The last year has seen an increase in shareholder activism in
the chemicals and materials sector with varying degrees of success.
In late 2014, the board of chemicals giant Dow Chemical negotiated
a settlement with hedge fund manager Daniel Loeb of Third Point
Management after Loeb threatened a proxy war. The settlement led
to, among other things, two independent Third Point nominees
joining the company's board. Agruim was also targeted last year
by two different activist investors, the first leading to a
10-month proxy fight in which Agrium was ultimately successful.
Most recently, the board of E.I. DuPont de Nemours, a leading
U.S. chemicals and materials conglomerate, was targeted by activist
investor Nelson Peltz of Trian Management. In mid-May, Trian
challenged Dupont's board and, after settlement negotiations
failed, the hedge fund began an aggressive proxy campaign against
the company. Trian nominated four directors to the board and
criticized Dupont's current management for alleged
inefficiencies which held DuPont back from its growth potential.
DuPont vehemently defended the company's productivity and
growth-focused initiatives and investment management. It also,
among other things, added two new well-regarded directors to its
board. DuPont reportedly spent $15 million on its
Although Trian was one of DuPont's largest shareholders,
with almost $2 billion worth of shares in the company, it owned
less than 3% of DuPont's outstanding shares and therefore
needed the support of DuPont's other shareholders to make its
campaign a success. Despite the fact that the major proxy advisory
services supported Trian, on May 13, 2015, DuPont emerged the
victor. On a relatively close vote, DuPont's shareholders
backed all 12 of the directors nominated by DuPont.
We commented previously on the Aberdeen proxy battle earlier
this year where Aberdeen mounted a successful defence to an
aggressive shareholder attack (
Lessons from the Aberdeen Proxy Battle). The latest
DuPont/Trian proxy battle is another reminder of the importance for
boards to develop and implement well-organized strategies when
confronting aggressive activism. In the case of DuPont, some
successful tactics included reminding shareholders of the
company's various business and strategic initiatives for
long-term growth, adding new talent to refresh its board, and
engaging in an extensive communications campaign with its various
Boards potentially facing a proxy fight should consider the
risks and potential harms unique to their situation and the
particular industry in which they do business. While a negotiated
settlement may be the best strategy in some cases, in others an
effective and well-organized proxy campaign may lead to a more
Planning allows continuous risk assessment and advanced
planning, including ensuring expert advisors are at the ready, can
bring significant benefits and enhanced shareholder value.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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