PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION — ATTORNEY WORK PRODUCT
June 12, 2024
MEMORANDUM
FROM: Nathaniel Bower, Partner Calderwood & Harkness LLP 787 Seventh Avenue New York, NY 10019
TO: The Board of Directors of Aurelius Global Media Group PLC Continuing Directors: Dame Elspeth Greenvale, Priya Nair-Whitfield, Lucinda Farrow-Grant, Reginald Osei, Dr. Anwen Llewellyn, Garrett Voss
CC: Nadine Khalil, General Counsel & Corporate Secretary
RE: Board Process Integrity Following Reconstitution — Fiduciary Obligations, Information Barriers, and Recusal Protocols
Matter No.: 1017-00002
This memorandum constitutes a privileged and confidential attorney-client communication and attorney work product prepared by Calderwood & Harkness LLP at the direction of the Board of Directors of Aurelius Global Media Group PLC. This memorandum is intended solely for the use of its addressees and should not be disclosed to any third party without the prior written consent of Calderwood & Harkness LLP and the General Counsel of Aurelius Global Media Group PLC. Unauthorized disclosure may result in a waiver of applicable privileges.
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I. Executive Summary
The purpose of this memorandum is to provide guidance to the six continuing directors of Aurelius Global Media Group PLC ("AGMG" or the "Company") on their fiduciary obligations and recommended procedural safeguards following the reconstitution of the Board of Directors (the "Board") at the 2024 Annual General Meeting of Shareholders (the "2024 AGM") held on June 7, 2024. This memorandum is addressed to the continuing directors in their capacity as the directors who served both before and after the reconstitution, although the fiduciary principles discussed herein apply with equal force to all ten members of the reconstituted Board.
At the 2024 AGM, three nominees put forward by Corvus Peak Capital Partners LP ("Corvus Peak") — Malcolm Trask, Vanessa Loring, and Dr. Raymond Chu — were elected to the Board in a contested election, replacing Tobias Kessler, Hugh Pemberton, and Sofia Delgado-Ríos, each of whom failed to receive sufficient votes for re-election. The reconstituted Board held its first meeting on June 10, 2024, at which Mr. Trask was elected Lead Independent Director, and Dame Elspeth Greenvale was confirmed as transitional Chair of the Board through September 30, 2024.
On June 14, 2024, the reconstituted Board is expected to pass a resolution tabling the CEO succession process indefinitely and dissolving the Special Committee that had been overseeing that process since its formation in March 2024. These actions, together with the broader shift in Board composition, give rise to a series of governance, fiduciary, and privilege-related concerns that warrant immediate attention.
This memorandum addresses the following topics:
(a) the equal fiduciary duties owed by all directors regardless of which shareholder nominated or supported their candidacy;
(b) potential and actual conflicts of interest involving the three new directors, with particular attention to the structural conflict arising from Vanessa Loring's concurrent employment at Corvus Peak;
(c) the appropriate framework for information barriers and access to pre-reconstitution privileged materials, including the critical distinction between general governance advice and proxy contest defense strategy;
(d) recusal protocols for conflicted matters at both the Board and committee levels;
(e) the status of the CEO succession process, the Interim CEO arrangement, and process integrity safeguards if the search is reopened;
(f) implications for the ongoing strategic alternatives review being conducted by Stonebridge Crane & Co.;
(g) the status and treatment of the pending DGCL § 220 books-and-records demand from Corvus Peak;
(h) UK regulatory disclosure obligations arising from AGMG's secondary listing on the London Stock Exchange;
(i) D&O insurance considerations; and
(j) recommended best practices and a timeline of action items for governance going forward.
Key Takeaway. All ten directors of the reconstituted Board owe fiduciary duties of care and loyalty to AGMG and the totality of its shareholders — not to any nominating shareholder, activist fund, or constituency that supported their candidacy. The Board should adopt formal protocols to ensure process integrity during the transition, particularly with respect to the management of privileged information, recusal of conflicted directors, and the governance of any future CEO search or strategic alternatives process. The structural conflict presented by Ms. Loring's dual role as an AGMG director and a Managing Director at Corvus Peak requires especially robust safeguards. Failure to adopt such protocols could expose the Board to claims of breach of fiduciary duty and could jeopardize AGMG's privilege assertions in pending and potential future disputes.
II. Background and Factual Context
A. The Proxy Contest and AGM Results
On or about January 19, 2024, Corvus Peak Capital Partners LP, a Delaware limited partnership with its principal office at 590 Lexington Avenue, 34th Floor, New York, NY 10022, publicly disclosed its intention to nominate a slate of three director candidates for election at AGMG's 2024 Annual General Meeting. Corvus Peak is an activist investment fund with approximately $14.2 billion in assets under management. Its founding partner and Chief Investment Officer is Damien Solberg. The AGMG campaign was managed by portfolio manager Erin Nakamura, who serves as the lead investment professional responsible for Corvus Peak's position in AGMG.
At the time of the proxy contest, Corvus Peak held approximately 8.7% of AGMG's common shares, representing approximately 35,896,200 of the 412,600,000 shares of common stock then outstanding. Corvus Peak's position made it the single largest activist shareholder of the Company, though not the largest overall institutional holder.
Corvus Peak was advised in connection with the proxy contest by Blackthorn Howell & Crane LLP ("BHC"), with Dominic Sayer serving as lead partner and Kathleen Bryce serving as lead associate. BHC's representation of Corvus Peak encompassed all aspects of the proxy contest, including the preparation and filing of proxy materials, SEC compliance, and engagement with AGMG's counsel on settlement discussions. Corvus Peak also retained Falconer Strauss LLC as its proxy solicitor, with Derek Huang serving as the primary contact.
AGMG was advised throughout the proxy contest by Calderwood & Harkness LLP ("C&H") in its capacity as independent governance counsel, with Nathaniel Bower serving as lead partner. AGMG's standing outside counsel, Ashworth Velmoran LLP ("Ashworth Velmoran"), also provided advice on certain matters, with Martin Cho serving as lead partner. AGMG retained Citrine Advisory Group Inc. as its proxy solicitor, with Sandra Eriksson serving as the primary contact. Citrine provided vote projection analyses, shareholder outreach strategy, and day-of-meeting vote tabulation support.
