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DEF14 Knowledge+: June's Activism Highlights

Updated: Aug 7, 2023

We are thrilled to introduce DEF14 Digest, your go-to source for the latest updates in Shareholder Activism.

We are thrilled to introduce #DEF14Knowledge+, your go-to source for the latest updates in #ShareholderActivism.

Presenting "DEF14 Knowledge+: Monthly Momentum"

- Your Insider's Guide to Shareholder Activism News

Welcome, shareholders, activists, and industry enthusiasts, to the debut of our exciting new monthly blog series, "DEF 14 Knowledge+." As part of our commitment to keeping you at the forefront of the latest developments in this dynamic field, we are thrilled to present a concise and comprehensive recap of the past month's most significant news and trends in the world of shareholder activism. Through "DEF 14 Knowledge+," you'll stay informed about the ongoing battles shaping the corporate landscape. So fasten your seatbelts and prepare to embark on a thrilling journey through the exhilarating world of shareholder activism. Let's dive right into the highlights of the past month!

June 1st:

Climate proposals rejected at ExxonMobil and Chevron shareholder meetings

Shareholder proposals for methane emissions transparency and Scope 3 emission targets were rejected at ExxonMobil and Chevron annual meetings. ExxonMobil's board defended its climate progress report, while Chevron faced an opposition to a resolution on Scope 3 emissions reduction. At ExxonMobil, a proposal called for setting new emissions baselines, including divested assets since 2016, to prevent emissions transfer. ExxonMobil emphasized that divestment decisions prioritize value and competitiveness over emissions management. Shareholder group Follow This submitted proposals for medium-term Scope 3 emissions reduction targets at ExxonMobil and Chevron, which garnered notable support, with the TotalEnergies proposal receiving 30% of shareholder votes in favor.

June 6th:

Activists clash with German chemical group Brenntag over board vote

Activist investors, PrimeStone Capital and Engine Capital, challenge Brenntag's board candidates and propose their own choices, gaining support from ISS and Glass Lewis. They advocate for the separation of Brenntag's non-core operations to streamline the company's structure. Highlighting underperformance and value destruction, activists call for change while CEO Christian Kohlpaintner implements a restructuring program to separate chemical production and distribution. Engine Capital proposes expanding the supervisory board to include candidates from both sides. ISS and Glass Lewis back the activist candidates, emphasizing missed opportunities and potential value loss, but Brenntag urges shareholders to support management's candidates.

June 11th:

Illumina CEO Francis deSouza Resigns Following Proxy Fight, Interim CEO Appointed

Illumina CEO Francis deSouza has resigned from his position following a proxy challenge from activist investor Carl Icahn. The company's board accepted deSouza's resignation and appointed Charles Dadswell as interim CEO. Despite surviving the proxy challenge, deSouza faced criticism over Illumina's $7.1 billion acquisition of cancer test maker Grail, which faced regulatory rulings against the transaction. The company's shares have seen a decline since the completion of the Grail deal. Illumina will now begin the search for a new CEO, considering both internal and external candidates. refer to our previous blog post for comprehensive information about this story.

June 14th:

Toyota faces shareholder challenges over governance and climate lobbying disclosures

Toyota faces challenges at its shareholder meeting as some pension funds vote against Chairman Akio Toyoda over governance and climate lobbying concerns. Activists criticize Toyota's slow adoption of electric vehicles and question the independence of its board. US pension funds and proxy advisers oppose Toyoda. Japanese companies face increased ESG pressure. Despite concerns, Toyoda is likely to retain his seat due to support from individual investors and Toyota group companies. Toyota defends its board's independence and multi-path approach to clean cars. Shareholders engage on EV strategy and propose greater disclosure on climate lobbying. ISS questions the independence of three outside directors. Toyota's transactions are considered immaterial. Investors remain hopeful for positive changes at Toyota.

June 27th:

Activist investor Elliott calls for new CEO at NRG Energy

Activist investor Elliott Investment has publicly called for a new chief executive at utility firm NRG Energy, increasing pressure on incumbent Mauricio Gutierrez. Elliott criticized NRG's recent measures, stating that they were insufficient to address a flawed strategy overseen by an unfit leadership team. The investor, which holds a more than 13% stake in NRG, is calling for a boardroom overhaul and strategic changes to refocus the company on its core business. Elliott specifically criticized NRG's acquisition of Vivint Smart Home, calling it the worst deal in the power and utilities sector in the past decade. NRG has defended the acquisition and expects cost synergies. NRG's management and the board continue to support Gutierrez and their strategy. Shares of NRG rose following the announcement.

Masimo shareholders elect activist investor's board candidates, signaling call for change

Activist investor Politan Capital Management has successfully elected two board candidates, Quentin Koffey and Michelle Brennan, to the board of patient monitoring company Masimo. The shareholders voted in favor of the Politan nominees, with each receiving at least 70% of the votes cast. Politan, holding a 9% stake in Masimo, argued for significant change at the company, citing management oversight issues and a detrimental acquisition that resulted in a $5 billion market value loss. Masimo expressed disappointment at losing the contributions of two current directors but stated that it would support Brennan as a member of an expanded board. Proxy advisory firms Glass Lewis and Institutional Shareholder Services endorsed the Politan board candidates. The new directors will aim to improve corporate governance, enhance capital allocation, and provide better strategic oversight at Masimo. Following the announcement, Masimo shares fell 1.7% in morning trading.

Activist investor Alex Denner faces backlash over corporate governance concerns at Biogen

Activist investor Alex Denner, head of Sarissa Capital Management, is stepping down from the board of Biogen Inc. to campaign against its partner, Alkermes Plc. However, Denner's decision to nominate his girlfriend, Susan Langer, as his successor has raised serious concerns about corporate governance. Biogen's board comes under scrutiny for not disclosing the conflict of interest and allowing the nomination to proceed. Shareholders are urged to reject Langer's nomination and demand an explanation from the board.

June 30th:

Alkermes successfully defends against activist challenge and retains shareholder support

Alkermes, the Ireland-based drugmaker, has emerged victorious in its battle against activist investor Sarissa Capital. Shareholders reelected seven board members and rejected the three nominees put forward by Sarissa. The activist investor, owning an 8.5% stake in Alkermes, had sought to transform the perceived "undervalued" company. However, it failed to garner enough shareholder support for its board nominees. Alkermes has not disclosed the specific voting results but believes the outcome reflects its strong performance and robust corporate governance practices. The company remains focused on its strategic priorities, emphasizing operational efficiency, disciplined capital allocation, and profitability.

June Highlights Growing Influence of Shareholder Activism in Corporate Landscape

June witnessed notable instances of shareholder activism, with prominent companies facing significant challenges from activist investors.

  • ExxonMobil and Chevron rejected climate proposals, reflecting resistance to environmental initiatives in the energy sector. However, activists achieved success at Masimo, as their board candidates were elected.

  • The resignation of Illumina CEO Francis deSouza after a proxy fight and the corporate governance concerns surrounding Alex Denner at Biogen highlighted the crucial role of effective leadership and transparent decision-making.

  • On the other hand, Alkermes successfully defended against an activist challenge, underscoring the importance of strong performance and robust corporate governance practices.

These events highlight the ever-changing realm of shareholder activism and the importance of navigating business complexity.

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Stay tuned for our next DEF14 Knowledge+, where we'll provide you with the latest insights, trends, and updates in the world of shareholder activism. In the meantime, make sure to subscribe to our social media accounts (LinkedIn and Twitter) to stay up to date with our product news, industry insights, and more. We look forward to keeping you informed and empowered in your journey through the shareholder activism world.

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