aaron’s Inc. Advance Auto Parts, Inc. Advance Auto Parts, Inc. AOL Inc. AOL Inc. AOL Inc. Brink’s Co. Brink’s Co. Brink’s Co. BWX Technologies (Formerly Babcock and Wilcox) Calgon Carbon Corporation Calgon Carbon Corporation Calgon Carbon Corporation Calgon Carbon Corporation Calgon Carbon Corporation Compuware Corp. Compuware Corp. Compuware Corp. Compuware Corp. Darden Restaurants Darden Restaurants Darden Restaurants Darden Restaurants
Action
Outcome
Push for Merger of Company with Third Party
Activist’s Objectives Unsuccessful
Amend Bylaw
Unresolved
Redemption/Amendment of Poison Pill Gain Board Representation
Compromise/Settlement Activist’s Objectives Successful
General Cost Cutting Gain Board Representation
Activist’s Objectives Successful Activist’s Objectives Successful
2012 2014 2012 2012 2012 2013 2013
Business Strategy Business Strategy Board-Related Activism M&A Activism Balance Sheet Activism Balance Sheet Activism Business Strategy
General Cost Cutting Focus on Growth Strategies Gain Board Representation Push for Sale of Company to Third Party Excess Cash Share Repurchase Business Focus
Activist’s Objectives Unsuccessful Activist’s Objectives Successful Activist’s Objectives Successful Unresolved Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful
2013 2012 2013 2013 2012 2013 2013 2014 2014 2014 2012
Board-Related Activism Board-Related Activism Balance Sheet Activism M&A Activism M&A Activism Board-Related Activism Business Strategy Board-Related Activism Balance Sheet Activism M&A Activism M&A Activism
Change Board Composition Gain Board Representation Share Repurchase Push for Sale of Company to Third Party Push for Sale of Company to Third Party Gain Board Representation Operational Efficiency Gain Board Representation Share Repurchase Spinoff/Sale of Business Division Push for Company Division
Activist’s Objectives Successful Activist’s Objectives Partially Successful Activist’s Objectives Successful Withdrew Demands Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Unresolved Activist’s Objectives Successful Activist’s Objectives Successful
2014 2014 2015 2015 2012 2012 2012 2015 2015 2016
Board-Related Activism Board-Related Activism Board-Related Activism Business Strategy Balance Sheet Activism Balance Sheet Activism Board-Related Activism Business Strategy M&A Activism Board-Related Activism
Change Board Composition Gain Board Representation Gain Board Representation Operational Efficiency Dividends Sell/Retain Assets Gain Board Representation Operational Efficiency Push for Sale of Company to Third Party Gain Board Representation
Withdrew Board Nominations Withdrew Board Nominations Activist’s Objectives Successful Ongoing Activist’s Objectives Unsuccessful Activist’s Objectives Unsuccessful Activist’s Objectives Unsuccessful Ongoing Ongoing Compromise/Settlement
2014 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2014 2014
Board-Related Activism Balance Sheet Activism Balance Sheet Activism Board-Related Activism Business Strategy Business Strategy Balance Sheet Activism Balance Sheet Activism Board-Related Activism M&A Activism Business Strategy M&A Activism Board-Related Activism Other Governance
Change Board Composition Recapitalization Share Repurchase Gain Board Representation Business Restructuring General Cost Cutting Dividends Share Repurchase Change Board Composition Push for Sale of Company to Third Party General Cost Cutting Spinoff/Sale of Business Division Gain Board Representation Lack Of/Inaccurate Information from Company
Activist’s Objectives Successful Unresolved Activist’s Objectives Successful Activist’s Objectives Partially Successful Activist’s Objectives Unsuccessful Activist’s Objectives Unsuccessful Unresolved Unresolved Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Unsuccessful Activist’s Objectives Successful Activist’s Objectives Successful
Continued on next page. Source: Activist Insight.
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Corporates Profiled Activists — Campaign Outcomes: Nonfinancial U.S. Corporates Only (Continued) Company Starboard Value (Continued) Depomed Inc. Depomed Inc. DSP Group Inc. DSP Group Inc. DSP Group Inc. Emulex Corporation Insperity, Inc. Insperity, Inc. Insperity, Inc. Insperity, Inc. Insperity, Inc. Integrated Device Technology Inc. Integrated Silicon Solution Inc. LSB Industries LSB Industries LSB Industries Macy’s, Inc. MeadWestvaco Corp. MeadWestvaco Corp. MedAssets Inc. MedAssets Inc. Media General Inc. Media General Inc. Office Depot Inc. Office Depot Inc. Office Depot Inc. Office Depot Inc. Office Depot Inc. Office Depot Inc.
Campaign Year Action Group
Action
Outcome
Gain Board Representation Push for Sale of Company to Third Party Gain Board Representation Gain Board Representation Business Focus Push for Sale of Company to Third Party Share Repurchase Gain Board Representation General Cost Cutting Push for Sale of Company to Third Party Gain Board Representation Gain Board Representation Gain Board Representation Gain Board Representation Business Focus Gain Board Representation Sell/Retain Assets Share Repurchase Focus on Growth Strategies Business Focus Operational Efficiency Oppose Acquisition of Third Party Push for Sale of Company to Third Party General Cost Cutting Redemption/Amendment of Poison Pill Sell/Retain Assets Gain Board Representation Gain Board Representation Push for Merger of Company with Third Party Spinoff/Sale of Business Division Remuneration Gain Board Representation Gain Board Representation
Compromise/Settlement Ongoing Activist’s Objectives Successful Activist’s Objectives Partially Successful Activist’s Objectives Successful Activist’s Objectives Unsuccessful Ongoing Activist’s Objectives Successful Ongoing Ongoing Compromise/Settlement Activist’s Objectives Successful Unresolved Activist’s Objectives Successful Activist’s Objectives Successful Compromise/Settlement Activist’s Objectives Partially Successful Unresolved Activist’s Objectives Successful Unresolved Unresolved Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Compromise/Settlement Activist’s Objectives Successful
2016 2016 2012 2013 2013 2013 2015 2015 2015 2015 2016 2012 2014 2014 2014 2015 2015 2014 2014 2015 2015 2015 2015 2012 2012 2013 2013 2013 2013
Board-Related Activism M&A Activism Board-Related Activism Board-Related Activism Business Strategy M&A Activism Balance Sheet Activism Board-Related Activism Business Strategy M&A Activism Board-Related Activism Board-Related Activism Board-Related Activism Board-Related Activism Business Strategy Board-Related Activism Balance Sheet Activism Balance Sheet Activism Business Strategy Business Strategy Business Strategy M&A Activism M&A Activism Business Strategy Other Governance Balance Sheet Activism Board-Related Activism Board-Related Activism M&A Activism
Office Depot Inc. Office Depot Inc. Progress Software Quantum Corporation
2013 2013 2012 2013
M&A Activism Other Board-Related Activism Board-Related Activism
Quantum Corporation
2013 Board-Related Activism
Gain Board Representation
Compromise/Settlement
Quantum Corporation
2014 Board-Related Activism
Gain Board Representation
Compromise/Settlement
RealD Inc.
2014 M&A Activism
Take Over Company
Activist’s Objectives Unsuccessful
Regis Corp.
2012 Board-Related Activism
Removal of CEO or Other Board Member
Activist’s Objectives Successful
Regis Corp. Rockwell Collins Inc. Rockwell Collins Inc. Smithfield Foods Inc. Smithfield Foods Inc. Smithfield Foods Inc. Staples, Inc.
2012 2016 2016 2013 2013 2013 2015
M&A Activism M&A Activism M&A Activism M&A Activism M&A Activism M&A Activism M&A Activism
Spinoff/Sale of Business Division Oppose Acquisition of Third Party Push for Acquisition of Third Party Spinoff/Sale of Business Division Oppose Terms of Merger Push for Company Division Push for Merger of Company with Third Party
Activist’s Objectives Successful Ongoing Ongoing Withdrew Demands Withdrew Demands Withdrew Board Nominations Activist’s Objectives Successful
Stewart Information Services Corporation SurModics Inc. Tessera Technologies, Inc. Tessera Technologies, Inc. Tessera Technologies, Inc. Tessera Technologies, Inc. TriQuint Semiconductor Inc. TriQuint Semiconductor Inc.
2016 2012 2012 2013 2013 2013 2013 2014
Board-Related Activism Balance Sheet Activism Board-Related Activism Balance Sheet Activism Board-Related Activism Business Strategy Board-Related Activism M&A Activism
Elect Director Share Repurchase Gain Board Representation Dividends Change Board Composition General Cost Cutting Gain Board Representation Push for Merger of Company with Third Party
Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Withdrew Demands Activist’s Objectives Successful
Activist’s Objectives Successful Activist’s Objectives Partially Successful Withdrew Board Nominations Activist’s Objectives Successful
Continued on next page. Source: Activist Insight.
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Corporates Profiled Activists — Campaign Outcomes: Nonfinancial U.S. Corporates Only (Continued) Company Starboard Value (Continued) Wausau Paper Wausau Paper Wausau Paper Wausau Paper Wausau Paper Wausau Paper Wausau Paper Wausau Paper Wausau Paper Wausau Paper Yahoo!
Campaign Year Action Group
Action
Outcome
Gain Board Representation Dividends Sell/Retain Assets Share Repurchase Gain Board Representation Gain Board Representation Push for Sale of Company to Third Party Spinoff/Sale of Business Division Gain Board Representation Gain Board Representation Push for Merger of Company with Third Party Share Repurchase Business Focus Spinoff/Sale of Business Division Oppose Acquisition of Third Party Gain Board Representation Change Board Composition Replace Management
Activist’s Objectives Successful Activist’s Objectives Unsuccessful Activist’s Objectives Successful Activist’s Objectives Unsuccessful Activist’s Objectives Successful Compromise/Settlement Activist’s Objectives Unsuccessful Activist’s Objectives Successful Activist’s Objectives Successful Compromise/Settlement Withdrew Demands
2012 2013 2013 2013 2013 2013 2013 2013 2014 2014 2014
Board-Related Activism Balance Sheet Activism Balance Sheet Activism Balance Sheet Activism Board-Related Activism Board-Related Activism M&A Activism M&A Activism Board-Related Activism Board-Related Activism M&A Activism
Yahoo! Yahoo! Yahoo! Yahoo! Yahoo! Yahoo! Yahoo!
2015 2015 2015 2015 2016 2016 2016
Balance Sheet Activism Business Strategy M&A Activism M&A Activism Board-Related Activism Board-Related Activism Business Strategy
Third Point Partners Yahoo! Yahoo! Murphy Oil CF Industries Holdings Inc. Sotheby’s Sotheby’s Sotheby’s Yahoo! Sotheby’s Dow Chemical Company Dow Chemical Company Sotheby’s Amgen Inc. Dow Chemical Company Dow Chemical Company Baxter International Inc. Baxter International Inc. Amgen Inc.
2012 2012 2012 2013 2013 2013 2013 2013 2013 2014 2014 2014 2014 2014 2015 2015 2015 2015
Balance Sheet Activism Board-Related Activism M&A Activism Balance Sheet Activism Board-Related Activism Board-Related Activism Board-Related Activism Business Strategy Other Balance Sheet Activism Board-Related Activism Board-Related Activism M&A Activism M&A Activism Board-Related Activism Board-Related Activism Board-Related Activism M&A Activism
Sell/Retain Assets Gain Board Representation Spinoff/Sale of Business Division Excess Cash Gain Board Representation Removal of CEO or Other Board Member Separate Chairman and CEO General Cost Cutting Remuneration Share Repurchase Gain Board Representation Gain Board Representation Push for Company Division Spinoff/Sale of Business Division Removal of CEO or Other Board Member Eliminate Staggered Board Gain Board Representation Push for Merger of Company with Third Party
Activist’s Objectives Unsuccessful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Compromise/Settlement Activist’s Objectives Unsuccessful Activist’s Objectives Unsuccessful Activist’s Objectives Unsuccessful Unresolved Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Unsuccessful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Compromise/Settlement Activist’s Objectives Unsuccessful
2014 2015 2014 2015 2015 2012 2012 2012 2012 2014
M&A Activism Board-Related Activism M&A Activism Balance Sheet Activism Business Strategy Business Strategy Balance Sheet Activism Board-Related Activism Other Board-Related Activism
Activist’s Objectives Unsuccessful Activist’s Objectives Unsuccessful Activist’s Objectives Successful Ongoing Ongoing Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful
Activist’s Objectives Successful
Trian Fund Management E. I. du Pont de Nemours & Co. E. I. du Pont de Nemours & Co. Family Dollar Stores Inc. General Electric General Electric Lazard Ltd. Legg Mason Legg Mason Legg Mason Madison Square Garden Company Mondelez International (Formerly Kraft Foods) Mondelez International Formerly Kraft Foods)
2013
M&A Activism
Push for Company Division Gain Board Representation Push for Sale of Company to Third Party Share Repurchase General Cost Cutting General Cost Cutting Share Repurchase Removal of CEO or Other Board Member Remuneration Gain Board Representation Push for Merger of Company with Third Party
2014
Board-Related Activism
Gain Board Representation
Activist’s Objectives Partially Successful Activist’s Objectives Successful Activist’s Objectives Successful Ongoing Compromise/Settlement Activist’s Objectives Successful Ongoing
Activist’s Objectives Unsuccessful
Continued on next page. Source: Activist Insight.
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Corporates Profiled Activists — Campaign Outcomes: Nonfinancial U.S. Corporates Only (Continued) Company
Campaign Year Action Group
Action
Outcome
Push for Company Division Gain Board Representation Push for Sale of Company to Third Party Share Repurchase General Cost Cutting General Cost Cutting Share Repurchase Removal of CEO or Other Board Member Remuneration Gain Board Representation Push for Merger of Company with Third Party
Activist’s Objectives Unsuccessful Activist’s Objectives Unsuccessful Activist’s Objectives Successful Ongoing Ongoing Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful
Gain Board Representation Push for Merger of Company with Third Party Push for Company Division Gain Board Representation Removal of CEO or Other Board Member Remuneration Return Cash to Shareholders Gain Board Representation Remuneration
Activist’s Objectives Successful Activist’s Objectives Unsuccessful
2014 Board-Related Activism
Gain Board Representation
Activist’s Objectives Successful
ValueAct Capital Partners Adobe Systems Inc. Adobe Systems Inc. Allison Transmission Holdings Inc. Armstrong Flooring, Inc. Armstrong World Industries, Inc. Baker Hughes Inc.