The proxy contest was vigorously contested over a period of approximately four and a half months. Corvus Peak's campaign was centered on three principal themes: (i) alleged underperformance of AGMG's share price relative to media-sector peers; (ii) criticism of the Board's handling of the CEO succession process following the resignation of former CEO Marcus Vane on February 28, 2024; and (iii) a call for a comprehensive strategic alternatives review. AGMG's Board responded with its own communications to shareholders, defending its governance track record and the integrity of the CEO search process.
The 2024 AGM was held on June 7, 2024. A total of 351,280,400 shares were voted, representing approximately 85.1% of the 412,600,000 shares of common stock outstanding. The voting results for the six contested director seats were as follows:
The election of directors at the 2024 AGM was governed by the plurality voting standard applicable to contested elections under AGMG's Amended and Restated Bylaws, effective March 22, 2022. Under this standard, the six candidates receiving the highest number of votes cast were elected to the six contested seats. All three Corvus Peak nominees received a majority of votes cast and were elected; all three management nominees received less than a majority and were not re-elected.
The decisive margin in favor of the Corvus Peak slate reflects the support of a significant portion of AGMG's institutional shareholder base. Based on Citrine Advisory Group's post-meeting analysis, Corvus Peak's nominees received the support of an estimated 60–65% of shares held by institutional shareholders other than Corvus Peak itself, suggesting broad institutional dissatisfaction with the incumbent directors who were not re-elected.
B. Post-Reconstitution Board Composition
Following the election results at the 2024 AGM, the Board was reconstituted effective June 7, 2024. The reconstituted Board held its first meeting on June 10, 2024. The current composition of the Board is as follows:
1. Dame Elspeth Greenvale — Transitional Chair of the Board (independent non-executive director). Dame Greenvale has served on the AGMG Board since 2018 and was elected Chair in 2021. She has agreed to remain as transitional Chair through September 30, 2024, at which point the Board will need to determine a permanent Chair arrangement.
2. Priya Nair-Whitfield — Interim Chief Executive Officer and Chief Operating Officer (executive director). Ms. Nair-Whitfield was appointed Interim CEO on March 1, 2024, following the resignation of Marcus Vane. She has served as COO since 2020 and has been a member of the Board since 2021.
3. Lucinda Farrow-Grant — Independent non-executive director. Ms. Farrow-Grant has served on the AGMG Board since 2019 and served as a member of the Special Committee overseeing the CEO search.
4. Reginald Osei — Independent non-executive director. Mr. Osei has served on the AGMG Board since 2020 and currently chairs the Compensation Committee.
5. Dr. Anwen Llewellyn — Independent non-executive director. Dr. Llewellyn has served on the AGMG Board since 2017 and currently chairs the Audit Committee. She also served as a member of the Special Committee.
6. Garrett Voss — Chief Financial Officer (executive director). Mr. Voss has served as CFO since 2019 and joined the Board in 2022.
7. Malcolm Trask — Lead Independent Director (Corvus Peak nominee; non-executive director). Mr. Trask, age 58, is the former Chief Executive Officer of Archway Digital Holdings Inc., where he served from 2012 to 2021. He was nominated by Corvus Peak and elected at the 2024 AGM. At the June 10, 2024 Board meeting, Mr. Trask was elected Lead Independent Director.
8. Vanessa Loring — Non-executive director; named Chair of the Nominating & Governance Committee effective June 17, 2024 (Corvus Peak nominee). Ms. Loring, age 44, is a Managing Director at Corvus Peak Capital Partners LP, where she has been employed since 2016. She was nominated by Corvus Peak and elected at the 2024 AGM.
9. Dr. Raymond Chu — Non-executive director (Corvus Peak nominee). Dr. Chu, age 61, is the former President of Helix Media Networks Inc., where he served from 2009 to 2019. He was nominated by Corvus Peak and elected at the 2024 AGM.
10. The seat vacated by former CEO Marcus Vane remains unfilled. The Board has not yet determined the process or timeline for filling this vacancy.
In addition, Nadine Khalil, General Counsel and Corporate Secretary of AGMG, attends all Board meetings in a non-voting advisory capacity. Ms. Khalil is responsible for ensuring compliance with applicable corporate governance requirements and serves as the custodian of AGMG's corporate records and privileged materials.
The reconstituted Board thus consists of six continuing directors and three new directors. Of the ten seats, two are held by executive directors (Nair-Whitfield and Voss), and the remaining eight are held by non-executive directors. Three of the eight non-executive directors (Trask, Loring, and Chu) were nominated by Corvus Peak. For the reasons discussed in Section IV below, only one of the three Corvus Peak nominees — Ms. Loring — presents a structural independence concern, although all three should be subject to ongoing monitoring.
C. Pending Corporate Matters Affected by Reconstitution
The reconstitution of the Board directly affects several significant pending corporate matters, each of which is addressed in greater detail in the substantive sections of this memorandum. A summary of these matters is provided here for context.
CEO Succession Process. Following the resignation of Marcus Vane on February 28, 2024, the pre-reconstitution Board established a Special Committee (composed of Tobias Kessler as Chair, Lucinda Farrow-Grant, and Dr. Anwen Llewellyn) to oversee the CEO succession process. The Board retained the executive search firm Hargrove Tate Partners LLC, with Christine Aldridge serving as lead partner, under an engagement letter dated March 15, 2024, providing for a total fee of $750,000, payable in three installments. Only the first installment of $250,000 has been paid. Two candidates had emerged as the primary contenders: Priya Nair-Whitfield, the Interim CEO and an internal candidate who enjoyed the support of a majority of the pre-reconstitution Board (including Greenvale, Farrow-Grant, Pemberton, and Delgado-Ríos); and Jonathan Hale, the former CEO of Meridian Studios International Inc. and a known associate of Damien Solberg, with whom he shared board service at Keystone Digital Ventures Ltd. The reconstituted Board is expected on June 14, 2024 to pass a resolution tabling the CEO succession process indefinitely and dissolving the Special Committee.
Strategic Alternatives Review. On April 22, 2024, the pre-reconstitution Board engaged Stonebridge Crane & Co. as financial advisor to conduct a review of strategic alternatives for the Company. The engagement, led by managing director Anil Kapoor-Mehta, provides for a monthly retainer of $250,000 and a transaction fee of 0.25% of enterprise value if a change-of-control transaction is consummated. The strategic alternatives review remains ongoing, and the reconstituted Board will need to determine whether to continue, pause, or terminate this engagement.
