In a Crowded Field, Activist Investors Choose Dialogue over Diatribes

Proxy season is under way, stirring the usual boardroom battles. One of the more anticipated struggles will unfold on May 6 at Sotheby’s annual shareholder meeting in New York, where hedge fund activist Daniel Loeb will push a slate of three director nominees — one of whom is himself. Investors in the 270-year-old auction house will wrestle with the issues that often accompany aggressive activist campaigns. Has Loeb, who is loosely aligned with another activist, Richard (Mick) McGuire, already pushed Sotheby’s far enough? Will the pair try to replace William Ruprecht, Sotheby’s CEO for 14 years? Will Loeb’s presence on Sotheby’s board produce destructive acrimony, or will he instigate enough change to boost the share price, then cash out and stroll away, as he did with Yahoo last year after winning three board seats and helping to install Marissa Mayer as CEO?

Activist investors are ubiquitous these days. But the Sotheby’s campaign run by Loeb, CEO of $14 billion-in-assets, New York–based Third Point, and McGuire, who heads $2.7 billion Marcato Capital Management in San Francisco, is activism at its most hyper. Sotheby’s is what activist investors seem to like best: a company that is not severely troubled but lacks a plan for putting assets to more-productive use — and boasts a pile of cash that can be channeled into dividends and share buybacks.

公司的cash hoards may be the biggest reason activism has thrived. But what’s become obvious is that a dividend and buyback strategy won’t suffice forever, particularly given the powerful run-up in stocks. Companies will have to invest their cash in R&D, new products, geographic expansion or M&A to spur growth. Those demands, in turn, will put pressure on activists to engage boards and managers in more-complex, longer-term strategies.

有迹象表明气候已经发生了变化。并购和资本支出在第一季度起来，股市增长了更多的歧视。行动主义是如此成功，作为新资金启动加入乐趣的战略。比如苏富比的目标比他们更加罕见，而且他们倾向于吸引人群，随着时间的推移驾驶返回。过度拥挤 - 熟悉的财务动态 - 推动了活动家，向需要坚强的运营转变或更大的企业在更明亮的阶段运行的大型企业来看看进一步的声望。

For instance, the largest companies that have drawn activists — Apple, Microsoft Corp., PepsiCo, Yahoo — demand far more in resources and time than a midcap industrial or tech company. Trying to turn around a larger company requires getting support from major investors for a turnaround plan. And that means activists have to conduct dialogues with boards and CEOs. In fact, many boards may want that conversation with activists, if only to placate the institutional investors that stand quietly behind them.

That’s not to say there won’t be a place for high-profile activists. Activism has made lots of money for some larger-than-life personalities — some of whom have been around for decades — whose fans cheer their victories and bemoan their losses as if they were athletes. Almost daily a地下城和龙-likike游戏，威廉阿克曼，大卫einhorn，Carl Icahn，Nelson Peltz或Loeb播放在有线电视上。这些局势个性主导了激进主义投资的最新阶段。但它是一个开放的问题，无论他们是否会在未来几年中播出。

毫无疑问，活动家对冲基金一直是表演者。根据芝加哥对冲基金研究，活动家资金于2013年返回16.6％，远高于平均对冲基金业绩为9.3％。他们也是前五年的表演者，年度收益率不到15％。2013年10月Citigroup公司和投资银行业部门的研究发现，自2006年以来，截至2006年的六个六个索引公司面临着公共股东活动活动的活动，一些由多个Forays拍摄。CITI研究还发现，自2009年以来，针对100亿美元的大型公司的竞选人数已经增加了两倍多。

A highly visible campaign can quickly devolve into a publicity stunt. Last year that renowned (and finely chiseled) financial guru George Clooney stepped in to defend Sony Corp. against Loeb, who was demanding that the Japanese company spin off its entertainment unit. After Clooney called Loeb a “carpetbagger ... trying to spread a climate of fear,” the hedge fund manager insisted that he and the movie star actually wanted the same thing. Loeb reduced his stake, and Sony announced a plan to spin off its TV division into a separate subsidiary. Loeb sort of won and sort of lost.

