Welcome to the New Year from New York City, where the metaphorical universal proxy dropped at midnight in Times Square and rolled all night long. As activists awoke from their holiday slumber ready to jump on their prey, Skadden's Rich Grossman noted what is sure to be a busy proxy season with two contests under the recently enacted rules. One takeaway from the fights is the importance of director qualifications, such as tenure, expertise, and skills as shareholders can now choose individual dissident nominees and essentially “cherry pick” candidates for the board. Semafor’s Liz Hoffman also discussed possible forthcoming SEC rule changes, such as modifications to the 13D disclosure window and rules around swaps. Coming off a year of high activism activity, there's plenty of conference room and zoom chatter on how activists will strike while the iron is hot.

Surprising no one, deal volume for the final quarter of the year remained low. Global deal value and volume in Q4 were both deflated, marking the slowest quarter of the year, an unusual trend. Alan Klein of Simpson Thacher writes in a LinkedIn post that it will be important to see what it will take to reach equilibrium in equity markets this year, allowing buyers to return with confidence and dealmakers to reach agreement on valuations. There are reasons to be optimistic that companies will adjust to current conditions and deals will return.

Meanwhile, activist investor Impactive Capital co-founded and led by Lauren Taylor Wolfe and Christian Alejandro Asmar wasted no time in nominating four directors to the board of Envestnet to start the new year. In the letter, the activist cited poor governance and lack of shareholder alignment to call for a board change. To remedy this, Impactive Capital wants all directors to be put up for election every year. Envestnet successfully defended a challenge to their board last year; however, the activist is pointing to the 11% increase in stock price since going public with their November 15 public letter as evidence to back their bold demands.

Lastly, GE officially separated its healthcare business into a new publicly trade company as part of ongoing spinoffs of the iconic conglomerate, whose downfall has been the topic of several books including William Cohan’s recently published Power Failure. With GE HealthCare Technologies Inc., always considered one of the crown jewels, now trading on Nasdaq this week, GE’s Larry Culp is able to shift focus to the next phase of the plan to spin-off the company’s renewables and power businesses to form GE Vernova, with the remaining core business rebranding to GE Aerospace. We wish the baby GE's the very best.

Have a great weekend,

GPP Team

Skadden: Lessons From the First Few Contests Under the Universal Proxy Rules, and the Outlook for 2023

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Reuters: Impactive Capital Nominates Four Directors to Envestnet's Board

In one of 2023’s first activist campaigns, the relatively small fund Impactive Capital has nominated new directors to technology company Envestnet’s board, citing poor capital allocation, lagging financial performance, and “questionable” governance practices. Read More

Harvard Law School Forum on Corporate Governance: 2022 U.S. Shareholder Activism and Activist Settlement Agreements

Lauren Boehmke, Melissa Sawyer and Susan Lindsay of Sullivan & Cromwell LLP discuss the impact of prevailing trends in shareholder activism including potentially higher activist success rates due to universal proxy, increased focus on ESG activism directly tied to financial performance and de-SPAC campaigns. Read More

Boardroom Governance with Evan Epstein: Peter Gleason: "We Look at Board Directorships as a Profession with Accountability and Expectations."

Peter Gleason, President and CEO of the National Association of Corporate Directors, joins the Boardroom Governance Podcast to discuss how boardroom governance has changed over his career and why he thinks the adoption of universal proxy is, "a step towards democratizing the proxy statement." Read More 

Bloomberg Law: Cooling M&A Activity Portends Focus Shift for Antitrust Agencies

The steep decline in M&A activity over the last year will likely afford regulatory agencies the bandwidth to investigate deals that have been scrutinized for antitrust violations. Read More

Wall Street Journal: General Electric Set to Spin Off Health Unit—Putting Focus Back on Power Division

Thomas Gryta reports on the latest development in GE’s sprawling restructuring process—the spin off and separate listing of the conglomerate’s healthcare business, GE HealthCare Technologies—and whether the move will fulfill its goal of streamlining and simplifying the company. Read More

The Exchange: Activists Will be No-Holds-Barred in 2023

Chris Couvelier, a shareholder activism specialist at Lazard, joins The Exchange to discuss 2022’s red-hot activist environment, and how the year ahead is likely to see sustained levels of campaign activity. Listen Here

New York Times: An Architect of Biden’s Antitrust Push Is Leaving the White House