DGCL § 220 Books-and-Records Demand. On March 22, 2024, Corvus Peak served a books-and-records demand on AGMG under Section 220 of the Delaware General Corporation Law, seeking access to CEO search committee materials. AGMG objected to the demand on privilege grounds, and C&H delivered a formal response on April 2, 2024. The reconstitution of the Board — which placed a Corvus Peak employee (Loring) on the Board and gave Corvus Peak nominees access to boardroom deliberations — creates novel issues regarding the management of this pending demand.
UK Regulatory Disclosures. AGMG's shares are admitted to the premium segment of the Official List of the Financial Conduct Authority and traded on the London Stock Exchange Main Market under the ticker AGMG.L. Changes in Board composition trigger disclosure obligations under the Disclosure Guidance and Transparency Rules ("DTR") and the FCA's Listing Rules, requiring timely notification through a Regulatory Information Service.
III. Fiduciary Obligations of All Directors — Regardless of Nominating Shareholder
The reconstitution of the Board brings into sharp focus the fundamental principle that all directors, regardless of the shareholder or faction that nominated or supported their candidacy, owe the same fiduciary duties to the corporation and the totality of its shareholders. This section sets forth the applicable legal standards under Delaware law, which governs AGMG's internal affairs as a corporation organized under the laws of the State of Delaware.
A. Duty of Care
Under Delaware law, each member of the Board of Directors owes a duty of care to the corporation and its shareholders. The duty of care requires that directors act on an informed basis, in good faith, and with the care that a reasonably prudent person in a like position would exercise under similar circumstances. See Aronson v. Lewis, 473 A.2d 805, 812 (Del. 1984). The duty of care encompasses the obligation to inform oneself of all material information reasonably available before making a business decision and to deliberate in a meaningful way before acting.
As applied to the reconstituted Board, the duty of care requires that all directors, including Mr. Trask, Ms. Loring, and Dr. Chu, exercise independent judgment on all Board matters. The new directors may not simply defer to the preferences, instructions, or strategic objectives of Corvus Peak or its management. Each director must form his or her own view on each matter presented to the Board based on the information available and the director's own assessment of the best interests of AGMG and its shareholders. The fact that a director was nominated by a particular shareholder does not relieve that director of the obligation to engage in independent deliberation.
Conversely, the continuing directors have an affirmative obligation to ensure adequate information flow to all Board members. The new directors are entitled to full access to non-privileged corporate information, including financial statements, business plans, pending litigation summaries, regulatory compliance reports, and other materials necessary for the discharge of their duties. Restricting access to information beyond what is justified by legitimate privilege or conflict-of-interest concerns could itself give rise to a breach of the duty of care by the continuing directors, as it would impede the new directors' ability to act on an informed basis.
Additionally, the continuing directors and the new directors alike should be mindful that enhanced judicial scrutiny under the Unocal/Unitrin framework may apply to any future defensive measures or actions that have the effect of affecting the shareholder franchise. See Unocal Corp. v. Mesa Petroleum Co., 493 A.2d 946 (Del. 1985); Unitrin, Inc. v. American Gen. Corp., 651 A.2d 1361 (Del. 1995). While the proxy contest has been concluded and no defensive measures are currently in place, the Board should remain conscious that any governance action perceived as entrenching incumbent directors or frustrating the will of the shareholder base could attract heightened judicial review.
B. Duty of Loyalty
The duty of loyalty is the most fundamental fiduciary obligation owed by each director to the corporation and its shareholders. Under Delaware law, the duty of loyalty requires that a director act in the best interests of the corporation and its shareholders and refrain from acting in a manner that prioritizes self-interest, the interests of a third party, or the interests of a particular shareholder constituency over the interests of the corporation as a whole. See Guth v. Loft, Inc., 5 A.2d 503 (Del. 1939); In re Trados Inc. S'holder Litig., 73 A.3d 17 (Del. Ch. 2013).
Each director of the reconstituted Board owes loyalty to AGMG and all of its shareholders — not to the nominating shareholder, activist fund, or faction that supported their candidacy. This principle is of critical importance in the present context. Mr. Trask, Ms. Loring, and Dr. Chu were nominated by Corvus Peak and elected with the support of Corvus Peak and a broad base of institutional shareholders. Their election does not, however, give Corvus Peak any special claim on their loyalty or any right to direct their conduct as directors. Once elected, each director assumes fiduciary obligations that run to the corporation and the totality of its shareholder base, including shareholders who voted against the Corvus Peak slate.
The duty of loyalty requires particular attention in the case of Ms. Loring. Her concurrent role as a Managing Director at Corvus Peak creates a structural conflict between her fiduciary duty to AGMG and her employment obligations to Corvus Peak. As a Corvus Peak employee, Ms. Loring has a financial and professional stake in advancing Corvus Peak's investment thesis for AGMG, which may not always align with the best interests of AGMG and its shareholders generally. This structural conflict must be managed through the recusal and information-barrier protocols discussed in Sections V and VI below.
Delaware courts have consistently held that directors nominated by significant shareholders are held to the same fiduciary standard as all other directors. At the same time, courts have applied enhanced scrutiny to decisions where nominated directors appear to act in the interest of their nominating constituency rather than the corporation as a whole. See In re Crimson Exploration Inc. S'holder Litig., C.A. No. 8541-VCL (Del. Ch. 2014) (applying enhanced scrutiny where directors nominated by a controlling shareholder were alleged to have favored the interests of that shareholder in approving a merger); In re MFW S'holders Litig., 67 A.3d 496 (Del. Ch. 2013), aff'd sub nom. Kahn v. M & F Worldwide Corp., 88 A.3d 635 (Del. 2014). While Corvus Peak, at 8.7% ownership, is not a controlling shareholder, the presence of a Corvus Peak employee on the Board and the potential for coordinated action among the three Corvus Peak nominees warrant vigilance.
