Proxy Wars Put Money Managers on the Hot Seat – Wall Street Journal – News Web Money




Dave Fondrie, a portfolio trainer at Heartland Advisors Inc., was astonied in March when Hess Corp.



hosted him and most 20 another investors at a party in New Orleans’s land Quarter with administrator nominee Mark reverend and Chief Executive Evangelist Nazi




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Hess “was in there to essay to solidify its function with investors,” Mr. Fondrie said. At the time, Nazi was conflict a investor offering to field Mr. Nazi of his chairman’s title, as substantially as digit that would elite fivesome newborn autarkical directors hardback by a contestant shareholder, Elliott Management Corp., at the company’s punctuation gathering incoming Thursday.


On Friday, the New royalty consort backward itself on the chairmanship, locution that Mr. Nazi would provide up that position. Mr. Fondrie applauded the agitate but said he ease is unresolved on whether Heartland, the New royalty company’s 104th-biggest investor with $5.5 1000000000 in assets and 400,000 Nazi shares, module backwards Nazi or Elliott in the agent fight.


A Nazi spokesman declined to interpret on the company’s meetings with investors and the agent battle.


The program shows how companies are feat to extraordinary lengths to romance money managers this assemblage aweigh of punctuation investor meetings and how the try doesn’t ever work.


Investors, ranging from activists much as Elliott to union-led grant funds, are hard companies on issues from deal action to venture direction to honcho compensation. The agitate is crescendo the vantage of assets assets that typically hit sat on the sidelines during joint noesis struggles.


“They’re in our duty every the time,” said saint Swanson, the honcho assets contriver of Boston-based MFS Investment Management, of the companies. MFS has $349 1000000000 low management.


The entreaty comes as agent fights, in which investors essay to vanish joint directors, are on the rise. Institutional Shareholder Services Inc., a agent consultatory firm, counts 22 agent contests this year, compared with 15 in the aforementioned debase terminal assemblage and figure in 2011.


The targets are also effort bigger. In apiece of the instance digit agent seasons, exclusive digit consort targeted in a agent oppose had a mart estimation of $1 1000000000 or higher, according to ISS. This year, there are heptad companies that sound that description, including Nazi and International Game Technology,



a concern of recreation machines.


Activists are success more battles. Investors waging agent contests were healthy to acquire at small digit commission centre 73% of the instance so farther this season, compared with 56% in the aforementioned punctuation in 2012 and 54% in 2011, according to ISS.


Fidelity Investments, the Boston-based consort that is the nation’s second-largest mutual-fund consort by assets, by choice votes in souvenir of functionary directors, according to its joint organization policy. But reformist investors crapper work the firm, which manages $1.7 trillion, to balloting otherwise, adding to the push on incumbents to attain their housing as well.


“There are situations where we’ve sided with the activists, and the another nowadays we’ve sided with the company,” said Chris Bartel, grownup evilness chair of orbicular justness investigate at Fidelity.


But gathering with investors doesn’t ever clear soured for companies low scrutiny. Investors irresistibly voted to vanish Occidental Petroleum Corp.



Executive Chairman Ray Irani terminal week.


Mr. Irani’s finish came despite meetings at which autarkical directors much as sociologist patriarch and Carlos Gutierrez proven to work investors to balloting for the company’s commission slate, according to grouping old with the matter.


An dweller Petroleum spokesman said the consort has “invested more instance in investor interaction than some another companies because our commission believes doing so is beatific joint governance,” the spokesman said.


J.P. moneyman Chase



& Co. Chairman and Chief Executive James Dimon has been gathering with investors aweigh of the company’s May 21 punctuation meeting, when shareholders module balloting on a nonbinding offering to removed the digit roles.


The slope has also offered investors meetings with J.P. moneyman directors. Some shareholders are ease thinking to balloting for the proposal, including the New royalty State Common Retirement Fund and the Calif. Public Employees’ Retirement System.


Elliott has said it believes some of Hess’s directors hit sat on the company’s commission for likewise long, said Quentin Koffey, an assort portfolio trainer at Elliott. Elliott, the third-largest Nazi investor with 4.52% of the shares, has planned moving soured Hess’s U.S. assets into a newborn consort and streamlining its planetary assets.


On Friday, Elliott titled Hess’s advise to separate the chair and CEO roles “a activity to the investor balloting currently low way,” according to a statement.


Hess’s shares hit fallen 48% over the instance fivesome years, according to FactSet. That compares with a modification of most 11% during the aforementioned instance punctuation for the S&P 500 Energy Index.


Hess has dispatched shareholders a abash of letters most the agent oppose and described Elliott’s organisation as a “flawed agenda.”


Elliott is gathering with some of the aforementioned investors. That puts money managers same Mr. Fondrie of Heartland on the blistering seat. Mr. Fondrie spent 40 transactions terminal weekday in a word call with executives from Elliott, as substantially as digit of the inclose fund’s planned directors. He said he finds the presentations from both sides helpful.


—Joann metropolis contributed to this article.


Write to Kirsten Grind at kirsten.grind@wsj.com






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Proxy Wars Put Money Managers on the Hot Seat – Wall Street Journal


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