At Sotheby’s, Loeb, an avid collector of contemporary art, has the advantage of knowing the product. His board nominees are a restructuring expert, Harry Wilson, and a former Lazard M&A banker, Olivier Reza, chairman of family-owned Reza-Gem, a French company that owns a major collection of rare gems and jewelry. Loeb and McGuire contend that CEO Ruprecht has been “administering” Sotheby’s rather than driving it, according to people familiar with their thinking. Sotheby’s has lost ground in the global art market since Steven Murphy took over in 2010 as Christie’s International CEO and pushed the company in a more commercial direction.

当他们推出他们的运动时，两国基金经理都认为，苏富比的“被困”的资本有近19亿美元，并通过成本削减，房地产销售和贷款业务的大修来掌握更好的收益，以便艺术经销商和买家举办贷款业务。But the campaign developed a nasty — if standard — tone, beginning with Loeb’s public denunciation of Sotheby’s as “an old painting in desperate need of restoration” and of CEO Ruprecht’s $6.3 million in compensation and perquisites as a throwback to “the long-gone era of imperial CEOs.” On October 2, Loeb sent a letter to Sotheby’s accusing management of being out of alignment with shareholder interests and noting that Third Point’s stake of less than 10 percent was nearly ten times the number of fully vested shares held by Sotheby’s directors and executive officers. He offered to join the board and recruit others.

第二天苏富比宣布通过股东 - 权利计划，这些计划将有效地稀释了Loeb的股权，这是一种毒药，其中Loeb从20世纪80年代称为“遗物”。他威胁了一个代理战斗，正在避开药丸。

Ruprecht和其他高级经理分别会见了Loeb和McGuire，并同意了他们的一些要求，包括聘请前高盛萨克集团投资银行家Patrick Mcclymont担任Sootheby的首席财务官，并通过股票回购和特别股息将4.5亿美元的投资者返回4.5亿美元。麦圭尔表示，他认为苏富比应该回到投资者10亿美元;仍然可以谈判开放。消息人士称，Loeb和McGuire认为Sotheby的是解锁其资本的三分之一。他们的偏好是产生更大的紧迫性，即释放价值，以推动增长，更多的股息和回购作为回归职位。

The Sotheby’s case demonstrates why some activist campaigns are tempting: The global nonfinancial corporate sector is sitting on more than $2.8 trillion in cash reserves, estimates Deloitte, so an activist can show up, demand cash be put to work and look like a crusader for shareholder rights. Though Loeb and McGuire offered Sotheby’s a growth plan, the company’s cash reserves minimize the risk.

然而，轻松的现金挑选可能会掩盖真正需要重大变化的公司短缺。根据CITI研究，并非所有受激活主义的公司都会延迟其表现。在他们有针对性之前，超过三分之一已经表现出股票。“因此，股价优惠无法自动将公司免于激进主义威胁，”该研究说。“更重要的是，针对表现良好的公司的活动家的趋势正在加剧，特别是在美国，其中56.7％的活动家对2013年的S＆P 1500公司的活动，涉及股价优于股价的公司。”

Much of the enthusiasm for activism finds justification in “The Long-Term Effects of Hedge Fund Activism那” a study published last year by Lucian Bebchuk of Harvard Law School, Alon Brav of Duke University’s Fuqua School of Business and Wei Jiang of Columbia Business School. The authors’ findings supported activism and suggested that stock returns following the initiation of a campaign were, on average, positive and continued that way for five years.