2012 2012 2014 2016 2014 2014
Board-Related Activism Business Strategy Board-Related Activism Board-Related Activism Board-Related Activism M&A Activism
Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Unsuccessful
Baker Hughes Inc. Baker Hughes Inc. CBRE Group CR Bard Gardner Denver Halliburton
2015 2015 2012 2012 2012 2014
Balance Sheet Activism Business Strategy Board-Related Activism Board-Related Activism M&A Activism M&A Activism
Halliburton Microsoft Corp. Motorola Solutions MSCI Inc. MSCI Inc. The Hillshire Brands Company (Formerly Sara Lee Corp.) Twenty-First Century Fox Inc.
2014 2013 2012 2015 2015
Other Board-Related Activism Board-Related Activism Board-Related Activism M&A Activism
Gain Board Representation Focus on Growth Strategies Gain Board Representation Gain Board Representation Gain Board Representation Push for Merger of Company Third Party Sell/Retain Assets Business Restructuring Gain Board Representation Gain Board Representation Push for Sale of Company to Third Party Push for Merger of with Third Party Remuneration Gain Board Representation Gain Board Representation Gain Board Representation Push for Company Division Spinoff/Sale of Business Division Gain Board Representation
Activist’s Objectives Successful Activist’s Objectives Successful
Trian Fund Management (Continued) E. I. du Pont de Nemours & Co. E. I. du Pont de Nemours & Co. Family Dollar Stores Inc. General Electric General Electric Lazard Ltd. Legg Mason Legg Mason Legg Mason Madison Square Garden Company Mondelez International (Formerly Kraft Foods) Mondelez International (Formerly Kraft Foods) PepsiCo Inc. PepsiCo Inc. PepsiCo Inc. State Street Corp. State Street Corp. Sysco Corp. Sysco Corp. Sysco Corp. The Bank of New York Mellon Corp. (BNY Mellon)
2014 2015 2014 2015 2015 2012 2012 2012 2012 2014
M&A Activism Board-Related Activism M&A Activism Balance Sheet Activism Business Strategy Business Strategy Balance Sheet Activism Board-Related Activism Other Board-Related Activism
2013 M&A Activism 2014 Board-Related Activism 2013 M&A Activism 2014 2015 2012 2012 2015 2015 2015
M&A Activism Board-Related Activism Board-Related Activism Other Balance Sheet Activism Board-Related Activism Other
2012 M&A Activism 2015 Board-Related Activism
Activist’s Objectives Unsuccessful
Activist’s Objectives Unsuccessful Activist’s Objectives Successful Activist’s Objectives Unsuccessful Activist’s Objectives Unsuccessful Activist’s Objectives Successful Activist’s Objectives Successful Ongoing
Ongoing Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Unsuccessful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Activist’s Objectives Successful Unresolved
Source: Activist Insight.
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61
Corporates Appendix B Campaigns Initiated 2015 — U.S. Nonfinancial Company
Fitch Sector
Activist
Action Group
Arconic Inc. (Formerly Alcoa Inc.) Baker Hughes Inc. Barnwell Industries, Inc. California Resources Corporation Callon Petroleum Company CF Industries Holdings Inc. Chemours Co. Cheniere Energy Inc. Cheniere Energy Inc. Chevron Cloud Peak Energy Inc. ConocoPhillips CONSOL Energy Inc. CONSOL Energy Inc. CONSOL Energy Inc. Crestwood Equity Partners Dakota Plains Holdings, Inc. E.I. du Pont de Nemours and Company E.I. du Pont de Nemours and Company Erin Energy Exxon Mobil Flotek Industries Flotek Industries Flotek Industries Freeport-McMoRan Inc. Gevo, Inc. GulfMark Offshore, Inc. Hyperdynamics Corporation LSB Industries MagneGas Corporation MagneGas Corporation MarkWest Energy OM Group, Inc. OM Group, Inc. OM Group, Inc. Omnova Solutions Inc. Penn Virginia Corporation Pioneer Natural Resources Praxair Inc. Rice Energy Inc. Sanchez Production Partners SemGroup Corp. SunCoke Energy Inc. SunCoke Energy Inc. Torchlight Energy Resources Ultra Petroleum Corp. Uranium Energy Corp. VAALCO Energy Inc. Westmoreland Coal Co. Westmoreland Coal Co. Willbros Group Inc. Allison Transmission Holdings Inc. American Apparel Amplify Snack Brands, Inc. Appliance Recycling Centers of America Inc. Archer-Daniels-Midland Co.
Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Consumer Consumer Consumer Consumer Consumer
Elliott Management ValueAct Capital Partners Ned Sherwood BlueMountain Capital Management, LLC Lone Star Value Management John Chevedden FourWorld Capital Management Kynikos Associates (Jim Chanos) Carl Icahn Arjuna Capital California Public Employees’ Retirement System (CalPERS) Office of the Comptroller of the City of New York Kynikos Associates (Jim Chanos) Central Laborer’s Pension Fund Southeastern Asset Management Raging Capital Management Lone Star Value Management Fidelity Management & Research Co. (FMR) Trian Fund Management Cannell Capital LLC Zevin Asset Management Bronte Capital The Street Sweeper Richard Pearson Carl Icahn The Street Sweeper Raging Capital Management Empower Capital Starboard Value Pump Stopper The Street Sweeper John Fox FrontFour Capital Group Wynnefield Capital SpringOwl Asset Management Barington Capital Group Lone Star Value Management Greenlight Capital, Inc. John Chevedden Long-Short Value Investment Partners Asset Management Sandell Asset Management Richard Pearson Jet Capital Investors The Street Sweeper Presbyterian Church (USA) Investment and Loan Programme Inc. The Street Sweeper Group 42, Inc. Venor Capital Management Charles Frischer Lawndale Capital Management Ashe Capital Management Jeffrey Kolb Richard Pearson Isaac Capital William Steiner
M&A Activism Balance Sheet Activism Other Governance Other Board-Related Activism Other Governance Other Other Board-Related Activism Balance Sheet Activism Other Governance Other Governance Other Board-Related Activism M&A Activism Balance Sheet Activism Board-Related Activism Board-Related Activism Board-Related Activism Other Other Other Other Other Board-Related Activism Other Board-Related Activism Board-Related Activism Board-Related Activism Other Other M&A Activism Balance Sheet Activism M&A Activism M&A Activism Board-Related Activism M&A Activism Other Board-Related Activism Other Balance Sheet Activism M&A Activism Other Balance Sheet Activism Other Other Governance Other Board-Related Activism Balance Sheet Activism Balance Sheet Activism Board-Related Activism Board-Related Activism Board-Related Activism Other Board-Related Activism Board-Related Activism
TMT – Telecom, Media & Technology. Continued on next page. Source: Activist Insight.
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Corporates Campaigns Initiated 2015 — U.S. Nonfinancial (Continued) Company
Fitch Sector
Activist
Action Group
Avon Products Inc. Avon Products Inc. Blount International Inc. Bob Evans Farms BorgWarner Inc. Chanticleer Holdings Chanticleer Holdings Chipotle Mexican Grill Inc. Conga Brands, Inc. Conn’s, Inc. Core Care America (CCA Industries Inc.) Cracker Barrel Old Country Store DeVry Education Group Inc. DHI Group DHI Group DLH Holdings Corp. Domino’s Pizza Inc. DS Healthcare Group Inc. Ecolab Inc. Elizabeth Arden, Inc. Emerson Radio Corp. Energy Focus Inc. Ethan Allen Interiors Inc. Famous Dave’s of America Inc. Fenix Parts Ford Motor Company General Motors General Motors General Motors General Motors General Motors General Motors Goodyear Tire & Rubber Co. GoPro Greif Inc. Hill International Inc. Hill International Inc. Insignia Systems Inc. International Paper Co. Intersections Inc. Inuvo iRobot Corp. ITT Educational Services JAKKS Pacific, Inc. Jamba, Inc. Jamba, Inc. Keurig Green Mountain Inc. Lear Corp. Learning Tree International Inc. Learning Tree International Inc. LifeLogger Technologies Corp. Mattel Inc. McDonald’s Corp. McDonald’s Corp. Mondelez International (Formerly Kraft Foods) MusclePharm Corp. MusclePharm Corp. Myers Industries Inc.
Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer
Barington Capital Group NuOrion Partners P2 Capital Partners Sandell Asset Management John Chevedden Bleecker Street Research The Street Sweeper Ampera Capital LLC JANA Partners Copperfield Research Biglari Holdings Inc. Biglari Holdings Inc. Alpha Exposure Ancora Advisors LLC Barington Capital Group Burton Osterweis CtW Investment Group Bleecker Street Research John Chevedden GeoInvesting Lloyd Miller The Street Sweeper Sandell Asset Management Wexford Capital The Street Sweeper John Chevedden Harry Wilson Hayman Capital Management Appaloosa Management HG Vora Capital Management Taconic Capital Advisors John Chevedden John Chevedden Devonshire Research Group LLC Spruce Point Capital Management Bulldog Investors DC Capital Partners Biglari Holdings Inc. Kenneth Steiner Osmium Partners The Street Sweeper Red Mountain Capital Partners CtW Investment Group Oasis Management Company The Street Sweeper Engaged Capital Marc Cohodes Marcato Capital Management Lloyd Miller Mill Road Capital Mako Research BlueMountain Capital Management, LLC CtW Investment Group Glenview Capital Management Pershing Square Capital Management Consac LLC Wynnefield Capital GAMCO Investors
Board-Related Activism Board-Related Activism M&A Activism M&A Activism Other Governance Other Other Other Board-Related Activism Other Board-Related Activism Other Governance Other M&A Activism M&A Activism Balance Sheet Activism Other Other Board-Related Activism Other Balance Sheet Activism Other Board-Related Activism Board-Related Activism Other Balance Sheet Activism Balance Sheet Activism Balance Sheet Activism Board-Related Activism Board-Related Activism Board-Related Activism Other Governance Other Governance Other Other Board-Related Activism M&A Activism Board-Related Activism Other Governance Board-Related Activism Other Board-Related Activism Board-Related Activism Board-Related Activism Other Board-Related Activism Other M&A Activism Board-Related Activism M&A Activism Other Other Board-Related Activism Business Strategy Business Strategy Board-Related Activism Board-Related Activism Board-Related Activism
TMT – Telecom, Media & Technology. Continued on next page. Source: Activist Insight.
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Corporates Campaigns Initiated 2015 — U.S. Nonfinancial (Continued) Company
Fitch Sector
Activist
Action Group
Noble Roman’s Inc. Noble Roman’s Inc. Nu Skin Enterprises Omega Protein Corporation Omega Protein Corporation Panera Bread Co. PepsiCo Inc. PepsiCo Inc. Perry Ellis International Inc. Perry Ellis International Inc. Remy International, Inc. S&W Seed Company Select Comfort Corporation Service Corp. International Service Corp. International Shutterfly Inc. Shutterfly Inc.
Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer
Board-Related Activism Board-Related Activism Other M&A Activism M&A Activism Balance Sheet Activism Board-Related Activism Other Governance Board-Related Activism Board-Related Activism Board-Related Activism Board-Related Activism Board-Related Activism Other Governance Other Balance Sheet Activism Board-Related Activism
SL Industries Inc. Superior Industries International Inc. Sysco Corp. Tempur Sealy International Inc. Tempur Sealy International Inc. The Staffing Group Ltd. Towers Watson (Premerger with Willis Group Holdings to Form Willis Towers Watson) Town Sports International Holdings Inc. Town Sports International Holdings Inc. United-Guardian Inc. Volt Information Sciences Inc. Yum Brands Inc. Yum Brands Inc. Affinity Gaming Diamond Resorts International Inc. Diamond Resorts International Inc. MGM Resorts International Morgans Hotel Group Co. Morgans Hotel Group Co. Morgans Hotel Group Co. Pinnacle Entertainment Inc. Pinnacle Entertainment Inc. Table Trac Inc. Wynn Resorts AAC Holdings, Inc. AAC Holdings, Inc. Abeona Therapeutics Inc. (Formerly PlasmaTech Biopharmaceuticals, Inc. and Access Pharmaceuticals) Accelerate Diagnostics, Inc. Accelerate Diagnostics, Inc. Acorda Therapeutics Inc. Acucela Inc. AdCare Health Systems Adeptus Health Inc. Advaxis Aegerion Pharmaceuticals Aegerion Pharmaceuticals Aetna Inc. Alexion Pharmaceuticals, Inc.
Consumer Consumer Consumer Consumer Consumer Consumer
Privet Fund Management Lucus Advisors (Radix Partners [Formerly Red Alder]) Marc Cohodes Joshua Schechter Wynnefield Capital Luxor Capital Group Trian Fund Management Kenneth Steiner California State Teachers’ Retirement System (CalSTRS) Legion Partners Asset Management H Partners MFP Investors Blue Clay Capital Management International Brotherhood of Teamsters General Fund CtW Investment Group Ancora Advisors LLC Marathon Partners Equity Management LLC (Cibelli Capital Management LLC) Steel Partners Holdings L.P. GAMCO Investors Trian Fund Management Chieftain Capital Management H Partners Labor Smart
Consumer Consumer Consumer Consumer Consumer Consumer Consumer Gaming, Lodging & Leisure Gaming, Lodging & Leisure Gaming, Lodging & Leisure Gaming, Lodging & Leisure Gaming, Lodging & Leisure Gaming, Lodging & Leisure Gaming, Lodging & Leisure Gaming, Lodging & Leisure Gaming, Lodging & Leisure Gaming, Lodging & Leisure Gaming, Lodging & Leisure Healthcare Healthcare
Driehaus Capital Management LLC HG Vora Capital Management PW Partners LLC Myra Young Glacier Peak Capital LLC Xuhua Zhou Corvex Management LP Z Capital Partners ADW Capital Partners FrontFour Capital Group Land and Buildings Rambleside Holdings Pine River Capital Management LP The Yucaipa Companies Orange Capital LLC UNITE HERE Doucet Asset Management Elaine Wynn Quintessential Capital Management Bleecker Street Research
M&A Activism Board-Related Activism Board-Related Activism Other Governance Board-Related Activism Other Board-Related Activism M&A Activism M&A Activism M&A Activism Board-Related Activism Balance Sheet Activism Board-Related Activism Board-Related Activism Balance Sheet Activism Other Governance M&A Activism Board-Related Activism Other Other
Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare
The Street Sweeper Citron Research Shareholder Watchdog Hayman Capital Management SBI Holdings Inc. Doucet Asset Management Long-Short Value Richard Pearson Hayman Capital Management Sarissa Capital Management John Chevedden John Chevedden
Other Other Other Other Board-Related Activism Balance Sheet Activism Other Other Other Board-Related Activism Other Other Governance
M&A Activism Board-Related Activism Balance Sheet Activism Board-Related Activism Board-Related Activism Business Strategy
TMT – Telecom, Media & Technology. Continued on next page. Source: Activist Insight.