C. Good Faith Obligation
The obligation to act in good faith is a component of the duty of loyalty under Delaware law. See Stone v. Ritter, 911 A.2d 362, 370 (Del. 2006). A director acts in bad faith when the director intentionally acts with a purpose other than that of advancing the best interests of the corporation, when the director acts with the intent to violate applicable positive law, or when the director consciously disregards a known duty. See In re Walt Disney Co. Derivative Litig., 906 A.2d 27, 67 (Del. 2006).
In the present context, the duty of good faith has particular significance. The continuing directors are aware of the structural conflicts arising from the reconstitution, particularly with respect to Ms. Loring's dual role. A failure to adopt appropriate safeguards when such conflicts are known could give rise to a claim that the continuing directors breached their duty of good faith by consciously disregarding a known risk of conflicted decision-making. Similarly, the new directors have a good-faith obligation to disclose any conflicts of interest to the Board and to refrain from participating in decisions where their loyalty is compromised.
The good-faith obligation also requires that the Board not take action — or refrain from taking action — for the primary purpose of benefiting Corvus Peak rather than the Company. For example, if the Board were to table the CEO search solely because Corvus Peak preferred a different candidate or a different process, without regard to the best interests of AGMG, such action could be challenged as having been taken in bad faith. Calderwood & Harkness does not express a view at this time on whether the expected June 14, 2024 resolution to table the CEO search and dissolve the Special Committee was taken in good faith; however, the Board should ensure that its deliberations are documented contemporaneously and that the stated rationale for the action reflects a genuine assessment of the Company's best interests.
IV. Conflicts of Interest Analysis — New Directors
A. Malcolm Trask
Background. Malcolm Trask, age 58, is the former Chief Executive Officer of Archway Digital Holdings Inc., a publicly traded digital media company, where he served from 2012 to 2021. Following his departure from Archway Digital, Mr. Trask has served on the boards of several technology and media companies in non-executive capacities. He was nominated by Corvus Peak for election to the AGMG Board and was elected at the 2024 AGM with 241,632,915 votes, or 68.8% of votes cast — the highest vote total among the six contested candidates.
At the June 10, 2024 Board meeting, Mr. Trask was elected Lead Independent Director. This role carries particular significance given the transitional Chair arrangement with Dame Elspeth Greenvale, who has agreed to serve as Chair only through September 30, 2024. In practice, the Lead Independent Director serves as a counterweight to the Chair and is typically responsible for leading executive sessions of independent directors, setting executive session agendas, and serving as a liaison between independent directors and management.
Conflict Assessment. Mr. Trask was nominated and supported by Corvus Peak, and his relationship with Damien Solberg and the Corvus Peak management team should be monitored on an ongoing basis. However, based on information currently available to Calderwood & Harkness, Mr. Trask does not have a structural conflict comparable to that of Ms. Loring. He is not employed by Corvus Peak, does not have a direct financial interest in Corvus Peak's fund performance, and is not otherwise contractually obligated to Corvus Peak. His independence should be assessed under the applicable NYSE listing standards and AGMG's own Corporate Governance Guidelines.
That said, the continuing directors should ensure that Mr. Trask's independence is re-evaluated periodically, particularly in the event that Corvus Peak proposes specific transactions, CEO candidates, or other matters in which its interests as a significant shareholder may diverge from the interests of the broader shareholder base. In particular, if the CEO search is reopened and Jonathan Hale is among the candidates considered, the Board should evaluate whether Mr. Trask's relationship with Corvus Peak or with Mr. Solberg personally gives rise to a conflict requiring recusal.
Lead Independent Director Role. Mr. Trask's role as Lead Independent Director is particularly sensitive given the transitional Chair arrangement with Dame Greenvale. Protocols are needed to ensure appropriate information flow between the Chair and the Lead Independent Director, particularly with respect to pre-reconstitution matters where privileged information may be involved. Calderwood & Harkness recommends that Dame Greenvale and Mr. Trask establish a regular cadence of communication and that the General Counsel be included in or informed of all substantive discussions between the Chair and the Lead Independent Director regarding governance matters, privileged information, or pending disputes.
B. Vanessa Loring
Background. Vanessa Loring, age 44, is a Managing Director at Corvus Peak Capital Partners LP, where she has been employed since 2016. In her capacity at Corvus Peak, Ms. Loring is responsible for portfolio company governance and engagement with portfolio company boards. She was nominated by Corvus Peak for election to the AGMG Board and was elected at the 2024 AGM with 228,231,780 votes, or 65.0% of votes cast. On June 17, 2024, Ms. Loring was named Chair of the reconstituted Nominating & Governance Committee.
Structural Conflict. Ms. Loring presents the most significant conflict-of-interest concern among the three new directors. As a current employee of Corvus Peak — the largest single activist shareholder of AGMG, holding 8.7% of the outstanding common shares (approximately 35,896,200 shares) with an approximate total investment of $752.8 million at an average cost basis of $20.97 per share — Ms. Loring has an inherent and ongoing structural conflict between her fiduciary duty to AGMG and the totality of its shareholders, on the one hand, and her employment obligations and financial interests at Corvus Peak, on the other.
This conflict manifests in several concrete ways. First, Ms. Loring's professional advancement, compensation, and continued employment at Corvus Peak are likely tied, at least in part, to the performance of Corvus Peak's investment in AGMG and the success of Corvus Peak's strategic objectives for the Company. Second, Ms. Loring owes duties of loyalty and confidentiality to Corvus Peak as her employer, which may conflict with her fiduciary duties to AGMG, particularly with respect to confidential information received in the boardroom. Third, Ms. Loring's presence on the Board creates a channel through which information could flow — intentionally or inadvertently — from the AGMG boardroom to Corvus Peak and its advisors, including BHC.
Under the New York Stock Exchange listing standards applicable to AGMG's primary listing, Ms. Loring would not qualify as an "independent" director given her employment at Corvus Peak. Section 303A.02(a)(ii) of the NYSE Listed Company Manual provides that a director who is a current employee of a company is not independent until three years after the end of such employment. While Corvus Peak is not AGMG itself, the NYSE commentary and the spirit of the independence standards recognize that a director who is employed by or otherwise financially dependent upon a significant shareholder may lack the independence necessary to serve on certain committees or to exercise fully independent judgment on matters affecting that shareholder's interests.
