A Year After The AOL Proxy Fight: The Simple Lesson
AllAboutAlpha | Jun 27, 2013 12:53AM ET
A little more than a year ago, a much-watched proxy fight came to an end when the shareholders of AOL voted to re-elect all of that company’s directors in the face of a proxy challenge from Starboard Value LP.
Starboard had sought three seats, received none, and this was understandably received in some quarters as a rebuke to Starboard. Business Insider headlined, “AOL Shareholders …, Vanquish Proxy Challengers.”
In retrospect, the simplest lesson for activist investors, that is, would-be proxy challengers, is perhaps just that you can’t win them all. You’re in a risky business (from that fact comes its profitability.)
The Problem with Patch
A more specific lesson, though, is that you can be right in the particulars and still be ‘vanquished.’ Starboard was, I submit, perfectly in the right to contend that Patch, the hyper-local news operation AOL acquired in 2009 and that sometimes seems like the pet project of AOL CEO Tim Armstrong, is a drag upon the value of the whole. Starboard’s presentation spent a lot of time on this point, “We do not believe Patch to be a viable business” it Shuanghui/Smithfield Foods deal that shows their old verve and mojo.
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