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Corporates Campaigns Initiated 2015 — U.S. Nonfinancial (Continued) Company
Fitch Sector
Activist
Action Group
Amgen Inc. Amgen Inc. Amgen Inc. Ampio Pharmaceuticals Inc. Anacor Pharmaceuticals, Inc. Anavex Life Sciences Anavex Life Sciences Anthem, Inc. Anthera Pharmaceuticals, Inc. Ariad Pharmaceuticals Inc. Asterias Biotherapeutics Baxter International Inc. Baxter International Inc. Baxter International Inc. Biogen Idec Inc. BioScrip Inc. Bristol-Myers Squibb Bristol-Myers Squibb Brookdale Senior Living Cascadian Therapeutics Inc. (Formerly Oncothyreon Inc.) Celgene Corporation Celgene Corporation Cellceutix Corporation Cellceutix Corporation Cellular Biomedicine Group Cellular Biomedicine Group Cleveland Biolabs Cord Blood America Inc. CorMedix, Inc. CorMedix, Inc. CorMedix, Inc. CTI BioPharma Corp. Cutera Inc. DATATRAK International, Inc.
Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare
Hayman Capital Management Third Point Partners Investor Voice Alpha Exposure Hayman Capital Management Melissa Davis The Street Sweeper John Chevedden The Street Sweeper Sarissa Capital Management Alpha Exposure Third Point Partners Kenneth Steiner John Chevedden Hayman Capital Management Coliseum Capital Management Hayman Capital Management International Brotherhood of Electrical Workers Pension Fund Sandell Asset Management
Other M&A Activism Other Governance Other Other Other Other Board-Related Activism Other Board-Related Activism Other Board-Related Activism Board-Related Activism Other Other Board-Related Activism Other Other Governance Balance Sheet Activism
Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare
Board-Related Activism Other Other Governance Other Other Other Other Balance Sheet Activism Board-Related Activism Other Other Business Strategy Board-Related Activism Board-Related Activism Board-Related Activism
Depomed Inc. Derma Sciences Inc. Dextera Surgical Inc. (Formerly Cardica) diaDexus, Inc. Diplomat Pharmacy Inc. Dyax Corp. Ekso Bionics Enzo Biochem Inc. Gilead Sciences Global Healthcare REIT Global Healthcare REIT Great Basin Scientific Healthcare Services Group Healthcare Services Group HeartWare International Heron Therapeutics Hospira iBio Inc. Immunomedics Inc. Insys Therapeutics Johnson & Johnson Johnson & Johnson KaloBios Pharmaceuticals, Inc.
Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare
BVF Partners Hayman Capital Management UAW Retiree Medical Benefits Trust Mako Research Bleecker Street Research Melissa Davis Pump Stopper Jeffrey Chokel Cryo-Cell International Pump Stopper The Street Sweeper Elliott Management BVF Partners Voce Capital Management Tabatabai Investment Management (Formerly Arosa Investment Management) Aralez Pharmaceuticals Inc. (Formerly POZEN Inc.) Broadfin Capital Broadfin Capital Leap Tide Capital Management Lakewood Capital Management WoodPecker Research Pump Stopper Lone Star Value Management John Chevedden Sabra Capital Partners Doucet Asset Management GeoInvesting Off Wall Street UAW Retiree Medical Benefits Trust Engaged Capital The Street Sweeper John Chevedden The Street Sweeper Alpha Exposure Hayman Capital Management Kenneth Steiner Myra Young MSMB Capital Management LLC
Board-Related Activism Board-Related Activism Board-Related Activism Board-Related Activism Other Other Other Board-Related Activism Board-Related Activism Board-Related Activism M&A Activism Other Other Board-Related Activism Board-Related Activism Other Other Governance Other Other Other Other Governance Other Governance Balance Sheet Activism
TMT – Telecom, Media & Technology. Continued on next page. Source: Activist Insight.
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Corporates Campaigns Initiated 2015 — U.S. Nonfinancial (Continued) Company
Fitch Sector
Activist
Action Group
Keryx Biopharmaceuticals Keryx Biopharmaceuticals Keryx Biopharmaceuticals La Jolla Pharmaceutical Co. McKesson Corp. Medytox Solutions Merck & Co., Inc. Nobilis Health Corp. Nobilis Health Corp. Northwest Biotherapeutics, Inc. Northwest Biotherapeutics, Inc. Northwest Biotherapeutics, Inc. Notis Global (Formerly Medbox) Ocata Therapeutics, Inc. (Formerly Advanced Cell Technology Inc.) Omeros Corporation OncBioMune Pharmaceuticals, Inc. (Formerly Quint Media Inc.) Organovo Pharmacyclics, Inc. ProPhase Labs, Inc. Puma Biotechnology Relmada Therapeutics Revance Therapeutics RTI Surgical Inc. Salix Pharmaceuticals Ltd. Sangamo Biosciences Second Sight Medical Products Special Diversified Opportunities Inc.
Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare
Richard Pearson Stanphyl Capital Baupost Group LLC The Street Sweeper International Brotherhood of Teamsters General Fund Concerned Shareholders of Medytox (Seamus Lagan) Kenneth Steiner Richard Pearson The Emperor Has No Clothes Phase Five Research The Street Sweeper Woodford Investment Management Vincent Chase Inc.
Other Other Board-Related Activism Other Other Governance Board-Related Activism Other Governance Other Other Other Other Board-Related Activism Board-Related Activism
Healthcare Healthcare
Mako Research Richard Pearson
Other Other
Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare
M&A Activism Other Other Business Strategy Board-Related Activism Board-Related Activism Other M&A Activism M&A Activism Other Other Board-Related Activism
Spectrum Pharmaceuticals STAAR Surgical Company STAAR Surgical Company Tokai Pharmaceuticals ULURU Inc. Unilife Corporation Universal Health Services Vertex Pharmaceuticals Inc. Vital Therapies Vital Therapies VIVUS Inc. ZIOPHARM Oncology ZIOPHARM Oncology Zoetis Inc. A M Castle & Co. Aerocentury Corp. AeroVironment Air Methods Corporation Air Transport Services Group Inc. Alaska Air Group Allegiant Travel Co. Allied Motion Technologies Arotech Corporation Blue Bird Corp. Boeing Company Breeze-Eastern Corp. Brink’s Co. Casella Waste Systems Caterpillar Inc.
Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials
Leone Group, LLC Alpha Exposure Hayman Capital Management BML Capital Management Fredric Eshelman Laidlaw & Company (UK) LTD. Richard Pearson Krensavage Asset Management Paulson & Co. Alpha Exposure The Street Sweeper B. Riley Capital Management (Riley Investment Management LLC, B. Riley & Co.) Armistice Capital Broadwood Capital Inc. EuroEyes Holding AG Richard Pearson Punch Trust Whitney Tilson Office of the Comptroller of the City of New York UAW Retiree Medical Benefits Trust Phase Five Research Martin Shkreli Sarissa Capital Management Lakewood Capital Management The Street Sweeper Pershing Square Capital Management Raging Capital Management Lee Beaumont Engaged Capital Voce Capital Management Bastogne Capital Management John Chevedden CtW Investment Group Juniper Investment Company Echo Lake Capital Coliseum Capital Management John Chevedden VN Capital Management Starboard Value JCP Investment Management Myra Young
Business Strategy Board-Related Activism Board-Related Activism Other Board-Related Activism Other Balance Sheet Activism Other Governance Other Other Board-Related Activism Other Other Board-Related Activism Board-Related Activism Board-Related Activism Board-Related Activism M&A Activism Balance Sheet Activism Board-Related Activism Board-Related Activism Board-Related Activism Balance Sheet Activism Board-Related Activism Board-Related Activism M&A Activism Business Strategy Board-Related Activism Board-Related Activism
TMT – Telecom, Media & Technology. Continued on next page. Source: Activist Insight.
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Corporates Campaigns Initiated 2015 — U.S. Nonfinancial (Continued) Company
Fitch Sector
Activist
Action Group
Clean Diesel Technologies Clearsign Combustion Corp. Clearsign Combustion Corp. Con-Way Inc. Cummins Inc. Dover Corp. Dow Chemical Company Ecology and Environment Energy Recovery, Inc. Essex Rental Corp. Expeditors International of Washington Expeditors International of Washington FedEx Corporation General Dynamics Corp. General Electric General Electric GrafTech International Ltd. Hardinge Inc. Honeywell International Inc. Illinois Tool Works Inc. Illinois Tool Works Inc. Installed Building Products, Inc. JPS Industries JPS Industries Keweenaw Land Association, Ltd. Layne Christensen Metalico, Inc. MYR Group Overseas Shipholding Group Inc. P&F Industries Pangaea Logistics Solutions Ltd. (Formerly Quartet Merger Corp.) PICO Holdings Inc. PICO Holdings Inc. PICO Holdings Inc. Poage Bankshares, Inc. Quanex Building Products Corporation Surge Components Swift Transportation Company Taser International Tecumseh Products Company The Eastern Company The Manitowoc Company Inc. Titan Machinery TriMas Corporation United Parcel Service Inc. UTi Worldwide Inc. Westinghouse Air Brake Technologies Corporation Advance Auto Parts, Inc. Advance Auto Parts, Inc. Asbury Automotive Group, Inc. AutoNation Inc. Big 5 Sporting Goods Corp. Build-A-Bear-Workshop Cabela’s Inc. Christopher & Banks Corporation CST Brands, Inc. CST Brands, Inc.
Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials
The Street Sweeper Cannell Capital LLC The Street Sweeper John Chevedden John Chevedden John Chevedden Third Point Partners Mill Road Capital Ludvig Lorentzen Casey Capital LLC International Brotherhood of Electrical Workers Pension Fund John Chevedden International Brotherhood of Teamsters General Fund John Chevedden Trian Fund Management Kenneth Steiner Nathan Milikowsky Privet Fund Management John Chevedden William Steiner John Chevedden The Forensic Factor Steel Partners Holdings L.P. Lloyd Miller Cornwall Capital Management GAMCO Investors Adam Weitsman Engine Capital LP BlueMountain Capital Management, LLC Timothy Stabosz
Other Other Other Other Governance Board-Related Activism Other Governance Board-Related Activism M&A Activism Board-Related Activism Board-Related Activism Other Governance Other Other Governance Board-Related Activism Balance Sheet Activism Other Governance Board-Related Activism Board-Related Activism Board-Related Activism Other Governance Other Governance Other Board-Related Activism M&A Activism Board-Related Activism Balance Sheet Activism M&A Activism Board-Related Activism Board-Related Activism Other
Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials
The Street Sweeper Central Square Management River Road Asset Management Leder Holdings LLC Stilwell Value LLC Praesidium Investment Management Michael Tofias International Brotherhood of Teamsters General Fund Lakewood Capital Management Hudson & Associates Minerva Advisors Carl Icahn The Street Sweeper Engaged Capital John Chevedden Sterling Capital Management
Other Balance Sheet Activism Balance Sheet Activism Board-Related Activism Balance Sheet Activism Business Strategy Board-Related Activism Balance Sheet Activism Other Board-Related Activism Business Strategy Board-Related Activism Other Board-Related Activism Other M&A Activism
Industrials Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail
Eminence Capital Starboard Value John Chevedden MSD Capital John Chevedden Stadium Capital Management Cannell Capital LLC Elliott Management Macellum Advisors Engine Capital LP JCP Investment Management
Other Board-Related Activism Other Governance Board-Related Activism Other Board-Related Activism Balance Sheet Activism Balance Sheet Activism Board-Related Activism Business Strategy M&A Activism
TMT – Telecom, Media & Technology. Continued on next page. Source: Activist Insight.
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Corporates Campaigns Initiated 2015 — U.S. Nonfinancial (Continued) Company
Fitch Sector
Activist
Action Group
eBay Inc. eBay Inc. EVINE Live (Formerly ValueVision Media) Freshpet Inc. Kohl’s Corp. Lowe’s Companies Inc. Macy’s, Inc. Medifast Inc. Pep Boys - Manny, Moe & Jack Pep Boys - Manny, Moe & Jack Performance Sports Group Ltd. Rite Aid Sotheby’s Staples, Inc. Staples, Inc. Target Corp. The Children’s Place, Inc. The Children’s Place, Inc. The Home Depot, Inc. TravelCenters of America LLC U.S. Auto Parts Network, Inc. United Online Inc. United Online Inc.
Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail
Board-Related Activism Other Governance Balance Sheet Activism Other Other Other Balance Sheet Activism Board-Related Activism Board-Related Activism M&A Activism Board-Related Activism Other Balance Sheet Activism M&A Activism Other Other Board-Related Activism Board-Related Activism Other Governance Balance Sheet Activism M&A Activism Board-Related Activism M&A Activism
Vitamin Shoppe, Inc. Wayfair Wayfair Wayfair Wayfair XO Group Inc. ZAGG Inc. 2U Inc. Allied Minds Alphabet Inc. Altera Corp. Altera Corp. Altera Corp. Ambarella Ameri Holdings Inc. (Formerly Spatializer Audio Laboratories Inc.) Angie’s List Applied DNA Sciences Arista Networks, Inc. AT&T, Inc. Autodesk Inc. Autodesk Inc. Avid Technology Axcelis Technologies Inc. Badger Meter Inc. Ballantyne Strong, Inc. Benchmark Electronics Blucora Inc. Boingo Wireless, Inc. Boingo Wireless, Inc. BroadVision, Inc. Brocade Communications Systems Inc. Carbonite, Inc. Carbonite, Inc. Carmike Cinemas Inc.
