Axios Communicators

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March 21, 2024

๐ŸฅŠ Welcome back! It's proxy season, so this week I partnered with my Axios Pro Deals colleagues to explore the comms element of these fights.

Today's newsletter is 1,782 words, a 6.5-minute read.

1 big thing: Communicating through a proxy fight

Illustration: Lindsey Bailey/Axios

Companies are under heightened scrutiny from a growing band of activist investors who attack a range of issues, including leadership, mergers and acquisition plans, strategy, and ESG policies.

Why it matters: When an activist investor enters a company's stock, clear communication is key.

  • And if an activist takes a campaign all the way to a shareholder vote, a company's communication plan is the most critical component of winning the fight.

Context: Think of proxy fights as political campaigns. The company has a platform, the activists have an opposing platform and each side is campaigning to win shareholder votes.

  • Just like in political campaigns, targeting key voters with a clear message and helping them understand how to vote is critical to winning.

Once a line is drawn in the sand, and peace efforts fail behind closed doors, a full-fledged external fight is typically what comes next.

Between the lines: Investors are skewing younger and they consume information differently, which means the proxy comms playbook needs to change with the times, says Collected Strategies founding partner Dan Moore.

  • When it comes to owned content, long letters, decks and white papers are now accompanied by easily digestible bullet points, graphics and videos.

And the strategies for deploying these assets have also evolved.

  • While traditional media remains an important channel for reaching institutional investors (like BlackRock, Vanguard or State Street), retail investors (like you and me) are increasingly getting proxy fight information from digital and social platforms.
  • Internal communication during a fight is also important, given that employee bases typically own a substantial amount of shares. And keeping up morale during a mud-sling fest, and maintaining a consistent message throughout, is key for the workforce.

What they're saying: "For too long, companies have been advised not to say anything until a proxy is filed or until some broader communication goes out," Nick Lamplough, founding partner of Collected Strategies, told Axios.

  • "But there are other things that we communicate in the background to put forth a position [because] public opinion can be formed quickly and starting on your back foot can set the tone for the entire fight," he added.

However, because companies might be limited on what they can say, enlisting third-party endorsements from business leaders, investors and academics is key to driving influence.

  • Like a political campaign, these outside spokespeople can micro-target audiences with specific context or messaging that will move the needle.

And there's another key constituent group: the proxy advisers.

  • A company's messaging and presentation is key to winning support from Institutional Shareholder Services (ISS), the largest proxy adviser, whose recommendations for its client base in a contested situation can swing an election. Glass Lewis, a smaller rival, also holds sway.

What to watch: Activists are getting more aggressive and sophisticated in the way they communicate. If companies want to effectively push back, their communications must sometimes come out of their comfort zone, says Moore.

2. Proxy fights 101

Illustration: Tiffany Herring/Axios

I asked Michael Flaherty, an Axios Pro editor who has covered activist investing for years, to explain how proxy fights work.

Here's his quick take ...

  • First, activists find an undervalued stock. They won't launch a campaign unless they see a positive return for the effort. The best defense against activists is a rising stock price.
  • Nobody wants a proxy fight. They're expensive and time consuming. So activists will try to get the company to make changes the investors deem necessary to jack up the stock price. Sometimes the company heeds the advice.
  • Often, though, the company says, "Thanks for the advice, but we got this." From there, the agitation escalates.
    • The two sides may eventually decide the private and public bickering over strategy isn't worth it, and they'll strike a settlement agreement. Usually that's in the form of a board seat or two and some strategy changes. Peace time follows, until next year anyway.
  • If the two sides are far apart, and no settlement is possible, activists have a choice to make: stay in the stock and be a nuisance; sell and move on; or name a director slate, file a proxy and launch a full-on fight.
  • Once the proxy fight is on, it's all about winning the hearts and minds of shareholders who will vote for the company's directors at the annual general meeting.
    • Shareholders can vote early or in-person at the meeting, and they can change their vote up to the last minute. A win for activists or the company is getting all or most of their directors elected.

๐Ÿ”Ž You can check out full deals coverage by the team Michael helps run here; Axios covers Health Tech, Fintech, Media, Climate Tech and Retail deals.

3. Bonus chart: Evolution of board communications

Share of board directors who say they've seen a change in board-investor communications over past two years
Data: NACD Board Trends and Priorities survey; Note: Respondents could choose multiple options; Chart: Axios Visuals

To quell concerns of potential activists, corporate boards are ramping up their communication efforts by sharing more about their operational decisions and personal credentials with investors.

  • "We're encouraging our public company friends to consider proactive reputation building strategies during the off-season that can help mitigate against activist activity," says Townsend Belisle, founder and CEO of strategic design and production company Haystack Needle.

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4. Disney's defensive strategy

Illustration: Gabriella Turrisi/Axios

The Walt Disney Co. and Trian Partners, led by Nelson Peltz, are currently in the midst of the most expensive proxy battle in history.

Why it matters: Disney is pulling every communications lever to fight off Peltz ahead of the April 3 shareholder meeting.

Between the lines: Disney must cast a wider than normal communications net because of the enormous amount of retail investors who own the stock.

Zoom in: To do that, it has launched a grassroots effort by placing targeted social media ads, creating a designated LinkedIn page, calling the everyday shareholder and launching a landing site โ€” โ€” that includes expert analysis, FAQs, attack ads and details about the board of directors.

