Topic: Proxy Battles

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ISS includes Economic Value Added in its Compensation Reports

Institutional Shareholder Services (ISS) announced earlier this year that, in its 2019 proxy research reports, it will be displaying financial ratios derived from a base measure called Economic Value Added (EVA). The EVA ratios will initially be used for informational purposes only, meaning they will not factor in to say-on-pay voting recommendations or evaluations of compensation policies. Nevertheless, boards should understand EVA’s value as a means of assessing management performance, and how ISS intends to use the measure in its reports.

EVA is an estimate of a firm’s true economic profit, that is, its after-tax operating … Continue Reading

A UK dispute sheds light on the duties of a dissident director

A recent decision of the UK’s High Court — Stobart v Tinkler [2019] EWHC 258 (Comm) — has been released following a dispute between directors of a large infrastructure company (the “Company”). The decision, and the circumstances preceding it, serve as a cautionary tale about the duties of a dissident director and of board members in the context of proxy contests.

The board dispute was initiated by a founder and significant shareholder of the company (the “Dissident Director”). After his resignation from the office of CEO in 2017, the Dissident Director remained with the Company as … Continue Reading

Shareholder Activism Reaches Record Levels

Activist Insight recently published the sixth edition of its annual report, entitled “The Activist Investing Annual Review 2019” (the “Review”). The Review analyzes recent global shareholder activism trends, forecasts expected developments in 2019, and highlights and compares jurisdictional data.

Oh, Canada: Increased Canadian Activism

As the Review outlines, 2018 was a notable year in Canada for shareholder activism. Not only did one of the biggest proxy fights of the year stem from Canada, but 75 Canadian companies received public demands from activist investors. The number of public demands received last year is significant considering there were 56 Canadian … Continue Reading

When defamation in hostile proceedings leads to serious consequences

It will come as no surprise to those who have participated in a proxy fight to learn that these disputes can be heated affairs.   Parties to a fight will routinely seek to discredit the other side to bolster their own narrative or otherwise gain a strategic advantage.  In such an atmosphere, it can be difficult to draw the line between behaviour that’s merely aggressive and behaviour that crosses into unethical or illegal territory.  A recent U.S. District Court case, Eshelman v. Auerbach et al, ­provides an example of the serious consequences that can ensue for those who cross this … Continue Reading

Lesson Learned: An Examination of Trends in Shareholder Proposals

Shareholder proposals are often viewed as an essential tool for maintaining corporate accountability, but what role do they play in shaping corporate governance? ISS Analytics recently published a study  (the Study) that reviewed the impact of shareholder proposals on corporate governance practices among U.S. companies since 2000. The Study offers helpful insights into shifting trends in corporate governance and investor attitudes, and provides important lessons for Canadian issuers.

A brief history of shareholder proposals in the U.S.

According to the Study, after a significant surge in the number of governance proposals in the early 2000s, the number of proposals … Continue Reading

Webinar – Corporate governance, shareholder activism, and hostile M&A: Key developments in 2018 and a look ahead

Walied Soliman and Orestes Pasparakis, co-chairs of Norton Rose Fulbright’s Canadian Special Situations team, will host a 60-minute webinar on corporate governance, shareholder activism, and hostile M&A on Tuesday, February 12, 2019 at 12 p.m. EST. To sign up, please click here.

Our Special Situations team played a leading role in some of the most complex and high-profile corporate governance, shareholder activism and hostile M&A matters of 2018. The webinar will highlight some of the key trends and developments in 2018 and trends taking shape in 2019.

This will be essential viewing for directors and executives at public companies, … Continue Reading

Kingsdale Releases 2018 Proxy Season Review

Kingsdale Advisors has released its annual Proxy Season Review for 2018. The Review examines trends observed in 2018, predicts issues on the horizon, and provides advice to both issuers and activists in the marketplace.

In what follows, we pick out just a few of the important trends that emerge from Kingsdale’s analysis. The complete report can be viewed here.

Public activist activity remains healthy

Kingsdale counts 29 public proxy contests for the year to date. Though not reaching the high-water mark set in 2015 (55), the 29 public fights so far this year are up by 38%, as compared … Continue Reading

Activist Insight Monthly features interview with Co-Chairs of Canadian Special Situations team

This month’s edition of Activist Insight Monthly, which focuses on Canada, features an in-depth interview with Walied Soliman and Orestes Pasparakis, Co-Chairs of Norton Rose Fulbright’s Canadian Special Situations team. The interview focuses on recent trends our team is seeing in the Canadian marketplace, including activist short selling, settlements, and the continued rise of “nice” activists.

