An interview with John Ferguson, co-founder of Saratoga Proxy Consulting.
Outline the key focus areas of Saratoga Proxy Consulting?
We started our full-service proxy solicitation business more than seven years ago and work with numerous companies from small cap to large cap offering a diverse suite of different shareholder services. In 2022, we were ranked joint No.1 for total activist representations [in the Insightia Advisor Awards] and had another fantastic proxy season in 2023.
What notable campaigns have you been involved in this season?
We were involved in the first UPC fight. And we were also involved in the first change of control UPC fight at Pitney Bowes. That fight was notable because the company had done a defensive refreshment of their board just prior to the proxy fight. Our client ended up winning four out of nine seats anyway. When you take into account the new directors that the company had put on, there are six new directors out of nine at Pitney Bowes now, including the four we won.
What trends have you seen emerge?
Unlike in the dueling proxy cards, passive funds seem more willing to support at least a subset of the activist’s slate than they have in the past. BlackRock, in particular, was noteworthy in the first two UPC campaigns that I was involved as they supported at least one of my clients’ nominees in each instance. That was a significant change from what we had witnessed over the past few years.
What impact has the universal proxy card (UPC) had?
It’s leading to more settlements and will lead to more settlements in the future as people become educated on the new realities under UPC.
In the past, especially when passive shareholders represented a significant percentage of outstanding shares, a lot of management teams and their advisors decided to fight. I think the reality of UPC is they’ve got to rethink that and that’s going to lead to more settlements in some dissident campaigns.
Activism doesn’t seem to have slowed down and I don’t see that changing. However, I don’t expect as many proxy fights will go the distance anymore because of the new dynamic twist. And, because UPC seems to have been a major benefit for activists so far, I think you’ll see more of them trying to take advantage of it in the coming years. You may even see more activists seeking a greater number of seats than they might have contemplated under the dueling card system.
Your thoughts on the coming year?
We are probably going to see some creative new bylaws which will make it harder for dissidents to actually nominate. I know Masimo was noteworthy this year and many commentators felt they probably went too far. However, I think we will see some creative new bylaws where the company will make it much more difficult for the activist to make nominations, while striking the balance of not being perceived as going too far.