Shareholder Activism — The New Dialogue The Changing Landscape in the EU & Lessons Learned from the US

8 April, 2014

Panelists: Selina Sagayam & Dennis Friedman (Gibson Dunn), Cas Sydorowitz (Georgeson),

Jonathan Kaye (Moelis) and Olly Scott (Bell Pottinger)

Your Speakers

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Selina Sagayam Gibson Dunn

+44 20 7071 4263 ssagayam@gibsondunn.com

Dennis Friedman Gibson Dunn +1 212 3513900

dfriedman@gibsondunn.com

Olly Scott Bell Pottinger

+44 207 861 3891 oscott@bell-pottinger.com

Jonathan Kaye Moelis

+1 212 883 3540 jonathan.kaye@moelis.com

Cas Sydorowitz Georgeson

+ 44 870 703 0302 cas.sydorowitz@georgeson.com

Selina is a corporate finance

partner in the London office

of Gibson Dunn. She is

recognized as a leading

lawyer in the fields of

Corporate/M&A and

corporate governance. She

spent two years seconded in

the senior role as The

Secretary to the UK Panel on

Takeovers and Mergers and

has extensive experience

advising on transactions

involving public companies,

including issuers and

shareholders on (hostile)

takeovers and public activist

situations.

Dennis is a partner in the

New York office of Gibson,

Dun. He has led the Firm's

Mergers and Acquisitions

Practice for many years. He is

a widely recognized corporate

lawyer with extensive

experience in the mergers and

acquisitions, corporate

governance and capital

markets areas. In addition to

his 35-year-plus legal career,

Dennis was an investment

banker at several major Wall

Street firms, where he was a

senior M&A banker and also

the head of a merchant

banking group (1986 to ‘92).

Cas has been with Georgeson for

close to 15 years, bringing with

him five years' experience in

international investor relations

and shareholder identification.

Cas is responsible for

Georgeson's Northern European

Proxy and Corporate Advisory

business. He has an expert

knowledge of global proxy

voting mechanics and key

governance matters affecting

issuers and shareholders globally.

Having worked for several

activists and against many more

he has in-depth experience to

support investors or issuers in

complex, sensitive activist

campaigns.

Jonathan is a Managing

Director and Partner at

Moelis & Company, based in

New York, where he leads

the Firm's shareholder

activism defense practice.

Jonathan has broad

experience working with

companies in dissident

shareholder situations across

sectors and in campaigns

ranging from private

settlement to public and

acrimonious disputes.

Jonathan joined Moelis from

Citigroup, where he was a

Managing Director and

founded the Activism

Defense practice.

Olly has over a decade of

communications experience

across several sectors, including

institutional and retail financial

services, asset management,

energy, retail and leisure. His

work focuses on helping

companies achieve their

objectives through reputation

development and defence by

undertaking programmes that

complement their wider

communications. Olly specialises

in financial and business issues

public relations, IPOs,

shareholder activism, crisis

management and campaigns.

Overview of Presentation & Materials

• Evaluating activism volume:

– How significant is the trend?

– Why are certain companies targeted? What has changed recently?

• Identifying typical agenda items that activists seek:

– Recent examples in the US and Europe

• The “new dialogue”: Are there differences in the US and UK/Europe?

• Activist strategies and campaigns:

– Points of note for activists and issuers

– Differences between the US and UK/Europe

• Issuer’s perspective: Preparation, preparation, preparation

• Conclusion: What really matters to issuers and activists?

• Q&A

Appendices: (1) Activist Agenda & Strategies (2) Activist Profile Data (3) Investment

Allocations

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Evaluating the Volume of Shareholder Activism In the US:

• Over 400 campaigns in each of 2012 and 2013

• 90 proxy fights last year alone

• Significant increase in AUM dedicated to activism

• “New Wave” of smaller funds attacking the small to

midcap market

US: 2013

Sources: Shark Repellent; 13D Monitor, Wall Street Research, Dealogic M&A Manager

414 campaigns

90 proxy fights

In Europe:

• Over 60 campaigns in each of 2012 and 2013

• Well below US levels…but 50% up from 2012

• Several prominent activists have invested in or set up shop

in Europe (Cevian, Elliott, Sandell and others)

• Relative valuation, opportunity for breakups and

macroeconomic recovery have set the stage for increased

volumes

Europe: 2013

Where is Activism Taking Place?

• Regional Split 2013 (2012) (Activist Insight) Industry Split (2012-2013) (Shark Repellent)

5

Consumer & Retail23%

Technology17%

Financials14%

Energy14%

Industrials9%

Healthcare9%

Telecom 5%

Materials7%

Utilities2%

Why Companies are Targeted and What’s New?

What matters to activists?

