The Activist Investor Blog
The Activist Investor Blog
2014 Preview - Activism Ascendant
We’re not very good at predicting things - just check out last year’s preview.
We’ll keep trying, though. As with the year just past, activist investors should continue their momentum, although we can’t quite put our finger on which ones, or which projects, will garner the most attention, or success. We expect the regulatory scene to remain quiet, with at most a few new developments to track.
Some Budding Activist Situations
While no one can forecast with much accuracy which activist investors will target which companies, we already know of a few situations worth following.
❖Apple will provide an early sense of direction. At their annual meeting on February 28, they will consider a precatory proposal from Carl Icahn requesting a $50 billion increase in their share repurchase program. Seems that this has a decent chance of winning a majority of votes - Apple’s substantial cash balances have attracted attention, and the proposal is non-binding.
❖Darden Restaurants looks like one of the more interesting activist situations brewing. Barington Capital put together a detailed case for breaking up the company. Darden disclosed it would undertake part of the break-up. Another activist, Starboard Value, has jumped in to support Barington.
❖At Cracker Barrel, Biglari Holdings culminates years of frustrating activism with a bid to buy the entire company. Cracker Barrel has declined, for now, to go along.
Wachtell, Lipton v. Icahn
That’s the title of the lawsuit, in addition to a neat summary of an ongoing dispute between activist investor Carl Icahn and corporate lackey Marty Lipton and his firm. The dispute revolves around how Wachtell advised CVR Energy, one of Icahn’s holdings, when Icahn sought to buy the company. No telling how it will work out, but it should entertain.
Investors Paying Directors, Directly
Earlier, we highlighted how some investors want to compensate BoD members themselves, how companies have fought this trend with bylaw amendments, and how investors have opposed directors that approve these amendments. We speculate that we’ll see more of this in 2014: more investors paying BoD members, more companies amending bylaws to oppose this, and more contentious BoD elections at companies with those amendments.
Don’t Blow Off Shareholder Proposals
This advice pertains both to investors, and to companies. This matters because ISS, the main proxy advisor, recommends voting against BoD candidates that ignore shareholder proposals that win significant investor support. This year, ISS has redefined “significant” such that it means proposals that receive a majority of votes cast at an annual meeting, rather than majority of shares outstanding. This should increase the number of BoD candidates that ISS opposes in 2014, or alternatively make these companies more responsive to shareholder proposals.
SEC Will Do Some Regulating
The SEC will likely issue a few regulations of interest to activist investors, mostly around exec comp. We expect final regulations on pay ratio disclosure (yawn), and proposed regulations on incentive comp disclosure. Otherwise, the invaluable Race to the Bottom blog shows that the SEC has no other plans in 2014 that would affect activist investors.
Dates and Events in 2014
Activist Investor Conference - January 29, New York City
Active-Passive Investor Summit - April 22, New York City
Value Investing Congress - April 3-4, Las Vegas; October in New York City
Invest For Kids - early November, Chicago
As always, we look forward to working with our friends and colleagues in what could become another interesting year.
Tuesday, December 31, 2013