然而，CITI研究发现，虽然这是适用于所有目标股票的平均值，但大多数公司都没有享受长期收益。“事实上，52％的有针对性公司实际上，在花旗研究中说，这是一个和两年的地平线的表现高度的市场基准。”“因此，通过相对少数的活动家努力，导致股票价格提升的努力等较大的平均改善，而不是在广大公司股票价格改善。”花旗的结论：“由于活动家一次往往会在几家公司投资，即使只有一些目标大幅胜过，他们也可以实现卓越的投资组合性能。然而，从公司的角度来看，活动人士议程可能并不一定总是在公司的长期利益中。“

许多投资者对20世纪70年代和20世纪80年代的敌对旅行战争追溯了行动主义的根源。虽然这一时代确实看到了“攻略”的出现，如Icahn，Peltz，Ronald Perelman，T. Boone Pickens和Saul Steinberg，这是一个非常不同的时间。这些袭击者中的一些是在公司购买大型赌注，威胁收购，然后在许多情况下走开目标后，目标为他们的股份支付了溢价：Greenmail，现在是非法的。许多袭击者成功获得了相当大的公司，包括Icahn与跨世界航空公司和佩尔塞尔曼的revlon。

伊坎和Peltz从未真正走了;他们reinvented themselves as shareholder tribunes. The business of challenging the corporate status quo didn’t go mainstream until the early 2000s. A succession of disasters — the tech bubble, the corporate scandals, later the financial crisis — led to “the big bang that changed any view of corporate America’s omnipotence,” said G. Mason Morfit, president of $12 billion activist hedge fund firm ValueAct Capital, in a lecture he gave at Stanford Law School in 2012. Morfit was joined by Abe Friedman, former head of corporate governance and responsible investing at BlackRock and managing partner of CamberView Partners, which advises companies on working with shareholders. “It was outrage that drove shareholders to say, ‘We’re not going to tolerate companies behaving this way,’” Friedman added.

The past decade or so has seen a steady, if often subtle, push and pull between shareholder and board prerogatives. The Sarbanes-Oxley Act of 2002, a response to the Enron Corp. and WorldCom scandals, focused mostly on disclosure and accountability but paved the way for a shareholder-friendly regulatory environment. Rule changes made it easier for minority shareholders to file board resolutions and express their views on pay more clearly. And various defensive strategies, like staggered boards and poison pills, fell out of favor.

但公司几乎没有裁卫。特拉华州法院仍然拥抱经营判决规则，使董事会余地提供在确定公司政策方面。证券和交易委员会长期以来，在十天内购买超过5％的公司股票的投资者揭示了持有的举行，使潜行袭击难以发布。代理招揽规则禁止投资者向其他股东询问他们在提交代理后的投票方式。

在2010年，股东群体说服了SEC来制定代理访问规则，要求公司列出股东委员会关于代理人的被提名人，储蓄投资者为邮寄单独选票的费用。但美国商会和商业圆桌会议起诉，以及哥伦比亚区的美国地区法院推翻了该规则。

不过,这是一个重大的发展,管理ments today feel they have to listen to outsiders, says Marcel Kahan, a professor of corporate law and governance at New York University School of Law. “We have an erosion of power of CEOs to shareholders and independent board members,” he says. Even with limitations on proxy solicitation, there are ways to gauge reactions. “Rumors fly around, and some investors will communicate their intentions publicly,” Kahan notes. “If you’re staging a proxy contest and the stock price goes up, it’s an indication that investors like your idea.”

For Thomas Sandell, founder of New York–based activist and event-driven hedge fund firm Sandell Asset Management Corp., the opportunities are largely in companies where “management is either not hungry enough or not qualified enough or seems to not care.” Adds Sandell, “A common theme is executives who act as if they own the company, yet 90 percent of the time they own only 1 percent of the company.”

That’s a theme Icahn has often decried, among many others. When Icahn decides to go after a company, he thinks the world should know about it immediately. His Twitter account states, in place of a standard profile: “Some people get rich studying artificial intelligence. Me, I make money studying natural stupidity.” Icahn also operates a website, Shareholders’ Square Table. In March he posted a letter to eBay stockholders denouncing CEO John Donahoe and director Marc Andreessen. Icahn contended that Andreessen defrauded eBay when, as a board member, he urged the sale of Skype to an investor consortium with which his venture firm, Andreessen Horowitz, was affiliated. That group then sold Skype to Microsoft at a much higher price a year later.

On April 10, however, Icahn agreed to a few concessions. He withdrew his demands that eBay spin off its PayPal unit and give him two board seats; in return, eBay will bring in former AT&T CEO David Dorman as a director, an appointment Icahn supported. Not that the compromise has made Icahn any less feisty: He has said publicly that he still believes PayPal should not be part of eBay.