The publication can be found here (sign-up required).… Continue Reading

Norton Rose Fulbright’s Canadian Special Situations Team ranks in the top 10 of global legal advisors for shareholder activist campaigns

Global law firm Norton Rose Fulbright’s Canadian Special Situations Team has ranked in the top 10 of global legal advisors advising both companies and activists in shareholder activist campaigns and is the only Canadian firm to be represented on the global ranking.

To view the Global Shareholder Activism Scorecard, please click here.Continue Reading

OSC Statement of Priorities

On July 5, 2018, the Ontario Securities Commission (“OSC”) released its annual Statement of Priorities (the “Statement”) for the financial year to end March 31, 2019. The Statement outlines the most pressing issues that the OSC hopes to address in connection with the administration of the Securities Act, regulations and rules.

While investor protection is a major focal point of the Statement, the OSC also addresses a number of issues that pertain to shareholder rights and proxy contests. As discussed in a previous post, there is a looming question as to whether regulators will implement … Continue Reading

Fee-Shifting By-Laws in Canadian Shareholder Litigation

A fee-shifting by-law in the shareholder litigation context, “obligate[s] the plaintiff-shareholder to reimburse the corporation’s expenses (including attorneys’ fees and other costs) when the plaintiff [is] unsuccessful in litigation.”

Shareholder litigation in the United States operates under the “American Rule” which provides that each party is responsible for their own attorney’s fees. Unlike South of the border, in Canada lawyers’ fees are largely recoverable by the prevailing party. The 2008 financial crisis escalated the number of shareholder-initiated suits, especially in the United States. To address this, American corporations have attempted to avoid bearing the cost burden of unsuccessful shareholder initiated … Continue Reading

“The Great White Short?” Canada Is the World’s #3 Destination for Activist Short Selling


Recently, Activist Insight released a report on activist short selling. Activist short selling is when investors publicly bet on a stock going down in value. Among other interesting trends, the report shows that Canada ranks number 3 in the world for activist short campaigns. The data suggest that Canadian companies should be on high alert about the possibility of an activist short play.

The global number of activist short campaigns is trending downward

2015 represented a high water mark for activist short selling, with 274 campaigns globally. Since 2015, numbers have trended downward, with 263 campaigns in 2016, 186 in … Continue Reading

Tracking the Rise of Shareholder Activism in Asia

Shareholder activism has steadily been on the rise in Asia in the past seven years, but is it here to stay?

According to a recent report published by J.P. Morgan in May 2018, the numbers seem to support this proposition. As outlined in the report, only 10 shareholder activist campaigns took place in Asia in 2011 — that number ballooned to 106 in 2017.

Shareholders of Asian firms have historically been reluctant to engage in public activism. There are likely many reasons for this, including, according to Chelsea Naso of Law360, the prevalence of control block shareholders in the Asian … Continue Reading

Canadian Securities Administrators are seeking comments on soliciting dealer arrangements

The Canadian Securities Administrators (the “CSA”) have issued CSA Staff Notice 61-303 and Request for Comment – Soliciting Dealer Arrangements (the “Notice”) on the use of soliciting dealer arrangements. “Soliciting dealer arrangements” generally refer to agreements entered into between issuers and investment dealers under which the issuer agrees to pay to the dealers a fee for each security successfully solicited to tender to a bid in the case of a take-over bid, or to vote in favour of a matter requiring securityholder approval. In many cases, the payment of any fee is contingent on “success” and/or … Continue Reading

Glass Lewis’ 2018 Canada Policy Guidelines on Proxy Advice

Glass, Lewis & Co., LLC (Glass Lewis), a leading governance and proxy voting firm, has recently released its 2018 Policy Guidelines for Proxy Advice in Canada.  The following are three of its key changes from the 2017 Policy Guidelines:

Board Gender Diversity

In the new year, Glass Lewis will not make voting recommendations solely on the basis of board diversity. However, starting in 2019, Glass Lewis claims that it will generally recommend voting against the nominating committee chair of a board that has no female members, or has not adopted a formal written gender diversity policy. This … Continue Reading

Shareholder activism leads to higher rate of CEO turnover – win or lose

Shareholder activism is now a global phenomenon. Activists commonly seek to shake up the board of a target company in hopes of instilling change and increasing shareholder value. The impact on target companies can be both disruptive and enduring – often resulting in turnover among top management and in particular chief executive officers (CEOs). A recent study by Lazard found that since 2013, the average annual turnover rate of CEOs at target companies was 23 percent, compared to 12 percent at non-target companies.