In a development that marks the end of a nearly two-year tenure, Tim Wu, one of the foremost proponents of anti-trust enforcement, is departing his post as special assistant to the president for competition and tech policy. Read More 

Wall Street Journal: Lagging Arms Production Makes Pentagon Wary of Further Industry Consolidation

The six major defense companies’ inability to supply Ukraine with weaponry has yet again raised questions about waning competition in the defense industry due to continued consolidation and M&A, reports Doug Cameron. Read More

Axios: 2022 Was A Huge Year for Leveraged Buyouts

Private markets continued to grow in 2022 as the number of private equity buyouts during the year reached their second-highest level in the past decade, but it remains unclear whether these buyouts will actually deliver profitable returns to investors, writes Kate Marino. Read More

Harvard Law School Forum on Corporate Governance: How Companies Should Approach Shareholder Proposals This Proxy Season

Kirkland & Ellis LLP partner Shaun Mathew analyzes the SECs recent proposed amendments to Rule 14a-8, and argues that the changes are likely to generate additional uncertainty and confusion for companies and investors. Read More

Semafor: A Win for Corporate Raiders

Liz Hoffman discusses how the SEC's proposed new rules to decrease the window for investors to publish 13D filings reveal their stakes would greatly benefit major activist investors. Read More

Fortune: The Crystal Ball: VCs, Private Equity Investors, and Tech Founders Predict M&A Activity for 2023

Jessica Mathews and Jackson Fordyce outline predictions from some of the financial industry’s leading voices, many of whom are leaning toward an active deals landscape in 2023. Read More  

ESG NEWS

Barron’s: This Little-Known U.S. Agency Determines Millions in ESG Investing

Community Development Financial Institutions (CDFIs), a certification given by the US Treasury Department to businesses who do business with typically disadvantaged groups, have come under scrutiny as some critics claim their practices undermine the people they claim to empower. Read More  

CLS Blue Sky Blog: The ESG Gap

While demand for ESG initiatives continues to grow among investors, corporate action to execute on these goals remains stunted— Sharon Hannes, Adi Libson and Gideon Parchomovsky posit that two structural issues are to blame: competence and motivation. Read More

Bloomberg: BlackRock, Citigroup Among Firms Named Fossil-Fuel Boycotters by Kentucky

Kentucky's State Treasurer has placed 11 major financial institutions, including BlackRock, Citigroup and JP Morgan Chase, on a restricted list due to their commitments to reduce fossil fuel investments. Read More

FROM OUR DESK TO YOURS

Like the whole sports world and indeed the whole nation, GPPers watched in horror during the Bengals-Bills Monday night football game and are heartened like all Americans by the news that Damar Hamlin, safety of the Buffalo Bills, has shown remarkable improvement in the past 24 hours, news that even President Biden tweeted about. When Damar awoke he wrote a question out to his doctors showing his cognitive abilities and competitiveness, “Who Won?” His doctors responded, “Yes Damar, you won. You won the game of life.”

Hoping to keep the New Year celebrations going? Look no further! If you’re in New York, ring in the Chinese New Year this weekend with events courtesy of The China Institute, ranging from traditional opera performances to interactive dumpling making tutorials.

Netflix’s new four-part docuseries on notorious white-collar criminal Bernie Madoff’s near $65bn ponzi scheme is a must watch. The show explores how the Wall Street veteran duped thousands of investors, his forays into helping organized crime, and his ultimate downfall. Madoff, who the show’s director claims was sociopathic and calculating, died in prison in 2021.

PEOPLE MOVES

• Andy Serwer, who for the past 8 years has served as editor in chief of Yahoo! Finance, is leaving the outlet. Read More  

• Amy Hauk, who has led Victoria’s Secret since July of 2022, is set to depart the company in March of 2023. Read More

• Orianna Rosa Royle has left her role at Management Today to join Fortune as Business Reporter. Read More

• Alex Stern, former President at Lazard, will rejoin IBM as SVP, strategy and mergers & acquisitions. Read More

• Known for his whistleblower complaint against Twitter last year, Peiter “Mudge” Zatko is joining Rapid7, a cybersecurity firm. Read More  

January 10-13, 2023: 40^th Annual J.P. Morgan Health Care Conference  

January 17-21, 2023: World Economic Forum (Davos)

February 2, 2023: Skytop Strategies Shareholder Activism Summit 2023