PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 787 Seventh Avenue New York, New York 10019
May 19, 2024
MEMORANDUM
TO: Board of Directors, Aurelius Global Media Group PLC Special Committee (Tobias Kessler, Chair; Lucinda Farrow-Grant; Dr. Anwen Llewellyn)
ATTENTION: Dame Elspeth Greenvale, Independent Non-Executive Chair Nadine Khalil, General Counsel & Corporate Secretary
FROM: Calderwood & Harkness LLP
RE: Analysis of ISS Proxy Advisory Recommendation — 2024 Annual General Meeting; Corvus Peak Capital Partners LP Director Nominations
MATTER NO.: 1017-00002
AUTHORS: Nathaniel Bower (Responsible Partner); Audrey Zhou (Lead Associate); Brendan Walsh (Working Associate)
CLASSIFICATION: Rapid-Response Analysis
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I. Executive Summary
On May 17, 2024, Cobalt Ridge Solutions ("ISS") issued its proxy voting recommendation for the Aurelius Global Media Group PLC ("AGMG" or the "Company") 2024 Annual General Meeting of Shareholders (the "AGM"), currently scheduled for June 7, 2024. This memorandum provides an analysis of the ISS recommendation, its implications for the contested director election, and our revised strategic recommendations for the Board of Directors (the "Board") and the Special Committee.
ISS recommends that shareholders elect two of the three director nominees put forward by Corvus Peak Capital Partners LP ("Corvus Peak"): Malcolm Trask and Dr. Raymond Chu. ISS recommends against the election of Vanessa Loring, the third Corvus Peak nominee. The ISS recommendation is a significant adverse development for the incumbent Board's proxy contest defense and materially alters the expected trajectory of the contested vote.
The ISS rationale for recommending in favor of Trask and Chu centers on three principal concerns regarding the incumbent Board: (i) what ISS characterizes as insufficient board refreshment, particularly given Hugh Pemberton's 15-year tenure as a co-founder and director; (ii) what ISS perceives as a lack of urgency in the CEO succession process following the resignation of Marcus Vane on March 8, 2024, including criticism of the designation of Priya Nair-Whitfield as Interim CEO as a "de facto precommitment"; and (iii) the relevant industry expertise of the two supported nominees, with Trask having served as former CEO of Archway Digital Holdings Inc. and Dr. Chu having served as former president of Helix Media Networks Inc. ISS withholds support for Loring based on her current role as Managing Director at Corvus Peak, concluding that she lacks sufficient independence from the activist sponsor and that her election would risk what ISS terms "activist capture" of governance processes.
Compounding the impact of the ISS recommendation, on the same date — May 17, 2024 — the Windermere Pension Trust ("Windermere"), which holds approximately 4.4% of AGMG's outstanding shares (approximately 18,154,400 shares), publicly announced its support for the full Corvus Peak slate of three nominees. This announcement by Windermere's Chief Investment Officer, Bernard Napier, further consolidates the institutional momentum behind the dissident campaign and materially complicates the Company's defensive position.
The Westmark Solutions ("Tarrant Partners LLC") recommendation remains pending as of the date of this memorandum and is expected to be released within the coming days. Based on Calderwood & Harkness's prior analysis in the May 8 ISS/Tarrant Partners LLC policy framework memorandum, we believe Tarrant Partners LLC is likely to support two or all three Corvus Peak nominees, given Tarrant Partners LLC's established policy positions on board refreshment, shareholder responsiveness, and contested elections involving governance-focused activist campaigns. A Tarrant Partners LLC recommendation in line with the ISS recommendation — or, worse for the Company, recommending all three Corvus Peak nominees — would effectively foreclose any realistic path to an incumbent slate victory.
Key Recommendation. Based on our analysis of the ISS recommendation, the Windermere endorsement, the revised vote projections set forth in Section III below, and the strategic implications detailed in Section IV, Calderwood & Harkness recommends that the Board immediately accelerate settlement discussions with Corvus Peak. The vote trajectory has shifted materially against the incumbent slate, and continued pursuit of a contested vote carries a high probability of resulting in a board reconstitution that the Company cannot control. A negotiated resolution — while necessarily involving concessions — may preserve significantly more Board influence over the CEO succession process, strategic direction, and governance trajectory than would a contested vote outcome in which the Board has no say in the composition of the reconstituted board or the allocation of committee seats. The window for a favorable settlement is narrowing rapidly as additional institutional investors align with the ISS recommendation and the Tarrant Partners LLC recommendation approaches.
This memorandum addresses the following: (i) a detailed summary of the ISS report (Section II); (ii) revised vote projections under three scenarios (Section III); (iii) strategic implications for the CEO succession process, board dynamics, the strategic alternatives review, insurance, and regulatory matters (Section IV); (iv) an assessment of the Company's settlement posture in light of the ISS recommendation (Section V); and (v) our recommended course of action, including immediate steps and a proposed settlement framework (Section VI).
II. Summary of the ISS Report
A. ISS Voting Recommendations — Director Election Proposals
The AGM will feature a contested election of directors. Pursuant to Section 2.09 of the AGMG Amended and Restated Bylaws, effective March 22, 2022, the plurality voting standard is triggered by virtue of the fact that Corvus Peak has submitted nominations, and accordingly the number of nominees exceeds the number of available board seats. In an uncontested election, AGMG's bylaws provide for a majority-of-votes-cast standard, but this standard is not operative in the present contested election. Under the plurality standard, the nominees receiving the greatest number of votes "FOR" will be elected, up to the number of seats available.
There are ten board seats up for election at the AGM. The Company's management has nominated ten incumbent directors for re-election, while Corvus Peak has nominated three alternative candidates competing for seats in the same election. Because this is a plurality election, shareholders may vote "FOR" up to ten nominees from the combined pool of thirteen candidates. The ISS recommendation addresses each nominee individually.
The ISS recommendations for the Corvus Peak nominees are as follows:
Malcolm Trask — ISS Recommends FOR. ISS cites Trask's experience as former Chief Executive Officer of Archway Digital Holdings Inc., a publicly traded digital media company, and characterizes him as having "deep operational expertise in digital transformation and media platform development." ISS concludes that Trask is independent of Corvus Peak — he has no current employment, equity, or consulting relationship with the fund — and would represent a "credible governance-oriented addition to the board" with skills complementary to the existing director skill matrix. ISS specifically notes Trask's experience overseeing a CEO transition at Archway as relevant to AGMG's current succession process.