Retail Retail Retail Retail Retail Retail Retail TMT TMT TMT TMT TMT TMT TMT
Carl Icahn John Chevedden Cannell Capital LLC The Friendly Bear John Chevedden Xuhua Zhou Starboard Value Engaged Capital GAMCO Investors Carl Icahn Walter Graeme Roustan Trust CtW Investment Group Marcato Capital Management Starboard Value International Brotherhood of Electrical Workers Pension Fund Suvretta Capital Management Barington Capital Group Macellum Advisors Myra Young RDG Capital Fund Management Mehran Nia Cannell Capital LLC B. Riley Capital Management (Riley Investment Management LLC, B. Riley & Co.) Carlson Capital Whitney Tilson Xuhua Zhou Citron Research The Friendly Bear Long-Short Value The Street Sweeper Citron Research Kerrisdale Capital Management John Chevedden TIG Advisors (Tiedemann Investment Group) John Chevedden Cadian Capital Management Citron Research
TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT
Lone Star Value Management TCS Capital Management Pump Stopper Lakewood Capital Management Kenneth Steiner Eminence Capital Sachem Head Capital Management Copperfield Research Viex Capital (Formerly Vertex Capital Advisors) The Street Sweeper Fundamental Global Partners Engaged Capital Voss Capital The Street Sweeper Jay Yoon Marlin Capital Kenneth Steiner Engine Capital LP j2 Global, Inc. Oasis Management Company
Board-Related Activism Board-Related Activism Other Other Other Governance Board-Related Activism Board-Related Activism Other Board-Related Activism Other Board-Related Activism Board-Related Activism M&A Activism Other Other Balance Sheet Activism Other Governance Board-Related Activism Board-Related Activism Balance Sheet Activism
Business Strategy Other Other Other Other Other Other Other Other Balance Sheet Activism Board-Related Activism Board-Related Activism M&A Activism Other
TMT – Telecom, Media & Technology. Continued on next page. Source: Activist Insight.
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Corporates Campaigns Initiated 2015 — U.S. Nonfinancial (Continued) Company
Fitch Sector
Activist
Action Group
CenturyLink Checkpoint Systems, Inc. Ciber Inc. Cicero, Inc. Cinedigm Corp. Cinedigm Corp. Citrix Systems Inc. Cognex Corporation Comcast Corp. New Comcast Corp. New Computer Sciences Corporation (CSC) Datawatch Corp. Dealertrack Technologies, Inc. DGT Holdings DGT Holdings DigiMarc Digital Turbine Inc. (Formerly Mandalay Digital Group, Inc.) Dun & Bradstreet Corp. Ebix Inc. Ebix Inc. Edgewater Technology Inc. Edgewater Technology Inc. eMagin Corporation EMC Corp. EMC Corp. EMC Corp. EMC Corp. Endurance International Group Holdings Endurance International Group Holdings Envivio Epiq Systems, Inc. Facebook Inc. Flir Systems Inc. Frequency Electronics Inc. Furmanite Corporation Google Great Elm Capital Group, Inc. (Formerly Unwired Planet) GSI Technology GTT Communications, Inc. Guidance Software Inc. HealthStream HMS Holdings Corp. HP Inc. (Formerly Hewlett Packard Company) Identiv Inc. IDI Inc. Image Sensing Systems Inc. ImageWare Systems Inc. Informatica Corporation Inseego Corp. (Formerly Novatel Wireless) Insperity, Inc. Insperity, Inc. Intel Corporation InterCloud Systems, Inc. Internap Corporation Internap Corporation
TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT
International Brotherhood of Electrical Workers Pension Fund NS Advisors, LLC (North Star Partners) Lone Star Value Management Privet Fund Management Sabra Capital Partners Ronald Chez Elliott Management California State Teachers’ Retirement System (CalSTRS) International Brotherhood of Electrical Workers Pension Fund Kenneth Steiner JANA Partners Potrero Capital Research, LLC Off Wall Street Norman Pessin Steel Partners Holdings L.P. The Street Sweeper
Other Board-Related Activism Board-Related Activism Board-Related Activism Balance Sheet Activism Board-Related Activism Balance Sheet Activism Other Governance Other Governance Other Governance Business Strategy Other Other M&A Activism M&A Activism Other
TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT
Mako Research John Chevedden Melissa Davis The Street Sweeper GAMCO Investors Lone Star Value Management The Street Sweeper James McRitchie John Chevedden Elliott Management Concerned Shareholders of EMC and VMware Gotham City Research Alecto Research Cannell Capital LLC Villere St Denis J & Co. NorthStar Asset Management William Steiner Privet Fund Management Mustang Capital Management NorthStar Asset Management
Other Other Governance Other Other Board-Related Activism Board-Related Activism Other Board-Related Activism Board-Related Activism Board-Related Activism M&A Activism Other Other Board-Related Activism Board-Related Activism Other Governance Other Governance Board-Related Activism Board-Related Activism Other Governance
TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT
MAST Capital Management Viex Capital (Formerly Vertex Capital Advisors) The Street Sweeper Shawn McCreight Long-Short Value Lakewood Capital Management John Chevedden David Callan Pump Stopper AB Value Management LLC Aristides Capital Elliott Management The Street Sweeper Starboard Value Stadium Capital Management John Chevedden The Street Sweeper RDG Capital Fund Management Discovery Group
Board-Related Activism Board-Related Activism Other Board-Related Activism Other Other Other Governance Business Strategy Other Board-Related Activism Other M&A Activism Other Balance Sheet Activism Board-Related Activism Board-Related Activism Other Board-Related Activism M&A Activism
TMT – Telecom, Media & Technology. Continued on next time. Source: Activist Insight.
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Corporates Campaigns Initiated 2015 — U.S. Nonfinancial (Continued) Company International Business Machines Corporation (IBM) International Business Machines Corporation (IBM)
Fitch Sector TMT TMT
Activist John Chevedden Kenneth Steiner
Action Group Other Governance Other
Interpace Diagnostics, LLC. Interpublic Group of Companies, Inc. iPass Inc. iPass Inc. IZEA, Inc. Lionbridge Technologies Inc. LoJack Corporation Loral Space & Communications Inc. MagnaChip Semiconductor Corp. MagnaChip Semiconductor Corp. Maxwell Technologies, Inc. MedAssets Inc. Media General Inc. Media General Inc. MeetMe, Inc. Meru Networks, Inc. Microsoft Corp. Microvision Inc. MSCI Inc. MSCI Inc. NCR Corp. NCR Corp. Netflix Inc. Netflix Inc. Neustar Inc. News Corp. Novation Companies Numerex Corp. Oracle Paycom Software, Inc. Paycom Software, Inc. Pericom Semiconductor Corp. Polycom, Inc. Premier Exhibitions Procera Networks, Inc. Procera Networks, Inc. Proofpoint, Inc. Pulse Electronics Corp. Qualcomm Quinstreet Inc. Qumu (Formerly Rimage Corporation) Reading International, Inc. Reading International, Inc. Reading International, Inc. RELM Wireless Corp. Resonant Inc. Resonant Inc. Rightside Group, Ltd. Rofin-Sinar Technologies Inc. root9B Technologies Rosetta Stone Inc. Rosetta Stone Inc. Rosetta Stone Inc. Rosetta Stone Inc. Rubicon Technology Inc.
TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT
Heartland Advisors, Inc. Elliott Management Maguire Asset Management Silk Investment Advisors Privet Fund Management Glen Capital Partners LLC Engine Capital LP MHR Engaged Capital Pleasant Lake Partners Viex Capital (Formerly Vertex Capital Advisors) Starboard Value OppenheimerFunds, Inc. Starboard Value The Street Sweeper Viex Capital (Formerly Vertex Capital Advisors) JANA Partners The Street Sweeper ValueAct Capital Partners Naya Capital Management Spruce Point Capital Management P. Schoenfeld Asset Management LP Citron Research Myra Young Lakewood Capital Management The Nathan Cummings Foundation Lone Star Value Management Viex Capital (Formerly Vertex Capital Advisors) UAW Retiree Medical Benefits Trust The Street Sweeper Alecto Research Montage Technology Group Elliott Management Lawndale Capital Management Cannell Capital LLC Castle Union LLC Muddy Waters Research AB Value Management LLC JANA Partners The Street Sweeper Dolphin Associates LLC Mark Cuban Whitney Tilson Lawndale Capital Management Fundamental Global Partners The Street Sweeper Park City Capital Daniel Negari SilverArrow Capital Pump Stopper Jay Yoon The D3 Family Funds Roumell Asset Management RDG Capital Fund Management Paragon Technologies
Business Strategy Board-Related Activism Board-Related Activism Board-Related Activism Board-Related Activism Board-Related Activism Board-Related Activism Board-Related Activism Board-Related Activism M&A Activism Balance Sheet Activism Business Strategy M&A Activism M&A Activism Other Board-Related Activism Business Strategy Other Board-Related Activism M&A Activism Other Balance Sheet Activism Other Other Governance Other Other Board-Related Activism M&A Activism Other Governance Other Other M&A Activism M&A Activism Balance Sheet Activism Balance Sheet Activism Board-Related Activism Other Board-Related Activism Balance Sheet Activism Other Board-Related Activism Board-Related Activism Board-Related Activism Board-Related Activism Board-Related Activism Other Board-Related Activism Board-Related Activism Board-Related Activism Other Other Business Strategy M&A Activism M&A Activism Board-Related Activism
TMT – Telecom, Media & Technology. Continued on next page. Source: Activist Insight.
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Corporates Campaigns Initiated 2015 — U.S. Nonfinancial (Continued) Company
Fitch Sector
S&P Global Inc. (Formerly McGraw-Hill) TMT Seagate Technology Plc TMT Sevcon, Inc. TMT Sitestar Corp. TMT Sitestar Corp. TMT Sizmek Inc. TMT SolarCity TMT Solera Holdings, Inc. TMT Solitron Devices, Inc. TMT Solitron Devices, Inc. TMT StarTek Inc. TMT Straight Path Communications Inc. TMT Straight Path Communications Inc. TMT Straight Path Communications Inc. TMT SunEdison Inc. (MEMC Electronic Materials Inc.) TMT SunEdison Inc. (MEMC Electronic Materials Inc.) TMT Support.com, Inc. TMT Synacor, Inc. TMT Synacor, Inc. TMT TEGNA Inc. (Formerly Gannett Co.) TMT TEGNA Inc. (Formerly Gannett Co.) TMT TeleCommunication Systems Inc. TMT TeleCommunication Systems Inc. Telenav, Inc. Telephone & Data Systems Inc. Telos Corp. Teradata Corporation Textura Corporation The Western Union Company The9 Limited TheStreet, Inc. TheStreet, Inc. TigerLogic Time Warner Cable Inc. Time Warner Cable Inc. Time Warner Inc. TrueCar, Inc. TubeMogul, Inc. Turtle Beach Corporation Twenty-First Century Fox Inc. Ultratech, Inc. UniPixel Universal Display Corp. Verizon Communications Inc. Viacom Inc. Viad Corp. Viavi Solutions (Formerly JDS Uniphase Corp.) VMware Inc. Voltari Corp. Vonage Holdings Corp. Yahoo! Yahoo! Yahoo! YuMe, Inc. YuMe, Inc. Ameren Corp. Ameren Corp. Atlantic Power Corporation
TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT Utilities Utilities Utilities
Activist
Action Group
Kenneth Steiner Lakewood Capital Management GAMCO Investors Jeffrey Moore Inelegant Investor Meruelo Investment Partners Kynikos Associates (Jim Chanos) Off Wall Street Eriksen Capital Management Mayflower Capital Partners B.V. Engine Capital LP Sinclair Upton Research Kerrisdale Capital Management Long-Short Value Bronte Capital Kenneth Steiner Viex Capital (Formerly Vertex Capital Advisors) JEC Capital Partners Ratio Capital Management Carl Icahn International Brotherhood of Teamsters General Fund Northern Right Capital Management, L.P. (Formerly Becker Drapkin Management) Cannell Capital LLC Nokomis Capital, LLC GAMCO Investors Wynnefield Capital Matrix Asset Advisors, Inc. Northwater Capital Management Anonymous Analytics The Street Sweeper Spear Point Cannell Capital LLC Viex Capital (Formerly Vertex Capital Advisors) As You Sow International Brotherhood of Electrical Workers Pension Fund Kenneth Steiner The Friendly Bear The Street Sweeper The Street Sweeper ValueAct Capital Partners Neuberger Berman Group The Street Sweeper The Street Sweeper International Brotherhood of Electrical Workers Pension Fund GAMCO Investors JCP Investment Management Sandell Asset Management Concerned Shareholders of EMC and VMware The Street Sweeper The Street Sweeper Starboard Value SpringOwl Asset Management Canyon Capital Advisors Viex Capital (Formerly Vertex Capital Advisors) AVI Partners (Active Value Investors) William Steiner John Chevedden Mangrove Partners
Board-Related Activism Other Board-Related Activism Board-Related Activism M&A Activism Balance Sheet Activism Other Other Board-Related Activism Other Governance Board-Related Activism Other Other Other Board-Related Activism Other Governance Board-Related Activism Board-Related Activism Board-Related Activism Board-Related Activism Other Governance Board-Related Activism Business Strategy Board-Related Activism Board-Related Activism M&A Activism M&A Activism M&A Activism Other Other Board-Related Activism Board-Related Activism Board-Related Activism Other Governance Other Governance Other Governance Other Other Other Board-Related Activism Business Strategy Other Other Other M&A Activism Board-Related Activism Board-Related Activism Balance Sheet Activism Other Other Balance Sheet Activism Board-Related Activism M&A Activism Balance Sheet Activism Board-Related Activism Board-Related Activism Board-Related Activism Board-Related Activism
TMT – Telecom, Media & Technology. Continued on next page. Source: Activist Insight.