• Vulnerability from a governance

perspective (annually elected board

in particular)

• Available cash

• Debt capacity

• Relative valuation vs peers

• Underperformance vs peers

• Liquidity

• Potential attractiveness to acquirers

• Any balance sheet event or asset sale

that could drive immediate positive

impact to share price

6

What (surprisingly) matters less than it

used to

• Vulnerability from a governance

perspective (annually elected board in

particular)

• Market cap size

• Returns

• An attractive multiple

• Likelihood (or possibility) of winning

a proxy/ requisition or effecting board

control

The Activist’s Agenda: Recent Examples in the US

Agenda Target Activist

Share repurchase

(return capital)

Greenlight

Reduce costs

(operational

improvements)

Corvex

JANA

Revise

management

compensation

CalPERS

Remove

management/

board

Corvex,

Related

Spin or divest

assets

Icahn

Third Point

Agenda Target Activist

Board

representation

JANA

Breakup or split Trian

Elliott

Influence M&A Eminence

Revoke rights

plan

Third Point

Acquire the

company

Elliott

Shorting Pershing

7

The Activist’s Agenda – Recent Examples in Europe

Issuer/ Listing “Activist” Shareholder Activist Agenda/Aim Outcome

2014

Leaf Clean Energy (UK) Crystal Amber Restructure board and adopt

restructuring strategy

Two board members resigned and

Activist’s nominees appointed

bwin.party digital entertainment (UK)

Cumberland Associates Restructuring divestiture of

non-core assets

Ongoing. Activist has acquired

board seat

F&C Asset Management (UK) Elliott Management Merger arbitrage to increase

takeover offer price

Takeover offer price at the original

offer price approved by

shareholders

WM Morrison (UK) Elliott Management Restructure property

portfolio to release value

Ongoing

First Group (UK) Sandell Asset Management Alternative turnaround plan

and restructuring

Ongoing

Essar Energy (UK)

Standard Life Increase takeover offer

price

Ongoing

Porsche (Germany) 23 Hedge Funds including:

(i) Viking Global Investors

(ii) Glenhill Capital

Litigation in connection

with attempted takeover of

Volkswagen

Claim for €1.36bn rejected. Other

claims ongoing

ThyssenKrupp Cevian Restructuring and

divestiture of assets

Issuer agreed to consider

restructuring and divestiture options

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The Activist’s Agenda – Recent Examples in Europe (cont.)

Issuer “Activist” Shareholder Activist Aim/Agenda Outcome

2013

Gulf Keystone Petroleum M&G Recovery Fund Restructure board and reduce

board remuneration

Issuer reached agreement with Activist

Hibu Hibu Shareholders Group Restructure board and oppose

lenders’ restructuring plan

Unsuccessful. Issuer placed into

Administration

Bumi Nathaniel Rothschild Restructure board and alternative

group restructuring

Unsuccessful.

EADS The Children’s Investment Fund Sale of 46% stake in Dassault

Aviation to return value to

shareholders

Unsuccessful but Activist achieved a

reported 90% return on investment

Transocean Icahn Associates Increase dividend payout and

restructure board

Initially unsuccessful – other

shareholders voted against proposals.

Issuer reached agreement with Activist

9 months after proxy fight

Telecom Italia Findim Group Restructure board First proposal rejected by shareholders.

Activist continuing with Agenda.

Ongoing

Rangers International F.C. Laxey Partners Support existing board Successful. Ongoing

Celesio Elliott Management Merger arbitrage to increase

takeover offer price

Successful. Price increased

UBS Knight Vinke Disposal of investment banking

arm

Ongoing

Kabel Deutschland Elliott Management Merger arbitrage to increase

takeover offer price

Successful. Price increased

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The “New Dialogue” – and How it Differs (US vs Europe)

What are we seeing

from the Activists? US UK/Europe

More Campaigns • Sustained levels of campaigns and proxy

fights

• More AUM = more $$ “seeking a home”

• Broader universe of viable targets: large

caps, expensive stocks, star

performers…all viable

• Expensive companies are also viable

targets

• Increase of circa 3.5% in 2013

compared to 2012.

• Q1 2014 has seen a significant

number of UK campaigns

More Activists • Emergence of new entrants to the strategy

• Trained portfolio managers from large

funds have launched their own vehicles

(Corvex, Marcato)

• New wave of portfolio managers targeting

small and mid-caps

• Quiet support from long only investors

…RFA …

• Activism remains contained

• Increased credibility and

changing perception of activists

• US players entered the market

• Long only and collective

shareholder groups increasingly

involved

• Launch of a few new entrants

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The “New Dialogue” – and How it Differs (US vs Europe)