Ms. Loring's committee assignments must therefore be carefully vetted. Calderwood & Harkness notes with concern the appointment of Ms. Loring as Chair of the Nominating & Governance Committee, which is the committee responsible for, among other things, identifying and evaluating director candidates, overseeing the CEO succession process, and making recommendations to the Board regarding corporate governance practices. Given Ms. Loring's non-independence, her appointment to chair this committee raises questions about the integrity of any process the committee may undertake, particularly with respect to the CEO search.
Recommended Recusals. Calderwood & Harkness recommends that Ms. Loring recuse herself from any matter where Corvus Peak's interests as a shareholder diverge from those of AGMG's shareholders generally. Specific matters requiring recusal include, but are not limited to:
(i) Any evaluation of Jonathan Hale as a CEO candidate, given Mr. Hale's pre-existing relationship with Damien Solberg, including their shared board service at Keystone Digital Ventures Ltd.;
(ii) Any discussion or vote regarding the pending DGCL § 220 books-and-records demand, as Corvus Peak is the demanding party and Ms. Loring is a Corvus Peak employee;
(iii) Any decision regarding the engagement or termination of counsel previously adverse to Corvus Peak, including any decision regarding Calderwood & Harkness's own engagement;
(iv) Any transaction or corporate action that disproportionately benefits or harms Corvus Peak's 8.7% position relative to the broader shareholder base; and
(v) Any matter in which Ms. Loring has received information from Corvus Peak that is not available to the Board generally and that is material to the Board's deliberations.
N&G Committee Chair Appointment. The Board should carefully consider whether Ms. Loring's appointment as Chair of the Nominating & Governance Committee is appropriate given her non-independence. If the Board determines to retain Ms. Loring in that role, formal recusal protocols are essential, and an independent director (such as Ms. Farrow-Grant or Mr. Osei) should serve as acting Chair of the committee for any matter from which Ms. Loring is recused.
C. Dr. Raymond Chu
Background. Dr. Raymond Chu, age 61, is the former President of Helix Media Networks Inc., a cable and digital media company, where he served from 2009 to 2019. Dr. Chu has served on several public company boards since his departure from Helix Media Networks and has a background in media operations and content strategy. He was nominated by Corvus Peak for election to the AGMG Board and was elected at the 2024 AGM with 234,554,027 votes, or 66.8% of votes cast.
Conflict Assessment. Based on information currently available to Calderwood & Harkness, Dr. Chu does not have an employment or financial relationship with Corvus Peak beyond having been nominated for election to the AGMG Board. He does not appear to be employed by, or to receive compensation from, Corvus Peak or any of its affiliates. On this basis, Dr. Chu appears to meet the independence criteria under the NYSE listing standards and AGMG's Corporate Governance Guidelines.
However, the continuing directors should verify that Dr. Chu does not have undisclosed relationships with Corvus Peak, Damien Solberg, or Jonathan Hale that could give rise to a conflict of interest. The Board should request that Dr. Chu complete a comprehensive director questionnaire, including questions regarding relationships with Corvus Peak, its affiliates, and the Hale candidacy, as part of the new-director onboarding process. Any relationships disclosed should be evaluated by the General Counsel and, if necessary, by independent governance counsel.
D. Continuing Conflicts — Jonathan Hale Candidacy
This memorandum incorporates by reference Calderwood & Harkness's April 19, 2024 memorandum to the Special Committee analyzing the pre-existing relationship between Jonathan Hale and Damien Solberg, including their shared board service at Keystone Digital Ventures Ltd. from 2017 to 2020 and their reported social and professional interactions. That memorandum concluded that the Hale-Solberg relationship presented a heightened conflict-of-interest concern that warranted enhanced scrutiny in the event Mr. Hale was selected as a finalist in the CEO search.
The reconstitution of the Board has amplified these concerns. Three directors nominated by Corvus Peak — the fund managed by Mr. Solberg — now sit on the Board. If the CEO search is reopened and Mr. Hale is among the candidates under consideration, the Board will face a situation in which three of its ten members were nominated by the fund whose founding partner has a pre-existing relationship with the candidate. This configuration creates a risk that the CEO selection process could be perceived — or could in fact be — influenced by Corvus Peak's preferences rather than by an independent assessment of the best candidate for the Company.
Any future evaluation of Jonathan Hale must therefore be conducted with robust conflict-management protocols in place, as described in Sections VI and VII below. At a minimum, Ms. Loring should recuse herself from all deliberations regarding the Hale candidacy, and the Board should consider whether Mr. Trask and Dr. Chu should also recuse themselves or, alternatively, whether a special committee of independent continuing directors should be empowered to evaluate the Hale candidacy.
V. Information Barriers and Access to Pre-Reconstitution Privileged Materials
A. Scope of the Issue
During the pre-reconstitution period — from approximately March 12, 2024 (the date Calderwood & Harkness was engaged as independent governance counsel) through June 7, 2024 (the date of the 2024 AGM) — the Board and the Special Committee received extensive privileged legal advice from Calderwood & Harkness on a wide range of matters. This advice encompassed the CEO succession process and related fiduciary duties, proxy contest defense strategies, shareholder engagement and settlement analysis, the Company's response to Corvus Peak's DGCL § 220 books-and-records demand, vote projection analysis and tactical recommendations, and general corporate governance matters. In total, Calderwood & Harkness delivered approximately seventeen substantive memoranda, multiple oral presentations, and numerous informal communications to the Board, the Special Committee, and the General Counsel during this period.
The new directors — Mr. Trask, Ms. Loring, and Dr. Chu — were, throughout the pre-reconstitution period, on the opposing side of the proxy contest. They were nominees of Corvus Peak, which was actively engaged in an adversarial campaign against the incumbent Board. Corvus Peak was represented by its own counsel, Blackthorn Howell & Crane LLP, and the pre-reconstitution Board's legal strategy was developed in part to defend against and respond to Corvus Peak's campaign. In this context, it would have been inconceivable for the pre-reconstitution Board to share its privileged strategy memoranda with the Corvus Peak nominees or with Corvus Peak itself.
The reconstitution of the Board fundamentally alters this dynamic. The former adversaries are now colleagues with equal standing as directors of the Company. The question is whether and to what extent the new directors should be given access to pre-reconstitution privileged materials, particularly those relating to the proxy contest defense and the § 220 demand response.