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Corporates Campaigns Initiated 2015 â&#x20AC;&#x201D; U.S. Nonfinancial (Continued) Company
Fitch Sector
Activist
Action Group
Cadiz Inc. Cadiz Inc. Clean Energy Fuels Corp. DTE Energy Company Duke Energy Corporation Edison International FirstEnergy Corp. Forcefield Energy Gas Natural Inc. Pinnacle West Capital TerraForm Power Inc.
Utilities Utilities Utilities Utilities Utilities Utilities Utilities Utilities Utilities Utilities Utilities
GeoInvesting Pump Stopper The Street Sweeper John Chevedden John Chevedden John Chevedden John Chevedden Richard Pearson InterTech Group As You Sow Appaloosa Management
Other Other Other Board-Related Activism Other Other Other Governance Other Board-Related Activism Other Governance Other Governance
TMT â&#x20AC;&#x201C; Telecom, Media & Technology. Source: Activist Insight.
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Corporates Appendix C Campaigns Initiated 2016 — U.S. Nonfinancial Company
Fitch Sector
Activist
Action Group
Arch Coal Inc. Arconic Inc. (Formerly Alcoa Inc.) Arconic Inc. (Formerly Alcoa Inc.) Ashland Inc. Axiall Corporation Axiall Corporation Axiall Corporation Axiall Corporation Axiall Corporation Barnwell Industries, Inc. Barnwell Industries, Inc. BNK Petroleum Inc. Boart Longyear Limited BP Prudhoe Bay Royalty Trust Bristow Group Inc. Bristow Group Inc. Cabot Oil & Gas Corporation Cabot Oil & Gas Corporation CARBO Ceramics Inc. CF Industries Holdings Inc. Chemours Co. Chesapeake Energy Corporation Chevron Chromadex Corporation Clayton Williams Energy Inc. Coeur Mining CONSOL Energy Inc. CONSOL Energy Inc. CONSOL Energy Inc. Continental Resources Inc. Dakota Plains Holdings, Inc. Dakota Plains Holdings, Inc. Diamond Offshore Drilling Inc. Discovery Energy Corp. Ener-Core Inc. Exxon Mobil Exxon Mobil Exxon Mobil Ferro Corp. Ferro Corp. Ferro Corp. Flotek Industries FMC Corp. Friedman Industries Inc. Gevo, Inc. Goodrich Petroleum Corp. Granite Falls Energy, LLC Halcon Resources Corp. Innophos Holdings Intrexon Corp. Lonestar Resources US Inc. Magellan Petroleum Corp. Marathon Petroleum Marathon Petroleum Nabors Industries Ltd. Nabors Industries Ltd.
Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials
Monarch Alternative Capital LP Kenneth Steiner Elliott Management Elmrox Investment Group LLC Westlake Chemical Partners Franklin Resources Inc. Brigade Capital Management Franklin Resources Inc. Westlake Chemical Partners Ned Sherwood Bradley Tirpak Livermore Partners Volmanac Alpha Exposure Richard Pearson Jay Yoon California Public Employees’ Retirement System (CalPERS) Office of the Comptroller of the City of New York Spotlight Research (Formerly Forensic Research Analyst) John Chevedden Citron Research The Nathan Cummings Foundation Newground Social Investment, SPC Bleecker Street Research Ares Management The Street Sweeper Greenlight Capital, Inc. California Public Employees’ Retirement System (CalPERS) Office of the Comptroller of the City of New York Livermore Partners Lone Star Value Management Lone Star Value Management Long-Short Value Avista Capital Partners (DEC Funding LLC) Sail Capital Partners Ellen M. Higgins Trust Kenneth Steiner Office of the Comptroller of the City of New York Engine Capital LP FrontFour Capital Group Kenneth Steiner FourWorld Capital Management Jonathan Kalodimos Poplar Point Capital Management Volmanac Franklin Resources Inc. Glacial Lakes Energy, LLC Franklin Resources Inc. FrontFour Capital Group Spotlight Research (Formerly Forensic Research Analyst) Leucadia National Corporation The Street Sweeper Elliott Management Elliott Management CtW Investment Group Office of the Comptroller of the City of New York
Board-Related Activism Board-Related Activism Board-Related Activism Balance Sheet Activism Board-Related Activism Business Strategy M&A Activism M&A Activism M&A Activism Board-Related Activism Board-Related Activism Board-Related Activism Other Other Other Other Other Governance Other Governance Other Other Governance Other Other Governance Other Governance Other Board-Related Activism Other Board-Related Activism Other Governance Other Governance Other Board-Related Activism Other Governance Other Board-Related Activism Board-Related Activism Board-Related Activism M&A Activism Other Governance M&A Activism M&A Activism Other Governance Other Other Governance Board-Related Activism Other Board-Related Activism Other Governance Board-Related Activism Board-Related Activism Other Board-Related Activism Other Balance Sheet Activism M&A Activism Board-Related Activism Other Governance
TMT – Telecom, Media & Technology. Continued on next page. Source: Activist Insight.
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Corporates Campaigns Initiated 2016 — U.S. Nonfinancial (Continued) Company
Fitch Sector
Activist
Action Group
Noble Energy, Inc. Noble Energy, Inc. Northern Oil and Gas, Inc. Penn Virginia Corporation Pershing Gold Corporation PPG Industries Praxair Inc. QEP Resources, Inc. Range Resources Corporation Rentech Rentech Resolute Energy Corporation Rowan Companies plc San Juan Basin Royalty Trust Stone Energy Corp. SunCoke Energy Inc. SunCoke Energy Inc. SunCoke Energy Partners SunCoke Energy Partners SunCoke Energy Partners Synthesis Energy United States Antimony Corp. VAALCO Energy Inc. Westmoreland Coal Co. Willbros Group Inc. Willbros Group Inc. Williams Companies, Inc. Accuride Corp. Advanced Drainage Systems, Inc. Allison Transmission Holdings Inc. Allison Transmission Holdings Inc. Amplify Snack Brands, Inc. Andersons Inc. Apollo Education Group Apollo Education Group Apollo Education Group Apollo Education Group Barfresh Food Group Inc. BorgWarner Inc. Buffalo Wild Wings Inc. Buffalo Wild Wings Inc. Buffalo Wild Wings Inc. Cal-Maine Foods Inc. Capella Education Co. Career Education Corp. CDI Corp. CDI Corp. CDI Corp. CDI Corp. Chegg Inc. Chipotle Mexican Grill Inc. Chipotle Mexican Grill Inc. Chipotle Mexican Grill Inc. Chipotle Mexican Grill Inc. Chipotle Mexican Grill Inc. ClubCorp. ClubCorp. ClubCorp. ClubCorp.
Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Basic Materials Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer
California Public Employees’ Retirement System (CalPERS) Office of the Comptroller of the City of New York TRT Holdings Wexford Capital Bleecker Street Research Jonathan Kalodimos Jonathan Kalodimos Gerald R. Armstrong SailingStone Capital Partners LLC The Street Sweeper Lone Star Value Management The Street Sweeper Blue Harbour Group Southwest Bank Concerned Shareholders of Stone Energy Kingstown Capital Mangrove Partners Foxhill Capital Partners Capital Family Holdings Inc. Savitr Capital White Diamond Research SAVE Partners (Locke Partners) Lone Star Value Management Mangrove Partners Lawndale Capital Management Lawndale Capital Management Corvex Management LP Coliseum Capital Management Lakewood Capital Management Ashe Capital Management Ashe Capital Management Long-Short Value HC2 Holdings, Inc. Long-Short Value Alberta Investment Management Corporation (AIMCo) First Pacific Advisors LLC Schroders Wolverine Asset Management John Chevedden Marcato Capital Management Marcato Capital Management Marcato Capital Management Newbrook Capital Long-Short Value Richard Pearson Bradley Radoff, BLR (Fondren Management) Bradley Radoff, BLR (Fondren Management) Bradley Radoff, BLR (Fondren Management) Bradley Radoff, BLR (Fondren Management) Copperfield Research Pershing Square Capital Management CtW Investment Group Amalgamated Bank California Public Employees’ Retirement System (CalPERS) Office of the Comptroller of the City of New York Kerrisdale Capital Management FrontFour Capital Group FrontFour Capital Group FrontFour Capital Group
Other Governance Other Governance Board-Related Activism Board-Related Activism Other Other Governance Other Governance Board-Related Activism Board-Related Activism Other Board-Related Activism Other Board-Related Activism Other Other Governance Board-Related Activism Board-Related Activism M&A Activism M&A Activism M&A Activism Other Board-Related Activism M&A Activism Balance Sheet Activism Board-Related Activism Other Governance Board-Related Activism M&A Activism Other Board-Related Activism Other Governance Other M&A Activism Other M&A Activism M&A Activism M&A Activism Board-Related Activism Other Governance Balance Sheet Activism Board-Related Activism Business Strategy Other Other Other Board-Related Activism Business Strategy M&A Activism Other Other Board-Related Activism Board-Related Activism Board-Related Activism Other Governance Other Governance Other Balance Sheet Activism Business Strategy M&A Activism
TMT – Telecom, Media & Technology. Continued on next page. Source: Activist Insight.
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Corporates Campaigns Initiated 2016 — U.S. Nonfinancial (Continued) Company
Fitch Sector
Activist
Action Group
Colgate-Palmolive Co. Creative Learning Corp. Dana Incorporated (Formerly Dana Holding Corporation) Dean Foods Company Del Frisco’s Restaurant Group DeVry Education Group Inc. DHI Group Domino’s Pizza Inc. DS Healthcare Group Inc. DS Healthcare Group Inc. Eastside Distilling, Inc. Ecolab Inc. Energous Corporation Energous Corporation Farmer Brothers Company Farmer Brothers Company Federal-Mogul Holdings Corp. Fiesta Restaurant Group, Inc. Ford Motor Company Fuel Systems Solutions, Inc. Fuel Systems Solutions, Inc. Goodyear Tire & Rubber Co. Goodyear Tire & Rubber Co. Goodyear Tire & Rubber Co. H&R Block Inc. H&R Block Inc. H&R Block Inc. H&R Block Inc. H&R Block Inc. Harman International Industries Inc. Hill International Inc. Hill International Inc. Hill International Inc. Hormel Foods Corporation Houghton Mifflin Harcourt Co. Iconix Brand Group Inc. Insignia Systems Inc. Insignia Systems Inc. iRobot Corp. iRobot Corp. Kate Spade & Co. McDonald’s Corp. McDonald’s Corp. MDC Partners Inc. Monster Beverage Corp. Monster Beverage Corp. Monster Beverage Corp. Monster Worldwide Inc. Monster Worldwide Inc. Myers Industries Inc. Nathan’s Famous Inc. National Beverage Corp. Omega Protein Corporation Omega Protein Corporation PACCAR Inc. PACCAR Inc. Planet Fitness Post Holdings, Inc.
Consumer Consumer
John Chevedden FranVentures, LLC
Other Governance Board-Related Activism
Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer
John Chevedden Lakewood Capital Management Engine Capital LP International Value Advisers LLC Barington Capital Group GeoInvesting Daniel Khesin Daniel Khesin Grover Wickersham John Chevedden Aristides Capital The Street Sweeper Save Farmer Bros. Save Farmer Bros. GAMCO Investors JCP Investment Management John Chevedden Pier Antonio Costamagna Lloyd Miller Newbrook Capital Marcato Capital Management John Chevedden Mario Costanz Mario Costanz James McRitchie John Chevedden Myra Young Atlantic Investment Management Petrus Asset Management Bulldog Investors Bulldog Investors Lakewood Capital Management Anchorage Capital Group, L.L.C. Huber Capital Management LLC Nicholas Swenson (Groveland Capital) Biglari Holdings Inc. Red Mountain Capital Partners Red Mountain Capital Partners Caerus Investors Equality Network Foundation John Chevedden Gotham City Research Citron Research Office of the Comptroller of the City of New York United Brotherhood of Carpenters Pension Fund Alden Global Capital (MediaNews Group) Alden Global Capital (MediaNews Group) GAMCO Investors Barry Pasternack Glaucus Research Group Wynnefield Capital Wynnefield Capital California Public Employees’ Retirement System (CalPERS) Office of the Comptroller of the City of New York Spruce Point Capital Management The Humane Society of the United States
Other Governance Other M&A Activism Board-Related Activism Board-Related Activism Other Board-Related Activism Business Strategy Board-Related Activism Other Governance Other Other Board-Related Activism Business Strategy M&A Activism Business Strategy Balance Sheet Activism M&A Activism M&A Activism Other Balance Sheet Activism Other Governance Business Strategy M&A Activism Other Governance Other Governance Other Governance M&A Activism Board-Related Activism Board-Related Activism Other Governance Other Board-Related Activism Board-Related Activism Balance Sheet Activism Board-Related Activism Board-Related Activism Business Strategy M&A Activism Other Governance Other Governance Other Other Other Governance Other Governance Board-Related Activism M&A Activism Board-Related Activism Board-Related Activism Other Balance Sheet Activism Board-Related Activism Other Governance Other Governance Other Other Governance
TMT – Telecom, Media & Technology. Continued on next page. Source: Activist Insight.
Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
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Corporates Campaigns Initiated 2016 — U.S. Nonfinancial (Continued) Company Rave Restaurant Group Inc. (Formerly Pizza Inn Inc.) Rave Restaurant Group Inc. (Formerly Pizza Inn Inc.) Rave Restaurant Group Inc. (Formerly Pizza Inn Inc.) Reed’s, Inc. RiceBran Technologies School Specialty Inc. SeaWorld Entertainment, Inc. Service Corp. International Shake Shack Shutterfly Inc. Shutterfly Inc. SolarWindow Technologies Sonoco Products Company Stanley Furniture Co. Inc. StoneMor Partners Superior Industries International Inc. Superior Industries International Inc. Supreme Industries Inc. Sysco Corp. TeamHealth Holdings, Inc. Tesla Motors Tesla Motors Tesla Motors Tesla Motors Tesla Motors Tesla Motors Tesla Motors Tesla Motors Tesla Motors Tesla Motors Tesla Motors Tesla Motors The Habit Restaurants, Inc. The WhiteWave Foods Company The WhiteWave Foods Company The WhiteWave Foods Company Tyson Foods, Inc. United Natural Foods United Natural Foods United Natural Foods Universal Technical Institute, Inc. Volt Information Sciences Inc. Vuzix Corporation Whole Foods Market Inc. Whole Foods Market Inc. Wingstop Inc. Wingstop Inc. Wingstop Inc. Workhorse Group Inc. Boyd Gaming Corporation ILG (Formerly Interval Leisure Group) MGM Resorts International 22nd Century Group, Inc. Abeona Therapeutics Inc. (Formerly PlasmaTech Biopharmaceuticals, Inc. and Access Pharmaceuticals) Acadia Healthcare Co Inc. Adamis Pharmaceuticals Corporation
Fitch Sector
Activist
Action Group
Consumer
Point Clear Strategic Capital (John Gilliam)
Balance Sheet Activism
Consumer
Point Clear Strategic Capital (John Gilliam)
Board-Related Activism
Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer Gaming, Lodging & Leisure Gaming, Lodging & Leisure Gaming, Lodging & Leisure Healthcare
Point Clear Strategic Capital (John Gilliam) Committee to Rescue Reed’s LF-RB Management Steel Partners Holdings L.P. Gregory Taxin International Brotherhood of Teamsters General Fund Long-Short Value Ancora Advisors LLC Eastbay Asset Management The Street Sweeper William Steiner Hale Partnership Capital Management Luma Asset Management GAMCO Investors GAMCO Investors Cliffside Research International Brotherhood of Teamsters General Fund JANA Partners Stanphyl Capital Cable Car Capital SpringOwl Asset Management Kynikos Associates (Jim Chanos) Devonshire Research Group LLC Citron Research CtW Investment Group Arkansas Teacher Retirement System P. Evan Stephens Ellen Prasinos City of Riviera Beach Police Pension Fund James McRitchie Melissa Davis Kenneth Bottesi Ampera Capital LLC Kenneth Bottesi Lakewood Capital Management James McRitchie John Chevedden Myra Young Coliseum Capital Management Livermore Partners The Street Sweeper Trillium Asset Management Corp. James McRitchie Whitney Tilson Diamond Technology Management GeoInvesting Mako Research Land and Buildings UNITE HERE Land and Buildings The Street Sweeper
M&A Activism Board-Related Activism Board-Related Activism M&A Activism Board-Related Activism Other Governance Other M&A Activism M&A Activism Other Other Governance Board-Related Activism Other Board-Related Activism Other Governance Other Other Governance Board-Related Activism Other Other Other Other Other Other Board-Related Activism M&A Activism M&A Activism M&A Activism M&A Activism Other Governance Other M&A Activism M&A Activism Other Governance Other Other Governance Other Governance Other Governance Board-Related Activism Balance Sheet Activism Other Other Governance Other Governance Other Other Other Other Business Strategy Other Governance Board-Related Activism Other
Healthcare Healthcare Healthcare
Mako Research California State Teachers’ Retirement System (CalSTRS) The Street Sweeper
Other Other Governance Other
TMT – Telecom, Media & Technology. Continued on next page. Source: Activist Insight.
Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
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Corporates Campaigns Initiated 2016 — U.S. Nonfinancial (Continued) Company
Fitch Sector
Activist
Action Group
Adeptus Health Inc. Adeptus Health Inc. Alexza Pharmaceuticals Amedica Corporation Amedica Corporation Amgen Inc. Amgen Inc. Amgen Inc. Anavex Life Sciences Anavex Life Sciences Apricus Biosciences, Inc. Arrhythmia Research Technology Inc. AveXis Inc. AveXis Inc. Baxter International Inc. Becton, Dickinson & Co. Bio-Path Holdings BioPharmX Corporation BiOptix (Formerly Venaxis Inc.) BiOptix (Formerly Venaxis Inc.) BiOptix (Formerly Venaxis Inc.) BiOptix (Formerly Venaxis Inc.) Birner Dental Management Services Bovie Medical Corporation Bovie Medical Corporation Brookdale Senior Living Brookdale Senior Living Capital Senior Living Corp. Celator Pharmaceuticals Inc. Celgene Corporation Celgene Corporation Clearside Biomedical Inc. Cogentix Medical Cogentix Medical Cogentix Medical ConforMIS, Inc. Connecture, Inc. Cyanotech Corporation Cyanotech Corporation Depomed Inc. Depomed Inc. diaDexus, Inc. Eagle Pharmaceuticals Inc. Ekso Bionics Exact Sciences Corporation Express Scripts Holding Company Express Scripts Holding Company Five Star Quality Care Inc. Five Star Quality Care Inc. Five Star Quality Care Inc. Flex Pharma Inc. GenMark Diagnostics Gilead Sciences Immunomedics Inc. Immunomedics Inc. Immunomedics Inc. Insulet Corporation Ironwood Pharmaceuticals Inc.
Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare
Lakewood Capital Management Deerfield Management Company LP (James Flynn) Lansdowne Partners The Street Sweeper VCM Group LLC (Value Creation Management Group) AJF Financial Services Newground Social Investment, SPC Walden Asset Management Aristides Capital GeoInvesting Sarissa Capital Management REF Securities & Co. Citron Research Mako Research John Chevedden Kenneth Steiner The Street Sweeper Franklin Resources Inc. Marlin Capital Marlin Capital Noble Equity Capital Management Noble Equity Capital Management Mark Birner Great Point Partners Great Point Partners Land and Buildings Land and Buildings Lucus Advisors (Radix Partners (Formerly Red Alder)) The Street Sweeper John Chevedden UAW Retiree Medical Benefits Trust Cliffside Research Lewis Pell Lewis Pell Lewis Pell SkyTides LLC Francisco Partners Meridian OHC Partners Meridian OHC Partners Starboard Value Starboard Value Meson Capital Partners Hudson Executive Capital LP The Street Sweeper The Street Sweeper Citron Research Dialectic Capital Management Senior Star Management Company (Thomas Group) Senior Star Management Company (Thomas Group) Senior Star Management Company (Thomas Group) Cliffside Research The Street Sweeper James McRitchie VenBio Select Advisor LLC VenBio Select Advisor LLC VenBio Select Advisor LLC SkyTides LLC Phase Five Research
Other Board-Related Activism M&A Activism Other Board-Related Activism Other Governance Other Governance Other Governance Other Other Board-Related Activism Board-Related Activism Other Other Board-Related Activism Board-Related Activism Other Board-Related Activism Balance Sheet Activism Board-Related Activism M&A Activism Other Governance Board-Related Activism Board-Related Activism M&A Activism Balance Sheet Activism M&A Activism Board-Related Activism Other Other Governance Other Governance Other Board-Related Activism Other Governance Other Other Board-Related Activism Board-Related Activism Other Governance Board-Related Activism M&A Activism Board-Related Activism Board-Related Activism Other Other Other Other Balance Sheet Activism Board-Related Activism M&A Activism Other Other Other Governance Balance Sheet Activism Board-Related Activism Other Other Other
TMT – Telecom, Media & Technology. Continued on next page. Source: Activist Insight.
Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
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Corporates Campaigns Initiated 2016 — U.S. Nonfinancial (Continued) Company
Fitch Sector
Activist
Action Group
Johnson & Johnson Johnson & Johnson Johnson & Johnson MannKind Corp. Mast Therapeutics, Inc. McKesson Corp. MediciNova Inc. Medivation, Inc. Medivation, Inc. Medivation, Inc. Merck & Co., Inc. Merck & Co., Inc. MGT Capital Investments, Inc. Natural Alternatives International Inc. Neurotrope, Inc. OncoGenex Pharmaceuticals OraSure Technologies Relypsa Inc. Relypsa Inc. RTI Surgical Inc. Sage Therapeutics Inc. Skyline Medical Inc. Sorrento Therapeutics Sorrento Therapeutics Sorrento Therapeutics St. Jude Medical, Inc. Surgery Partners Inc. The Medicines Company TherapeuticsMD TransEnterix Inc. TransEnterix Inc. TransEnterix Inc. Trovagene Inc. Trovagene Inc. Universal Health Services Universal Health Services Vertex Pharmaceuticals Inc. Vertex Pharmaceuticals Inc. Vertex Pharmaceuticals Inc. Zafgen Inc. A M Castle & Co. A M Castle & Co. Aerocentury Corp. Air Methods Corporation Air T Inc. Allegiant Travel Co. American Airlines Group Inc. American Airlines Group Inc. American Superconductor Corporation Arotech Corporation Arotech Corporation Ascent Capital Group Avis Budget Group Blue Bird Corp. Blue Bird Corp. Blue Sphere Corp. Braas Monier Building Group Brink’s Co. Brink’s Co.
Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Healthcare Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials Industrials
Kenneth Steiner Artisan Partners Jonathan Kalodimos White Diamond Research Martin Shkreli International Brotherhood of Teamsters General Fund Mako Research Sanofi Sanofi James McRitchie Kenneth Steiner William Steiner Volmanac Cliffside Research Iroquois Capital Management VCM Group LLC (Value Creation Management Group) Richard Pearson White Diamond Research The Street Sweeper Krensavage Asset Management Kerrisdale Capital Management The Street Sweeper Wildcat Capital Management Wildcat Capital Management Wildcat Capital Management Muddy Waters Research The Street Sweeper Sarissa Capital Management Lakewood Capital Management The Street Sweeper Bleecker Street Research White Diamond Research Bridger Management LLC Bridger Management LLC California Public Employees’ Retirement System (CalPERS) Office of the Comptroller of the City of New York Office of the New York State Comptroller City of Philadelphia Board of Pensions and Retirement International Brotherhood of Electrical Workers Pension Fund Kerrisdale Capital Management Raging Capital Management Stone House Capital Management Brookhurst Capital Voce Capital Management Biglari Holdings Inc. CtW Investment Group Hoplite Capital Management John Chevedden The Street Sweeper Admiralty Partners (Jon B. Kutler) Echo Lake Capital Okumus Fund Management SRS Investment Management GeoInvesting Spitfire Capital LLC Lazarus Management Company Petrus Advisers Starboard Value William Steiner
Board-Related Activism M&A Activism Other Governance Other Other Other Governance Other Board-Related Activism M&A Activism Other Governance Board-Related Activism Other Governance Other Other Board-Related Activism Board-Related Activism Other Other Other Board-Related Activism Other Other Balance Sheet Activism Board-Related Activism Other Governance Other Other Board-Related Activism Other Other Other Other Board-Related Activism Business Strategy Other Governance Other Governance Board-Related Activism Other Governance Other Governance Other Board-Related Activism Board-Related Activism M&A Activism Board-Related Activism Other Governance Board-Related Activism Other Board-Related Activism Other Board-Related Activism Other Governance Board-Related Activism Board-Related Activism M&A Activism M&A Activism Board-Related Activism M&A Activism Board-Related Activism Other Governance
TMT – Telecom, Media & Technology. Continued on next page. Source: Activist Insight.
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Corporates Campaigns Initiated 2016 â&#x20AC;&#x201D; U.S. Nonfinancial (Continued) Company
Fitch Sector
Activist
Action Group
Broadwind Energy, Inc.
Industrials
The Street Sweeper
Other
Capstone Turbine Corporation
Industrials
VCM Group LLC (Value Creation Management Group)
Board-Related Activism
Caterpillar Inc.
Industrials
Greenlight Capital, Inc.
Other
Caterpillar Inc.
Industrials
John Chevedden
Board-Related Activism
Caterpillar Inc.
Industrials
Myra Young
Other Governance
Celadon Group Inc.
Industrials
Jay Yoon
Other
Command Security Corp.
Industrials
The Street Sweeper
Other
Covenant Transportation Group, Inc.
Industrials
Cliffside Research
Other
Cummins Inc.
Industrials
John Chevedden
Other Governance
Deere & Company
Industrials
Cascade Investment LLC (Bill Gates)
Board-Related Activism
Deere & Company
Industrials
Jantz Management LLC
Other Governance
Delta Air Lines Inc.
Industrials
International Brotherhood of Electrical Workers Pension Fund
Other Governance
Delta Air Lines Inc.
Industrials
International Brotherhood of Teamsters General Fund
Other Governance
Dover Corp.
Industrials
John Chevedden
Other Governance
Dycom Industries, Inc.
Industrials
Lakewood Capital Management
Other
Echo Global Logistics
Industrials
Spruce Point Capital Management
Other
Ecology and Environment
Industrials
Mill Road Capital
Board-Related Activism
Energy Recovery, Inc.
Industrials
Cannell Capital LLC
Other
EnSync, Inc.
Industrials
Melodious Investments Company
Board-Related Activism
Esterline Technologies Corporation
Industrials
First Pacific Advisors LLC
Board-Related Activism
Expeditors International of Washington
Industrials
John Chevedden
Other
Expeditors International of Washington
Industrials
William Steiner
Other
FedEx Corporation
Industrials
Newground Social Investment, SPC
Other Governance
FedEx Corporation
Industrials
International Brotherhood of Teamsters General Fund
Other
Genco Shipping & Trading Ltd.
Industrials
Apollo Global Management LLC
Board-Related Activism
General Dynamics Corp.
Industrials
Jonathan Kalodimos
Other Governance
Global Power Equipment Group Inc.
Industrials
Wynnefield Capital
Board-Related Activism
Great Lakes Dredge & Dock Company
Industrials
Clinton Group
Balance Sheet Activism
Great Lakes Dredge & Dock Company
Industrials
Clinton Group
Board-Related Activism
Great Lakes Dredge & Dock Company
Industrials
Privet Fund Management
Board-Related Activism
Great Lakes Dredge & Dock Company
Industrials
Clinton Group
Business Strategy
Honeywell International Inc.
Industrials
International Brotherhood of Teamsters General Fund
Board-Related Activism
Honeywell International Inc.
Industrials
John Chevedden
Board-Related Activism
Honeywell International Inc.
