Shareholder Rights and Activism

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    Southwest Airlines Agrees to Board Changes After Pressure From Elliott

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    The airline has been under pressure from the hedge fund Elliott to replace its top management and make other changes to increase its profits.Southwest Airlines on Tuesday announced an overhaul of its board of directors, including the planned departure of its executive chairman, Gary Kelly, after a meeting with a hedge fund that has called for sweeping changes at the company.The board announced the changes while expressing unanimous support for the airline’s chief executive, Bob Jordan, who with Mr. Kelly had been the target of sharp criticism from the hedge fund, Elliott Investment Management. In a statement, the airline said its board was “confident that there is no better leader” for Southwest than Mr. Jordan, who became chief executive in February 2022.“Bob has a proven track record over decades and, most importantly, he has what it takes to lead Southwest through a significant transformation and usher in a new era of profitable growth, innovation and industry leadership,” Mr. Kelly, who was chief executive before Mr. Jordan took over, said in a letter to shareholders.Southwest presented its plan to Elliott at a meeting in New York on Monday. It was not clear whether the overhaul would satisfy Elliott, which has a roughly 11 percent stake in the company. Elliott has called for both Mr. Kelly and Mr. Jordan to step down and has sought to replace most of the directors on the company’s board.Shares of Southwest were down nearly 3 percent in morning trading on Tuesday.“We are pleased that the board is beginning to recognize the degree of change that will be required at Southwest, and we hope to engage with the remaining directors to align on the further necessary changes,” Elliott said in a statement. “The need for thoughtful, deliberate change at Southwest remains urgent, and we believe the highly qualified nominees we have put forward are the right people to steady the board and chart a new course for the airline.”Mr. Kelly, who was the airline’s chief executive for nearly two decades before Mr. Jordan took over, said that he planned to retire after the airline’s annual meeting in the spring. Six other mostly longstanding board members plan to step down after a meeting in November.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      Carl Icahn, Activist Investor, Faces Intense Scrutiny From Wall Street

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      The value of the 88-year-old activist investor’s stake in his own company has fallen by nearly $20 billion. Mr. Icahn said that he was “absolutely not selling.”Chief executives of public companies have long feared Carl C. Icahn. The 88-year-old investor made a name and billions for himself by questioning the decisions and strategies of corporate leaders and agitating for change at companies like Apple, RJR Nabisco and Netflix.But now Mr. Icahn is under intense scrutiny from Wall Street investors, who are rapidly selling his company’s stock. In the past year and a half, shares of Icahn Enterprises, his publicly traded investment company, have dropped more than 75 percent, losing nearly $20 billion of value. After dropping more than 30 percent since mid-August alone, it now trades at about $11 a share, its lowest level in more than two decades.Mr. Icahn owns roughly 86 percent of the shares, so he has personally lost billions of dollars, too.“There’s a confidence game and he’s lost the confidence of investors,” said Don Bilson, who focuses on activist investing as the head of event-driven research at Gordon Haskett Research Advisors.Some Wall Street investors are now worried that the stock’s continuing fall could threaten the health of the entire company and that it could be forced to sell companies it holds. Icahn Enterprises holds a mix of public stocks, real estate and other investments, according to interviews with Mr. Bilson and several other market watchers.Investors have been questioning whether Mr. Icahn himself has been selling his stock. He has taken out personal loans using his stock as collateral. Banks that offer these loans typically have strict requirements related to the value of a company. A sharp drop in a stock price could force a lender to sell shares.

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      Icahn Enterprises share price
      Source: FactSetBy The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      Exxon Suit Over Activist Investor’s Climate Proposal Is Dismissed

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      A federal judge ruled that the case was moot after the investor, Arjuna Capital, withdrew the proposal with a promise not to try again.A federal judge in Texas on Monday dismissed a lawsuit that Exxon Mobil had filed against an activist investor, Arjuna Capital, over a shareholder proposal that called for cuts in the oil giant’s greenhouse gas emissions.Judge Mark T. Pittman of U.S. District Court for the Northern District of Texas ruled that because Arjuna had withdrawn its proposal and had vowed not to submit similar proposals, Exxon’s claim was moot.“The trend of shareholder activism in this country isn’t going anywhere,” Judge Pittman wrote, but he added that “the court cannot advise Exxon of its rights without a live case or controversy to trigger jurisdiction.”Exxon sued Arjuna and another investor, Follow This, in January to stop their nonbinding resolution from going to a vote of shareholders. A month earlier, Arjuna had filed a proposal for the resolution, which called on Exxon to accelerate its plans to reduce its carbon emissions “and to summarize new plans, targets and timetables,” according to Exxon’s complaint. Follow This then joined in support, the complaint said.In its complaint, Exxon said the proposal “does not seek to improve ExxonMobil’s economic performance or create shareholder value.”“Defendants’ overarching objective is to force Exxon Mobil to change the nature of its ordinary business or to go out of business entirely,” the company said.Judge Pittman dismissed Follow This, which is based in the Netherlands, from the lawsuit in May but allowed the case against Arjuna to continue.Arjuna withdrew the proposal and moved for a dismissal of the lawsuit, which the judge denied “because the proposal’s withdrawal didn’t foreclose the same conduct moving forward.” Arjuna then promised not to put forth similar proposals and said its pledge “forecloses even the remotest chance of another proposal” related to Exxon’s carbon emissions.Judge Pittman’s ruling followed a hearing held on Monday to determine whether Arjuna’s promise made Exxon’s complaint moot.Alain Delaquérière More