What are we seeing

from the Activists? US UK/Europe

Increased

Allocation to

Activist Funds

• Increased allocation of monies by state

pension funds and similar to activist

funds

• Increased allocation of monies by

county councils and Church of

England to activist funds

Targets are

Larger … and

Smaller

• Size of the issuer no longer relevance

• Successes…despite no chance of taking

control

• New entrants focused on small to

middle market

• There are more and more examples

of FTSE 100 companies coming

under attack

• Underperforming companies in the

FTSE 250 remain targeted

Diversification of

Tone

• Styles range from constructive to

acrimonious

• Willingness to work with management

• Willingness (by some) to participate on

boards and sacrifice liquidity

• The threat of public attack remains

relevant

• Private dialogue the norm

• Tone historically softer

• Approach has been to appeal (with

increasing levels of firmness) to

common law and statutory duties of

directors and fiduciary obligations

• Trajectory likely to be increasingly

aggressive

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The “New Dialogue” – and How it Differs (US vs Europe)

What are we seeing

from Issuers? US UK/Europe

Companies are

Better Prepared

• Management teams keenly aware of the

threat

• Boards evaluating areas of

vulnerability…in advance

• “Off the shelf” responses

• In some cases, pro-active corporate

action pre-empts an activist attack

• Some UK companies have started

to take steps to prepare in advance

of activist attacks

• In particular: financial and

governance reviews to identify

areas of weakness and vulnerability

Willingness to

Engage and/or

Listen

• “More of a widespread acceptance of the

policy changes that so-called activists are

trying to effect” (Mary Jo White, Head of

the SEC)

• UK boards appreciate the benefit of

engaging with activists by

demonstrating an openness at least

in initial stages when discussions

are in private

More Receptive to

& Higher Quality

Board

Representation

• Powerful tool…more activists seeking to

effect agenda through direct Board

representation or appointees

• Higher quality of candidates proposed

• High number of settlements admitting

activist appointees to the Board –

typically a “must” for settlement

• More NEDs are willing to work

with activists

• Higher quality/ broader pool of

candidates

12

The “New Dialogue” – Other UK & EU Drivers

REGULATORY PRESSURES & INCREASED ENGAGEMENT

• Governmental encouragement to engage (Stewardship Code 2010; Revised 2012)

• Major industry associations are also encouraging intervention and engagement:

– Association of British Insurers (ABI): Improving Corporate Governance and Shareholder

Engagement (July 2013)

– The National Association of Pension Funds (NAPF): Corporate Governance Policy and

Voting Guidelines (November 2013)

– Institutional Shareholders’ Committee (ISC): (i) Statement of Principles on the

Responsibilities of Institutional Shareholders and Agents (2002); (ii) Code on the Responsibilities of

Institutional Investors (2009)

– The Institute of Chartered Secretaries and Administrators (ICSA): Enhancing

Stewardship Dialogue (March 2013)

– Hedge Fund Working Group (HFWG): Statement of Principles (2008)

• More engagement by smaller retail shareholder associations e.g. UK Shareholders

Association, ShareSoc

• Many large institutional investors (e.g. BlackRock, L&G, T Rowe Price, Vanguard)

have developed “active” substantial corporate governance teams

13

The “New Dialogue” – Other UK & EU Drivers INCREASED ENGAGEMENT, NEW GROUPS, REGULATORY CLARITY

• Increasing importance and use of proxy advisors - ISS, Glass Lewis, PIRC, Manifest,

ABI

• Increasing importance and engagement by professional engagement firms - Hermes

EOS, F&C’s Responsible Engagement Overlay (reo®) Services, RobecoSAM,

Governance for Owners (GO)

• Important lobby groups e.g. Share Action, Greenpeace, Alliance for Water Stewardship

• Emergence of new collection engagement groups – Investor Forum for Collective

Engagement, Shareholder-Director Exchange

• Regulators have aided collective engagement (formal or ad hoc) by action groups

through clarifying the rules on concerted parties and related issues (market abuse,

disclosures)

– UK Panel on Takeovers and Mergers: Practice Statement 26

– ESMA “White List” of Activities (December 2013)

– Engagement Action Groups to be formed by Investor Forum and seek pre-clearance

from UK Takeover Panel (from June 2014)

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Activist Campaign Strategies & Points of Note

Strategy Points of Note/ Relevant Questions for Activists & Issuers

Building a “Relevant”

Stake & “Dawn Raids”

• How do activists acquire their stakes?

- Equity v Debt?

- Direct holdings, CFDs, derivatives

• How much is “enough”?

• Differences in disclosure in US and Europe can impact strategy

• US: Delayed disclosure - ability time stake building to delay public

disclosure of position. However13D filings require disclosure of purpose

of acquisition (5% />)

• Europe: DTRs - disclosure starting at 5% and in four trading days.

Some member states (e.g. UK) have tighter requirements. Enhanced

disclosure during an “offer period” (1%; extends to derivatives). No

mandatory disclosure of intention.

The Approach …

Activist At the Door

• Is there any benefit to engaging privately with issuers?

• What should issuers expect? What should an issuer do? Engage or not ?

• What does the initial approach usually entail?

