The Elliott team brushed off its tried-and-true activist playbook this week echoing past fights such as Arconic. On Monday, Elliott sent a letter to Southwest Airlines’ Board, reiterating calls for leadership changes and a comprehensive business review, and threating a fight. Like any good company preparing for a fight, Southwest strengthened its board by adding Rakesh Gangwal, former US Airways CEO, to it and adopting a poison pill after unsuccessful attempts to engage constructively. Of course, Elliott didn’t much like the self-help. Now, Elliott has said it will “move expeditiously” to give shareholders a direct say, hinting at calling for a special shareholder vote.

Whether we go the full 10 rounds remains to be seen. Full-on proxy fights are increasingly rare, according to recent data from Lazard, since the adoption of the universal proxy card. The firm found that 39% of seats won in settlements were announced within a week of a public campaign starting, up from the five-year average of 26% before the UPC was introduced. A report from legal advisor Freshfields backed this up after finding that 39 of 42 board seats won by activists so far this year occurred via settlements rather than shareholder votes.

The summer holiday hasn’t slowed things down in Delaware, where dissenting voices are growing louder over SB 313. Charles Elson, founding director of the John L. Weinberg Center for Corporate Governance at the University of Delaware, penned an op-ed saying that approving the bill would threaten Delaware’s standing as the legal home and primary regulator of corporate America. Elson joins fellow legal and corporate governance heavyweights who would rather let the Delaware Supreme Court rule on the case instead of a “hasty” legislative override. 

Have a great weekend,

GPP team 

Skadden: Shareholder Proposal No-Action Requests in the 2024 Proxy Season

In 2024, companies increased no-action requests by 50%, and the SEC granted over two-thirds. In a new post, Skadden Partner Marc Gerber argues that these results indicate that the no-action process remains a feasible option for many companies to respond to shareholder proposals. Read More

CNBC: Rise of Shareholder Activism: Here’s What You Need to Know

Alfredo Porretti, head of shareholder engagement at JPMorgan, discusses the recent uptick in activist engagements and how activist demands are shaping the M&A market. Watch Here

CORPORATE GOVERNANCE

CLS Blue Sky Blog: Elon Musk’s Threat

Zohar Goshen, Columbia Law School Professor, discusses how Tesla shareholders' strong support for CEO Elon Musk’s pay package was driven in response to typical bargaining tactics to rally shareholder votes rather than from any potential coercion tactics. Read More

Knowledge at Wharton: Are Corporate Human Rights Practices Up to Par?

William Laufer, Wharton Professor and Co-Director of The Carol and Lawrence Zicklin Center for Governance & Business Ethics, discusses the Zicklin Bright Index, a new tool used to evaluate the human rights practices of companies, and the results from the first edition analyzing South American companies. Read More

M&A

The Wall Street Journal: Bain Capital to Buy Envestnet in $4.5 Billion Deal

Bain and other investors will pay $63.15 a share for the wealth management software company, Envestnet. The deal adds to the flurry of private equity facilitated M&A in the first half of 2024. Read More

Financial Times: Dealmaking Revival Expected to Boost Results for Wall Street Banks

Joshua Franklin and Stephen Gandel report that many analysts expect an up to 30% uptick vs. a year earlier in the banking sector this quarter when the big banks begin to report today. Read More

ESG

Harvard Business Review: It’s Time to Change How ESG Is Measured

Lauren Cohen, Umit Gurun, and Quoc Nguyen argue that current ESG metrics are flawed and have structural biases for and against certain companies/industries. They offer a two-pronged solution involving the unbundling of “ESG” and to allow firms to publicly declare their objectives. Read More

Reuters: Republican Challenge to ESG Investing Rule Could Showcase Risk to US Agency Powers

On Tuesday, the 5th U.S. Circuit Court of Appeals listened to arguments in a lawsuit challenging the U.S. Department of Labor rule, which says 401(k) and other plans can consider environmental, social and corporate governance factors as a "tiebreaker" in making investment decisions. Read More

FROM OUR DESK TO YOURS



Oh Abe! GPP already wrote about seeing “Oh Mary” off Broadway, the riotous comedy about Mary Todd Lincoln’s desire to be a cabaret star, and we now have caught the new show on Broadway, which opened last night. If you like the physical comedy of Lucille Ball and the outrageousness of Monte Python or Spinal Tap, please enjoy Cole Escola’s take on Mary before it sells out. The line was around the corner so get there early. We dined at a great Thai place called Chalong on Ninth Avenue, and then walked down to the Lyceum Theatre.

If you are looking for summer reading, GPP recommends the new book by Percival Everett called “James,” which is an adaptation of “Adventures of Huckleberry Finn,” Mark Twain’s classic, told through the lens of the escaped slave Jim. We recommend actually reading or even listening to the original Huck Finn first, then told from the perspective of Jim. We have really enjoyed listening to books, and in this particular case, the different dialects and characters, as well as “James” use of different language, make it fascinating to listen to. (The narrator of “James” is the same as James McBride’s Heaven & Earth Grocery Store, another GPP favorite.)

PEOPLE MOVES

• Cara Lombardo and Dave Benoit have been appointed as co-Wall Street Bureau Chiefs for the Wall Street Journal. They both previously served as Deputy Bureau Chiefs and reporters. Read More
• 3M’s CFO Monish Patolawala will be leaving the company at the end of the month to join Archer Daniels Midland as executive vice president and CFO. Read More
• Hewlett-Packard hired former Medtronic finance chief Karen Parkhill as the company’s new CFO. Read More
• Jefferies will hire European dealmakers Birger Berendes and Michael Borch from Bank of America and Citigroup, respectively. Read More

• July 15-17: Society for Corporate Governance 2024 National Conference, National Harbor, MD

• Local NYC Events:
• July 14: L'Alliance New York's Bastille Day Celebration
• Every Thursday through August 1: Union Square Night Market
• June 28 - August 10: Paramount+ Movie Nights in Bryant Park
• June 28 - August 17: Celebrate Brooklyn Concert Series in Prospect Park