Dr. Raymond Chu — ISS Recommends FOR. ISS cites Dr. Chu's experience as former President of Helix Media Networks Inc. and his expertise in media network operations, content distribution, and international media market strategy. ISS views Dr. Chu as "complementary to the existing board skill matrix," noting that the current Board lacks directors with recent operational experience in large-scale media network management. ISS concludes that Dr. Chu's independence from Corvus Peak is satisfactory, noting that while he was initially identified by Corvus Peak as a potential nominee, he has no ongoing financial relationship with the fund beyond reimbursement of out-of-pocket expenses incurred in connection with the nomination process.
Vanessa Loring — ISS Recommends AGAINST. ISS flags Loring's current employment as Managing Director at Corvus Peak Capital Partners LP as a significant concern and concludes that she lacks sufficient independence from the activist proponent. ISS notes the risk of "activist capture" of governance processes should Loring be elected, observing that her fiduciary duties as a director would potentially conflict with her economic interests as a principal of the fund that initiated the proxy contest. ISS specifically states that "while dissident-affiliated nominees are not inherently objectionable, an insider at the proponent fund presents heightened concerns regarding the independence of boardroom deliberations."
With respect to the incumbent nominees, ISS recommends as follows:
ISS Recommends AGAINST Re-Election of Three Incumbents:
• Tobias Kessler: ISS recommends against Kessler's re-election, citing what it characterizes as a lack of accountability for the delayed CEO succession planning process. ISS notes that Kessler chairs the Special Committee formed on March 18, 2024, but criticizes the formation of the Special Committee as belated and reactive to the activist campaign rather than reflective of proactive governance.
• Hugh Pemberton: ISS recommends against Pemberton's re-election, citing his 15-year tenure on the Board since the Company's founding in 2009 and his age (71). ISS characterizes Pemberton's continued service as emblematic of insufficient board refreshment, notwithstanding the Board's declassification in 2021. ISS states that "the continued presence of a co-founder who has served since inception, while not per se problematic, suggests a board culture that has not prioritized the independent perspective that fresh directors can bring."
• Sofia Delgado-Ríos: ISS recommends against Delgado-Ríos's re-election, citing concerns about perceived lack of accountability for governance shortcomings and insufficient shareholder responsiveness. ISS groups Delgado-Ríos with Kessler and Pemberton as directors who bear responsibility for the Board's handling of the CEO succession process and its response to Corvus Peak's engagement efforts.
ISS Recommends FOR All Other Incumbent Nominees: ISS recommends in favor of the re-election of the remaining six incumbent nominees: Dame Elspeth Greenvale, Priya Nair-Whitfield, Lucinda Farrow-Grant, Reginald Osei, Dr. Anwen Llewellyn, and Garrett Voss. ISS does not identify any governance concerns with respect to these directors that would warrant a recommendation against their re-election.
B. ISS Key Criticisms of AGMG Board
The ISS report identifies several areas of concern regarding the incumbent Board's governance and strategic performance. These criticisms are broadly consistent with the themes raised by Corvus Peak in its public communications and proxy materials, and merit close attention because they form the analytical basis for ISS's recommendation against three incumbent directors.
CEO Succession. ISS devotes significant attention to the Board's handling of the CEO succession process following Marcus Vane's resignation on March 8, 2024. ISS characterizes the designation of Priya Nair-Whitfield as Interim CEO on the same date as Vane's departure as a "de facto precommitment" to an internal candidate. This language notably echoes the characterization used by Corvus Peak in its April 15, 2024 public letter to shareholders, in which Corvus Peak accused the Board of "predetermining the outcome of a succession process that has not yet been conducted." ISS criticizes the Board for not completing — or, in ISS's view, even meaningfully commencing — a comprehensive external search before designating an Interim CEO, stating that best governance practice would have involved a parallel external search process from the outset, with the Interim CEO role filled on a clearly temporary basis pending the outcome of that search.
Board Refreshment. The ISS report identifies board refreshment as a significant governance concern. ISS notes that Hugh Pemberton has served continuously on the Board since the Company's founding in 2009 — a tenure of approximately 15 years. While acknowledging that the Board was declassified in 2021, ISS argues that declassification alone does not constitute meaningful refreshment if the same directors are re-nominated and re-elected each year. ISS states that the Board lacks "insufficient fresh perspective" and would benefit from the addition of new directors with current operational experience in digital media, streaming platforms, and content distribution — expertise that it identifies in Trask and Dr. Chu.
Shareholder Responsiveness. ISS notes that Corvus Peak's February 12, 2024 demand letter — which requested (i) the appointment of two new independent directors, (ii) a comprehensive strategic review of the Company's portfolio and operations, and (iii) a formal CEO succession plan with defined timeline and search parameters — received no substantive public response from the Board prior to the launch of the proxy contest. ISS characterizes this silence as reflective of a board culture that is "insufficiently responsive to legitimate shareholder concerns." While ISS acknowledges that private engagement may have occurred, it notes that the absence of any public disclosure of the Board's position on the demand letter's substantive requests prior to the proxy contest launch undermines the Board's claim to shareholder responsiveness.
Strategic Performance. ISS references AGMG's fiscal year 2023 financial performance, noting that the Company's EBITDA margin of 18.6% (approximately $812 million on total revenue of $4.37 billion) falls below the media sector peer group median. ISS does not elaborate extensively on financial performance — consistent with its focus on governance rather than financial analysis — but states that the below-peer-median EBITDA margin "suggests room for operational improvement" and "lends credibility to the dissident's case for board-level change as a catalyst for enhanced performance."
Engagement with Hargrove Tate Partners. ISS acknowledges that the Board retained Hargrove Tate Partners LLC, an executive search firm led by Christine Aldridge, on March 15, 2024 — one week after Vane's resignation — to conduct a formal external CEO search. However, ISS characterizes the timeline of this engagement as "reactive rather than proactive," noting that a well-governed board would have had a CEO succession planning framework in place well before the CEO's departure, and that the retention of a search firm only after the resignation and the commencement of an activist campaign suggests that the Board was responding to external pressure rather than exercising independent governance leadership.