“Corporate governance, with many exceptions, is dysfunctional in this country,” Icahn declares. “I strongly believe that bringing accountability to corporations, which is what I do, is important for the future of our economy. While there are many exceptions, the problems in our economy will exacerbate because of lack of accountability, which creates corruption that inevitably will lead to the decline of our hegemony.”

Icahn invests his own money. Some fellow activists quietly say that although he’s always been a brilliant stock picker, Icahn seems to be practicing activism in part to entertain himself. It is that entertainment aspect that might be threatened in changing times, mostly because it often sits uneasily with other investors. Until a few years ago, the major institutions — BlackRock, Fidelity Investments, TIAA-CREF, Vanguard Group, the big public pension funds — generally acted as passive investors. John Bogle, founder and retired CEO of Vanguard, famously said big providers of mutual funds didn’t want to make demands on management for fear of alienating their own client base for retirement plan investments.

该观点可能会发生变化。基于纽约的活动家公司Jana Partners的Barry Rosenstein，创始人和管理合作伙伴说，曾经考虑与活动家投资者交谈的机构投资组合管理人员，但他们开始认为它是不负责任的。可以在返回他的电话的机构数量中来衡量变化。“我们现在拥有一个公开对话，大型机构通常决定激进主义情况的结果，因为他们试图为股东提供正确的结果，就像我们一样，”他说。然而，大多数机构管理人员更倾向于保持低曲线关于他们支持的措施，让活动人员发出噪音。

Martin Lipton是一个现代化的和纽约律师事务所Wachtell，Lipton，Rosen＆Katz的创始人的先驱，拥有长期支持的管理和董事会特权，1982年发明了毒药 - 多年来最有效的收购辩护。Lipton断言，活动家赢得了与良好治理有关的原因，而不是与短期收益有关的原因。“这是一个不公平的比赛，”他说。“拥有80％左右库存的机构是巨大的压力，以支持活动家努力推动库存，因为它们在任何季度都没有经济衰退。这不会产生长期值。“

But institutional shareholders have shown in a number of cases that they are perfectly willing to resist activists. Rosenstein lost a very public battle last year with other shareholders of Agrium, a Calgary, Alberta–based agricultural and fertilizer supplier. He believed he had the votes to replace at least two board members, then reacted with fury at the shareholder meeting when management’s slate narrowly won. He accused Agrium of contacting shareholders at the 11th hour to urge them to change their votes. Rosenstein would not comment on Agrium.

In December the California Public Employees’ Retirement System, the largest U.S. pension fund, chose not to support Icahn in his demand that Apple return more cash to shareholders than CEO Tim Cook had already promised. A month earlier Anne Simpson, CalPERS’s head of corporate governance, told the纽约时报“股东激进主义正在从大门的野蛮人发展来表达像业主。”辛普森说，苹果们做得够够了，并叫做了掠夺者和约翰尼最近的掠夺者。她描述了他的推文关于与厨师的晚餐谈话为“不良”。

Lipton不一定反对更加温和的激进活动。虽然他坚持认为，活动主义的威胁可以使管理人员过于谨慎，导致他们削减资本投资，他支持他们投资的资产管理人员和公司之间的有效参与，所有缔约方作为企业管家。最近，在新奥尔良的一个会议上，Lipton提出了他尊重的活动家列表：Ralph Whitworth和关系投资者的大卫Batchelder;Peltz和Peter Trian Partners;和jana的罗森斯坦。

Marc Giles是一名高管，他认为他相信他的公司更强大。Giles是Gerber Scientific的前任首席执行官，这是一家位于康涅狄格州荷兰自动化制造系统的制造商的Gerber Scientific。2009年8月他收到了每首CEO恐惧的信。它来自于纽约的活动对冲基金公司Barington Capital Group的首席执行官詹姆斯·米塔顿大道。这封信是，因为Giles描述了它，“非常重要，”说格伯应该检查其四个部门的可行性并打击支出。拥有大约5％格柏股的Mitaronda要求三个董事会席位。

