2016 Proxy Season in Review

FTI Consulting, Inc.Activism and M&A Solutions

Proxy Season in Review

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2013 2014 2015 2016

Made it to a Shareholder Vote Settled Withdrawn Pending

Proxy Fight Trend Analysis2

January 1, 2013 - July 22, 2016

The 2016 proxy season was incredibly busy with 99 proxy fights through July 22nd, a 30%

increase over the same period in 2015.1 100 individual activist investors were involved in the action, many of which formed dissident “wolf-pack” groups and others underwent multiple campaigns simultaneously.2 Interestingly, 17 proxy fights this year involved relatively new activist investors that had not launched their first campaign until 2013. For many of these new activists, such as Ides Capital Management, Lion Point Capital and Newtyn Management, this season marked the first ever activist campaign for those funds. Altogether, 63 dissident board nominees found seats at 31 companies.2

There was no favoritism shown between company size or industry. A wide range of targets like Yahoo (~$36 billion/internet software) and Arotech (~$75 million/aerospace & defense), both underwent proxy

contests and were forced to place dissident nominees onto their boards.

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2013 2014 2015 2016

Dissident Success Rate, Proxy Fights2

January 1, 2013 - July 22, 2016Proxy Season

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1. Through July 22, 2016. Total proxy fight count includes all activist/holder types as well as any pending, settled or withdrawn fights.2. Source: FactSet SharkRepellent

Proxy Season in Review

DISSIDENT / COMPANY

MEETING DATE

DISSIDENT BOARD SEATS

SOUGHT

DISSIDENT BOARD SEATS

GRANTED

PROXY SEASON SUMMARY

MAIN TAKEAWAY

Starboard Value/ Yahoo

6/30/16 9 4 Starboard publicly disclosed its stake in Yahoo in 2014, and has since become the most vocal activist in Yahoo’s stock. In late-November of last year, Starboard began pushing for a spin-off/sale of a business division, a request that escalated to replacement of board members and ultimately the replacement of Marissa Mayer, Yahoo’s CEO. By April 27th, Yahoo and Starboard announced a settlement, giving Starboard four board seats on the Company’s nine member board. On July 25th, Verizon Communications announced it would purchase Yahoo’s core internet properties for $4.8 billion.

Starboard’s proxy fight to remove the entire Board of Directors resulted in a settlement for four seats.

Harvest Capital Strategies/ Green Dot Corporation

5/23/16 3 2 Harvest published a letter to Green Dot’s management on January 25th, kicking off a campaign to remove the Company’s CEO, Steve Streit and gain board seats. Green Dot immediately responded to the activist campaign by adding three of its own directors to its board. A week before Green Dot’s annual meeting, it agreed to appoint one of Harvest’s three dissident nominees, separate the Chairman and CEO roles and declassify the board. Ultimately, Harvest won two board seats and Streit maintained his position on the board, but by only a narrow margin.

CEO’s margin of victory was so narrow that additional advances by Harvest may be forthcoming.

Sessa Capital/ Ashford Hospitality Prime

6/10/16 5 0 In a months-long campaign involving multiple state courts, Ashford Hospitality Prime (AHP) was ultimately victorious in fending off Sessa’s five director nominees due to the process Sessa took in nominating those candidates. The federal court (Sessa consolidated its TX and MD litigation to bring it to federal court) rejected Sessa’s preliminary injunction on the grounds that Sessa failed to follow the Company’s nominating process bylaws.

Sessa launched a withhold campaign similar to the one launched by H Partners Capital at Tempur Sealy International. The withhold campaign was ultimately successful.

Red Mountain Capital Partners/ iRobot Corporation

5/25/16 2 0 iRobot accommodated many of Red Mountain’s requests in 2015, however, the Company ultimately prevailed this proxy season as none of Red Mountain’s candidates were elected to the board.

Red Mountain lost the proxy contest for two board seats even though both ISS and Glass Lewis supported Red Mountain’s director nominees.

2016’s proxy season started out strong for many activist funds, resulting in many outright wins, partial victories or settlements. As the season has progressed, however, the activist win rate dropped to approximately 60% - closer to the win rates we saw in 2015 of 58%.1 A few highlights of the season below:

31. Source: FactSet SharkRepellent

Proxy Season in Review

DISSIDENT / COMPANY

MEETING DATE

DISSIDENT BOARD SEATS

SOUGHT

DISSIDENT BOARD SEATS

GRANTED

PROXY SEASON SUMMARY

MAIN TAKEAWAY

Clover Partners/ Financial Institutions, Inc.