Industrials
Cathy Snyder
Other Governance
Honeywell International Inc.
Industrials
June Kreutzer
Other Governance
HRG Group, Inc.
Industrials
Fortress Investment Group LLC
Board-Related Activism
Illinois Tool Works Inc.
Industrials
AFL-CIO
Other Governance
ITT Inc. (Formerly ITT Corporation)
Industrials
Jonathan Kalodimos
Other Governance
Kansas City Southern
Industrials
James McRitchie
Other Governance
Kansas City Southern
Industrials
Myra Young
Other Governance
Keweenaw Land Association, Ltd.
Industrials
Cornwall Capital Management
Board-Related Activism
Keweenaw Land Association, Ltd.
Industrials
Cornwall Capital Management
M&A Activism
LB Foster Co.
Industrials
Legion Partners Asset Management
Board-Related Activism
Lennar Corp.
Industrials
William Steiner
Other Governance
LightPath Technologies Inc.
Industrials
The Street Sweeper
Other
MFRI Inc.
Industrials
Strategic Value Partners Group
Board-Related Activism
MFRI Inc.
Industrials
Strategic Value Partners Group
M&A Activism
MYR Group
Industrials
Engine Capital LP
Board-Related Activism
Ocean Power Technologies
Industrials
The Street Sweeper
Other
Odyssey Marine Exploration
Industrials
The Street Sweeper
Other
P&F Industries
Industrials
Lawndale Capital Management
Balance Sheet Activism
P&F Industries
Industrials
Lawndale Capital Management
Board-Related Activism
P&F Industries
Industrials
Lawndale Capital Management
Other Governance
TMT â&#x20AC;&#x201C; Telecom, Media & Technology. Continued on nest page. Source: Activist Insight.
Activist Activities II: Emerging Trends, Rising Influence March 9, 2017
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Corporates Campaigns Initiated 2016 — U.S. Nonfinancial (Continued) Company
Fitch Sector
Activist
Action Group
PICO Holdings Inc.
Industrials
Leder Holdings LLC
Board-Related Activism
PICO Holdings Inc.
Industrials
Leder Holdings LLC
Other Governance
PICO Holdings Inc.
Industrials
River Road Asset Management
Other
PulteGroup Inc.
Industrials
Elliott Management
Board-Related Activism
PulteGroup Inc.
Industrials
William Pulte
Board-Related Activism
Raven Industries
Industrials
GeoInvesting
Other
Rockwell Collins Inc.
Industrials
Starboard Value
M&A Activism
SBA Communications Corporation
Industrials
California Public Employees’ Retirement System (CalPERS)
Other Governance
SBA Communications Corporation
Industrials
Office of the Comptroller of the City of New York
Other Governance
Simpson Manufacturing Company
Industrials
Iron Compass
Balance Sheet Activism
Simpson Manufacturing Company
Industrials
Iron Compass
Business Strategy
Simpson Manufacturing Company
Industrials
Iron Compass
M&A Activism
Skullcandy Inc.
Industrials
Meliora Capital
M&A Activism
Skullcandy Inc.
Industrials
Derek Capo
M&A Activism
Skullcandy Inc.
Industrials
Mill Road Capital
M&A Activism
Skyline Corporation
Industrials
The Street Sweeper
Other
Southwest Airlines
Industrials
Kenneth Steiner
Other Governance
Surge Components
Industrials
Michael Tofias
Board-Related Activism
Surge Components
Industrials
Bradley Rexroad
Board-Related Activism
Surge Components
Industrials
Michael Tofias
Business Strategy
Surge Components
Industrials
Michael Tofias
M&A Activism
Surge Components
Industrials
Michael Tofias
Other Governance
Swift Transportation Company
Industrials
International Brotherhood of Teamsters General Fund
Other
Terex Corporation
Industrials
Marcato Capital Management
M&A Activism
The Eastern Company
Industrials
GAMCO Investors
Board-Related Activism
Tutor Perini Corporation
Industrials
Iceberg Research
Other
Tutor Perini Corporation
Industrials
Muddy Waters Research
Other
Tutor Perini Corporation
Industrials
GlassHouse Research
Other
United Continental Holdings Inc.
Industrials
Altimeter Capital Management
Board-Related Activism
United Continental Holdings Inc.
Industrials
PAR Capital Management
Board-Related Activism
United Parcel Service Inc.
Industrials
John Chevedden
Other Governance
US Concrete Inc.
Industrials
The Street Sweeper
Other
Xpo Logistics Inc.
Industrials
International Brotherhood of Teamsters General Fund
Balance Sheet Activism
Abercrombie & Fitch Co.
Retail
International Brotherhood of Teamsters General Fund
Other Governance
Advance Auto Parts, Inc.
Retail
John Chevedden
Other Governance
Armstrong Flooring, Inc.
Retail
ValueAct Capital Partners
Board-Related Activism
Ascena Retail Group Inc.
Retail
Stadium Capital Management
Board-Related Activism
AutoNation Inc.
Retail
Dialectic Capital Management
Other
AutoNation Inc.
Retail
John Chevedden
Board-Related Activism
Bebe Stores
Retail
Prentice Capital Management
Balance Sheet Activism
Bebe Stores
Retail
Prentice Capital Management
Other
Bed Bath & Beyond Inc.
Retail
Office of the Comptroller of the City of New York
Board-Related Activism
Bed Bath & Beyond Inc.
Retail
California Public Employees’ Retirement System (CalPERS)
Other Governance
Bed Bath & Beyond Inc.
Retail
Office of the Comptroller of the City of New York
Other Governance
Bed Bath & Beyond Inc.
Retail
Office of the Comptroller of the City of New York
Other
Build-A-Bear-Workshop
Retail
Cannell Capital LLC
Board-Related Activism
Burlington Stores, Inc.
Retail
Spruce Point Capital Management
Other
CarMax Inc.
Retail
Dialectic Capital Management
Other
Chico’s FAS Inc.
Retail
Barington Capital Group
Board-Related Activism
Chico’s FAS Inc.
Retail
Barington Capital Group
Business Strategy
Chico’s FAS Inc.
Retail
Barington Capital Group
Other
Christopher & Banks Corporation
Retail
Macellum Advisors
Board-Related Activism
Copart Inc.
Retail
The Street Sweeper
Other
TMT – Telecom, Media & Technology. Continued on next page. Source: Activist Insight.
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Corporates Campaigns Initiated 2016 — U.S. Nonfinancial (Continued) Company
Fitch Sector
Activist
Action Group
CSS Industries, Inc. CSS Industries, Inc. CST Brands, Inc. CST Brands, Inc. EVINE Live (Formerly ValueVision Media) EVINE Live (Formerly ValueVision Media) Gap Inc. HealthWarehouse.com, Inc. HealthWarehouse.com, Inc. HealthWarehouse.com, Inc. Kohl’s Corp. Mattress Firm Holding Corp. O’Reilly Automotive Inc. O’Reilly Automotive Inc. Outerwall Inc. (Coinstar Inc.) Outerwall Inc. (Coinstar Inc.) Outerwall Inc. (Coinstar Inc.) Outerwall Inc. (Coinstar Inc.) Performance Sports Group Ltd. Performance Sports Group Ltd. Performance Sports Group Ltd. Pier 1 Imports Inc. Pier 1 Imports Inc. Pier 1 Imports Inc. RPX Corporation Sears Holdings Corp. Sotheby’s Staples, Inc. Staples, Inc. Tailored Brands Tiffany & Co. U.S. Auto Parts Network, Inc. ULTA Salon, Cosmetics & Fragrance, Inc. United Online Inc. Urban Outfitters Wayfair 2U Inc. Acacia Communications Aecom Technology Corp. Aerohive Networks Airgain Inc. Alliance Data Systems Corp. Alphabet Inc. Alphabet Inc. Alphabet Inc. Alphabet Inc. Alphabet Inc. Alphabet Inc. Amber Road, Inc. Angie’s List Apple Inc. Apple Inc. Applied Materials, Inc. ARI Network Services Inc. Asta Funding Inc. AT&T, Inc. Authentidate Holding Corp. Aviat Networks Inc.
Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT
Ides Capital Management (Robert Longnecker) Ides Capital Management (Robert Longnecker) Engine Capital LP JCP Investment Management Cove Street Capital, LLC Clinton Group Citron Research Rx Investor Value Corporation Rx Investor Value Corporation Rx Investor Value Corporation John Chevedden Berkshire Partners LLC California Public Employees’ Retirement System (CalPERS) Office of the Comptroller of the City of New York Engaged Capital Engaged Capital Engaged Capital Engaged Capital Walter Graeme Roustan Trust Sagard Capital Partners Walter Graeme Roustan Trust Alden Global Capital (MediaNews Group) Alden Global Capital (MediaNews Group) Alden Global Capital (MediaNews Group) Mangrove Partners Fairholme Capital Taikang Life Insurance Co., Ltd. John Chevedden Marco Consulting Group Citron Research Jonathan Kalodimos Cannell Capital LLC Prescience Point Research Group Cannell Capital LLC Office of the Comptroller of the City of New York Long-Short Value Lakewood Capital Management Long-Short Value Spruce Point Capital Management Discovery Group The Street Sweeper Citron Research James McRitchie John Chevedden Myra Young NorthStar Asset Management Marco Consulting Group Firefighters’ Pension System of the City of Kansas City, Missouri, Trust Real Talk Investments Vajra Asset Management James McRitchie Jing Zhao Kenneth Steiner Park City Capital Mangrove Partners Arjuna Capital The Street Sweeper Julian Singer (JDS1, LLC)
Board-Related Activism Other Governance Board-Related Activism Board-Related Activism Board-Related Activism M&A Activism Other Balance Sheet Activism Board-Related Activism Other Governance Other Board-Related Activism Other Governance Other Governance Balance Sheet Activism Board-Related Activism Business Strategy M&A Activism Board-Related Activism Board-Related Activism M&A Activism Board-Related Activism Other Governance Other Balance Sheet Activism Board-Related Activism Board-Related Activism Other Governance Other Governance Other Other Governance Board-Related Activism Other M&A Activism Other Governance Other Other Other Other Board-Related Activism Other Other Balance Sheet Activism Balance Sheet Activism Balance Sheet Activism Balance Sheet Activism Board-Related Activism Other Governance Other Board-Related Activism Other Governance Other Other Governance Board-Related Activism Board-Related Activism Other Governance Other Board-Related Activism
TMT – Telecom, Media & Technology. Continued on next page. Source: Activist Insight.
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Corporates Campaigns Initiated 2016 — U.S. Nonfinancial (Continued) Company
Fitch Sector
Activist
Action Group
Avid Technology Avid Technology Benchmark Electronics Benefitfocus Inc. Birner Dental Management Services Boingo Wireless, Inc. Carmike Cinemas Inc. Carmike Cinemas Inc. CDK Global CDK Global CDK Global CenturyLink Checkpoint Systems, Inc. Checkpoint Systems, Inc. Checkpoint Systems, Inc. Cinedigm Corp. Cognizant Technology Solutions Corporation Cognizant Technology Solutions Corporation Cognizant Technology Solutions Corporation Concurrent Computer Corporation Concurrent Computer Corporation Control4 Corporation Covisint Corporation Covisint Corporation Covisint Corporation Covisint Corporation CPS Technologies Corporation CPS Technologies Corporation CPS Technologies Corporation CSW Industrials, Inc. Cybergy Holdings Inc. Cypress Semiconductor Corp. Datawatch Corp. Digital Ally, Inc. Discovery Communications DISH Network Corp. DTS Inc. Edgewater Technology Inc. Edgewater Technology Inc. Electronics For Imaging Ellie Mae Inc. EMCORE Corporation Emmis Communications Corp. Emmis Communications Corp. Epiq Systems, Inc. Everyday Health Inc. Everyday Health Inc. Exar Corp. Facebook Inc. Facebook Inc. FairPoint Communications, Inc. FairPoint Communications, Inc. FairPoint Communications, Inc. FleetCor Technologies Inc. FleetCor Technologies Inc. Flir Systems Inc. Form Holdings Corp. (Formerly Vringo, Inc.) Frequency Electronics Inc.
TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT
Jay Yoon Blum Capital Partners Engaged Capital Real Talk Investments Mark Birner Ides Capital Management (Robert Longnecker) Driehaus Capital Management LLC Mittleman Brothers Elliott Management Elliott Management Elliott Management International Brotherhood of Electrical Workers Pension Fund NS Advisors, LLC (North Star Partners) Wynnefield Capital NS Advisors, LLC (North Star Partners) Ronald Chez Elliott Management James McRitchie Myra Young Julian Singer (JDS1, LLC) Julian Singer (JDS1, LLC) Cannell Capital LLC Roumell Asset Management Dialectic Capital Management Vector Capital Management Roumell Asset Management The Horton Fund (Horton Capital Management) The Horton Fund (Horton Capital Management) The Horton Fund (Horton Capital Management) Newtyn Management MM Asset Management Three Bays Capital Potrero Capital Research, LLC The Street Sweeper CtW Investment Group Kerrisdale Capital Management VCM Group LLC (Value Creation Management Group) Ancora Advisors LLC Lone Star Value Management GlassHouse Research Long-Short Value Viex Capital (Formerly Vertex Capital Advisors) Francis Capital Management Timothy Stabosz Marcato Capital Management The Street Sweeper Cliffside Research Simcoe Capital Management Citron Research NorthStar Asset Management Maglan Capital Maglan Capital Maglan Capital California State Teachers’ Retirement System (CalSTRS) Office of the Comptroller of the City of New York UAW Retiree Medical Benefits Trust Iroquois Capital Management Privet Fund Management
Other Board-Related Activism Board-Related Activism Other M&A Activism Board-Related Activism M&A Activism M&A Activism Balance Sheet Activism Board-Related Activism Business Strategy Other Board-Related Activism M&A Activism M&A Activism Board-Related Activism Balance Sheet Activism Other Governance Other Governance Balance Sheet Activism Board-Related Activism Other Board-Related Activism Board-Related Activism M&A Activism M&A Activism Other Business Strategy Other Governance Board-Related Activism Board-Related Activism Business Strategy Board-Related Activism Other Board-Related Activism Other Board-Related Activism Board-Related Activism Board-Related Activism Other Other Board-Related Activism M&A Activism M&A Activism Board-Related Activism Other Other Board-Related Activism Other Other Governance Balance Sheet Activism Board-Related Activism M&A Activism Other Governance Other Governance Other Governance Board-Related Activism Board-Related Activism
TMT – Telecom, Media & Technology. Continued on next page. Source: Activist Insight.