“每个人都很沮丧，”吉尔斯回忆道。“但[董事长唐纳德·艾肯]说，”让我们冷静下来。“Lipton总是告诉CEO，让他们的头在沙滩上埋葬是最糟糕的反应方式。格柏队会见了Mitarotonda，他认为自己是一个绅士的活动家，但经常从苛刻的信件开始竞争，他希望为建设性对话铺平道路。“这几乎是标准的，即活动主义者在脸上打开你，然后奠定了他们的思考，”吉尔斯说。“我们见面并惊讶地发现我们对公司的看法或多或少一致。之后，所有的紧张都消失了。“他认为mitarotonda有一些好的想法。

The demand for three board seats turned out to be a tactic to get the company’s attention; the board agreed to bring on a Barington representative. Mitarotonda was already serving on too many boards, so Barington portfolio manager Javier Perez, a former McKinsey & Co. consultant, took the seat instead, and a year later Mitarotonda joined him. Gerber’s board agreed to spin off two smaller and less profitable business lines — something Giles had already been considering — but Barington pressed Gerber to do it in six months rather than several years. The stock had fallen from a high of $28 to $3 when Barington bought it; the restructuring lifted it to $9. That’s a point at which some activists might cash out, but Mitarotonda prefers to advise companies on the next step.

The spin-offs left Gerber smaller. Giles says one of the issues with a sale was that the board knew that shrinking would mean Gerber couldn’t remain publicly listed. Ultimately, Mitarotonda helped set a valuation, and San Francisco private equity firm Vector Capital acquired Gerber for $11 a share.

Giles has stepped down as CEO but remains a director. Mitarotonda and Giles spoke on a panel at an activist investor conference in New York last year, along with Barington COO and general counsel Jared Landaw and former Gerber general counsel William Grickis Jr., presenting the experience as a case study in constructive activism.

Today, Mitarotonda is best known for his involvement with casual-dining operator Darden Restaurants. Barington and another activist investor, New York–based Starboard Value, want the company to spin off real estate it owns through its chains, particularly Red Lobster and Olive Garden, and create real estate investment trusts or lease space to the restaurants. Starboard has argued against Darden’s plans to spin off Red Lobster without a separate sale of its real estate and has called for a special shareholders’ meeting to vote on a nonbinding resolution against the plan. In late March, Barington sent a letter to Darden’s independent directors asking them to consider replacing CEO Clarence Otis Jr., though in conversations that week no one at the hedge fund firm seemed happy about taking that step.

Mitarotonda现在坐在他帮助的三家公司的董事会上，他帮助转身：服装公司Jones Group，树脂和塑料制造商A. Schulman和汽车供应零售商Peo：Manny，Moe＆Jack。“I’ve seen corporate boards where activists come in and are just interested in wringing out cash or selling the company,” says Joseph Gingo, a former Goodyear Tire & Rubber Co. executive, whom Barington helped install as chairman and CEO of A. Schulman. “When I came in, Jim thought A. Schulman should be for sale. But after we turned around a lot of the operational problems, he said it would be foolish to sell, so we didn’t. He really represents the shareholder interests.”

Increasingly, U.S. activist investors seem to be borrowing from the playbook of European activists, the largest of which are $13 billion Cevian Capital, which operates out of Stockholm, Zurich and London, and $7.6 billion The Children’s Investment Fund Management (UK) in London. Lars Forsberg and Christer Gardell, the Swedish founders of Cevian, come from private equity backgrounds and have in recent years helped Denmark’s Danske Bank shed distressed assets and Volvo’s truck division raise operating margins. They are now trying to turn around troubled German conglomerate ThyssenKrupp. They have taken board seats at half the companies they’ve invested in, always by asking politely. It is easier in Northern Europe and the U.K. — the only places Cevian invests — which have governance structures that hold boards and CEOs accountable to all stakeholders.