• Governance structures drive differences in the approach in US, UK, EU

• US: Communication lines opened with IR. Dialogue commences with

management team

• UK: Good/better access to Chairman and SID and/or Rem Com head

• Europe: Need to take account of dual board structures

15

Activist Campaign Strategies & Points of Note

Strategy Points of Note/ Relevant Questions for Activists & Issuers

Pressing the Public

“Play” Button

• When does the activist “go public”?

- Does the activist want to admit that their private dialogue has

effectively failed?

- Disclosures of significant holdings in the issuer can commence the

public debate?

• What happens when the activist goes public?

- Once there is a public dispute, tone can degrade … rapidly

- Acrimonious personal accusations (bad judgement, cronyism,

entrenchment, even fraud)…all fair game

• What tools are used?

- Publishing open letters, white papers, press releases

- Setting out detailed arguments in shareholder circulars

• When should the issuer respond publicly?

• US: Activists more willing to make their arguments public to persuade

other stakeholders and constituents. Public campaigns are often far

reaching and extensive - press releases, investor presentations, white

papers, media warfare

• UK/Europe: Fewer public appeals … but this is seeing an increase.

Public campaigns are not as “sophisticated” and extensive as US

campaigns (e.g. use of white papers). This is changing particularly where

US activists are involved. Tone is also changing. 16

Activist Campaign Strategies & Points of Note (cont.)

Strategy Points of Note/ Relevant Questions for Activists & Issuers

Media Warfare • Activists are willing to use all types of media tools but not all are appropriate for

issuers

• What are the most effective media tools?

• Essential for activist and issuer to have regular contact with media (pre and during

campaign)

• Social media: When is Twitter used by activists? Should an issuer ever use Twitter?

• Use of other media - broad sheet advertisements, website campaigns, investor

presentations, investor open days?

• What are the key tips for issuers?

Assessing

Shareholder

Sentiment &

Garnering

Support

• Activist starts ‘soft’ pre-campaign testing on public disclosure of interest in issuer

• Once proposals are public, more active engagement with shareholders commences to

identify like-minded supporters or opposition and to gather intelligence to refine and

develop proposals

• Issuer should in parallel engage with shareholders to gauge their reaction to activist

proposals. Is there any need to lobby long-standing shareholders for support?

• What are the risks in and issues to be aware of when canvassing shareholder support?

• Is there a difference of approach in the US and Europe? Why?

17

Activist Campaign Strategies & Points of Note (cont.)

Strategy Points of Note/ Relevant Questions for Activists & Issuers

Engaging With

Other Stakeholders

• Well prepared activists seek input or support from relevant agencies and other

stakeholders e.g.: (i) bondholders (i) credit rating agencies (iii) analysts (iv) pension

trustees (v) anti-trust regulators (vi) proxy advisors and (vii) trade unions

Objective: To identify key issues which may impact proposals

• Well prepared issuers should undertake similar analysis and reconnaissance both

within the company and externally. In addition, issuers should reach out to other

stakeholders e.g.: (i) employees (ii) option holders (iii) customers (iv) employees

Objective: To manage potential damage from activist campaign

Using Minority

Shareholder Rights

• Activist will utilise minority rights to achieve objectives e.g.: (i) attend/speak/ vote at

general meetings (in person or by proxy) (ii) inspect and request copy of shareholder

register (iii) requisition resolution at issuer AGM (iv) require circulation of 1,000

word statement (v) require independent scrutiny of poll vote

• How can and should the issuer react to these initiatives?

(i) Check compliance with by-laws and company law requirements e.g. confirmation of

persons with relevant interests to exercise shareholder rights; compliance with statutory

deadlines; satisfaction of proper purpose test to inspect register

(ii) Use statutory rights to identify beneficial holders (e.g. UK – section 793 notices)

(iii) Strict control and checks at general meeting of proxies, corporate representatives

(iv) At the general meeting, allow debate and questions … ensure a fair hearing

18

Activist Campaign Strategies & Points of Note (cont.)

Strategy Points of Note/ Relevant Questions for Activists & Issuers

Requisitioning

General Meetings

• When will the activist requisition a general meeting?

• How commonplace are meetings used to challenge by-laws, expedite corporate

change … in the US … Europe?

• What kind of resolutions will the activist propose?

• What is the objective of a mere advisory vote?

• Should issuers ignore them?

Gathering Formal

Shareholder Support

• What are the different types of formal support that an activist will seek?

- Consent to use name in discussions with issuer

- Satisfy statutory requirements for minimum voting shares to requisition

meeting or utilise other shareholder rights

- Undertaking to vote in favour of a resolution or block issuer resolution(s)

• How can the issuer respond?

- Also consider obtaining voting undertakings to block or support

- Consider if possible to restructure transaction to avoid or change voting

requirements for shareholder support needed to succeed

- Monitor activist and supporters behaviour and shareholdings – are parties

acting in concert? Should interests have been disclosed collectively? is there

any evidence of market abuse or abusive conduct?