B. Attorney-Client Privilege Belongs to the Corporation
Under well-established Delaware law, the attorney-client privilege for corporate governance advice belongs to the corporation — that is, to AGMG itself — and not to any individual director. See Wal-Mart Stores, Inc. v. Indiana Elec. Workers Pension Trust Fund IBEW, 95 A.3d 1264 (Del. 2014); Moore Business Forms, Inc. v. Cordant Holdings Corp., 1996 WL 307444 (Del. Ch. June 4, 1996). The corporation's privilege is held and administered by the Board as the governing body of the corporation, and the Board has the authority to waive or assert privilege on behalf of the corporation.
This principle means that the reconstituted Board, as the current governing body of AGMG, has the legal authority to decide whether to provide pre-reconstitution privileged materials to the new directors. The privilege is not personal to the continuing directors, and the continuing directors do not have the right to withhold privileged materials from fellow directors simply because those materials were generated during a prior Board composition.
However, the practical exercise of this authority must be tempered by a critical concern: providing pre-reconstitution strategy memoranda to directors who were, until June 7, 2024, adverse parties in a proxy contest raises significant risks of waiver of privilege vis-à-vis Corvus Peak itself and its counsel, Blackthorn Howell & Crane LLP. This concern is most acute with respect to Ms. Loring, who is a current employee of Corvus Peak. If Ms. Loring receives privileged materials and subsequently shares them — intentionally or inadvertently — with Corvus Peak or BHC, the attorney-client privilege over those materials could be deemed waived, not only as to the specific materials disclosed but potentially as to the entire subject matter of the disclosure.
The risk of inadvertent disclosure is real. Ms. Loring works in the offices of Corvus Peak. She reports to senior Corvus Peak personnel. She participates in Corvus Peak's investment discussions regarding AGMG. Even with the best of intentions, the risk that privileged AGMG Board materials could be commingled with Corvus Peak's own files or discussed in the context of Corvus Peak's investment strategy is not trivial.
C. Recommended Information Barrier Framework
In light of the foregoing, Calderwood & Harkness recommends that the Board adopt a formal information barrier framework that categorizes pre-reconstitution privileged materials into three tiers, with different access rules for each tier. The proposed framework is as follows:
Category 1 — Freely Accessible. This category includes general governance memoranda that contain legal analysis of general applicability and do not reveal litigation or contest strategy. Examples include:
• Memoranda analyzing the fiduciary duties of directors in the context of CEO searches;
• Memoranda analyzing the AGMG Bylaws and corporate governance guidelines;
• Memoranda analyzing the CEO search evaluation framework (April 5, 2024 memorandum);
• Memoranda analyzing AGMG's UK regulatory obligations under the DTR and Listing Rules; and
• General governance best-practice guidance.
These materials are appropriate for distribution to all directors, including the new directors, because they do not contain information that would prejudice AGMG's legal position if disclosed to Corvus Peak or its counsel. Providing these materials to the new directors is not only appropriate but necessary to enable them to discharge their fiduciary duties on an informed basis.
Category 2 — Restricted Access. This category includes materials that contain confidential contest strategy, settlement analysis, or other information that, if disclosed to Corvus Peak or its counsel, could prejudice AGMG's legal position in any future dispute or could constitute a waiver of privilege. Examples include:
• The proxy contest defense strategies memorandum (April 28, 2024);
• The settlement analysis memorandum (May 30, 2024);
• Vote projection analyses prepared by Citrine Advisory Group or discussed in Board sessions;
• Draft settlement term sheets and related communications;
• Communications with proxy solicitor Citrine Advisory Group regarding vote solicitation strategy; and
• Board minutes reflecting deliberations on proxy contest tactics.
Category 2 materials should be made available to new directors only upon a specific Board resolution authorizing such access and only with appropriate confidentiality undertakings. Before such a resolution is adopted, the Board should consider the risk that disclosure to the new directors — particularly Ms. Loring — could result in waiver of privilege. Calderwood & Harkness recommends that Category 2 materials not be disclosed to Ms. Loring absent extraordinary circumstances and a determination by the Board that the benefit of disclosure outweighs the risk of waiver.
Category 3 — Highly Restricted. This category includes materials directly related to the pending § 220 books-and-records demand, including:
• AGMG's formal objection to the § 220 demand (April 2, 2024 response letter);
• Privilege logs prepared in connection with the § 220 demand;
• Calderwood & Harkness memoranda analyzing the scope of the § 220 demand and AGMG's privilege claims;
• Internal communications regarding the strategy for responding to the § 220 demand; and
• Any materials that were specifically withheld from production in response to the § 220 demand on privilege grounds.
Category 3 materials should remain restricted from Ms. Loring entirely, given her employment at Corvus Peak. Corvus Peak is the demanding party in the § 220 proceeding, and disclosure of these materials to a Corvus Peak employee could constitute waiver of AGMG's privilege with respect to the very documents Corvus Peak sought through its demand. This would be a potentially devastating outcome for the Company's legal position and could expose the Board to claims that it failed to protect the corporation's privilege.
Access to Category 3 materials by Mr. Trask and Dr. Chu requires a separate Board assessment of whether disclosure would risk waiver. While Mr. Trask and Dr. Chu are not Corvus Peak employees, they were nominated by Corvus Peak and may have ongoing communications with Corvus Peak's management. The Board should evaluate the specific circumstances before authorizing access and should require enhanced confidentiality undertakings from any director who receives Category 3 materials.
Calderwood & Harkness recommends that the Board adopt a formal resolution establishing the information-access categories and requiring all directors to sign updated confidentiality acknowledgments reflecting these protocols. A proposed form of Board resolution is attached as Appendix A, and a proposed form of director confidentiality acknowledgment is attached as Appendix B. A detailed categorization of specific pre-reconstitution privileged materials is set forth in Appendix C, with a cross-reference to the index of C&H work product in Appendix D.
D. Practical Implementation
The effective implementation of the information barrier framework requires a designated gatekeeper. Calderwood & Harkness recommends that Nadine Khalil, in her capacity as General Counsel and Corporate Secretary, serve as the gatekeeper for access to pre-reconstitution materials. Ms. Khalil should maintain a log of all requests for access to Category 2 and Category 3 materials, the Board's determination with respect to each request, and the identity of each director to whom such materials are provided.
