7th AnnualAlternative Investment Management Seminar

October 22, 2014

Overview

• Emerging Trends in Shareholder Activism

• Marketing Your Fund: Regulatory Implications

• Asset Raising for Fund Managers

Emerging Trends in Shareholder Activism

Panelists

George Hall, The Clinton Group

Douglas Hirsch, Sadis & Goldberg LLP

Sam Lieberman, Sadis & Goldberg LLP

Featured Panelist:

• George Hall, Founder of Clinton Group

• Roughly $8 billion under management

• Recent successful majority-slate proxy contests vs. ValueVision Media, Stillwater Mining, Wet Seal

• Dozens of Negotiated Activist Campaigns

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Incumbent Boards More Likely to Engage Activists

• Boards Are Engaging More as Activism Has Become More Successful • More of an Opportunity to Achieve Objectives Through Settlement &

Negotiation

• Conversely, Hostile Boards are More Likely to Have Serious Flaws and/or Entrenchment Motives

• Examples of Desperate Board Tactic: Stockholder Meeting at Mineshaft Log Cabin – No Cell Service

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Majority Slates More Popular & Successful

• Clinton Group Successfully Uses Majority Slates in Proxy Contests vs. Value Vision Media, Stillwater Mining, and Wet Seal.

• Key Focus: Presenting a Strategic Vision Justifying Wholesale Change of the Board – Showing that Activism is About Creating Long-Term Value (Not Corporate Raiding)

• Focused on ValueVision failure to Monetize Wide Cable Distribution as Effectively as Competitors

• ISS: Clinton Group “has laid out a plan to create proprietary brands, improve product mix and develop creative programming, which appears needed at ValueVision.”

• “Clearly, ValueVision is not monetizing its distribution as effectively [as HSN and QVC]. … The disconnect in household monetization appears to be driven by ValueVision’s misaligned merchandise mix, a lack of proprietary brands and outdated programming.”

• “[L]ooking at the programming [schedule] … it is easy to see why QVC and HSN are attracting more viewers to [their] more differentiated, diversified and engaging content. … [T]he company needs to diversify and create more engaging programming and programming personalities.”

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Choosing a Slate Reinforcing Long-Term Value Message:

• Value Vision: Clinton Group Value Vision Slate included:

– Former CEO of Home Shopping Network (Mark Bozek)

– Former CEO of SONY Music (Tommy Mottola)

– Former Presidents of Tommy Hilfiger & Saks Fifth Ave.

– Senior Marketing VP from QVC

– Producer of American Idol

• Recruiting Quality Candidates Not as Difficult as You Think (Clinton Group has recruited former Montana Senator, CEO of Appleby’s)

• Industry-Veteran Nominees Can Help Develop Activist Strategy

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Persuading Proxy Advisory Firms• Persuading Stockholders and Proxy Advisory Firms: Both ISS & Glass-Lewis endorsed

Clinton Group slate in Value Vision (ISS endorsed four directors; Glass-Lewis, all six).

• Proxy Advisory Firms More Open to Majority Slates in Recent Years

• A Strong Strategic Vision for Wholesale Change is Necessary

• Role of Proxy Advisory Firms in Making it Easier to Win Majority Slates

– ISS and Glass-Lewis Positions Against Staggered Boards and In Favor of Annual Election of All Directors Makes Majority Proxy Contests More Likely

– ISS and Glass-Lewis Positions on Governance Provide Additional Angle to Get

Approval: E.g., Requiring Shareholder Approval for Significant Bylaws, Compensation Issues, etc.

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Using Social Media to Reach Stockholders• Websites are Efficient Way to Reach Stockholders Directly

– Example: www.addValueandVision.com: Website for Clinton Group position

– Video Presentation by Board Members Adds Enthusiasm for Strategic Vision

• Twitter: Can release multiple messages quickly directly to stockholders, by notifying them of Twitter site and getting them to follow.

– E.g., Icahn/Apple.

• Can Reduce the Costs of Wholesale Activism Dramatically

• Example: ValueVision spends $3 million vs. ~$700,000 Clinton Group

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Other Recent Developments• Bylaws Barring Nominees/Directors from accepting compensation from third parties

– ISS characterized bylaw adopted by Provident Financial a “material failure of governance” because it restricted ability for activists to select nominees & recommended voting against Board’s governance committee directors. Formally Oppose in Early 2014

– Entrenchment vs. preventing conflicts from activist incentive compensation

• Liquid Alternatives Mean Activists Are Well-Funded: Ackman Raises Billions in Netherlands, Clinton Long-Short Equity Fund through Wakefield (WKCIX)

• 13D/13G Poison Pills: Upheld in Third Point/Sotheby’s Case. Counter-Strategy is that a Large Position is No Longer Necessary for Effective Activism

• Negotiating Settlement Agreements with Companies to Reimburse Costs

– Delaware companies have discretion to pay expenses if contest benefitted company,

– Will settlement achieve enough? Willing to agree to stand still?

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Marketing Your Fund: Regulatory Implications

Panelists

Martin Kornish, MJ Hudson

David Charnin, Strategic Value Partners

Lance Friedler, Sadis & Goldberg LLP

Daniel G. Viola, Sadis & Goldberg LLP

Asset Raising for Fund Managers

Panelists

Betsy Battle, Lone Peak Partners

David Solomon, Goldman Sachs

Ron Geffner, Sadis & Goldberg LLP

Yehuda Braunstein, Sadis & Goldberg LLP

Thank you for attending Sadis & Goldberg’s

7th AnnualAlternative InvestmentManagement Seminar