  • The site also includes what can best be described as an attack ad. The video takes shots at Peltz and Trian's other board nominee, former Disney CFO Jay Rasulo, while touting Bob Iger's business savvy and track record as CEO.
  • It also includes a more light-hearted "get out the vote" ad, featuring DuckTales character Professor Ludwig Von Drake.

The other side: Trian has its own landing page โ€” โ€” which makes the case for changes at Disney through graphics, white papers and videos.

State of play: Disney has also launched a wide-reaching surrogate strategy, winning the public support of JP MorganChase CEO Jamie Dimon, Star Wars creator and one of Disney's largest shareholders, George Lucas, and eight grandchildren of Walt and Roy Disney.

  • Peltz โ€” who has previously engaged in activist campaigns at Heinz, DuPont, Unilever and Procter & Gamble โ€” is demanding two Disney board seats and has the support of Rasulo and former Marvel chairman Issac Perlmutter.

What they're saying: "Disney is naturally retail heavy and because of that, third party influencers and a digital communications campaign have really had an influence. From the outside looking in, I think that's helped put Peltz on his back foot," says Collected Strategies' Moore.

Yes, but ... ๐Ÿ‘‡๐Ÿป

5. โšก๏ธPlus: Peltz's PR blitz

Photo illustration: Gabriella Turrisi/Axios. Photo: Heidi Gutman/CNBC

Trian Partners is also using the power of public relations in the lead-up to next month's shareholder vote.

Driving the news: Peltz has stepped even further into the spotlight, with CNBC interviews and other press appearances.

  • The New York Times ran a 5,000-word profile on Peltz and Barron's hinted at Peltz's winning strategy, regardless of how the votes shake out.

Between the lines: The Wall Street Journal published a profile on ESPN boss and potential Iger successor, Jimmy Pitaro, and Bloomberg ran a piece on Disney's overall succession plan.

What to watch: Of interest is how Disney positions Iger's heir apparents, given that one of Trian's main knocks against it is poor succession planning, Axios Pro reporter Tim Baysinger points out.

Go deeper

6. Scoop: Meservey launches firm to support founder-led comms

Lulu Cheng Meservey at Axios Communicators event in NYC in December. Photo: Steven Duarte on behalf of Axios

As Axios scooped this week, communications guru Lulu Cheng Meservey joined Toya Holness and Sergey Alexashenko to launch Rostra, a strategic communications firm that will help tech founders and startups go direct with their comms.

Why it matters: Rostra is the latest addition to the long line of challenger firms that have formed in the past year.

Zoom in: As the former chief communications officer for Substack and Activision Blizzard, Meservey built a reputation for her quick-witted communication style and raised eyebrows after publicly pushing back against FTC regulators in the midst of the Activision-Microsoft deal.

  • She will serve as CEO, while Holness โ€” an Activision Blizzard alum and former head of communications for the Duke and Duchess of Sussex โ€” will be chief operations officer.
  • Alexashenko, a former Substack engineer, will serve as chief technology officer.

What they're saying: Direct communication is key if emerging tech founders hope to build a movement and bring people along, Meservey told Axios.

  • "I think what's missing is, for too long founders have relied on what other people are saying and writing about them. ... There's been a vacuum of what they are saying about themselves and how they explain what they're doing in an unvarnished way."

Go deeper

7. Communicator spotlight: Chime's chief corporate affairs officer Jennifer Kuperman

Photo illustration: Gabriella Turrisi/Axios. Photo: Mark Leet

Jennifer Kuperman helped establish Chime's corporate affairs function by bringing together the external and internal communications,ย public affairs, government affairs and community impact functions.

  • ๐Ÿ—ฃWhat she's saying: "The corporate affairs team is basically like a little spinal cord that works cross functionally to help us kind of tell our story to all the stakeholders that matter to our success," she told Axios.

๐Ÿ“How she got here: Kuperman got her start in management consulting before taking on a communications role at Visa.

  • After a decade-long stint, she was recruited by Alibaba to serve as head of international corporate affairs before joining Chime in 2022.

๐Ÿ’ผ Zoom in: Kuperman is an active board member of Post Holdings, Bellring Brands, Kyriba and the nonprofit, CoachArt.

  • "What I found in my experience on public and private boards is that reputation management, government affairs and social impact are things that every company โ€” irrespective of industry, size and public or private status โ€” all face and to be able to bring that expertise to bear is great for the company," she says.

๐Ÿง  Best advice comes from Visa CEO Joseph Saunders: Drive with influence.

  • "It's not how big your budget is or how many team members you have โ€” you need to build and leverage the relationships across the organization. That's how you affect change."

Go deeper ... read this spotlight in its entirety.

8. ๐Ÿ”ฎ 1 quote to-go

Axios senior business reporter Hope King interviewing Slack CEO Denise Dresser at the Axios What's Next Summit . Photo: Ronald Flores for Axios

"When we know we're communicating to a certain audience, we can tailor the conversation [with] the right behavior and the right kind of modality."
โ€” Slack CEO Denise Dresser, to Axios' Hope King at the third annual What's Next Summit yesterday

โœ… That's all for this week! Thanks for reading and thanks to editors Nick Johnston and Kathie Bozanich.

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