Monthly Archives: March 2016

March 9, 2016

March-April Issue: Deal Lawyers Print Newsletter

This March-April issue of the Deal Lawyers print newsletter was just posted – & also mailed – and includes articles on (try a 2016 no-risk trial):

– Spin-Offs: Frequently Asked Questions
– More Reminders That “Boilerplate” Matters
– Short-Term Investment Strategies Can Create Board Conflicts of Interest
– Delaware’s Latest M&A Export to Other States: Streamlined Tender Offers & Section 251(h)
– A Russian Proverb Explains Investor Approaches to Risk Management

Remember that – as a “thank you” to those that subscribe to both & our Deal Lawyers print newsletter – we are making all issues of the Deal Lawyers print newsletter available online for the first time. There is a big blue tab called “Back Issues” near the top of – 2nd from the end of the row of tabs. This tab leads to all of our issues, including the most recent one.

And a bonus is that even if only one person in your firm is a subscriber to the Deal Lawyers print newsletter, anyone who has access to will be able to gain access to the Deal Lawyers print newsletter. For example, if your firm has a firmwide license to – and only one person subscribes to the print newsletter – everybody in your firm will be able to access the online issues of the print newsletter. That is real value. Here are FAQs about the Deal Lawyers print newsletter including how to access the issues online.

March 8, 2016

8 Blows in the Activist Battle Royale

Here’s an excerpt from this IR Magazine article:

There were as many different ways of taking in the conference as there were types of participants, so here’s but one:

1. After a years-long move toward settlements instead of proxy fights, a scary counter-trend is revealed: some activists wish they hadn’t settled. They may have placed a nominee or two onto a board but they feel that if they had held on for a proxy contest they could have scored a real mandate for change.

On the other side, a lot of long-only investors say companies have become skittish and are too fast to acquiesce. ‘If the company is comfortable with its business plan, knows it has the shareowners’ support and believes it has the right folks in the boardroom, we encourage the board to have backbone and continue to articulate that,’ cheered a pension fund.

2. A down market is good for activists, even though some have seen their holdings hit hard in recent months. The reason is simple: activist investors are value investors, so lower valuations produce attractive targets. Some observers predicted there will be a shakeout of smaller funds while bigger ones get additional investment. ‘If you have dry powder, it’s a great market. If you’re all invested and you have redemptions, it’s a crappy one,’ said a panelist.

3. Boards see the ranks of activists as tiered, with nine or 10 respectable – even desirable – ones, and a few dozen more ‘ankle-biters’, or smaller upstarts looking to get attention. A hidden benefit to companies: some activists are producing ‘really solid’ board nominees.

4. Even though there was a lot of airtime given to shortening activists’ 13D reporting window from 10 days to one, a well-known Wachtell Lipton hobby horse, most at the conference said it’s a dying cause and the SEC won’t budge.

5. Companies often see their main vulnerabilities to activism in performance, strategy or capital allocation. But activists and their advisers are obsessed with governance factors like term limits and board refreshment. Succession planning, diversity, over-boarding and staggered boards were also much discussed, while proxy access barely came up.

6. Corporate America’s shift from long-term investment to short-term shareholder payouts was invoked throughout. ‘The tradeoff of activism has been returning capital to shareholders instead of investing for the future,’ said one lawyer, inciting good-natured debate. But ‘it depends’ was generally the conclusion, with a pension fund saying, ‘We’re happy when companies want to return capital to us but we have to have a long-term vision.’

7. The massive rise in passive investment also got a lot of mentions, with most experts viewing it as a challenge for activists because index funds tend to vote with management. One activist investor said the level of support index funds give to activists was at an eye-opening low level. On the other hand, the fact that BlackRock voted with activists in 39 percent of last year’s 18 biggest proxy battles was seen by some as encouraging growth.

8. One thing all sides agreed on was the overarching importance of communication and engagement. ‘Every company, regardless of whether there are activist funds in your shareowner list or not, should be proactively articulating your business strategy for creating long-term value, and how your capital allocation supports it, as well as how the board composition is aligned with the business plan and watching out for risks,’ said a prominent investor.

March 4, 2016

How Activists Harness Media Power to Affect Change

Activists today are using both earned media and owned media – rather than proxy contests – to drive their agendas. In many ways, it’s a “war of words” when competing for support – and the advantage goes to the trained storyteller. Not too many companies are not making their words count in response. Here’s the intro from this Q4 blog:

It’s fair to say that when it comes to activist investing Carl Icahn is a superstar – and he has a Twitter account with 270,000 followers. Currently he’s Tweeting about Xerox. Icahn disclosed Nov. 23 that he’d acquired a 7.1 percent stake in the printer/copier company and on Jan. 29 Xerox announced it would split into two separate companies, a decision made in no small part because of pressure from Icahn. No costly, protracted proxy battle was needed. Icahn will get board seats on one of the companies; such is the power of the activist superstar.

In the era of the 24-hour news cycle and social media, activist investors are affecting change by becoming experts in harnessing public opinion. Whether it be through “earned” media, such as interview segments on CNBC and Bloomberg, or via “owned” media – e.g., posts on Twitter and Facebook – the use of media is increasingly replacing the proxy vote. In 2009, about 14 percent of activist campaigns resulted in a proxy vote. That dropped to about about 3.6 percent in 2014, according to, which tracks activist activities.

March 2, 2016

Fewer Proxy Contests in 2016?!

Here’s the intro from this blog by “The Activist Investor”:

We recently asked a friend of ours in the proxy contest world how it’s going. We received an unexpected reply: “Not very busy right now … No proxy contests of note in the first Q. I don’t think there’s even a single multibillion contest on the horizon this season. Some kind of sea change is rolling through the activist ranks – it seems like anyone with a credible reputation for driving value-accretive change is getting board seats without going anywhere near a definitive proxy.”

We didn’t see this coming.

We wondered, what does the data say? More or fewer? And what would this mean?

The evidence supports our friend’s observations. While the number of activist situations remains as high as ever, we see fewer and fewer proxy contests.

We plumbed the always-useful SharkRepellent data set for answers. We looked at activist projects and proxy contests since 2012. We defined each “year” as the trailing twelve month period as of Feb 23 of each year. So, 2012 consists of activist situations from Feb 24, 2011 through Feb 23, 2012, and so forth.