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Corporates Campaigns Initiated 2016 — U.S. Nonfinancial (Continued) Company Function(x) Inc. (Formerly DraftDay Fantasy Sports and Viggle Inc.) Function(x) Inc. (Formerly DraftDay Fantasy Sports and Viggle Inc.) Gogo Inc. Guidance Software Inc. Guidance Software Inc. Hanger Inc. (Formerly Hanger Orthopedic Group Inc.) Hanger Inc. (Formerly Hanger Orthopedic Group Inc.) Harris Corporation iCAD, Inc. iCAD, Inc. iCAD, Inc. IDW Media Holdings, Inc. (Formerly CTM Media Holdings, Inc.) Image Sensing Systems Inc. Immersion Corp. Immersion Corp. Implant Sciences Corp. IMS Health Holdings, Inc. Independent Film Development Corp. Ingram Micro Inc. Inseego Corp. (Formerly Novatel Wireless) Inseego Corp. (Formerly Novatel Wireless) Insperity, Inc. Intel Corporation Intel Corporation Intermolecular, Inc. International Business Machines Corporation (IBM) International Business Machines Corporation (IBM) Interpace Diagnostics, LLC. Intralinks Iteris Inc. Iteris Inc. j2 Global, Inc. Journal Media Group Journal Media Group KEMET Corporation Landauer Inc. Landauer Inc. Live Nation Entertainment LRAD Corporation MACOM Technology Solutions MagnaChip Semiconductor Corp. Maxwell Technologies, Inc. MeetMe, Inc. MeetMe, Inc. Mentor Graphics Corp. MGT Capital Investments, Inc. MGT Capital Investments, Inc. Microsoft Corp. Mindbody Inc. Mitek Systems Mitek Systems MRV Communications NCR Corp. Netflix Inc. Netflix Inc. Netflix Inc. Netflix Inc. Netflix Inc.
Fitch Sector
Activist
Action Group
TMT
Wolverine Asset Management
Balance Sheet Activism
TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT
Wolverine Asset Management Ailanthus Capital Management Shawn McCreight Shawn McCreight Welsh, Carson, Anderson & Stowe Welsh, Carson, Anderson & Stowe JANA Partners Harbert Management Corporation Harbert Management Corporation Harbert Management Corporation
Business Strategy Other Board-Related Activism Other Governance Business Strategy M&A Activism Board-Related Activism Balance Sheet Activism Business Strategy M&A Activism
TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT
Raging Capital Management The Street Sweeper Viex Capital (Formerly Vertex Capital Advisors) Viex Capital (Formerly Vertex Capital Advisors) Platinum Partners Suhail Capital Glendon Hudson The Street Sweeper North Sound Management North Sound Management Starboard Value John Chevedden Newground Social Investment, SPC Raging Capital Management Kenneth Steiner John Chevedden Heartland Advisors, Inc. Cannell Capital LLC Fundamental Global Partners RELM Wireless Corp. Citron Research GAMCO Investors Water Island Capital, LLC The Street Sweeper Gilead Capital Gilead Capital IATSE (International Alliance of Theatrical Stage Employees) Iroquois Capital Management Cold Shower Analytics Engaged Capital Viex Capital (Formerly Vertex Capital Advisors) Real Talk Investments The Friendly Bear Elliott Management GeoInvesting The Street Sweeper James McRitchie The Friendly Bear Real Talk Investments The Street Sweeper Raging Capital Management Myra Young Odey Asset Management CtW Investment Group John Chevedden Myra Young Office of the Comptroller of the City of New York
Board-Related Activism Other Board-Related Activism M&A Activism Board-Related Activism Other Other Other Board-Related Activism Business Strategy Board-Related Activism Other Governance Other Governance Board-Related Activism Board-Related Activism Other Governance M&A Activism M&A Activism Board-Related Activism Board-Related Activism Other M&A Activism Other Governance Other Board-Related Activism Other Governance Other Governance Board-Related Activism Other Board-Related Activism Board-Related Activism Other Other Business Strategy Other Other Other Governance Other Other Other Board-Related Activism Other Governance Other Board-Related Activism Board-Related Activism Other Governance Other Governance
TMT – Telecom, Media & Technology. Continued on next page. Source: Activist Insight.
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Corporates Campaigns Initiated 2016 — U.S. Nonfinancial (Continued) Company
Fitch Sector Activist
Action Group
NetSuite Inc. Neustar Inc. New Media Insight Group, Inc. News Corp. Nortech Systems Incorporated Numerex Corp. NVIDIA Corporation Pandora Media Inc. Perceptron, Inc. Perceptron, Inc. Perceptron, Inc. Premier Exhibitions Premier Exhibitions PRGX Global Inc.
TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT
M&A Activism Other Governance M&A Activism Other Business Strategy Board-Related Activism Other M&A Activism Board-Related Activism Board-Related Activism Other Governance Balance Sheet Activism Other Governance Board-Related Activism
PTC Inc. Quantum Corporation Radisys Corp. Resonant Inc. Rightside Group, Ltd. Rightside Group, Ltd. Rofin-Sinar Technologies Inc. RPX Corporation RPX Corporation RPX Corporation RPX Corporation Sabre Corp. salesforce.com Inc. salesforce.com Inc. Sevcon, Inc. ShoreTel Inc. ShoreTel Inc. Simulations Plus Sitestar Corp. Sizmek Inc. SolarCity SolarCity SolarCity Solitron Devices, Inc. Solitron Devices, Inc. Solitron Devices, Inc. Sparton Corp. Sparton Corp. SS&C Technologies Holdings Inc. Stamps.com Inc. Stamps.com Inc. Steel Excel Inc. Straight Path Communications Inc. SunEdison Inc. (MEMC Electronic Materials Inc.) SunEdison Inc. (MEMC Electronic Materials Inc.) Support.com, Inc. Tangoe, Inc. Teladoc Inc. Telenav, Inc. Telephone & Data Systems Inc. Telkonet Telkonet The Dewey Electronics Corp. TheStreet, Inc.
TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT
T. Rowe Price Group, Inc. John Chevedden Leone Group, LLC The Nathan Cummings Foundation Kyle Packer Viex Capital (Formerly Vertex Capital Advisors) Citron Research Corvex Management LP Harbert Management Corporation Moab Capital Partners Harbert Management Corporation AJB Capital AJB Capital Northern Right Capital Management, L.P. (Formerly Becker Drapkin Management) Dialectic Capital Management Viex Capital (Formerly Vertex Capital Advisors) The Street Sweeper Park City Capital Cannell Capital LLC Cannell Capital LLC SilverArrow Capital Mangrove Partners Mangrove Partners Mangrove Partners Mangrove Partners Spruce Point Capital Management International Brotherhood of Electrical Workers Pension Fund Office of the New York State Comptroller Meson Capital Partners Ancora Advisors LLC Legion Partners Asset Management The Street Sweeper Inelegant Investor Meruelo Investment Partners Citron Research Elon Musk (Tesla) James McRitchie Mayflower Capital Partners B.V. Mayflower Capital Partners B.V. Mayflower Capital Partners B.V. Engine Capital LP Somerset Capital Advisers Tourbillon Capital Partners Prescience Point Research Group The Friendly Bear GAMCO Investors The Street Sweeper Greenlight Capital, Inc. Greenlight Capital, Inc. Viex Capital (Formerly Vertex Capital Advisors) Marlin Management Company The Street Sweeper Nokomis Capital, LLC Kenneth Steiner Peter Kross Peter Kross Polymathes Capital LLC FiveT Capital AG
Other Board-Related Activism Other Board-Related Activism Balance Sheet Activism Board-Related Activism M&A Activism Board-Related Activism Business Strategy Other Governance Other Other Other Governance Other Governance Board-Related Activism Board-Related Activism Board-Related Activism Other Board-Related Activism M&A Activism Other M&A Activism Other Governance Balance Sheet Activism Board-Related Activism Other Governance Board-Related Activism Board-Related Activism Other Other Other M&A Activism Other Board-Related Activism Other Governance Board-Related Activism M&A Activism Other Board-Related Activism Other Governance Board-Related Activism M&A Activism M&A Activism Board-Related Activism
TMT – Telecom, Media & Technology. Continued on next page. Source: Activist Insight.
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Corporates Campaigns Initiated 2016 — U.S. Nonfinancial (Continued) Company
Fitch Sector Activist
Action Group
Time Inc. Time Warner Inc. T-Mobile US, Inc. T-Mobile US, Inc. T-Mobile US, Inc. T-Mobile US, Inc. Travelzoo tronc Inc. (Formerly Tribune Publishing Company) tronc Inc. (Formerly Tribune Publishing Company) tronc Inc. (Formerly Tribune Publishing Company) tronc Inc. (Formerly Tribune Publishing Company) tronc Inc. (Formerly Tribune Publishing Company) Twilio Inc. Twilio Inc. Tyler Technologies, Inc. Ultimate Software Group Ultimate Software Group Ultimate Software Group Ultratech, Inc. USA Technologies Veeva Systems Inc. Verizon Communications Inc. Verizon Communications Inc. Verizon Communications Inc. Viacom Inc. Viacom Inc. Viacom Inc. Viacom Inc. Viacom Inc. ViaSat Inc. Viavi Solutions (Formerly JDS Uniphase Corp.) Viavi Solutions (Formerly JDS Uniphase Corp.) Viavi Solutions (Formerly JDS Uniphase Corp.) Violin Memory Inc. Violin Memory Inc. VirnetX Holding Corp. Vocera Communications Inc. Westell Technologies, Inc. Western Digital Corporation Western Digital Corporation WPCS International Inc. Xerox Corporation Xerox Corporation Xerox Corporation Xilinx Yahoo! Yahoo! Yahoo! YuMe, Inc. YuMe, Inc. YuMe, Inc. YuMe, Inc. YuMe, Inc. YuMe, Inc. YuMe, Inc. YuMe, Inc. Archrock, Inc. Archrock, Inc. Cadiz Inc.
TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT TMT Utilities Utilities Utilities
M&A Activism M&A Activism Other Governance Other Governance Other Governance Other Governance Other Board-Related Activism M&A Activism M&A Activism M&A Activism M&A Activism Other Other Other Other Other Other Board-Related Activism Business Strategy Other Board-Related Activism Other Other Board-Related Activism Business Strategy Business Strategy Other Governance Other Other Balance Sheet Activism Board-Related Activism M&A Activism Board-Related Activism M&A Activism Other Other M&A Activism Balance Sheet Activism M&A Activism Board-Related Activism Balance Sheet Activism Board-Related Activism Other Governance Balance Sheet Activism Board-Related Activism Business Strategy M&A Activism Balance Sheet Activism Board-Related Activism Board-Related Activism Board-Related Activism M&A Activism M&A Activism Other Governance Other Governance Board-Related Activism Business Strategy Other
JANA Partners Corvex Management LP CtW Investment Group AFL-CIO Amalgamated Bank Marco Consulting Group Cliffside Research Gannett Co (Post 2015 spin off) HG Vora Capital Management Towle & Co. Oaktree Capital Management Gannett Co (Post 2015 spin off) Long-Short Value Cable Car Capital Real Talk Investments Spruce Point Capital Management Soapbox Research Suhail Capital Neuberger Berman Group Legion Partners Asset Management Suhail Capital Kenneth Steiner International Brotherhood of Electrical Workers Pension Fund Association of BellTel Retirees Inc. SpringOwl Asset Management GAMCO Investors SpringOwl Asset Management Mercy Investment Services SpringOwl Asset Management Lakewood Capital Management Sandell Asset Management Sandell Asset Management Sandell Asset Management Clinton Group Clinton Group The Street Sweeper SkyTides LLC Cove Street Capital, LLC Alken Asset Management Ltd. Alken Asset Management Ltd. Iroquois Capital Management Darwin Deason Carl Icahn AFL-CIO Blue Harbour Group Starboard Value Starboard Value Mason Capital Management Edenbrook Capital AVI Partners (Active Value Investors) AVI Partners Viex Capital (Formerly Vertex Capital Advisors) AVI Partners (Active Value Investors) Edenbrook Capital Viex Capital (Formerly Vertex Capital Advisors) Edenbrook Capital Carlson Capital Carlson Capital Cable Car Capital
TMT – Telecom, Media & Technology. Continued on next page. Source: Activist Insight.
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Corporates Campaigns Initiated 2016 — U.S. Nonfinancial (Continued) Company
Fitch Sector
Activist
Action Group
Duke Energy Corporation Edison International Gas Natural Inc. International Seaways, Inc. National Fuel Gas NRG Energy Inc. NRG Energy Inc. PPL Corporation TerraForm Power Inc. TerraForm Power Inc. TerraForm Power Inc. Universal Power Group, Inc. US Geothermal Inc. WEC Energy Group WEC Energy Group
Utilities Utilities Utilities Utilities Utilities Utilities Utilities Utilities Utilities Utilities Utilities Utilities Utilities Utilities Utilities
John Chevedden John Chevedden Committee to Re-Energize Gas Natural Paulson & Co GAMCO Investors California Public Employees’ Retirement System (CalPERS) Office of the Comptroller of the City of New York William Steiner Appaloosa Management Brookfield Asset Management Inc. Appaloosa Management Concerned Shareholders of Universal Power Group Inc. JCP Investment Management California Public Employees’ Retirement System (CalPERS) Office of the Comptroller of the City of New York
Other Governance Other Governance Board-Related Activism Board-Related Activism Board-Related Activism Other Governance Other Governance Board-Related Activism Board-Related Activism M&A Activism Other Governance Business Strategy Board-Related Activism Other Governance Other Governance
TMT – Telecom, Media & Technology. Source: Activist Insight.
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Corporates
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