It is no surprise that shareholder activists and the companies they target are shifting gears amid the coronavirus pandemic. In particular, insurgent investors have increased scrutiny on ESG issues, executive pay, operational performance and board alignment rather than agitating for M&A or buybacks. But companies aren’t standing by as their valuations dip and they become susceptible to activists or hostile bids.
The Deal’s Shareholder Activism Seminar explores the strategies companies are employing to defend themselves amid the pandemic and how activists are approaching their campaigns during one of the biggest economic disruptions of the past century.
Ms. Foran is Chief Governance Officer, Senior Vice President and Corporate Secretary of Prudential Financial, Inc. Her role at Prudential also includes oversight of the Company’s Shareholder Services and Sustainability divisions.
The Biden administration sets in motion changes at key U.S. regulators, including the Securities and Exchange Commission and Labor Department, that will have implications for activist investors and their tactics. Expect the shift to have both positive and negative consequences for insurgent investors. This panel will look at how changes in the White House will impact regulations on 13D and 13F disclosures, activist wolfpacks, proxy adviser recommendations, proxy plumbing, shareholder proposals, ESG initiatives and universal proxy cards. How will the world of activist investing be affected by these changes, and which areas should investors, corporates or institutions worry most about?
Panelist: John C. Coffee Jr., Adolf A. Berle Professor of Law, Columbia Law School
As companies and markets settle into a new normal, or at least gain a better handle on their operations amid Covid-19, many traditional activist tactics, including calls for M&A and proxy contests, have returned to the forefront. With piles of private capital waiting in the wings as well as a handful of well-positioned multinational companies considering opportunistic deals, will activist-driven spinoffs, divestitures and outright sales return as they did in years past? Will companies that were unable to adjust to the pandemic be more susceptible to these tactics? What challenges lie ahead in activist efforts to drive M&A or force change at companies to improve the bottom line?
Panelist: Michael Ellis, Partner, Proskauer
Panelist: Daniel Ganitsky, Partner, Proskauer
Panelist: Laurie Hays, Managing Director, Edelman
In recent years, activists and private equity firms have teamed up to launch unsolicited bids and director fights, combining efforts to buy companies. The practice has continued amidst the Covid-19 pandemic. At the same time, dozens of companies have installed poison pills in attempts to thwart unsolicited bidders and activists. This panel will review hostile bids, director fights and anti-takeover devices amidst an M&A environment that is bringing together private equity shops with capital to invest and undervalued target companies, whose valuations have dropped amid the pandemic dislocation.
Panelist: Kai Liekefett, Partner, Sidley Austin
Panelist: Andrea Rose, Partner, Joele Frank
Corporations that are faced with activist campaigns must decide — do they settle or fight it out to the finish? When companies push back, the most aggressive fund managers turn to their biggest weapon — the proxy fight. By threatening to elect dissident director candidates or, in many cases, actually nominating board candidates, activists can often drive change. In recent months, activists and hostile bidders have sought to elect directors employing written consent solicitations or at a special meeting, in addition to the traditional annual meeting contest. How can corporations encourage institutional investors’ support or discourage votes for the dissidents, including the nomination of new incumbent board-backed directors? How have these dynamics changed as balance sheets become more pressured and markets remain in flux?
Panelist: Patricia Figueroa, Senior Vice President, Gladstone Place Partners
Panelist: Yaron Nili, Assistant Professor, University of Wisconsin-Madison
Panelist: Patrick Gadson, Partner, Shareholder Activism and Mergers & Acquisitions, Vinson & Elkins
Boards and management of publicly traded companies frequently turn to bankers, attorneys, proxy solicitors and other advisers, including stock watch services, in an attempt to prepare themselves for the potential onslaught of insurgent managers. C-suite executive directors, meanwhile, play “war games” of sorts, mapping out how they would respond if an activist came knocking with a laundry list of operational suggestions. This panel will examine how companies prepare for the potential of activist insurgencies, sometimes enlisting the help of proxy solicitors and stock watch services. What tools are available for companies in preparing for activists, and how can companies use those tools to actively manage their businesses to preempt shareholder unrest?
Panelist: Josh Dubofsky, Partner, Latham & Watkins
Panelist: Richard Gluckselig, Executive Director, Assistant General Counsel and Assistant Secretary, Regeneron Pharmaceuticals Inc.
Executive compensation has always been a hot topic for activist investors. However, the pandemic had put a brighter spotlight on CEO pay structures that aren’t aligned with shareholder performance. This panel will review how activists, companies and regulators may change their view of C-suite pay, as the 2021 proxy season gets underway. Will activist investors put corporate boards with big negative shareholder votes on executive pay in their crosshairs? What kind of CEO pay plans will activists, investors and companies deem to be appropriate? How should boards adjust executive compensation and CEO pay to best align shareholders and executives?
Panelist: Mark Viviano, Managing Partner & Portfolio Manager, Kimmeridge
Proxy advisers, ESG advocacy groups and institutional investors alike continually update their governance standards. These standards, which are increasingly focused on demographic and gender diversity as well as executive pay, capital allocation and sustainability practices at the world’s top companies in 2021, are also key tools in driving activist campaigns. Reports from institutional shareholders or proxy advisers can have wide-ranging implications in determining how investors vote on key companywide decisions and how boards and management teams are composed, governed and judged. This panel will review the latest in governance standards, including recommendations, policy changes and listing standards that could drive shareholders to seek change at companies that have fallen behind the times.
Moderator: Frank Aquila, Partner, Sullivan & Cromwell
Panelist: Peggy Foran, Chief Governance Officer, SVP and Corporate Secretary, Prudential Financial, Inc.
Panelist: Shane Goodwin, Associate Dean, Professor of Practice Graduate Programs & Executive Education, Department of Finance, The Cox School of Business, Southern Methodist University
Panelist: Preston Hopson, Senior Vice President, General Counsel, and Secretary, Tetra Tech, Inc.
Panelist: Patrick McGurn, Special Counsel & Head of Strategic Research & Analysis, Institutional Shareholder Services
Panelist: Krishna Veeraraghavan, Partner, Sullivan & Cromwell
The term “stakeholder capitalism” became a new buzzword for corporate activity after the Business Roundtable in 2019 issued a statement in which CEOs committed to “deliver value for all stakeholders,” not just shareholders. This panel will examine how the needs of a company’s management team align with the needs of those on the floor or those of customers. It will review the way companies enact sustainable and profitable practices without short-changing customers. The panel also will examine how companies manage shareholder concerns and sustainable practices and explore correlations between employee morale, share performance and customer satisfaction. Activist investing is also often in the mix, with insurgent managers often targeting corporate capital expenditures and second-guessing management decision making on key investments. Panel members will review the types of operational tactics often employed by activist managers.
Panelist: Kathleen Camilli, Independent Director, UniFirst Corporation, NACD Leadership and Governance Fellow
Panelist: Sheila Hooda, Director, ProSight Global, ScION Tech Growth 1, Mutual of Omaha
Panelist: Tensie Whelan, Director, NYU Stern School of Business’s Center for Sustainable Business
Panelist: Kal Goldberg, Partner, Finsbury Glover Hering
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This conference will provide predictions and perspectives on post-pandemic dealmaking in the UK and Europe.