即便如此，越来越多地在美国越来越多地付出代价，Subserts ValueAct Ceo Jeffrey Ubben。自2000年在2000年在Arkansas的信息管理公司在2006年推出了对冲基金公司以来，他的一项代理战斗是在2006年教授他一个有价值的课程。“我们觉得公司的战略有缺陷，但管理人员希望与我们的建议无关，”他回忆道。“我想将信息业务从数据业务分开，但事实证明这两个被纠缠在一起，你不能将它们分开。如果您没有在公司内部，您不知道所有细节，但代理比赛迫使您提出计划。一旦我们安顿下来并获得了两个董事会席位，它就会显然是我们反对他们。所以我从来没有完全信任。需要四年时间进行更改，然后，该公司有点失去了。“

Today, Ubben works hard at building networks with investors who are likely to support his demands, and that helps him win board positions. ValueAct has placed representatives on some 32 boards.

Ubben和其他人说良好的关系良好的关系良好的关系：如果您呼吁机构投资者投票投票，他们更有可能回到目标公司长期支持者所称的其他活动家。亚博赞助欧冠

潘兴广场的首席执行官威廉•阿克曼110亿美元Capital Management in New York and a high-octane news maker for his campaigns to destroy Herbalife and team up with the pharmaceutical company Valeant to take over Allergan — a move that Ubben’s ValueAct is also backing. Among institutional investors, however, Ackman has gained a reputation for not sticking it out, particularly since his experience with J.C. Penney Co. In 2010, Ackman began buying Penney’s stock with a plan to change management and make the company a hipper retailer — but it all ended with the firing of the CEO Ackman had championed, former Apple retail chief Ron Johnson. Last August, after protracted arguments with the board, Ackman resigned and sold his 18 million shares at a loss of nearly $500 million. On the one hand, he looked shrewd; he unloaded shares at $12.91, and the stock fell as low as $5 in early February. But many now remember Ackman for muscling his way onto the board, then walking and leaving the company in worse shape than ever.

While pension funds have embraced some activists, a few have tried the strategy themselves. The $163.7 billion California State Teachers’ Retirement System recently joined with $6 billion Relational Investors in an effort, ultimately successful, to get Canton, Ohio, specialty steelmaker Timken Co. to separate its two main businesses. Aeisha Mastagni, an investment officer in CalSTRS’ corporate governance unit, says the pension presented its case to institutions and won their support. “We have relationships with all of them, and without their backing you wouldn’t have seen our shareholder proposal pass,” she says.

仍然，CALSTRS通过对冲基金组合使其大部分活动家投资。“这个空间已经为我们增长了，”马斯塔尼说。“与任何特定的资产类别一样，有臭氧和流动。现在有很多并购，公司有现金。我们还有很多公司的长期被动投资，我们的活动管理人员正在举行[也是]。这是一种方式，我们可以确保公司制定正确的并购决定并明智地支出现金。“

CalSTRS’ allocations include Relational, Starboard Value, Trian, European activist manager Knight Vinke Asset Management and Blue Harbour Group. The last, a $2.4 billion fund based in Greenwich, Connecticut, is run by Clifton Robbins, a 15-year KKR & Co. veteran who started the fund in 2004. He believes in approaching a target like a private equity manager: meeting with senior managers rather than accumulating shares and announcing he wants to change things. He likes companies with large cash reserves, but he says he’ll bow out if he meets a CEO who doesn’t seem interested. “Sometimes after meeting with a company, we might realize there’s a tax or structural impediment to what we want to do or the company isn’t as undervalued as we thought,” he says. Among his biggest holdings are women’s clothing retailer Chico’s FAS, which he believes is being valued based on its largest, oldest business (overlooking three growing brands), and Internet server operator Akamai Technologies, which he has urged to return capital to shareholders and make acquisitions that boost earnings.

Mastagni says that before investing with an activist, CalSTRS portfolio managers review past campaigns to see how many came to fruition. It’s a sign of what activists increasingly will have to prove in a crowded market. “I think there’s a specialized skill set in doing activist investing and being successful at it,” she says. “Anyone with financial acumen can identify undervalued companies. But you have to find levers that extract what’s undervalued and communicate it to management. It takes very patient capital.” • •