19

Activist Campaign Strategies & Points of Note (cont.)

Strategy Points of Note/ Relevant Questions for Activists & Issuers

Getting the Votes In • Significant resources and preparation required in advance to gather votes in

• Initial analysis required of shareholder registers to determine most appropriate

tools for solicitation

• How long does it take to get people to vote at meetings?

• What is the typical voting “leakage”?

• How important is the support of ISS and Glass Lewis? Do they only matter in US

campaigns? Who matters in the UK and Europe?

Litigation • How often is litigation used as a tool by the activist?

• Is there any perceptible difference between the US and Europe?

• Are there differences within Europe?

• Recent examples

• US - Sothebys v Third Point

• Europe – Porsche

20

Issuers – Advance Preparation & Protection

• Pre-emptive Governance Initiatives: Identify weaknesses in structure, governance

and remuneration and in all cases deviations from industry best practices and

guidelines

Effect changes or be prepared to defend existing structures

• Rigorously and Periodically Review All Alternatives: Board should be familiar

with the full range of alternatives and strategic options

The Board should be prepared to address any reasonable activist agenda and

defend the road taken or not taken. Use internal resources (e.g. SID) to run “mock

challenges” to the Board or senior management

• Know Your Investors: Monitor registers, track voting records, track who is

following proxy or governance advisers and engage in regular dialogues with

shareholders (to gauge vulnerabilities, listen for concerns, understand views on

governance and strategic issues)

Too often issuers are taken by surprise by shareholder discontent

21

Issuers - Preparation & Protection Once Its ‘Kicked Off’

• Initiate Rigorous Internal Protocol: Establish communication lines to board or

senior management, establish a working group (legal, PR, proxy, independent

financial adviser, brokers, registrar), establish protocol for engagement with media

Preparation makes all the difference; staying nimble and flexible is key

• Know Your Activist & Their Agenda : Who is the activist? Are they respected?

Do they have a following? What is their track record and modus operandi with other

issuers? What are their direct and indirect holdings in the company? When did they

acquire their stake(s)? Do you really understand their agenda? What is credible and

accurate? What isn’t? Does the agenda generate more value than a standalone plan?

Do not make assumptions about the campaign in hand or underestimate depth of

analysis undertaken by activist

• Plan a Response Strategy & Plan: Develop a response plan, consider risks of

settlement, offering a board seat and implementation of appropriate elements of

activist’s proposals, consider if the campaign will bring others, evaluate legal

remedies

Remember … pacification may protect the issuer … but for how long … who next?

22

What Matters to the Activist

• Key Concerns

– Failure of agenda and potential equity downside

– Risk of becoming an insider

– Forming a concert party and/or triggering a mandatory bid (EU specific issue)

– Cost benefit analysis of an expensive campaign

– Reputation

– Building up a successful track record

• Other Issues/ Concerns

– Reputational issues for the “novice activist” or the new market entrant

– Defective proposals due to poor preparation and/or reliance on public

information and missing the “big” issue

– Triggering control or disclosure levels inadvertently

– Triggering anti-trust / merger control issues

– Staying off the radar screen of the regulators

23

Top Tips for Issuers

• Try to identify issues in advance - Consider steps can be taken to head off an

attack e.g.: distribute excess cash or dispose on assets that do not fit with strategy

Preparation is key

• Try to keep dialogue private - Remember the activist wants the share price to

increase, not necessarily a public, costly fight

Retain the moral high ground

• Stay in front of your long shareholders with your strategy and why it makes

sense - Do not wait for a proxy fight or activist attack to make your case

It’s good to talk

• Prepare the board for what is coming - Consider the possibility of cutting a deal,

putting one representative on the board as early as possible

Retain flexibility

24

APPENDICES

25

APPENDIX 1– ACTIVIST AGENDAS & STRATEGIES

26

Appendix 1 – List of Activist Agenda & Strategies

• Management and Board changes:

– New “blood” and/or added expertise at board and/or management level,

management issues and related structural governance issues

• Remuneration:

– Say on pay in the context of global regulatory developments and best practices

• Unlocking Shareholder Value:

– Return of capital to shareholders through buy-backs or dividends; leveraged

recapitalisations; refinancing of debt

• Strategic or Operational Tuning:

– Business re-focussing; changing operational model (e.g. sale and lease backs);

decreasing overheads

• Transaction Specific:

– Requiring company to divest or spin-off a failing business or asset; undertake a

specific acquisition

27

Appendix 1 – List of Activist Agenda & Strategies (cont.)