C. ISS Positive Assessments of Incumbents
The ISS report is not uniformly negative in its assessment of the incumbent Board. Several positive observations are noteworthy and may be relevant to the Company's settlement discussions and ongoing proxy solicitation efforts.
ISS acknowledges Dame Elspeth Greenvale's strong governance credentials, noting her prior service as Chief Executive Officer of Halcyon Broadcasting Group plc and her reputation as an experienced and independent board leader. ISS specifically states that it "sees no governance basis for opposing Dame Elspeth's continued service as Chair" and notes her role as a stabilizing presence during a period of management transition.
ISS also recognizes Priya Nair-Whitfield's deep operational experience within AGMG, noting her 12-year tenure at the Company and her track record of operational achievement. ISS specifically credits Nair-Whitfield with leading the launch of the Luminos streaming platform in 2019 — a strategic initiative that ISS characterizes as "one of the Company's most significant recent value-creation initiatives." ISS traces her career progression from Senior Vice President of Digital Strategy (2012) to Executive Vice President of Streaming (2017) to Chief Operating Officer (2020) and notes that her operational knowledge of the business is an asset. Critically, however, ISS stops short of endorsing Nair-Whitfield as the permanent CEO candidate, consistent with its criticism of the "de facto precommitment" narrative.
Finally, ISS recognizes the formation of the Special Committee on March 18, 2024, with Tobias Kessler as Chair, Lucinda Farrow-Grant, and Dr. Anwen Llewellyn as members, as a "positive governance step" reflecting the Board's recognition of the need for a structured process to oversee the CEO search and the Company's response to the activist campaign. However, this positive assessment is tempered by ISS's recommendation against Kessler's re-election, which, if effectuated by shareholders, would require reconstitution of the Special Committee.
III. Revised Vote Projections
A. Methodology
The vote projections set forth below update and supersede the projections contained in Calderwood & Harkness's May 1, 2024 Shareholder Base Analysis and Vote Projection memorandum. The revisions reflect the ISS recommendation, the Windermere public endorsement, and updated intelligence from Citrine Advisory Group Inc. ("Citrine"), the Company's proxy solicitor, regarding institutional shareholder sentiment.
Our analysis is based on AGMG's shareholder register as of the record date for the AGM. Total shares of AGMG common stock outstanding as of the record date are 412,600,000 shares. We project total voter turnout of approximately 85%, or approximately 350,710,000 shares voting. This turnout estimate is consistent with AGMG's historical AGM turnout patterns and is in line with the 85.3% turnout achieved at the 2023 AGM held on June 9, 2023. We note that contested elections generally produce higher turnout than uncontested elections, but the 85% estimate accounts for the fact that a meaningful portion of AGMG's shareholder base consists of retail holders whose voting participation rate, even in contested elections, tends to be lower than that of institutional holders.
Our projections break down the shareholder base into the following key categories: activist holdings (Corvus Peak), institutional long-only funds, index and passive funds, retail shareholders, and management and Board insiders. Within the institutional long-only category, we further distinguish between holders that have publicly declared voting positions, holders that are known to follow ISS recommendations at high rates, holders with independent governance teams that exercise judgment independent of ISS, and holders whose voting intentions remain uncertain.
B. Key Shareholder Positions
The following table summarizes the voting positions and projected voting behavior of the largest and most significant shareholders:
Several observations regarding these positions are important for the vote projection analysis:
Corvus Peak Capital Partners LP (8.7%, 35,896,200 shares): Corvus Peak will vote its full position in favor of Trask, Loring, and Chu and against Kessler, Pemberton, and Delgado-Ríos. Corvus Peak's position has been stable at 8.7% since its amended Schedule 13D filing on February 26, 2024. There is no indication that Corvus Peak has increased or decreased its position since that date, though we note that any changes would be subject to SEC reporting requirements and FCA DTR 5 notification obligations.
Thorne Capital Management LP (6.3%, 25,993,800 shares): Thorne Capital, led by portfolio manager Oliver Thorne based in Boston, is a passive long-only fund that has historically followed ISS recommendations in contested elections. Based on Citrine's engagement records and Thorne Capital's publicly available proxy voting guidelines, we project that Thorne Capital will follow the ISS recommendation and vote FOR Trask and Chu, AGAINST Loring, and AGAINST Kessler, Pemberton, and Delgado-Ríos. Thorne Capital has not publicly declared its voting intentions and has declined to engage directly with Citrine on this matter.
Ridgeway Asset Management Ltd. (5.1%, 21,042,600 shares): Ridgeway, headed by Fiona Ashcroft as Head of Governance out of London, is a traditional asset manager that maintains an independent governance research team. Ridgeway does not mechanically follow ISS recommendations but has a demonstrated tendency to align with ISS in contested director elections. Citrine reports that Ashcroft's team has been receptive to engagement but has not indicated a final voting decision. We project that Ridgeway will likely vote FOR Trask and Chu; its position on Loring is uncertain, and its disposition toward the targeted incumbents is similarly uncertain. Ridgeway represents a potential swing vote that could be influenced by the Tarrant Partners LLC recommendation and any settlement developments.
Windermere Pension Trust (4.4%, 18,154,400 shares): Windermere's public declaration of support for the full Corvus Peak slate on May 17, 2024, is a significant development. CIO Bernard Napier issued a public statement characterizing AGMG's board as "in need of renewal" and endorsing all three Corvus Peak nominees. Windermere will vote FOR Trask, Loring, and Chu and is expected to vote AGAINST Kessler, Pemberton, and Delgado-Ríos. Windermere's public endorsement is notable not only for the 4.4% voting block it represents but also for the signal it sends to other institutional holders that may be deliberating their votes.
Management & Board Insiders (3.2%, 13,203,200 shares): Management and Board insiders, of which Hugh Pemberton holds the most significant individual position at 2.1% (8,664,600 shares), will vote in favor of the full incumbent slate and against all three Corvus Peak nominees. This block, while meaningful, represents a relatively small portion of the total voting shares.