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      Activist Ancora Wins Three Norfolk Southern Board Seats but Will Not Oust CEO

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      An activist investment firm failed to replace the railroad’s top executive and all its directors, but did win three seats on its board.Shareholders of Norfolk Southern, the beleaguered freight railroad, on Thursday voted down an attempt by an activist investment firm to remove the company’s chief executive and take control of its board.But the activist, Ancora, a Cleveland firm, managed to secure a foothold at the company, after shareholders voted to place three of its directors onto Norfolk Southern’s 13-member board. Ancora had hoped to take control of the company’s leadership with an aim to cut costs and increase Norfolk Southern’s profits and stock price.The result is a partial victory for Norfolk Southern’s executives, who had to defend themselves against criticisms of the company’s safety record and its lackluster financial performance. A company train carrying hazardous chemicals derailed last year in East Palestine, Ohio, forcing residents to evacuate.The results of the shareholder vote, which are preliminary, were announced Thursday morning at a virtual company annual meeting.During the meeting, Alan Shaw, Norfolk Southern’s chief executive, said he looked forward to working with the new directors.“Norfolk Southern persevered through several challenges over the last year,” he said, “We have met every challenge and never lost sight of where we are taking our powerful franchise.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      Activist Investor’s Group Raises Bid for Macy’s

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      The new offer values the department store chain at $6.6 billion. Macy’s, which just announced a strategy to turn around its business, said it would “carefully review” the proposal.The activist investor group that is seeking to buy Macy’s increased the pressure on the department store chain on Sunday, raising its offer and disclosing additional details about its financing plans.Arkhouse Management and Brigade Capital Management said in a news release that they were now offering $24 per share, valuing the retailer at $6.6 billion. The new offer is up from the $21 a share they last put forward and a 33.3 percent premium to Macy’s closing share price of at $18.01 on Friday.Arkhouse and Brigade named additional investors they had brought on as equity partners, Fortress Investment Group and One Investment Management. Arkhouse and Brigade also said, in an apparent response to Macy’s questions about its financing, that they had “identified large global institutional financing sources” that “represent 100 percent of the capital required to buy the shares in Macy’s we do not already own.”The retailer has been facing pressure from the investor group since December, when the group submitted a bid that would take Macy’s private at a value of $5.8 billion. Arkhouse said that unless the retailer began sharing nonpublic information, it might take its offer to shareholders. The investor has since nominated nine people to Macy’s board.Macy’s on Sunday said it would “carefully review and evaluate” the latest proposal.“The Macy’s Inc. board has a proven track record of evaluating a broad range of options to create shareholder value, is open-minded about the best path to achieve this objective and is committed to continuing to take actions that it believes are in the best interests of the company and all Macy’s Inc. shareholders,” the company said in a statement.The retailer has been trying to stay focused on its own strategy for turning around the business.Last week, Macy’s announced a strategy that would vastly change the makeup of the company. It said it would close 150 of its namesake stores over the course of three years, while also opening more locations of Bloomingdale’s and Bluemercury, its upscale chains.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      At BlackRock, State Street and Vanguard, Millions of Investors Are Getting a Voice

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      BlackRock, State Street and Vanguard have opened up voting on environmental, social and management issues. It’s not true shareholder democracy, but it’s progress.Index fund investing has swept the world. In December, for the first time, U.S. investors entrusted more money to index funds than actively managed funds, in which a manager picks stocks or bonds for you.There’s a good reason for the index funds’ popularity. For most people, owning a little piece of the entire market, which you can do at low cost with an index fund, has been more profitable than buying and selling securities, either on their own or through a manager.But the relentless growth of index funds has come at a cost. One significant problem is that the most diversified funds own shares in every publicly traded company in the market, and if you don’t like a company, or its specific policies, you’re stuck. You couldn’t even exercise your vote on issues you thought were important because until recently, the fund managers insisted on doing that for you.Well, that’s been changing in a big way.BlackRock announced this month that it was expanding an experimental program to give investors six flavors of policy choices — like a focus on climate change or a preference for religious values — in votes on corporate issues. State Street already has a similar program underway, and Vanguard is tiptoeing into this kind of voting choice, too.All told, the three giant fund companies have given scores of millions of investors, with $4.6 trillion in assets, a way of expressing their views on corporate issues. This is certainly an improvement. And it could eventually lead to profound changes throughout corporate America, even as it eases some ticklish problems for the big index fund companies.The ProblemsIn the view of scholars like John Coates, the author of “The Problem of 12: When a Few Financial Institutions Control Everything,” the growth of index funds has had the unintended consequence of diminishing shareholder democracy.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More