• Event-Driven:

– Seeking to direct the outcome of a current transaction (takeover), “bumpitrage”

• Total Exit:

– Requiring company to put itself up for sale and realise a premium. Activists

themselves may solicit buyers

• Buy Out:

– Some activists (e.g. Icahn and Elliott) are prepared to launch hostile bid for

targets, whether alone or in a consortium

• Entering into short selling positions:

– Activists may short their stocks and launch a parallel campaign to discredit

company

• Litigation & Regulatory Actions:

– Threaten or take legal action (derivative actions, claim of breach of directors’

duties or claim of unfair prejudice against activist as a minority shareholder)

– Encourage intervention by regulators, initiate complaints about regulatory or

other breaches

28

APPENDIX 2 – KEY DATA ON KEY ACTIVISTS

29

Appendix 2 – Who Are the Key Activists in UK and Europe? Activist Key Principal(s)/Founder AUM Location Targets

Audley Capital Julian Treger No public

information

London Anglo Pacific Group, Western Coal

Breeden Richard Breeden US$219m

Oct 2013

Connecticut Zale Corp

Bristol Capital Advisors Paul Kessler No public

information

Los Angeles Miller Energy Resources

Cevian Capital Christer Gardell and Lars Förberg €8.5bn London ThyssenKrupp, Volvo

Clinton Group George E. Hall US$1.5bn

(Feb 2014)

New York The Wet Seal Inc, Nutrisystem, ValueVision

Coppersmith Capital Jerome Lande No public

information

New York ConMed, Alere Inc

Corvex Keith Meister US$5bn

Feb 2014

New York Williams Companies, Fidelity National Financial,

Commonwealth REIT, TW telecom, Signet Jewlers,ADT

Corporation, Ralcorp, AboveNet, Corrections Corporation

of America

Crystal Amber Asset Management Richard Bernstein, Jonathan Marsh UK£164.4m (NAV)

Feb 2014

Guernsey API Group, Sutton Harbour Holdings, TT Electonics,

Leaf Clean Energy , Thorntons

Cumberland Associates Andrew Wallach US$156m

Oct 2013

New York bwin.party#

Davis Selected Advisors Christopher Davis US$43.1bn

Oct 2013

New York American Express, Google, Bank of New York Mellon

Dialectic John Fichthorn, Luke Fichthorn US$2.03bn

Oct 2013

New York Immersion Corporation, AT&T

Elliott Management Corp Paul Elliott Singer US$32bn

Oct 2013

New York Juniper Networks, Riverbed Technology, NetApp, Hess,

BMC Software, Compuware, Brocade Communications,

National Express #, WM Morrison #

Eminence Capital Ricky Sandler US$6.61bn

Oct 2013

New York The Mens Warehouse, eBay, Cognizant Technology

Engaged Capital Glenn Welling US$22bn

Feb 2014

California Abercrombie & Fitch, Rentech, Volcano Corp

* - Long Investors # - UK/ EU targets of non-EU activists

Appendix 2 – Who Are the Key Activists in UK and Europe? (cont.) Activist Key Principal(s)/Founder AUM Location Targets

Franklin Mutual Advisers Peter Langerman US$59bn

Oct 2013

New Jersey Dell, Tribune Co, Assicurazioni Generali#

Glenhill Capital Glenn Krevlin US$1.18bn

Oct 2013

New York FedEx, Motorola, Starwood Properties

GVO Investment Management (formerly SVG

Investment Managers)

Adam Steiner UK£1.25bn

Jan 2014

London Aberdeen Asset Management, Wills Group Holdings, EV2

Technologies plc, CVS Group, Goals Soccer Centres

Harwood Capital Christopher Mills US$974m

Oct 2013

London Cyprotex, Active Risk Group, Goals Soccer Centres

Icahn Associates Carl Icahn US$30,456m

Feb 2014

New York Hologic, Talisman Energy, Dell, Nuance, Forest

Laboratories, Transocean, Apple, Herbalife, Oshkosh,

Enzon Pharmaceuticals, The Greenbrier Companies,

Netflix, Navistar, Broadview Networks, Mentor Graphics,

Chesapeake Energy, CVR Energy, Amylin

Pharmaceuticals, Clorox

Jana Partners Barry Rosenstein US$5.46bn

Oct 2013

New York QEP Resources, Outerwall, Safeway, Oil States, Ashland,

Agrium, Marathon Petroleum

JEC Capital Partners Peter Heiland Massachusetts Ithaca Energy#, Miranda Technologies Inc

JCP Investment Management James Pappas US$18.3m

Oct 2013

Houston The Pantry Inc, Morgans Food, Samex Mining Corp

Knight Vinke Asset Management Eric Knight US$1.33bn

Oct 2013

New York Darty Group (formerly Kesa) #, UBS#

Laxey Partners Andrew Pegge, Colin Kingsnorth US$159m

Oct 2013

Isle of Man Rangers International Football Club,

Lone Star Value Management Jeff Eberwein US$698m

Dec 2013

Connecticut The Pantry Inc, Miller Energy Resources, Rentech

M&G Recovery Fund * Tom Dobell UK£7.2bn

Feb 2014

UK Gulf Keystone Petroleum

Odey Asset Management Crispin Odey US$11.1bn

Feb 2014

London Rockhopper Exploration,

Paulson & Co John Paulson US$27.4bn

Oct 2013

New York Family Dollar Store, Grifols SA, Harfords, Deutsche

Telekom #

* - Long Investors # - UK/ EU targets of non-EU activists

Appendix 2 – Who Are the Key Activists in UK and Europe? (cont.)