Index/Passive and Retail Shareholders (~72.3%): The largest segment of the shareholder base consists of index and passive funds (estimated at approximately 45–50% of outstanding shares) and retail shareholders (estimated at approximately 22–27%). Index and passive funds are expected to follow ISS and Tarrant Partners LLC recommendations at high rates — typically in the range of 60–70% ISS-follow rate, with some variation by fund family and the nature of the contest. Retail shareholders, while less predictable, tend to follow proxy advisory firm recommendations when they vote, though their participation rate is lower than that of institutional holders.
C. Projected Vote Outcomes — Three Scenarios
Based on the shareholder position analysis above and the ISS recommendation, we model three scenarios for the contested director election.
Scenario 1: ISS Recommendation Holds; Tarrant Partners LLC Recommends 2 of 3 Corvus Nominees (Base Case)
This scenario assumes that Tarrant Partners LLC issues a recommendation substantially similar to that of ISS — recommending FOR Trask and Chu, and AGAINST Loring — and that institutional shareholders follow the proxy advisory firm recommendations at historical rates. We consider this the most likely scenario based on our analysis of Tarrant Partners LLC policy positions and precedent.
Under this base case, all six non-targeted incumbent nominees (Greenvale, Nair-Whitfield, Farrow-Grant, Osei, Llewellyn, Voss) are projected to receive vote totals in the range of 60–75% FOR and are expected to be re-elected comfortably. With respect to Loring, although both ISS and Tarrant Partners LLC would be recommending against her in this scenario, the combined voting blocks of Corvus Peak (8.7%), Windermere (4.4%), and a significant minority of institutional holders who support the full dissident slate regardless of advisory firm recommendations may push her above the plurality threshold needed for election. In a plurality election with thirteen nominees competing for ten seats, the relevant question is whether Loring receives more votes than the lowest-voted nominees, which under this scenario would be Pemberton (projected at ~37–42%).
Net Outcome Under Scenario 1: All three Corvus Peak nominees are elected; three incumbents (Kessler, Pemberton, and Delgado-Ríos) are removed. The reconstituted 10-member board would include three Corvus-aligned directors (Trask, Chu, and Loring) and seven continuing incumbents (Greenvale, Nair-Whitfield, Farrow-Grant, Osei, Llewellyn, Voss, and the remaining four who do not face targeted opposition).
Scenario 2: Tarrant Partners LLC Recommends All 3 Corvus Nominees (Bear Case for Incumbents)
This scenario assumes that Tarrant Partners LLC recommends in favor of all three Corvus Peak nominees, including Loring. While we believe this is a less likely outcome than Scenario 1 — given Tarrant Partners LLC's own independence policies — it cannot be ruled out, particularly if Tarrant Partners LLC places greater weight on the principle of shareholder choice in contested elections than on concerns about Loring's independence from the activist sponsor.
Net Outcome Under Scenario 2: Full sweep by Corvus Peak. All three dissident nominees are elected; all three targeted incumbents are removed. This represents the most adverse scenario for the incumbent Board and would result in a reconstituted board in which Corvus-aligned directors constitute 30% of the voting membership (three of ten seats). This scenario would give Corvus Peak maximum leverage over the CEO succession process, committee composition, and strategic direction.
Scenario 3: Aggressive Incumbent Campaign / ISS Recommendation Partially Overcome (Bull Case)
This scenario assumes that the Company mounts an aggressive counter-campaign that partially overcomes the negative ISS recommendation. This would require significant engagement by Dame Elspeth Greenvale and other senior incumbents with major institutional holders, persuasive counter-messaging that reframes the governance narrative, and a Tarrant Partners LLC recommendation that is less favorable to the dissident than ISS's recommendation (e.g., recommending only one Corvus nominee, or none). We consider this scenario to be the least likely of the three, given the strength of the ISS recommendation and the momentum created by Windermere's public endorsement.
Net Outcome Under Scenario 3: Even in this most favorable scenario for the incumbents, at minimum two Corvus Peak nominees (Trask and Chu) are elected and at least one incumbent (Pemberton) is not re-elected. The probability of the Board preventing any reconstitution at all is negligible. The only question under this scenario is the degree of reconstitution — whether the Board loses one, two, or three seats — not whether it occurs.
D. Analysis of Vote Dynamics
Several structural dynamics warrant particular attention.
First, the ISS recommendation effectively consolidates institutional sentiment against the status quo. Empirical data on contested director elections demonstrates that overcoming a negative ISS recommendation is statistically rare. According to academic studies and proxy advisory firm tracking data, the success rate of incumbent boards in contested elections where ISS recommends in favor of the dissident's nominees is approximately 15–25%. While each contest has unique characteristics, the structural advantage conferred by an ISS recommendation in favor of dissident nominees — particularly in an election involving a governance-focused activist campaign against a company with identifiable governance weaknesses — is substantial and well-documented.
Second, Windermere's public endorsement of the full Corvus Peak slate amplifies the momentum behind the dissident campaign. Public declarations by institutional investors serve as signaling mechanisms to other holders who have not yet committed to a voting position. The Windermere endorsement may influence Ridgeway Asset Management and other institutional holders that maintain independent governance teams but are sensitive to the weight of institutional consensus. Citrine reports that several mid-tier institutional holders have indicated that Windermere's endorsement "moved the needle" in their internal governance deliberations.
Third, the arithmetic of the locked-in dissident support is formidable. Corvus Peak's 8.7% combined with Windermere's 4.4% represents 13.1% of outstanding shares that are locked in for the dissident slate before any institutional ISS-followers are counted. With Thorne Capital's 6.3% likely following ISS, approximately 19.4% of outstanding shares — or approximately 22.8% of projected voting shares assuming 85% turnout — are almost certainly FOR at least Trask and Chu even before broader institutional and index fund alignment is considered. In a plurality election, this baseline of support, combined with the expected ISS-follow behavior of passive and index funds, makes the election of Trask and Chu a near certainty.
Fourth, the Company's insider block of 3.2% is insufficient to materially alter the vote trajectory. While Pemberton's individual 2.1% holding provides some support for the incumbent slate, the combined insider position is dwarfed by the cumulative dissident and dissident-aligned positions.
IV. Strategic Implications
A. Impact on CEO Succession Process
The most consequential strategic implication of the projected vote outcome is its impact on the CEO succession process, which is the central governance issue animating both the ISS recommendation and the Corvus Peak campaign.
