Pros Expect More Activism in 2025 While Nom Gov Chairs Taking Increased Heat  

If it feels like 2024 was a crazy busy year for shareholder activism, just wait for the New Year. Avi Mehrotra, Goldman Sachs’ co-head of M&A in the Americas and activism defense guru, told CNBC that 2024 has been the busiest year on record for activism based on the number of total campaigns. His crystal ball predicts that there will be more wolfpacks at the door in 2025 as activists double and triple up against targets. Already, 20% of S&P 500 companies have one activist, and one in 12 companies in the index are facing two or more activists, according to Goldman. There’s no reason boards and executives should expect a slowdown in activity.

In a year-end wrap, Diligent’s Josh Black took a look at the biggest investor stewardship trends from the year. His new post on the Harvard Law School Forum on Corporate Governance notes that it’s not CEOs who are the ones under the most scrutiny from investors; it’s the chairs of board nominating and governance committees who are the primary targets. According to Diligent data, they received the lowest average institutional investor support of all senior board positions at annual shareholder meetings, underscoring the growing weight investors place on board composition, refreshment and diversity as critical elements of corporate governance.

These results are in line with a recent note by Skadden’s Elizabeth Gonzalez-Sussman, Louis Davis and Alexander Vargas, which highlights growing investor demand for board refreshment. In particular, the report suggests that proxy advisors and institutional investors now view nine years as the cutoff point at which a director tenure is considered “too long,” underscoring the importance for companies to regularly review and adjust their own board composition to ensure they have the right mix of skills, tenure and background.

Back in Delaware, Delaware Court of Chancery Judge Kathaleen McCormick upheld her January decision to strike down Elon Musk’s Tesla compensation package now valued at over $100 billion. Despite a new shareholder vote intended to address issues raised in her original ruling, Judge McCormick ruled that the vote did not override her previous decision. Paul Graham, a tech industry guru, noted on X that, “it used to be automatic for startups to incorporate in Delaware. That will stop being the case if activist judges start overruling shareholders.” 

Have a great weekend,

GPP team

Financial Times: Activist Shareholder Intensifies Campaign for Rio to Quit London

Palliser Capital sent a letter to the board of Australian mining giant Rio Tinto urging the company to eliminate its dual corporate structure across both London and Australia, which it argues has cost shareholders $50 billion in value. Read More

The Deal: Activist Funds Urge Martin Midstream Shareholders to Reject Buyout

Jean Haggerty reports that two hedge funds, Nut Tree Capital and Caspian Capital, who have a combined 13% stake in Martin Midstream Partners, are publicly urging shareholders of the energy company to reject a takeover bid from rival Martin Resource Management. Read More

The Wall Street Journal: BlackRock Strikes $12 Billion Deal for HPS, Betting Big on Wall Street’s Hottest Market

BlackRock is making big moves in private credit, announcing it will buy $150 billion credit manager HPS. Jack Pitcher notes the deal will boost BlackRock’s alternative assets by 25%. Read More

Financial Times: Australian Gold Miners Strike $3.2bn Takeover Deal

Northern Star Resources is acquiring rival De Grey Mining in a $3.2 billion all-share deal, marking the latest consolidation in the gold sector. The acquisition will make Northern Star a global top-10 gold producer, adding a promising mine expected to generate over 500,000 ounces of gold annually. Read More

Axios: 7-Eleven Management Reportedly Preps IPO to Finance Takeover

To fend off takeover pressure from Canadian retailer Alimentation Couche-Tard, Seven & i Holdings is allegedly planning to launch a $6 billion IPO of its North American business to help fund its $58 billion take-private buyout, writes Dan Primack. Read More

Financial Times: Lex: Toxic Shareholder Relations Are a Red Flag for Company Performance

Natalie Thomas examines how two ongoing shareholder disputes in the U.K. at Topps Tiles and MS Galleon underscore the importance of having strong senior independent directors who can act as relationship mediators between management and investors. Read More

Columbia Law School Blue Sky Blog: Why Companies Choose CEOs from Outside or Within

Professors from York University’s School of Business as well as from the Universities of Alberta, South Carolina and South Florida discuss how boards evaluate choosing CEO candidates. Read More

ANTITRUST

Bloomberg Opinion: Texas Asks If Index Funds Are Illegal

A group of states led by Texas sued the three largest asset managers, alleging that their climate-focused “systemic stewardship” reduced coal production and violated antitrust law. Matt Levine calls it “classic antitrust stuff with just a hint of ESG,” raising the question of whether such concentration of ownership reflects the very “trusts” antitrust laws were meant to stop. Read More

FROM OUR DESK TO YOURS

GPP attended the sold-out DealBook Summit this week in Columbus Circle, and it remains hands down the best of the elite CEO-oriented conferences. From Ken Griffin to Jay Powell to Jeff Bezos, it was a star-studded cast, and the common theme was how well the U.S. economy is doing relative to the rest of the world and how innovative and productive we all are here –“remarkable” in the words of the Fed Chair.

While we were skeptical having Prince Harry speak, we were humbled at how poised and interesting he was—even joking that Andrew’s deep questions about mental health and social media made the session sound like “group therapy.”

Jeff Bezos was funny, fascinating and down-to earth — the 60-year-old worth $200 billion pointed out that he Venmo's cash to his college-aged kids just like the rest of us! When Andrew asked Bezos what he wanted the room to know, he said he would rather be known as an inventor than a billionaire, and didn’t want to be viewed as “a reclusive Howard Hughes type,” so he accepted Andrew’s invitation to DealBook. It worked.

One incredible highlight was the lunch sessions, where a “trailblazer” anchored each table. We were lucky enough to join “The Future of Fine Dining” session with Eric Ripert, the chef of Le Bernardin, which was recently crowned as the best restaurant in the world once again. Eric was brilliant, and his philosophy of life and managing the best restaurant in the world is to devote one third of your time to work, one third to family and one third to self. Not a bad way of living. His autobiography “32 Yolks” is a wonderful read.

Lastly, the funniest part of the day may have been when former President Clinton finished his Q&A with Andrew and reminded people how good “Too Small to Fail” was, before correcting himself about Andrew’s seminal book on the financial crisis, “Too Big to Fail.”

PEOPLE MOVES

• Prudential Financial named the head of its international business Andy Sullivan CEO. Read More
• Carlos Tavares stepped down as CEO of Jeep-maker Stellantis. Read More
• Citigroup’s head of global mergers and acquisitions, Cary Kochman has retired. Read More
• Evercore hired Joseph Modisett, Morgan Stanley’s former global head of healthcare investment banking. Read More
• Lazard hired veteran energy banker Chris Miller from Citigroup. Read More

• January 30: Skytop Shareholder Activism Summit, New York

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