The wildest activist campaigns of 2018

A listicle! Originally appeared in Activism this week, August 10 and 17, 2018.

While there’s been no shortage of action this week, it seems an apt time to go tabloid and roll out our top 10 “wildest” activist campaigns of the year so far. What follows is the first half of our top 10 – submit your suggestions for a chance to influence the order of the remaining five.

10. Ironwood Pharmaceuticals – Carl Icahn’s former healthcare analyst Alex Denner gave everyone following this nearly $3 billion drugmaker a cardiac event when he announced plans to nominate himself to the board in early April. Within three weeks, the company announced that it would split into two companies, an announcement it followed with an aggressive solicitation on behalf of its board. It needn’t have bothered; Denner’s Sarissa Capital Management never filed a definitive proxy statement, didn’t meet with Institutional Shareholder Services, and left it until the day of the annual meeting to disclose its support for the plan. Last month, Denner told an investment conference in New York that the company could improve its capital allocation. Too little, too late?

9. The subject of August’s campaign in focus in Activist Insight MonthlyWheeler Real Estate Investment Trust is a small REIT with a big problem. It has four activists in its stock, two with board representation, one – Stilwell Value – that wants to force its way onto the board and is accusing the others of allowing inappropriate spending on the former CEOs pet projects, and another – JCP Investment Management – in its preferred stock that claims Wheeler is in breach of its obligations and should pay a liquidation preference that looks certain to bankrupt the company. Unenviable, to say the least.

8. Families, eh? When Canadian e-payments company Glance Technologies fired its chief operating officer, Penny Green, she responded by requisitioning a meeting to oust the husband and wife team of CEO and chief technology officer, Desmond and Angela Griffin. Never mind that Angela is Green’s sister; the two sides spent months trading increasingly vicious allegations about each other’s business records, while denying that the proxy fight was a family feud. (Would it surprise you that cryptocurrency was mentioned more than once during the fight?). Moreover, all three directors continued to serve on the board. In June, shareholders backed the Griffins, leaving Green to say she would be “watching the board and management very closely” and would keep them “on a short leash.”

7. Turns out that Papa John International is a marketing company that happens to make pizzas, and it has two important marketing strategies it has tried with various levels of success. First, that preferred by founder and former CEO John Schnatter: criticizing the operations of its main advertising outlet, the NFL, to the point where both sides “mutually agree” to abandon a promotion with three years left to run and engulfing the fast food brand in racial controversy. Second, leading the board is an outright revolt against “Papa John” Schnatter, introducing a poison pill to stop him buying the company outright or forming a coalition with other shareholders to oust the board, and letting the business go down the toilet. Admittedly, the strategies have overlapped, so it’s difficult to perform a scientific analysis of which one institutional shareholders should endorse.

6. How do you come to an agreement with an ex-CEO you’ve accused of “clandestine collusion” and “frivolous and costly litigation,” as well as transferring company property to a friend for no consideration. For that matter, how do you settle with a company you’ve accused of a “rancorous campaign of frivolous lawsuits, entrenchment tactics, and wasteful spending.” The news stories on Activist Insight Online about Joseph Payne’s nearly four-month battle with Arcturus Therapeutics is the best place to start.

5. How often does an activist win a proxy contest without support from either of the two main proxy advisory firms? (Nine times since 2013 at U.S. companies, according to Proxy Insight). That wasn’t even the most notable thing about Nathan Miller and Peter O’Malley’s board sweep at maternity-wear retailer Destination Maternity, where an all-male board was replaced with a 75% female slate after a three-month campaign. That the company settled with a French retailer which had tried to buy it in the past, then saw one of Orchestra-Prémaman’s two nominees resign after 10 days on the board due to health issues, only added to the drama. Shares have almost tripled over the past year, but it is still a long way back to the $62 million company’s glorydays, when its stock traded in the low $30’s.

4. Remember when Starboard Value’s CEO Jeff Smith was “the most-feared man in corporate America” and we took that with a pinch of salt? Newell Brands didn’t, because it opted to bring in Carl Icahn as a white knight when faced with a full board slate from Smith’s fund. Carl Icahn! Newell ended up settling with Starboard anyway, which went on to release a 172-slide presentation critical of CEO Michael Polk to little effect. Just three of the 12 board members who stood for election this year were directors before 2018, amid fallout from the clash between Newell’s management and that of its largest-ever acquisition, Jarden.

3. Speaking of Carl Icahn, his partnership with Darwin Deason in the campaign to oustXerox CEO Jeff Jacobson was like a rock band with two lead singers. Turns out that Xerox’s board had considered firing Jacobson and ordered him not to negotiate a merger with joint venture partner Fujifilm, before reversing its position and allowing him to continue. That made for embarrassing disclosure and helped convince a New York judge to reopen the nomination window so Deason could nominate a full slate. Xerox then settled with Icahn and Deason not once but twice, saying the first settlement expired when Deason did not withdraw litigation by an agreed deadline.

2.  Last year, Richmond Brothers won a seat on the board of Rockwell Medical in a hard-fought but ultimately unremarkable proxy fight. Fast forward to August 2017, when its nominee Mark Ravich complained of being isolated by the board and Richmond called for the head of Rockwell CEO Robert Chioini. After another settlement between Richmond and Rockwell, two board cliques formed; one claiming it had fired Chioini and successfully obtained a court order banning him from the premises, while the other claimed that the first group had breached its fiduciary duties. Last week the parties settled and the company found itself a new CEO. The stock, however, has yet to fully recover – possibly from too many locksmith-related expenses.

1. The proxy fight between HomeStreet and Roaring Blue Lion was described as “a train wreck for the activist” by Kai Liekefett, the lawyer who defended the Washington state-based bank, in a recent story which appeared on Activist Insight Online. Not only did the company reject the activist’s nominations, but the withhold campaign Blue Lion ran in its place became a farce three days before the annual meeting when it was revealed that state regulators had issued an interpretative statement requiring the activist to make an application before it submitted proxies representing 25% of HomeStreet’s voting shares. Blue Lion said it was unaware of the guidance, which had been publicly available on the regulator’s website for more than two months. The activist urged shareholders to withhold on the management card, in vain.

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