Highlights from the
world of Proxy Papers you can’t afford to miss: Yahoo!, Old Mutual, Carmike Cinemas, and Suzuki Motor.
Yahoo! Inc.
NASDAQ – June 30
Yahoo CEO Marissa Mayer approaches this year’s annual meeting under intense scrutiny from all directions. Despite dozens of acquisitions and wholesale management changes since Ms. Mayer’s 2012 appointment, investors have become increasingly frustrated with the Company’s strategic direction and the declining health of its core business. Of primary concern is the company’s $1 billion stake in Alibaba Group Holding Ltd., an asset which now accounts for the majority of the Company’s market capitalization. Having failed in its initial plan to divest its Alibaba stake in a tax-free spin-off, the Company’s management team now faces the deflating prospect of selling off its core internet business. Most recently, Starboard Value LP, perhaps Ms. Mayer’s most strident critic, secured four board seats after reaching a settlement agreement in April; combined with the board’s own refreshment efforts since the turn of the year, the slate of directors to be elected by shareholders is virtually unrecognizable from the one in 2015. At this year’s meeting, shareholders will have a chance to weigh in on the ongoing sale process, itself a maelstrom of untimely media leaks and criticism, in addition to Ms. Mayer’s pay package, which some have pointed out as being tied more to Alibaba’s performance than the Company’s in recent years.
Old Mutual plc
London Stock Exchange – June 28
It’s not quite turkeys voting for Christmas, but CEOs recommending their own redundancy is nonetheless rare. Just months after being appointed, Old Mutual CEO Bruce Hemphill proposed a radical restructuring that will split off the Company’s UK wealth management, U.S. asset management, South African banking and African insuring arms into four separate businesses, after a review found that there was “no compelling strategic logic” to maintain the current structure. Investors appear comfortable with the strategy, however questions have been raised about the revised compensation package that is intended to incentivize executives to carry it out, which includes relatively high award levels and potential for ostensibly “long-term” awards to pay out quickly if the separation is achieved early. Both the size of payouts and degree of emphasis on the long-term have been hot button issues for UK investors; in this case, shareholders will have to consider whether the unique circumstance of encouraging executives to bring about their own redundancy over a variable timeframe justifies the unusual terms of the award.
Carmike Cinemas Inc.
NASDAQ – June 30
Carmike Cinemas, the fourth-largest U.S. movie theater chain agreed to an all-cash buyout by larger rival AMC Theatres. The combination makes strategic sense and AMC expects to realize financial synergies, but the Company’s shareholders won’t participate in any of the future value accretion following the cash-out transaction. The offer price appears low to some investors, particularly when compared to the Company’s trading price prior to a significant decline leading up to the acquisition announcement, and in relation to the company’s all-time record quarterly financial results released just three days before the buyout announcement. The Company’s two largest shareholders, Mittleman Brothers LLC and Driehaus Capital Management LLC, are opposed to the acquisition and have publicly sought to convince other shareholders to vote against the deal as well.
Suzuki Motor Corporation
Tokyo Stock Exchange – June 29
At its upcoming annual meeting, Suzuki Motor has its hands full addressing not only a recent fuel emission scandal but also a leadership succession, as the CEO has announced he will fall on his sword in response to the crisis. After marrying into the Company’s founding family, Osamu Suzuki rose through the ranks and ultimately helming the firm as representative director and president since 1978. Mr. Suzuki’s top-down management style and charisma is consistently cited as helping to transform the Company into one of the most successful small-to-medium-sized automakers by differentiating the firm from Toyota Motor, Nissan Motor and Honda Motor — Japan’s “Big Three” automakers. While it seemed that Mr. Suzuki was going to pass down the torch to his son under a phased handover, the revelation that the Company had been improperly conducting its fuel economy testing has cut short the succession schedule. While he will remain as representative director and chairman, Mr. Suzuki has taken responsibility for the fuel emission scandal and will step down as CEO at the upcoming annual general meeting, with his son taking over.