If two or three Corvus Peak nominees are elected — as all three scenarios project — the reconstituted Board is likely to reconsider the CEO search process currently being conducted under the oversight of the Special Committee and Hargrove Tate Partners LLC. The degree of reconsideration will depend on the number of Corvus-aligned directors seated and the composition of the reconstituted Board, but any degree of reconstitution introduces the possibility that the search will be tabled, restarted with different parameters, or redirected toward candidates favored by Corvus Peak.
The Special Committee, currently composed of Tobias Kessler (Chair), Lucinda Farrow-Grant, and Dr. Anwen Llewellyn, will need to be reconstituted if Kessler is not re-elected. Under all three projection scenarios, Kessler's re-election is at best a coin flip (Scenario 3) and more likely will not occur (Scenarios 1 and 2). The loss of the Special Committee Chair would disrupt the CEO search process, necessitate the appointment of a new Chair, and potentially alter the committee's mandate and approach. Farrow-Grant and Llewellyn are both projected to be re-elected, but a reconstituted Special Committee with a new Chair — potentially one of the Corvus Peak-aligned directors — would be a fundamentally different body than the one currently overseeing the search.
Priya Nair-Whitfield's designation as Interim CEO may be revisited by a reconstituted Board. Corvus Peak has publicly criticized this designation as a "predetermined outcome" and has called for a "truly independent external search." If Corvus Peak-aligned directors hold three seats on a ten-member board, they would constitute a significant voting block capable of influencing — though not unilaterally controlling — decisions regarding the Interim CEO's status and the scope and direction of the permanent search.
Of particular concern, as detailed in Calderwood & Harkness's April 19 memorandum on conflicts of interest, Jonathan Hale — an external CEO candidate who has been identified in media reports as a potential contender — has pre-existing ties to Corvus Peak's founder and CIO, Damien Solberg. Specifically, Hale and Solberg served together on the board of Keystone Digital Ventures Ltd. from 2018 to 2022. The election of Corvus Peak-aligned directors could result in renewed and potentially preferential consideration of Hale's candidacy, raising the conflict-of-interest concerns previously analyzed. A reconstituted Board should be counseled on its fiduciary obligations in this regard.
The Company's engagement with Hargrove Tate Partners (first installment of $250,000 of a $750,000 flat fee paid; $500,000 remaining) may be paused or terminated by a reconstituted Board that views the search process as compromised or wishes to redirect it. Any such termination would need to be evaluated in light of the contractual terms of the engagement letter and the Board's fiduciary obligations.
B. Impact on Board Dynamics and Governance
A reconstituted Board with three Corvus Peak nominees (Trask, Loring, and Chu) joining six continuing incumbents (Greenvale, Nair-Whitfield, Farrow-Grant, Osei, Llewellyn, and Voss) and one vacancy (the seat formerly held by Marcus Vane, which remains unfilled) would create a ten-member board (assuming the Vane vacancy remains unfilled) in which Corvus-aligned directors constitute 30% of the voting membership. This proportion, while not a majority, is sufficient to exercise significant influence over board deliberations, particularly on matters requiring more than a simple majority vote, matters requiring unanimity of independent directors, and matters on which the continuing incumbents may themselves be divided.
There is a meaningful risk that a reconstituted Board may seek changes in governance counsel. Corvus Peak's outside counsel is Blackthorn Howell & Crane LLP ("BHC"), with lead partner Dominic Sayer. While Corvus Peak-aligned directors would owe fiduciary duties to the Company and all shareholders — not to Corvus Peak — there is a practical risk that they may advocate for engaging BHC or similarly aligned counsel in connection with certain governance matters, potentially displacing Calderwood & Harkness in its current advisory role. We flag this not as a self-interested concern but as a governance matter: changes in counsel during a sensitive transition period can disrupt the continuity of legal advice and institutional knowledge.
Committee composition will be a contested issue in the reconstituted Board. Corvus Peak nominees will likely seek — and may be entitled to — seats on key Board committees, including the Nominating & Governance Committee and potentially the Compensation Committee. The allocation of committee seats will be a critical governance question that should be addressed in any settlement negotiation, as the composition of these committees will determine the degree of Corvus Peak influence over director nominations, CEO compensation, and governance policies going forward.
Finally, Dame Elspeth Greenvale's continuing role as Independent Non-Executive Chair may be challenged. While ISS recommends in favor of Greenvale's re-election and she is projected to be re-elected comfortably, Corvus Peak-aligned directors may seek to install a Lead Independent Director or may challenge Greenvale's authority on matters related to the CEO search and governance reforms. At minimum, the Chair should be prepared for heightened scrutiny of boardroom process and decision-making from newly seated directors who may view their mandate as a directive for change.
C. Impact on Strategic Alternatives Review
The Board authorized the retention of Stonebridge Crane & Co. ("Stonebridge") on April 22, 2024, to evaluate strategic alternatives as a defensive measure. The engagement, led by managing director Anil Kapoor-Mehta, is on a monthly retainer of $250,000. The strategic alternatives review was intended to demonstrate to shareholders that the Board is proactively evaluating all options for value creation, including potential divestitures, restructurings, or strategic transactions.
A reconstituted Board may choose to shelve or accelerate this review depending on Corvus Peak's preferred strategic direction. If Corvus Peak favors operational improvements and governance reforms rather than a strategic transaction, the review may be deprioritized. Conversely, if Corvus Peak views a sale, merger, or significant divestiture as the optimal path to value creation, the review may be accelerated and its scope expanded.
Any termination or material modification of the Stonebridge engagement should be evaluated in light of the engagement letter's tail fee provisions. Specifically, the engagement letter provides for a tail fee of 0.25% of enterprise value if a change-of-control transaction is consummated within the tail period following termination. Based on AGMG's estimated enterprise value of approximately $8.65 billion (as of March 1, 2024), this would represent a potential tail fee exposure of approximately $21.6 million. The Board should be aware of this exposure when considering any modifications to the Stonebridge engagement in connection with settlement negotiations or post-reconstitution governance changes.