Activist Key Principal(s)/Founder AUM Location Target

Pershing Square Bill Ackman US$13.2bn

Oct 2013

New York J.C. Penney, Air Products, Herbalife, Procter & Gamble,

Canadian Pacific Railway

Relational Investors Ralph Whitworth US$5.3bn

Oct 2013

San Diego Hologic, Hess, Timken, SPX, Flowserve, Esterline, PMC-

Sierra, Illinois ToolWorks, Par Pharmaceuticals

RWC Partners Paul Harrison, Nigel Davis, Philip

Harris (UK); Maarten Wildschut,

Petteri Soininen (EU)

US$6.4bn

Sept 2013

London Grontmij. Vodafone, Siemens (formerly Hermes Focus

Asset Management)

Sandell Asset Management Tom Sandell US$497m

Dec 2013

New York First Group#, Bob Evans, F&C Management#,

Sherborne Investors Edward Bramson US$573m

Oct 2013

New York 3i#, F&C Management#, Electra Private Equity

Standard Life Investments* Keith Skeoch UK£184.1bn

Dec 2013

Edinburgh Essar Energy, RSA Insurance, Persimmon, Glencore

Starboard Value Jeff Smith US$1.64bn

Oct 2013

New York Darden Restaurants, TriQuint Semiconductor, Smithfield

Foods, Emulex, Office Depot, DSP Corp, Calgon Carbon,

Wausau Paper, Quantum, Integrated Device Technology,

AOL, Progress Software, Avid Technology, Tessera

The Children’s Investment Fund Chris Hohn US$6,860mm

London Airbus Group (formerly EADS), Newscorp, Royal Mail#

Third Point Partners Daniel S. Loeb US$14.5bn

March 2014

New York Dow Chemical, Sotheby’s, CF Industries, Sony (Japan),

Murphy Oil, Yahoo!

Trian Fund Management Nelson Peltz, Peter May, Ed Garden US$5.93bn

Dec 2013

New York Mondelēz, PepsiCo, Danone (France), Ingersoll–Rand

Value Act Capital Management Jeff Ubben, Mason Morfit, George

Hamel Jr

US$11bn

Oct 2013

San Francisco Wills Group Holdings#, Microsoft

Viking Global Investors US$28.5bn

Oct 2013

Connecticut Porsche SE#, Canadian Pacific Railway, Facebook,

Valero Corporation

West Face Capital Greg Boland US$2.5bn

Dec 2013

Toronto Longreach Oil and Gas,

* - Long Investors # - UK/ EU targets of non-EU activists

APPENDIX 3 – STATE PENSION FUNDS AND

ACTIVIST INVESTMENT ALLOCATIONS

33

Appendix 3 - State Pension Funds and their Activist Investments

Pension Fund Blue Harbour

Blum Capital

Breeden Partners

Breeden Europ.

Cartica Capital

Partners

G4O Hermes Knight Vinke

Lazard Korea

Corp Gov

Legion Partners

New Mountain

Relational Investors

Shamrock Sparx Value Creation

Fund

CalPERS $500m+ $500m $300m (Exited)

$200m $300m+ Exited $300m+ $100m $200m+ $1,300 m X X

CalSTRS $200m $250m $300m X $350m $200m X $500m $1,300 m X

Pension Fund Breeden Partners

Cartica Capital

Sandell Elliott G4O Hermes Mason Capital

New Mountain

Pershing Square

Relational

Investors

Starboard Value

Stinson Taconic

Alaska Retirement Management Board X State of Wisconsin Investment Board X $150m Philadelphia Board of Pensions and Retirement X X

Devon County Council X X

Hampshire Pension Fund X LA County Employees Retirement Association X Exited Maryland State Retirement and Pension System X X

North Carolina Department of State Treasurer X

Nottinghamshire County Council Pension X Public Employees Retirement New Mexico X X X X X University of Texas Inv Mgt Company X X X

