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2017 Proxy Fights: High Cost, Low Volume
New York - November 6, 2017

Procter & Gamble and Automatic Data Processing have seen a lot of press coverage recently as two of the largest companies to ever face proxy contests for board seats. P&G is the largest target ever, with a market value of $223 billion, and ADP is number 12, at $50 billion. Trian Fund's proxy contest for one board seat at P&G, in an attempt to address weak shareholder returns and deteriorating market share, was defeated at the October 10 annual meeting, based on preliminary voting results. ADP's annual meeting will take place on November 7, where Pershing Square is seeking three board seats as a step towards increasing operational efficiency at the company.

In addition to the size of the targets, P&G and ADP are also two of the costliest fights on record. When looking at combined estimated costs related to proxy fights, P&G is by far the most expensive on record, with costs reaching an astounding $60 million. This is almost double the expected costs of the recently settled fight at Arconic Inc., where Elliott Management was granted three seats after campaigning against the company's poor operational and financial results and corporate governance. ADP and Pershing Square's combined costs of $26 million is the fourth highest on record; however, the $24 million disclosed by the company is the second highest single cost (just behind P&G's $35 million).

One would expect the largest activists seeking seats at the largest companies to result in the highest costs, but P&G's historic total also highlights the importance of its retail ownership component. Based on FactSet Ownership data from the last 10 years, the average institutional ownership as a percentage of public float is roughly 90% in SharkWatch 50 (a compilation of the 50 most significant activist investors as chosen by FactSet) proxy fight targets with over $1 billion in market cap. P&G's institutional ownership of 62% is not only well below the average, it is the lowest percentage of any company on the list. With potentially 40% of the voting shares held by retail holders, the solicitation of these votes was both necessary and costly.

Year Company Dissident  Combined Estimated Costs Proxy fight Winner
2017 The Proctor & Gamble Compant Trian Fund $60,000,000 Managment
2017 Arconic inc. Elliott Managment $32,500,000 Settled/Concessions Made
2008 CSX Corporation TCI Fund/ 3G Capital $31,000,000 Dissident
2017 Automatic Data Processing, Inc. Pershing Square $26,000,000 Pending
2015 E.I. du Pont de Nemours and Company Trian Fund $23,400,000 Management
2017 General Motors Company Greenlight Capital $21,400,000 Management
2006 H.J. Heinz Company Trian Fund/Sandell $21,000,000 Split
2009 Target Corporation Pershing Squre $20,100,000 Management
2007 Motorola, Inc. Icahn Associates $16,750,000 Management
2012 AOL Inc Starboard Value $14,408,000 Management


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