D. D&O Insurance Considerations
Board reconstitution triggers certain notice obligations under the Company's directors and officers liability insurance policy with Helmsley Indemnity Corp. (Policy No. HIC-DOL-2024-009347). The policy provides coverage of $75 million per occurrence and $150 million in the aggregate for the policy period of January 1 through December 31, 2024, at an annual premium of $3.8 million.
Departing directors — specifically Kessler, Pemberton, and Delgado-Ríos, who are at risk of not being re-elected — will require assurance of tail coverage under the D&O policy. Standard D&O policies provide coverage for claims arising from acts or omissions during the policy period, including coverage for directors who leave the board during the policy period. However, it is important that the Company proactively address tail coverage to ensure that departing directors are not exposed to potential liability gaps, particularly given the heightened scrutiny associated with activist campaigns and the possibility of derivative claims related to the CEO succession process. This issue should be addressed regardless of whether the Board pursues settlement or proceeds to a contested vote.
E. UK Regulatory Overlay
AGMG shares are dual-listed on the New York Stock Exchange (NYSE: AGMG) and the London Stock Exchange Main Market (LSE: AGMG.L). As a consequence of the LSE listing, the Company is subject to the FCA Disclosure Guidance and Transparency Rules, including DTR 5, which imposes notification obligations on holders who acquire or dispose of major shareholdings or whose voting rights cross specified thresholds.
Any changes to Corvus Peak's shareholding or governance arrangements triggered by settlement negotiations — including, for example, the execution of a cooperation agreement, the grant of board nomination rights, or the imposition of standstill provisions — may create DTR 5 notification obligations for Corvus Peak, the Company, or both. Additionally, if settlement negotiations involve agreements regarding the exercise of voting rights, such arrangements could constitute "concert party" arrangements under UK regulatory frameworks, triggering additional disclosure and potentially substantive regulatory requirements.
As analyzed in greater detail in Calderwood & Harkness's April 3, 2024 memorandum, the Company's compliance team should be alerted to monitor for any notifiable changes in connection with settlement discussions. We recommend that Nadine Khalil, as General Counsel and Corporate Secretary, coordinate with the Company's UK counsel to ensure that all DTR 5 obligations are timely satisfied.
V. Assessment of Settlement Posture
A. The May 10 Corvus Peak Settlement Proposal (Rejected)
On May 10, 2024, Corvus Peak submitted a settlement proposal to the Board through counsel-to-counsel communication between Dominic Sayer of Blackthorn Howell & Crane LLP and Nathaniel Bower of this firm. The substance of the Corvus Peak proposal was as follows: (i) two Corvus Peak nominees (identity not specified) would be immediately seated on the Board; (ii) the CEO search would be paused pending reconstitution of the relevant oversight committee with Corvus Peak participation; and (iii) Corvus Peak would withdraw its proxy solicitation and support the settled slate at the AGM.
The Board considered and rejected this proposal on May 12, 2024, following a Special Committee meeting at which the Committee determined that the proposal was unacceptable because it would effectively cede control of the CEO succession process to Corvus Peak without adequate governance protections for the Company. The Board's assessment of its negotiating position at the time of rejection was that the Company had a reasonable prospect of retaining a majority of the contested seats at the AGM, particularly if the ISS recommendation was neutral or only partially favorable to the dissident.
The ISS recommendation issued on May 17, 2024 — five days after the Board's rejection of the Corvus Peak proposal — materially undermines the factual predicate for that rejection. The ISS recommendation is substantially more favorable to Corvus Peak than the Board anticipated, and the Windermere public endorsement further compounds the adverse shift in institutional sentiment. In light of these developments, the proposal that was rejected on May 12 may now represent a more favorable outcome for the Board than the projected contested vote results. The Board's negotiating leverage has diminished significantly, and the terms available in a settlement negotiation today are likely to be less favorable than those available on May 10.
B. Revised Settlement Calculus Post-ISS
The fundamental calculus facing the Board is whether to proceed to a contested vote or to negotiate a settlement. The two paths produce meaningfully different outcomes for the Board's influence over governance, the CEO succession process, and strategic direction.
If the Board proceeds to a contested vote, the most likely outcome — based on the vote projections in Section III above — is the election of all three Corvus Peak nominees (or at minimum two) and the removal of three incumbent directors (Kessler, Pemberton, and Delgado-Ríos). This would result in a board reconstitution that the Company cannot control. The Board would have no input into which Corvus Peak nominees are seated (all three would be elected if they receive sufficient votes, regardless of the Board's preferences), no ability to impose standstill or governance protections, and no mechanism for ensuring continuity in the CEO succession process. The reconstitution would occur as a fait accompli at the AGM, with the newly constituted Board immediately empowered to reshape governance, committee composition, and strategic priorities.
If the Board negotiates a settlement now, it may be able to achieve several important objectives that would not be available through a contested vote:
Limiting Corvus Peak Board Representation. A settlement could limit Corvus Peak's board representation to two seats — consistent with ISS's implicit endorsement of only two nominees — rather than the three seats that are likely to result from a contested vote. This would give Corvus-aligned directors 20% of the board rather than 30%, a significant difference in practical influence.
Excluding Vanessa Loring. ISS's recommendation against Loring, based on her lack of independence from Corvus Peak, provides a credible and principled basis for the Board to insist that Loring be excluded from any settlement slate. This is a negotiating point that is supported by the leading proxy advisory firm and would resonate with the institutional shareholder community.
Preserving Influence Over the CEO Search. A settlement could include mutual governance commitments regarding the CEO succession process, including agreement on a reconstituted search committee with balanced representation, continuation of the Hargrove Tate Partners engagement, and procedural safeguards to ensure that the search is conducted independently and without preferential treatment of any candidate.
Standstill Provisions. A settlement could include a standstill provision preventing Corvus Peak from acquiring shares beyond a specified threshold (e.g., 12% of outstanding shares) or launching additional proxy contests for a defined period (e.g., 18 months). Such standstill provisions are standard in activist settlement agreements and provide the Board with a period of stability in which to demonstrate performance improvements and governance reforms.
Joint Governance Commitments. A settlement could include mutual agreements to support the full settled slate at the AGM, with Corvus Peak withdrawing its proxy solicitation and publicly endorsing the agreed-upon board composition. This would eliminate the uncertainty and cost of a contested vote and present a unified front to the shareholder community.