The following practical steps should be taken:
1. Immediate Distribution of Category 1 Materials. New directors should be provided with Category 1 materials promptly to ensure they can fulfill their duties. Delay in providing these materials could impede the new directors' ability to act on an informed basis and could itself give rise to fiduciary concerns.
2. Board Resolution on Category 2 Access. The Board should adopt a resolution specifying the conditions under which Category 2 materials may be disclosed to new directors and the confidentiality undertakings required. This resolution should be adopted at the June 14, 2024 meeting or at the earliest practicable date thereafter.
3. Absolute Restriction on Category 3 Access for Loring. Category 3 materials should not be disclosed to Ms. Loring under any circumstances absent a court order or a determination by independent counsel that such disclosure is legally required. This restriction should be documented in the Board resolution and acknowledged by Ms. Loring in her confidentiality acknowledgment.
4. Case-by-Case Assessment for Trask and Chu (Category 3). Access to Category 3 materials by Mr. Trask and Dr. Chu should be evaluated on a case-by-case basis, with the General Counsel and independent governance counsel making a recommendation to the Board regarding the risk of waiver.
5. Updated Confidentiality Acknowledgments. All directors — continuing and new — should sign updated confidentiality acknowledgments reflecting the information barrier framework. These acknowledgments should explicitly state that directors may not share privileged Board materials with any third party, including nominating shareholders, their counsel, or their advisors.
6. Physical and Electronic Security. Pre-reconstitution materials classified as Category 2 or Category 3 should be stored in a separate, access-controlled section of the Board portal (Larkspur Data Systems or equivalent) and should not be included in the general Board materials distributed to all directors. Hard copies should be maintained in a secure location under the custody of the General Counsel.
VI. Recusal Protocols
A. When Recusal Is Required
Recusal is the primary procedural safeguard for managing conflicts of interest at the Board and committee levels. A director should recuse himself or herself from any discussion, deliberation, or vote on a matter in which the director has a personal financial interest, a conflicting duty to another entity, or a relationship that could reasonably be perceived as impairing the director's ability to exercise independent judgment in the best interests of the corporation.
The following recusal recommendations are based on the conflict-of-interest analysis set forth in Section IV above:
Vanessa Loring — Mandatory Recusal Recommended. Given the structural conflict arising from Ms. Loring's dual role as an AGMG director and a Corvus Peak Managing Director, Calderwood & Harkness recommends mandatory recusal for Ms. Loring with respect to the following categories of matters:
(i) Any matter directly involving Corvus Peak's economic interests as a shareholder, including any proposed transaction or corporate action that disproportionately benefits or harms Corvus Peak's 8.7% position relative to the interests of AGMG's shareholders generally;
(ii) The pending DGCL § 220 books-and-records demand and any related litigation or settlement discussions, as Corvus Peak is the demanding party and Ms. Loring is a Corvus Peak employee;
(iii) The evaluation of Jonathan Hale as a CEO candidate, given the pre-existing relationship between Mr. Hale and Damien Solberg, Corvus Peak's founding partner;
(iv) Any decision regarding the engagement, retention, or termination of counsel previously adverse to Corvus Peak in the proxy contest, including any decision regarding Calderwood & Harkness's own engagement or the engagement of Ashworth Velmoran LLP; and
(v) Any other matter identified by the General Counsel or independent governance counsel as presenting a conflict between Ms. Loring's fiduciary duty to AGMG and her obligations to Corvus Peak.
Malcolm Trask — Recusal Recommended in Specific Circumstances. Mr. Trask should recuse himself from any matter that involves his prior relationship with Corvus Peak or Damien Solberg beyond the nominating relationship, or any matter where his role as Lead Independent Director creates a perception of bias in favor of Corvus Peak's strategic objectives. Specific recusal triggers should be identified on a case-by-case basis by the General Counsel.
Dr. Raymond Chu — Recusal Only If Specific Conflicts Identified. Based on information currently available, no mandatory recusal is recommended for Dr. Chu. However, if the onboarding process or subsequent disclosures reveal relationships with Corvus Peak, Mr. Solberg, or Mr. Hale that were not previously disclosed, the Board should reassess whether recusal is appropriate.
B. Recusal Mechanics
When a director is subject to recusal with respect to a particular matter, the following procedures should be observed:
1. Physical Departure. The recusing director should physically leave the boardroom (or exit the virtual meeting platform) during the discussion and vote on the conflicted matter. The recusing director should not remain in the room as an observer and should not participate in the deliberations in any manner, including by asking questions, making comments, or providing information.
2. Minutes. The minutes of the Board or committee meeting should reflect the recusal, the reason for the recusal, the time at which the recusing director departed the meeting and the time at which the recusing director returned, and a statement that the recusing director did not participate in the deliberation or vote on the conflicted matter.
3. Materials. Board or committee materials related to the conflicted matter should not be circulated to the recusing director in advance of the meeting. If materials are distributed via the Board portal, the relevant materials should be placed in a restricted access folder to which the recusing director does not have access.
4. Advance Identification. The General Counsel, Nadine Khalil, should review the agenda for each Board and committee meeting in advance and identify potential recusal situations. Directors who may be subject to recusal should be notified in advance of the meeting so that the recusal can be effected in an orderly manner. In cases of uncertainty, the General Counsel should consult with independent governance counsel before the meeting.
5. Documentation. A record of all recusals, including the matter, the recusing director, the reason, and the meeting date, should be maintained by the Corporate Secretary and made available to the Board upon request.
C. Committee-Level Recusals
The same principles that govern Board-level recusals apply with equal force at the committee level. Each standing committee — including the Audit Committee, the Compensation Committee, and the Nominating & Governance Committee — should apply the recusal protocols described above to its own proceedings.
Particular attention should be given to Ms. Loring's role as Chair of the Nominating & Governance Committee. If the CEO search is reopened, the N&G Committee will likely play a central role in the evaluation of candidates. Ms. Loring should recuse herself from any evaluation of candidates with ties to Corvus Peak, Damien Solberg, or the Corvus Peak investment thesis. In the event of recusal by the Committee Chair, an independent member of the committee should serve as acting Chair for the matter in question.
