Here’s what people were saying at Skytop Strategies’ global activism summit in Toronto on Thursday. As the conference was under Chatham House Rules, the sources of these comments are not identified.
- Rising levels of activism are partially secular, but being accelerated by macro factors such as volatility, certain commodity prices and political change. At least one speaker said the number of settlements was reducing impediments and thus de-risking activism.
- In the context of a couple of proxy contests where the activist and target board disagree about whether buyers exist, the problem is often one side’s projections or asking price. Settlements with minority representation and strategic review committees are a way to re-establish trust, but one investor said most boards were diligent.
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- There was much antipathy to the universal ballot, both on the management side (“why create an equivalence between incumbent directors and dissident nominees”) and on the activist side (because it splits votes for change). A universal ballot was used by Cation Capital at Crescent Point Energy, this year’s largest activist campaign in Canada.
- Nearly three in every five shareholder proposals in North America were governance-related in 2018 but the second largest group, on social topics, represented twice as many proposals as on environmental issues.
- Multiyear activist engagements, or even campaigns that continue beyond a proxy fight, are a rarity in Canada. That may be changing with Cation Capital sticking around at Crescent Point Energy.
- Asia is the next market where a big increase in activism is being predicted. I also heard this a lot last week in London.
Quote of the week comes from Marathon Partners’ Mario Cibelli. Forays by activists into stocks with financial sponsors as large shareholders are not unknown, most notably at Fiesta Restaurant Group last year. Now, Marathon Partners is levelling the charge at e.l.f. Beauty that TPG Growth is improperly unaligned with other shareholders. Should it go to a proxy fight, Marathon ought to heed the warning from Fiesta that a grievance and no plan will not win widespread support.
“We have significant concerns regarding TPG’s level of influence at the company and the board’s lack of urgency in addressing opportunities to increase shareholder value,” Cibelli said. “Multiple factors, including TPG’s role on the compensation committee, heighten our concerns in this area.”
Article by Activist Insight
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