C. Risks of Continued Contest
The risks of proceeding to a contested vote without pursuing settlement are significant and increasing:
Additional Institutional Defections. In the days following the ISS recommendation, additional institutional holders are likely to align their voting positions with the ISS recommendation. Citrine reports increasing difficulty in garnering uncommitted institutional support for the incumbent slate, and several holders who were previously characterized as "leaning incumbent" have shifted to "undecided" or "leaning dissident" following the ISS report.
Tarrant Partners LLC Recommendation. The Tarrant Partners LLC recommendation, expected imminently, could further erode incumbent support. If Tarrant Partners LLC recommends in favor of all three Corvus Peak nominees — the Scenario 2 "bear case" — the Board's position would deteriorate from difficult to untenable.
Reputational and Operational Damage. A continued public proxy battle damages the perception of board stability and leadership continuity among employees, customers, content partners, and regulators. AGMG employs approximately 23,400 people worldwide, and senior management time devoted to the proxy contest is time not devoted to operating the business. The Company's stock price — reflecting a market capitalization of approximately $8.65 billion as of March 1, 2024 — may be adversely affected by perceptions of governance dysfunction and strategic uncertainty.
Proxy Solicitation Costs. The financial costs of continuing the proxy contest are substantial, including printing and mailing of supplemental proxy materials, proxy solicitation fees to Citrine Advisory Group Inc. (managing director Sandra Eriksson), legal fees, and the cost of management time and attention diverted from operations. These costs are incurred without a realistic prospect of changing the outcome.
Corvus Peak Proxy Solicitation Activity. Corvus Peak's proxy solicitor, Falconer Strauss LLC (partner Derek Huang), is actively campaigning among institutional holders. Citrine reports that Falconer Strauss has been effective in its outreach and that the ISS recommendation has significantly enhanced the credibility of its solicitation efforts.
DGCL § 220 Demand. Corvus Peak's demand under Section 220 of the Delaware General Corporation Law, served on March 22, 2024, seeks books and records related to the CEO search committee materials, board deliberations regarding the Interim CEO designation, and related governance matters. This demand remains partially unresolved, with certain categories of documents withheld on attorney-client privilege and work product grounds. A contested vote outcome followed by board reconstitution could lead to a waiver or ordered disclosure of materials that the Board has sought to protect. Corvus Peak-aligned directors on a reconstituted Board could, as a practical matter, access or authorize disclosure of materials that the current Board has determined should remain privileged. This risk is mitigated if a settlement agreement includes provisions addressing the disposition of the Section 220 demand.
VI. Recommended Course of Action
A. Immediate Steps (Within 48 Hours)
Calderwood & Harkness recommends that the Board and Special Committee take the following steps within 48 hours of receipt of this memorandum:
1. Convene an emergency Board meeting (or, if a full Board meeting cannot be assembled on short notice, a Special Committee meeting with authority to act on behalf of the Board) to discuss the ISS recommendation, the revised vote projections set forth in Section III, and the settlement analysis set forth in Section V. The meeting should be convened by telephone or videoconference at the earliest practicable time and should include all available directors, General Counsel Nadine Khalil, and Calderwood & Harkness. We are available at any time convenient to the Board.
2. Authorize Dame Elspeth Greenvale and the Special Committee to reopen direct settlement discussions with Corvus Peak. Communication should be initiated through appropriate channels — through Damien Solberg and/or portfolio manager Erin Nakamura on the Corvus Peak side, with parallel counsel-to-counsel contact between Nathaniel Bower of Calderwood & Harkness and Dominic Sayer of Blackthorn Howell & Crane LLP. The authorization should be sufficiently broad to permit substantive negotiations, subject to Board approval of any final agreement.
3. Brief Citrine Advisory Group (Sandra Eriksson, managing director) on the Board's updated settlement posture so that Citrine can calibrate its proxy solicitation messaging accordingly. Citrine should not, at this stage, alter its solicitation activities in a manner that signals settlement to the market, but should be prepared to shift messaging rapidly if an agreement is reached.
4. Coordinate with Ashworth Velmoran LLP (Martin Cho, lead partner) on any SEC disclosure obligations that may be triggered by the commencement of settlement negotiations or the execution of a cooperation agreement. Per the coordination protocol established on March 19, 2024, any material developments in the proxy contest, including the commencement of substantive settlement discussions, should be evaluated for potential Current Report on Form 8-K disclosure obligations and proxy supplement requirements.
B. Settlement Framework — Recommended Parameters
Based on our analysis of the vote projections, the ISS recommendation, and the relative bargaining positions of the parties, Calderwood & Harkness recommends that the Board pursue settlement negotiations within the following framework:
Board Seats. Offer two board seats to Corvus Peak nominees Malcolm Trask and Dr. Raymond Chu, excluding Vanessa Loring. The exclusion of Loring is consistent with the ISS recommendation and can be justified on governance grounds — specifically, Loring's lack of independence from the activist sponsor. The offer of two seats rather than three represents a meaningful concession by the Board but preserves a board composition in which Corvus-aligned directors constitute 20% of the membership rather than 30%.
Mutual Standstill. Corvus Peak to agree not to exceed 12% ownership of AGMG outstanding shares and not to launch additional proxy contests, nominate additional directors, or submit shareholder proposals (other than routine governance proposals) for a period of 18 months from the date of the cooperation agreement. The standstill should include customary exceptions for unsolicited tender offers or exchange offers, material adverse changes in the Company's business or financial condition, and transactions initiated by the Company.
CEO Succession Process. The CEO search to continue under a reconstituted Special Committee or Nominating & Governance Committee with one Corvus Peak-nominated member participating. The search is to be conducted by Hargrove Tate Partners with full committee oversight. Priya Nair-Whitfield to remain as Interim CEO during the search, with an explicit understanding that the search is genuinely open to external candidates and that Nair-Whitfield is one of several candidates under consideration, not a presumptive appointee. Joint governance commitments regarding the independence and integrity of the search process should be included.
Joint Support of Settled Slate. Both sides to agree to support the full settled slate at the AGM. Corvus Peak to withdraw its proxy solicitation and publicly endorse the agreed-upon board composition. The Company to amend its proxy materials to reflect the settlement and recommend that shareholders vote in favor of the settled slate.