6/3/16 2 0 Clover Partners filed its initial Form 13D in December 2015 in which it urged Financial Institutions (FISI) to sell to a larger bank and stated the rationale for recent acquisitions was flawed. Disregarding this advice, FISI then closed on its acquisition of Courier Capital Corporation. By April, Clover announced its two dissident candidates, neither gained support from the proxy advisory firms, ISS, Glass Lewis or Egan-Jones. Ultimately, FISI prevailed and all four of its candidates were elected to the board.

All four of FISI’s director nominees were elected to the board and the relevant compensation plans were approved.

Wynnefield Capital/ Omega Protein

6/28/16 2 2 Wynnefield launched its activist campaign against Omega Protein last fall in an effort to split the Company into two separate businesses. The activist ultimately sought two seats on the eight-person board and Omega acquiesced, accepting one of the nominees early on. The parties also jointly supported the candidacy of CEO Bret Scholtes. Wynnefield persisted with its proxy fight and ultimately won an additional seat.

Omega Protein hired JP Morgan to undergo a strategic review which resulted in the conclusion to keep both business segments intact. However, Wynnefield insisted otherwise and continued to pursue the proxy contest.

Altimeter Capital Management LP and Par Capital Management Inc./ United Continental

6/10/16 6 2 Altimeter and PAR nominated six director candidates for election to the Company’s board. United settled with the activists for two board seats after two of the labor unions that represent 30,000 of United’s workers sided with the activists. The Company also conceded to add a mutually agreeable independent director within six months.

United Continental’s proxy contest was one of only three involving a company larger than $10 billion in market capitalization. This marks a decrease over last year’s five proxy fights at companies with a market cap greater than $10 billion.

Notable Proxy Fights of 2016, continued:

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About FTI ConsultingFTI Consulting, Inc. is a global business advisory firm dedicated to helping organizations protect and enhance enterprise value in an increasingly complex legal, regulatory and economic environment. FTI Consulting professionals, who are located in all major business centers throughout the world, work closely with clients to anticipate, illuminate and overcome complex business challenges in areas such as investigations, litigation, mergers and acquisitions, regulatory issues, reputation management and restructuring.

ftiactivism.com @FTIactivism ftiactivism@fticonsulting.com ©2016 FTI Consulting, Inc. All rights reserved.

Jason Frankl202.312.9216jason.frankl@fticonsulting.com

Steven Balet212.850.5735steven.balet@fticonsulting.com

Proxy Season in Review

DISSIDENT / COMPANY

MEETING DATE

DISSIDENT BOARD SEATS

SOUGHT

DISSIDENT BOARD SEATS

GRANTED

PROXY SEASON SUMMARY

MAIN TAKEAWAY

Marathon Partners/ Shutterfly, Inc.

6/21/16 0 0 Since Mario Cibelli’s involvement with Shutterfly, he received a board seat in 2015 (which he subsequently resigned from in May 2016), as well as board seats for one other GAMCO backed nominee. Most notably, Cibelli was able to pressure the departure of Jeffrey Housenbold as CEO to be replaced by Chris North while also setting a new compensation plan tied to share price performance.

In 2016, Shutterfly continued to face activism from Marathon and Cibelli left the board in May.

Icahn Associates/ Xerox Corporation

5/20/16 4 4 Icahn revealed a stake in Xerox in November 2015 and soon thereafter the Company announced it would split its hardware and services units. Ursula Burns, previously CEO of the combined company, has been quoted saying that the split was well underway prior to Icahn’s arrival. However, Icahn, who most recently owned as much as 18.25% of Xerox, received three board seats on the Company’s Business Process Outsourcing company and by the end of June, received another seat on the Document Technology company board through non-public conversations.

Icahn notably commented that he hoped to see a similar split at AIG.

Elliott Management/ Bank of East Asia

2/29/16 0 0 Elliott initially got involved with Bank of East Asia (BEA) in early 2015 when it attempted to block a share issuance and failed. This year, prior to BEA’s annual general meeting, Elliott pushed for a complete sale of the company at HK$60/share. BEA refused to comply, but did announce some changes to its board. Ultimately, shareholders voted in favor of BEA’s board candidates and approved the board’s right to issue more shares. However, roughly 30% of shareholders voted against re-election of CEO David Li Kwok Po and against additional share issuance, demonstrating widespread concern. Soon after, BEA announced plans to sell a business unit and lay off workers.

While companies may win overall in shareholder votes, if the margin is not great enough, it may be forced to acquiesce to activist demands. Elliott and BEA remain in a legal dispute over the purpose of past share issuances.

Activist campaigns often do not take the form of a full blown proxy fight. Below are a few highlights of additional activist campaigns that have been underway this past year:

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