2012 Shareholder Activism in Review - Started Out Slow, But Then...

January 2nd, 2013
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Contributed by: Michael R. Levin, The Activist Investor
As we predicted a year ago, 2012 started out slowly - no major activist projects underway, few regulatory developments, all the significant players quiet. Yet, it progressed fitfully, with more and more interesting events coming each month. Activist investors should view it as a pretty good year, all told.

Corporate governance improved incrementally but meaningfully.
The Harvard Business School Shareholder Rights Project got underway, with impressive results in its first year. The project, which despite its grand name addresses the more basic problem of classified BoDs, persuaded dozens of US companies to de-stagger their BoD terms. It also absorbed its share of critical shots, mostly from corporate lackey Marty Lipton.

On the other hand, proxy access was largely a bust in 2012. Of over two dozen proxy access proposals, only a couple achieved any kind of success.

Companies and investors also wrangled over the usual array of corporate governance reforms, with mixed results. In previous years ISS had prepared the best, most comprehensive survey of governance trends, but the most recent one we have is from 2011 - we can’t seem to find anything from them this year. Proxy solicitor Georgeson also has a decent analysis, with something of a slant toward corporate interests. Georgeson describes 2012 as the “Year of Engagement” as companies increased their formal and informal interaction with investors.

Say-on-pay settled into more of a routine. The vast majority of say-on-pay votes in 2012 favored companies, with over 99% of US companies winning a majority of shareholder votes for their exec comp packages. Most of the lawsuits that followed losing votes were thrown out, too. Citigroup lost its say-on-pay vote, along with some other biggies (Chesapeake, Best Buy) but with at best minor consequences.

Few regulatory changes
The main regulatory development concerned the JOBS Act, which Congress approved last spring. Most of its provisions affect companies rather than investors. Earlier we highlighted how a few terms of the new law limit the disclosure obligations of smaller or emerging growth companies, but otherwise investors would not notice much difference.

Some fascinating activist situations
Pershing Square Capital Management appears to have become the leading activist fund these days, if we assess leadership in terms of size of successful projects. Bill Ackman won BoD control at Canadian Pacific Railroad, bringing US-style activism to our sleepy northern neighbors.

Carl Icahn was of course plenty busy, with projects at Navistar and Chesapeake, among many others.

One newcomer made a splash, too: Ryan Morris runs Meson Capital, a tiny ($15 million) fund that earned BoD seats at two microcap companies (InfuSystem and Lucas Energy), and earned him a feature in Bloomberg Businessweek.

We continue our work, too, at Comarco, Mac-Gray, and other companies, and look forward to corresponding with you in 2013.
For Detailed Investor Profiles on these Investors, click below:
Icahn Associates (Carl Icahn)
Pershing Square Capital Management
Related People: Alexander J. Denner; Brett Icahn; Carl Icahn; Keith A. Meister*; Nicholas Botta; Roy J. Katzovicz; Scott Ferguson*; William 'Bill' Ackman
Related Entities: High River Limited Partnership; Icahn Partners; Icahn & Co Inc; Icahn Associates; Icahn Enterprises (formerly American Real Estate Partners); Icahn Fund Ltd; Icahn Partners LP; Leucadia Corporation (NYSE: LUK); Pershing Square Capital; Pershing Square IV; Pershing Square LP
Related Article Tags: Shareholder Activists, Corporate Raiders and Proxy Battles; Featured Reports; Hedge Fund Resources and Featured Partner News


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