Additionally, if the Compensation Committee is called upon to benchmark compensation for a CEO candidate favored by Corvus Peak, directors with Corvus Peak ties should consider whether recusal is appropriate. The appearance of a process in which Corvus Peak nominees evaluate and set the compensation of a CEO candidate with ties to Corvus Peak's founding partner could undermine the credibility of the Board's governance processes and invite shareholder litigation.
VII. Governance of the CEO Succession Process Going Forward
A. Status of the CEO Search
As noted above, the reconstituted Board is expected to pass a resolution on June 14, 2024, tabling the CEO succession process indefinitely and dissolving the Special Committee that had been overseeing the search. If adopted, this resolution will effectively suspend the formal CEO search process that was initiated following the resignation of Marcus Vane on February 28, 2024.
Priya Nair-Whitfield will continue to serve as Interim CEO. Ms. Nair-Whitfield has served in this capacity since March 1, 2024 and has simultaneously continued to discharge her responsibilities as Chief Operating Officer. Her interim appointment was approved by the pre-reconstitution Board and has not been formally reconsidered by the reconstituted Board.
The status of the Hargrove Tate Partners LLC engagement requires attention. The engagement letter, dated March 15, 2024, provides for a total fee of $750,000 payable in three installments. Only the first installment of $250,000 has been paid; the remaining $500,000 is payable in two unpaid tranches. The Board should determine whether the engagement is to be formally paused or terminated. If terminated, the Board should review the engagement letter for any termination fees, tail provisions, or other financial obligations. If paused, the Board should communicate clearly with Christine Aldridge at Hargrove Tate regarding the expected duration of the pause and the conditions under which the engagement might be reactivated.
Similarly, the status of the Brackenridge Howard Associates Inc. engagement should be determined. Brackenridge Howard, a compensation consulting firm led by Miriam Estabrook, was retained on a standing basis to provide CEO compensation benchmarking and analysis. If the CEO search is paused indefinitely, the Board should assess whether to maintain this engagement on a standby basis or to formally terminate it, subject to any applicable contractual obligations.
B. Process Integrity If Search Is Reopened
If the reconstituted Board subsequently determines to reopen the CEO search, Calderwood & Harkness recommends that the following process-integrity safeguards be adopted:
1. Reconstitute the Search Committee. Any committee established to oversee the CEO search should be composed of a majority of directors who are free from Corvus Peak conflicts. At a minimum, the committee should include a majority of continuing directors, and Ms. Loring should not serve on the committee in any capacity. Mr. Trask's participation on the committee should be evaluated in light of the specific candidates under consideration.
2. Apply the Evaluation Framework Consistently. The evaluation framework previously developed by the pre-reconstitution Board (as set forth in Calderwood & Harkness's April 5, 2024 memorandum) should be applied consistently to all candidates, whether internal or external, and whether or not the candidate has ties to Corvus Peak or its management. The use of consistent, objective criteria is essential to demonstrating the fairness of the process and to obtaining the protection of the business judgment rule.
3. Enhanced Independence Scrutiny for Corvus-Connected Candidates. Any candidate with ties to Corvus Peak, Damien Solberg, or the Corvus Peak investment thesis — including, most notably, Jonathan Hale — should be evaluated under heightened independence scrutiny. The Board should specifically assess whether the candidate's relationship with Corvus Peak or its management could compromise the candidate's independence as CEO or create a perception that the CEO was selected to advance Corvus Peak's interests rather than the interests of AGMG and its shareholders.
4. Independent Executive Search Firm. The Board should retain an independent executive search firm — either by re-engaging Hargrove Tate Partners or by retaining a new firm — with a mandate to identify candidates who do not have pre-existing activist shareholder relationships. The search firm should be instructed to cast a wide net and to present a diverse slate of candidates.
5. Contemporaneous Documentation. All deliberations of the search committee and the full Board regarding the CEO search should be documented contemporaneously in detailed minutes. This documentation is essential for fiduciary protection in the event of a subsequent legal challenge to the selection process.
C. Interim CEO Considerations
Ms. Nair-Whitfield's continued service as Interim CEO should be confirmed by formal Board resolution at the earliest opportunity. While the pre-reconstitution Board approved her interim appointment, the reconstituted Board should independently affirm its support for her continued service to avoid any ambiguity regarding her authority or status.
Calderwood & Harkness notes that Corvus Peak, in its April 15, 2024 public letter to AGMG shareholders, criticized Ms. Nair-Whitfield's designation as Interim CEO as a "predetermined outcome" that reflected the pre-reconstitution Board's preference for an internal candidate rather than a genuine, independent search process. While Calderwood & Harkness does not endorse this characterization, the Board should be mindful of it. Specifically, the Board should ensure that Ms. Nair-Whitfield's interim status is genuinely interim and does not foreclose a fair evaluation of all candidates — internal and external — if and when the CEO search resumes. The Board should avoid taking any action that could be construed as effectively confirming Ms. Nair-Whitfield as permanent CEO without a fair and transparent process.
Any change to Ms. Nair-Whitfield's interim authority, title, compensation, or reporting relationships should be approved by the full Board, with appropriate recusals by any director who has a conflict of interest with respect to the matter. Given the significance of the CEO role and the sensitivity of the current governance environment, even routine adjustments to the Interim CEO's authority should be documented and approved at the Board level.
VIII. Strategic Alternatives Review
The strategic alternatives review represents one of the most significant pending corporate matters affected by the reconstitution of the Board. On April 22, 2024, the pre-reconstitution Board engaged Stonebridge Crane & Co. as financial advisor to conduct a review of strategic alternatives for the Company, including a potential sale, merger, spin-off, or other transformative transaction. The engagement is led by managing director Anil Kapoor-Mehta and provides for a monthly retainer of $250,000, which has been running since the date of engagement. In addition, the engagement provides for a transaction fee of 0.25% of enterprise value if a change-of-control transaction is consummated.
The reconstituted Board may choose to continue, pause, or terminate the strategic alternatives review. Each option carries distinct implications:
Continuation. If the Board elects to continue the strategic alternatives review, all directors — including the new directors — should be briefed on the current status of the review, subject to the information barrier framework described in Section V above. The Board should ensure that the review is conducted on a basis that reflects the interests of all shareholders, not solely the interests of Corvus Peak, which may prefer a particular outcome (such as a near-term sale at a premium) that may not maximize long-term shareholder value.
Pause. If the Board elects to pause the review, the monthly reta