Voluntary Incumbent Departure. Consider the voluntary departure of one or two targeted incumbent directors as part of the settlement to address board refreshment concerns. Pemberton's departure, in particular, may satisfy the ISS refreshment criticism without requiring three forced removals. A voluntary departure framed as a planned succession step — rather than a concession to activist pressure — would be less damaging to the Board's credibility and would preserve goodwill among continuing directors.
Standstill Exceptions. The standstill provisions should include customary exceptions, including the ability of Corvus Peak to communicate privately with the Board, to vote its shares in its discretion on matters other than director elections (during the standstill period), and to respond to unsolicited takeover proposals or material events.
C. Contingency Planning
If settlement discussions fail to produce an agreement before the Tarrant Partners LLC recommendation is issued — an event that could occur within a matter of days — the Board should prepare for a full contested vote with the realistic expectation that at least two (and possibly all three) Corvus Peak nominees will be elected.
In connection with this contingency, Calderwood & Harkness will prepare a more detailed settlement analysis memorandum with specific term sheet proposals and draft cooperation agreement language for Board consideration, to be delivered no later than May 30, 2024. This memorandum will include an analysis of comparable activist settlement agreements in the media and technology sectors, model standstill provisions, and recommended committee composition frameworks for the reconstituted Board.
Additionally, the Board should continue preparation of board process integrity protocols for potential post-reconstitution governance, as previewed in our earlier fiduciary duties memoranda. These protocols are designed to ensure that the Board's fiduciary decision-making processes remain intact and that proper procedures for managing conflicts of interest, preserving privilege, and maintaining governance standards are in place from the first meeting of a reconstituted Board.
Finally, regardless of whether the Board pursues settlement or proceeds to a contested vote, the Company should ensure that all D&O notice obligations to Helmsley Indemnity Corp. under Policy No. HIC-DOL-2024-009347 are timely satisfied, including notice of the ISS recommendation, the prospect of board reconstitution, and any related claims or circumstances that could give rise to claims.
VII. Conclusion
The ISS recommendation issued on May 17, 2024, is a material adverse development for the incumbent Board's proxy contest defense. It consolidates institutional sentiment in favor of board-level change, endorses two of the three Corvus Peak nominees, and explicitly recommends against the re-election of three incumbent directors. The concurrent public endorsement of the full Corvus Peak slate by Windermere Pension Trust further compounds the shift in momentum.
All three vote projection scenarios modeled in this memorandum indicate that at least two Corvus Peak nominees — Malcolm Trask and Dr. Raymond Chu — will be elected and that at least two incumbents — Hugh Pemberton and Tobias Kessler, with Sofia Delgado-Ríos also at high risk — will not be re-elected. The most likely outcome is the election of all three Corvus Peak nominees and the removal of all three targeted incumbents, resulting in a board reconstitution that the Company has no ability to shape or control.
A negotiated settlement offering two board seats to Trask and Chu, with governance protections including a standstill, CEO search process commitments, and committee composition agreements, represents the most favorable realistic outcome available to the Board at this juncture. Such a settlement would limit Corvus Peak's board representation, exclude the non-independent Loring nominee, and preserve meaningful Board influence over the CEO succession process and governance trajectory.
Delay in reopening settlement discussions will further weaken the Board's negotiating leverage, particularly if Tarrant Partners LLC issues a recommendation favorable to the full Corvus Peak slate. Every day that passes without progress toward settlement is a day in which additional institutional holders finalize their voting decisions in alignment with the ISS recommendation, further narrowing the Board's options and reducing the concessions it can extract in negotiations.
Calderwood & Harkness is available for an emergency Board call at the Chair's convenience to discuss the contents of this memorandum and to receive authorization to initiate counsel-to-counsel contact with Blackthorn Howell & Crane LLP. We will circulate a detailed settlement analysis memorandum, including draft term sheet language and a model cooperation agreement, in the coming days.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
CALDERWOOD & HARKNESS LLP
By: ________
Name: Nathaniel Bower
Title: Partner — Mergers & Acquisitions / Corporate Governance
Date: May 19, 2024
Lead Associate: Audrey Zhou Working Associate: Brendan Walsh
VIII. Appendices
Appendix A: Summary of ISS Voting Recommendations by Director Nominee
The following table summarizes the ISS voting recommendations for each nominee standing for election at the AGMG 2024 Annual General Meeting:
Appendix B: Updated Shareholder Base Analysis
The following table presents the top shareholders by share ownership, together with their known or projected voting tendencies and estimated ISS-follow rates. Share counts are based on the shareholder register as of the record date. Projected votes under each scenario are detailed in the working model attached as Appendix C.
Note: Rankings 7–20 include numerous institutional holders, each holding between 0.5% and 3.5% of outstanding shares. Detailed position-by-position analysis is maintained in the working model and is available to the Board upon request.
Appendix C: Vote Projection Model — Detailed Assumptions
Turnout Assumption: 85% of outstanding shares, or approximately 350,710,000 shares voting. This assumption is consistent with AGMG's historical AGM turnout and with the 85.3% turnout (approximately 351,280,400 shares) achieved at the June 9, 2023 AGM. Contested elections tend to produce modestly higher turnout than uncontested elections, but retail participation remains a limiting factor.
ISS Follow-Rate Assumptions by Institutional Category:
Sensitivity Analysis on Key Swing Holders:
The two most significant swing holders are Ridgeway Asset Management (5.1%) and Thorne Capital Management (6.3%). Together, they represent 11.4% of outstanding shares, or approximately 13.4% of projected voting shares.
• If both Ridgeway and Thorne vote in line with ISS (FOR Trask and Chu; AGAINST Loring, Kessler, Pemberton, Delgado-Ríos), the projected vote FOR Trask rises to ~67–70% and the projected vote FOR Kessler falls to ~42–44%.
• If Ridgeway breaks from ISS and votes FOR the full incumbent slate (a scenario we consider unlikely but possible), the projected vote FOR Trask declines by approximately 3–4 percentage points but remains well above the plurality threshold.
• If Thorne breaks from ISS (also unlikely given its historical ISS-follow pattern), the impact on