2011 mid-year shareholder activism update

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COMMENTARY

Many shareholder activism experts, public company executives, board members and activist investors expected shareholder activismto surge once again in 2011. With growing support from pension funds, a burgeoning M&A environment, excessive cash on

companies balance sheets, and a slew of new corporate governance reforms coming out of Washington, most factors were certainly

pointing in that direction.

Thus far, the era of Dodd-Frank reform has yielded no such result. By contrast, according to data compiled from Hedge Fund

Solutions weekly research on activist investing [Catalyst Equity Research Report], activism is actually down for the first 5 months of2011 compared to that of 2010. Within the referenced period, the number of companies targeted by activists has fallen 15% to 142 so

far this year.

While it is clear that shareholder activism has fallen, there remains a lack of credible explanation for this. For one, it could very wellbe that the corporate governance reforms enacted and pending were over-hyped. It could also be that stock volatility and concerns

about the economy have made investors wary about getting involved in multi-year investment campaigns.

Whatever it may be, one should certainly not dismiss 2011 as an uneventful year for activism. Indeed when we look beyond thecontested elections that culminated in a shareholder vote, we see that much more is happening behind the scenes than what is upfront

and apparent. 2011 should be seen as the year that activism moved further away from the public limelight and inside the boardroom.Although 25 campaigns concluded with a shareholder vote so far (12 of these involved dissidents seeking board representation), 27

concluded with a settlement agreement between the activist and board of directors of the target company. In our opinion, this is a signthat both sides have become more adept at managing shareholder activism, knowing when best to concede, negotiate or fight.

166

142

137

93

0

20

40

60

80

100

120

140

160

180

2010 2011

NumberofTargetsandActivists

5MonthsEndingJune1

Targets

Activists

65

27 25

10

0

10

20

30

40

50

60

70

Current

Campaigns

Settlements Shareholder

Vote

Withdrawn

2011ActivistCampaigns

January1,2011-June1,2011

Targets


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Note: In general, this data reflects shareholder demands and binding shareholder proposals from investors owning at least 5% of a target companys stock.This data does not include non-binding shareholder proposals such as say-on-pay, majority voting, board de-classification and poison pills.

MostActiveActivistInvestors

January1,2011June1,2011

1. BulldogInvestors 9CompaniesTargeted(InvestmentFocus:Closed-EndFunds)

2. JosephStilwell8Companies(InvestmentFocus:Thrifts/Banks)

3. DiscoveryCapital7CompaniesTargeted4. FinancialEdge/PLCapital 6Companies

(InvestmentFocus:Thrifts/Banks)

5. CarlIcahn5CompaniesTargeted6. StarboardValue4CompaniesTargeted

(FormerlyRamiusCapital)

7. WesternInvestment 4Companies(InvestmentFocus:Closed-EndFunds)

8. ElliottAdvisors3Companies9. LawrenceSeidman3Companies10. NormanPessin3Companies

52

17

26

69

14

BreakdownofActivistDemands


M&A

Operational

Financial

Governance

NotDisclosed

9

16

27

0

5

10

15

20

25

30

ActivistWins ManagementWins Settlements

ShareholderVoteResultsComparedtoSettlements


ShareholderVote


3/10


4/10


5/10


6/10


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Target Ticker Market Cap Activist(s) Ownership Demand Meeting Date Outcome

2011 Activist Campaigns Ending in a Shareholder Vote (as of June 1, 2011)

Myers Industries, Inc. MYE $343M GAMCO Investors 10.10%Elect 2 GAMCO representatives to

board April 29, 2011All nine of management's nominees

were elected

NovaMed Inc. NOVA$105M

(Taken Private)HealthInvest Partners 5.10%

Reject $13.25/share buyout from

Surgery Center Holdings

Special meeting on

May 4, 2011

Activist defeated; company merger

approved

Opti Inc. OPTI.OB $22M S. Muoio & Co 28.25% Elect 1 Director May 23, 2011Activist defeated; activist challenging

results

Pulse Electronics PULS $192M Bel Fuse Inc. 1%Elect 2 Bel Fuse representatives;

sell Company to Bel FuseMay 18, 2011 Dissident defeated

Red Robin Gourmet Burgers RRGB $555M Clinton Group; Spotlight Advisors 9.73%

Remove the poison pill and pledge

not to adopt another one without

shareholder support; explore

strategic alternatives

May 26, 2011Poison pill removed; board

declassified

Singapore Fund SGF $139M City of London Investment Group 24.85%

Terminate investment advisory

agreement between the Fund and

Daiwa SB Investments

June 2, 2011Investment advisory agreement

terminated

Smurfit-Stone Container Corp SSCC$3.6B

(Taken Private)

Third Point; Monarch Alternative

Capital; Royal Capital8.97%

Opposed Rock-Tenn buyout offer

equal to 50% cash ($17.50/share)

and 50% stock (0.0365/RKT

shares)

Special meeting on

June 2, 2011


approved

United PanAm Financial Corp. UPFC.PK $107M Lawndale Capital NAOppose $7.05 Management-led

buyout

Special meeting on

February 24, 2011


approved

Zoran Corp. ZRAN $393M Ramius Capital 9.30% Elect 6 Ramius representatives

Special Meeting on

March 11, 2011

Ramius received enough written

consents to replace 3 board membersat ZRAN

Shareholder Vote


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Target Ticker Activist(s) Ownership Demand Withdrawl Date Reason for Withdrawl

Advanced Analogic Technologies,Inc. AATI Dialectic Capital 6.10% Support merger with Skyworks Solutions; elect 2individuals to 7-member board May 26, 2011 AATI announced merger with Skyworks Solutions

Celera Corp. CRABiotechnology Value

Fund24.50%

Reconstruct proposed merger to carve out non-

strategic drug royalties or raise purchasing price

per share

May 17, 2011 Celera merged with Quest Diagnostics

Charles River Laboratories

InternationalCRL

Relational Investors;

CalSTRS6.01%

Form a Strategic Planning and Capital Allocation

Committee; explore strategic alternatives,

including a sale

January 25, 2011

2 new directors nominated by management; company

formed a strategic planning and capital allocation

committee

Immersion Corp. IMMR Ramius Capital 5.90% Elect 3 Ramius representatives March 11, 2011IMMR reached a settlement agreement with Dialectic

Capital and nominated 2 Dialectic representatives

McCormick & Schmick's SeafoodRestaurants Inc. MSSR Landry's Restaurants 10.10% Sought to acquire company for $9.25/share incash; May 4, 2011 Company initia ted a sale process

Matrixx Initiatives MTXX BML Investment Partners 9.90% Sell to HIG Capital at least at $8.75/share February 18, 2011 Taken private by HIG Capital for $8.75/share

Matrixx Initiatives MTXX Porter Orlin 12.40% $8/share sale to HIG Capital undervalues MTXX February 18, 2011 Taken private by HIG Capital for $8.75/share

Tessco Technologies Inc. TESS Discovery Group 13.50% A majority vote standard in uncontested elections April 25, 2011

On 25-Apr-11, the board approved a bylaw

amendment stipulating a majority vote standard in

uncontested elections

Tenet Healthcare Corporation THCCommunity Health

Systems

2011 mid-year shareholder activism update

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