It should not come as a surprise that successful activists who secure board seats may have greater … Continue Reading

Defamation lawsuits as a defence to shareholder activism

Activist investors engaged in proxy fights typically mount aggressive public relations campaigns in order to undermine shareholder confidence in a target company’s performance and leadership, whether through social media, online forums or by using the more traditional PR channels. In response, target companies have turned to a number of defensive measures, many of which have been previously discussed on this blog. As part of their proxy defence playbooks, target companies may threaten or actively pursue legal action, such as by filing complaints with securities regulators or by suing for defamation.

Naturally, the decision to commence legal action must take into … Continue Reading

Alberta Securities Commission declines to exercise public interest jurisdiction to terminate soliciting dealer arrangement in proxy fight

In its recent PointNorth Capital Inc. decision, the Alberta Securities Commission (ASC) was called upon to consider the appropriateness of a soliciting dealer arrangement that had been entered into by the issuer, Liquor Stores N.A. Ltd., in the context of a proxy fight. The arrangement was intended to address management’s constrained ability to solicit proxies due to the fact that many of the shareholders were “objecting beneficial owners” who could only be contacted indirectly through brokers.

The ASC dismissed the application by dissident shareholders of Liquor Stores, the PointNorth limited partnerships, for orders requiring Liquor Stores to terminate the arrangement, … Continue Reading

Trends and strategies for companies involved in M&A transactions

In a report entitled “M&A Activism: A Special Report”[1] (the Report), the editor-in-chief of Activist Insight describes the types of companies most at risk of being targeted by shareholder demands, providing steps that can be taken to increase the resilience of M&A transactions.

The Report identifies a number of trends and findings, as summarized below:

  • Deal Prevention: M&A demands from shareholders have increased in recent years in both Canada and the United States, most commonly by activists seeking to prevent deals, to pursue appraisal rights, and to make their own takeover bids. Notably, 45% of Canadian shareholder activism
Continue Reading

Fasten your seatbelts: preparing for the globalization of hedge fund activists

Activist hedge funds have grown up and gone global, reinforcing the need for companies of all shapes and sizes to plan ahead for the possibility of an attack. A recent article by Martin Lipton in the Harvard Law School Forum of Corporate Governance and Financial Regulation reviews recent developments in the activist landscape and reconfirms the importance of preparing for an attack.

The Fight Has Gone Global

One recent development is the expansion of hedge fund activism across the globe within the past two years. Mr. Lipton suggests that activism typically associated with the American marketplace is quickly gaining traction … Continue Reading

The drivers and consequences of settlement agreements in proxy fights

Activist interventions are being increasingly resolved by way of settlement agreements, with 3% of activist interventions in 2000 having resulted in a settlement agreement versus 16% in 2011.[1] In light of this emerging trend, the Columbia Business School recently published a paper, Dancing with Activists, in which the authors sought to provide the first systematic analysis of the drivers, nature, and consequences of such settlements. The authors identified 4 main drivers of settlement agreements: (1) the activist’s stake; (2) market reaction to a SEC Schedule 13(d) filing; (3) settlements in past engagements; and (4) past firm performance.… Continue Reading

Key takeaways from the 2016 proxy season in the US

The EY Centre for Board Matters (EYC) recently published its annual report setting out key takeaways from 2016’s proxy season in the United States. Canadian issuers should take note of the developments in the US as trends south of the border will impact the proxy landscape in Canada.

Investor Communications

One of the takeaways from the 2016 proxy season was that proxy circulars have developed into a tool for communication to investors. For more companies, this annual disclosure is being used to engage investors by communicating companies’ goals and guiding principles.

Further, over the last few years, proxy … Continue Reading

The State of Proxy Access Reforms

With the rise of shareholder activism led by what some refer to as “constructivists”, “reluctavists” or “suggestivists” (and, yet others, those who commit “extortion”), shareholders have become increasingly distrustful of leaving matters of corporate governance to management and boards. One tool that investors can rely on is exercising rights pursuant to a proxy access by-law, or, in Canada, the statutory rights of certain shareholders.

Proxy access is about enabling shareholders to influence who governs a company, and by extension, how the company proceeds with its affairs. It expands the activist shareholder’s quiver of offensive … Continue Reading

Multiple activist campaigns on the rise as activists outnumber target companies

A corollary to the trend of rising shareholder activism is the increasing frequency with which target companies are facing multiple activist campaigns. Companies that have successfully defended activist campaigns in the past are not free to rest on their laurels – if the same issues persist, future attacks may be on the horizon.

The Wall Street Journal reports that 39 companies have dealt with more than one shareholder activist over the past year – a 95% increase since 2011. Companies that are underperforming seem to be a breeding ground for multiple shareholder activist activity, but there do not seem to … Continue Reading

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