Proxy Contests - Mark Foletta Summit Conference


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Proxy Contests - Mark Foletta Summit Conference

  1. 1. Proxy Contests - A Reflection After 18 Months<br />Mark G. Foletta<br />Sr. VP & Chief Financial Officer<br />Amylin Pharmaceuticals, Inc.<br />
  2. 2. Key Observations<br />2<br />4-5 month process for us – a HUGE time sink that can cost several million dollars<br />Establish a qualified team of advisors and internal people<br />Focus the leadership team on running the business<br />Establish the best Corporate Governance policies well before you have an activist in your stock<br />Remember…this is an election<br />
  3. 3. Overview of Presentation<br />3<br />Investor Considerations<br />Internal and External Team<br />Process<br />Key Learnings<br />
  4. 4. Investor Considerations<br />4<br />Road Show Meetings and Presentation<br />Challenges Facing Investors<br />Record Date Issues<br />Index Funds<br />
  5. 5. Road Show Meetings and Presentation<br />5<br />Different than a typical investor interaction<br />Corporate Governance issues<br />Respond to dissident arguments<br />From investors, legal/proxy attendees as well as PM and analyst<br />From Company, Board attendees to show strength, experience and commitment<br />Presentation needs to be clear, concise and impactful<br />Many investors will just review on the web<br />
  6. 6. Challenges Facing Investors<br />6<br />Difficult for some investors to vote against proxy governance services (Risk Metrics, Glass Lewis, etc.)<br />Internal policies make it time consuming<br />Decision sometimes made by other than PM<br />Understand leverage points and decision maker within the institution (proxy solicitor can help)<br />Busy time – they have hundreds of proxies to vote!<br />
  7. 7. Record Date Issues<br />7<br />The investors who held your stock on the record date matter (even if they subsequently sold)<br />If investor is out of stock after record date, they may be unwilling to take a meeting, and may not be sympathetic to your cause<br />Stock surveillance service is critical to help determine who held at the record date<br />
  8. 8. Index Funds<br />8<br />Don’t forget them!<br />They will meet with you and they will engage around the issues and make a decision<br />
  9. 9. Internal & External Team<br />9<br />Investor Relations<br />Public Relations<br />Proxy Solicitor<br />Legal<br />Finance/Investment Banker<br />
  10. 10. Investor Relations<br />10<br />First line contact with investor community<br />Provide insights to investor perceptions<br />Prepare the road show presentation<br />This will tax your IR team<br />Use stock surveillance service to assist<br />Analytics around ownership and scenarios around voting<br />
  11. 11. Public Relations<br />11<br />Very important<br />Media often takes an interest in proxy contests – especially if a serial activist is involved<br />Manage multiple “news events” as there are many public filings (DEF 14A) that may result in a media inquiry…and you can’t always predict when they will occur<br />Drive to respond with company statement(s) in same news cycle as activist(s) <br />Results in accelerating pace best managed by specialist PR agency<br />
  12. 12. Legal<br />12<br />Manage preparation of proxy statement and other filings<br />Manage external advisors and Board<br />Manage potential litigation<br />
  13. 13. Finance/Investments Bankers<br />13<br />Many Banks have specialists that focus on activists and proxy fights<br />They have relationships with Proxy Solicitors and Stock Governance Services<br />Financial analysis around possible business proposals proposed by dissident <br />Peer financial comparison<br />Reduce expenses<br />Sell off divisions<br />An external advisor can enable your internal Finance team to remain focused on the business<br />
  14. 14. Proxy Solicitor<br />14<br />Critical function<br />Intelligence around how funds vote and funds that tend to follow activists<br />Information useful in setting road show schedule<br />
  15. 15. Process Issues <br />15<br />Fight Letters<br />DEF 14A’s <br />Stock Governance Services (ISS, etc)<br />
  16. 16. Fight Letters<br />16<br />Necessary, but not a value add<br />Targeted more to retail investors and the media than institutional holders<br />They take a lot of time!<br />
  17. 17. DEF 14A’s (Technical Term for SEC Proxy Filings)<br />17<br />Everything you mail or present to investors requires a filing<br />Typical proxy season has 1-2 filings <br />Proxy contest requires many more<br />In our fight, there were 73 filings! (including Company and Dissidents)<br />They are all public and subject to investor/media scrutiny<br />
  18. 18. Stock Governance Services(Risk Metrics, Glass Lewis, etc.)<br />18<br />They have a lot of influence<br />They don’t spend a lot of time<br />Mostly focused on stock performance<br />Less focused on drivers of stock performance<br />Generally supportive of investors having board representation in proportion to their ownership<br />Often take a “split the baby” approach<br />
  19. 19. Key Learnings<br />19<br />Good corporate governance matters<br />Don’t wait until you have an activist in your stock<br />Determine what you can accept and consider settling before proxy materials are printed<br />If you engage in a contest, be prepared to go all the way and to spend several million dollars<br />Get good advisors – but be careful of advice from those that don’t have to live with the consequences!<br />Focus your leadership team on running the business<br />