West Midlands Pension Fund X

West Yorkshire Pension Fund X

The Church of England The Church of England does not disclose which Hedge Funds it invests with, but announced earlier this month that it will be increasing

its allocation to such funds from April 2014

34

Pension Fund Cevian Capital

Elliott Glenview Capital

Healthcor Jana Partners

Knight Vinke

P2 Capital

Pershing Square

Starboard Value

Taconic Third Point

Trian Partners

ValueAct Capital

HighfieldCapital

Wexford Spectrum

State of New Jersey Dpt of the Treasury $150m

$200m

$100m $100m $100m $75m $100m $150m

CPP Investment Board X Exited X X University of California Retirement Plan X X Office of the New York State Comptroller X Texas County and District Retirement System $50m $40m $18m X X Teachers Retirement System of Texas X X School Employees Ret System of Ohio X X X X X

Florida State Board of Administration

$100mn

X $100m $125m X X X

Fire and Police Pension Association of Colorado $30m School Employee Ret Sys of Missouri X Missouri State Employee Retirement System X

Appendix 3 - State Pension Funds and their Activist Investments

35

Q&A

?

36

Gibson Dunn & Crutcher

Our Hostile M&A and Shareholder Activism Practice

• Gibson Dunn has developed a premier practice in representing companies and investors in connection with all forms of shareholder activism,

including efforts to implement special interest shareholder proposals, seek board representation, de-stagger board composition and weaken anti-

takeover defences. In the US, we have recently represented many Fortune 500 and other companies in responding to shareholder activism and

have represented many of the largest companies in successfully negotiating non-public resolutions with the largest and best-known activist

investors. In the UK, representations have included recent high profile activist cases involving FTSE 250 companies such as Asian Resources

Minerals (formerly Bumi plc) and First Group.

• In activist situations we integrate our Firm’s expertise in securities regulation and corporate governance, M&A and litigation to bring targeted

solutions to each of our clients. Our multidisciplinary approach enables us to explore a full range of options for each activist situation, including

potential regulatory and litigation remedies, aggressive proxy contests, or quick and effective engagement, if appropriate.

• We also advise clients on an array of corporate governance-related matters that impact shareholder activism, including board composition,

procedures and responsibilities of boards and committees, analysis of director independence issues, fiduciary duty issues and D&O

indemnification and insurance issues. We draw on our extensive experience in corporate governance matters to provide advice that integrates both

current best practices and practical judgments to address complex situations that pose regulatory and liability risks. Our lawyers are active in

developing and reviewing governance policies and have developed expertise in preparing and tailoring the key governance documents responsive

to the needs of our clients.

37

More than 1,100 lawyers in 18 offices in leading

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The Georgeson Story

38

PROVIDES CERTAINTY ID & ANALYSIS CORPORATE GOVERANACE ADVISORY

That you will achieve the best possible result Identifying the beneficial owners and investment

managers who are investing in your stock

Agenda Analysis and Proxy Advisor Risk Analysis (PARA)

VITAL INVESTOR INTELLIGENCE DRIVE PARTICIPATION ACHIEVE YOUR DESIRED GOALS Enabling you to adapt your strategy and neutralise dissent

By engaging in direct dialogue with

the proper voting authorities Proactively monitoring proxy instructions

Moelis & Company Overview

39

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600 employees located in 14 offices in the United States, Europe, the Middle

East, Asia and Australia

Investment banking capabilities include mergers & acquisitions,

recapitalizations & restructurings, capital markets and risk advisory

Named Most Innovative Independent Investment Bank by The Banker in

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Multiple situations working with issuers representing dissident shareholders

Aerospace & Defense

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Infrastructure

Financial Institutions

Financial Sponsors

Healthcare

Homebuilding & Building

Products

Hotels & Gaming

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Forest Products Public Sector Real Estate

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SECTOR EXPERTISE HIGHLIGHTS

SELECT TRANSACTIONS

$42.0bn

Sale to Discover and

associated asset sales

to Sallie Mae and Citi

$61.2bn

Sale to Inbev

€30.0bn+

Disposal of most of

its complex credit

derivative portfolio

$35.1bn

Merger with

Publicis Groupe

$29.6bn Chapter 11

Reorganization

$17.0bn Merger

with US Airways

Group

$28bn

Sale to

Berkshire Hathaway

and 3G Capital

$26.5bn

Sale to The

Blackstone

Group

$24.9bn

Restructuring

of Dubai World

$15.7bn

Sale to Thermo

Fisher Scientific Inc.

$10.7bn

Sale to

IntercontinentalExchange, Inc.

$9.4bn US asset sale to

The Blackstone Group

A$5.0bn Merger of

Australian Interests

A$4.3bn Restructuring

€4.1bn

Restructuring

¥278.4bn

Combination with

the Tokyo Stock

Exchange

$2.2bn

Senior dividend

and notes offering

Bell Pottinger

40

MCLE Certification Information

• Most participants should anticipate receiving their certificate of attendance

in 3 to 4 weeks following the webcast.

• Virginia Bar members should anticipate receiving their certificate of

attendance in 6 weeks following the webcast.

• Questions regarding MCLE information should be directed to Jeanine

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41