PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP
787 Seventh Avenue New York, New York 10019
25 Bishopsgate London EC2N 3AR, United Kingdom
April 28, 2024
MEMORANDUM
TO: The Board of Directors of Aurelius Global Media Group PLC
Attention: Dame Elspeth Greenvale, Independent Non-Executive Chair
Nadine Khalil, General Counsel & Corporate Secretary
FROM: Calderwood & Harkness LLP Nathaniel Bower, Partner Colette Whitman, Partner Audrey Zhou, Counsel Brendan Walsh, Associate
RE: Proxy Contest Defense Strategies — 2024 Annual General Meeting (June 7, 2024)
MATTER NO.: 1017-00002
This memorandum is a privileged and confidential attorney-client communication and attorney work product. It is intended solely for the Board of Directors of Aurelius Global Media Group PLC and its designated advisors. This memorandum should not be disclosed to any third party without the prior written consent of Calderwood & Harkness LLP. Disclosure to any third party may constitute a waiver of the attorney-client privilege and/or work product protection.
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I. Executive Summary
The purpose of this memorandum is to provide the Board of Directors of Aurelius Global Media Group PLC ("AGMG" or the "Company") with a comprehensive analysis of the defensive strategies available in connection with the contested director election at the Company's 2024 Annual General Meeting (the "AGM"), currently scheduled for June 7, 2024. This memorandum assesses the Company's current position in the proxy contest, models a range of voting outcome scenarios, identifies the key swing constituencies within the shareholder base, evaluates potential courses of action — both offensive and defensive — and provides our preliminary assessment of settlement considerations. The Board should read this memorandum in conjunction with the companion memoranda identified below.
Context. On March 1, 2024, Corvus Peak Capital Partners LP ("Corvus Peak"), which holds approximately 8.7% of the Company's outstanding ordinary shares (approximately 35,896,200 shares of 412,600,000 shares outstanding), submitted nominations for three director candidates in connection with the 2024 AGM. Corvus Peak subsequently filed a definitive proxy statement seeking the election of its three nominees — Malcolm Trask, Vanessa Loring, and Dr. Raymond Chu — in opposition to three incumbent directors nominated by the Board: Tobias Kessler, Hugh Pemberton, and Sofia Delgado-Ríos. Corvus Peak filed its preliminary proxy statement on Schedule 14A with the U.S. Securities and Exchange Commission (the "SEC") on April 1, 2024. AGMG filed its preliminary proxy statement on April 5, 2024. Definitive proxy filings by both parties are expected in early May 2024.
This proxy contest occurs against the backdrop of a CEO succession process that is underway following the resignation of Marcus Vane as Chief Executive Officer on March 8, 2024. Priya Nair-Whitfield, the Company's Chief Operating Officer, has been serving as Interim Chief Executive Officer since Mr. Vane's departure. A Special Committee of the Board, chaired by Tobias Kessler and consisting of independent directors Nora Farrow-Grant and Thomas Llewellyn, is overseeing the CEO search process. The Special Committee has retained Hargrove Tate Partners LLC, a nationally recognized executive search firm led by Christine Aldridge, to conduct the search. Hargrove Tate was formally engaged on March 15, 2024.
Overall Assessment. Based on our analysis of the shareholder base, predicted proxy advisory firm recommendations, vote projection modeling, and review of comparable contested elections in the media and entertainment sector, Calderwood & Harkness's overall assessment is as follows: the Board faces a challenging but not unwinnable proxy fight. However, the probability of losing one or more seats is significant, and we estimate the most likely outcome is that at least two of the three Corvus Peak nominees will be elected. Accordingly, we recommend that the Board simultaneously pursue a vigorous defense through enhanced shareholder engagement and proxy solicitation while also preparing for potential settlement scenarios that could preserve greater Board influence over the composition and terms of any reconstitution.
Companion Memoranda. This memorandum should be read in conjunction with the following companion memoranda previously delivered or forthcoming from Calderwood & Harkness:
• Board Fiduciary Duties in the Context of a Contested Election (March 25, 2024)
• Defensive Measures Available to the Board (April 12, 2024)
• Shareholder Rights Plan (Poison Pill) Analysis and Recommendation (April 8, 2024)
• Interim CEO Fiduciary Considerations and Special Committee Governance (March 28, 2024)
Each of these memoranda addresses a discrete legal or strategic issue that intersects with the overall proxy contest defense analyzed herein. Cross-references to specific companion memoranda are provided throughout this memorandum where relevant.
II. Overview of the Contested Election
A. Procedural Status
Corvus Peak submitted its director nominations on March 1, 2024. The nominations were received within the advance notice window established by Article II, Section 2.11 of the AGMG Amended and Restated Bylaws (effective March 22, 2022), which requires nominations for the 2024 AGM to be delivered no earlier than February 10, 2024 and no later than March 11, 2024. Calderwood & Harkness conducted a detailed advance notice bylaw compliance review and confirmed in our memorandum dated March 5, 2024 that the Corvus Peak nominations are timely and procedurally compliant in all material respects. Accordingly, we do not recommend any challenge to the timeliness or form of the nominations.
Voting Standard. Under Article II, Section 2.10 of the Bylaws, AGMG employs a majority-of-votes-cast standard for the election of directors in uncontested elections. However, the Bylaws provide that where the number of nominees exceeds the number of directors to be elected — i.e., in a contested election — the voting standard reverts to a plurality standard. Because Corvus Peak has nominated three candidates for the three seats also being contested by the Board's incumbent nominees, the 2024 AGM will proceed under a plurality voting standard. Under plurality voting, the three candidates receiving the highest number of affirmative votes will be elected, regardless of whether any candidate receives a majority of the votes cast. This standard has important tactical implications: it means that shareholders cannot effectively "split" their votes between management and activist nominees for the same seats. Each share may be voted in favor of up to the number of directors to be elected (three), and the six candidates (three management, three activist) compete in a single pool.
Board Declassification. The Board declassified in 2021, meaning that all directors now stand for annual election. This is significant because all Board seats, not merely a subset, are technically at stake at the 2024 AGM. However, only three seats are being actively contested by Corvus Peak, and the remaining incumbent directors are running unopposed. The declassification, while adopted as a governance reform, has the practical consequence of eliminating staggered terms that might otherwise have provided a structural defense against activist campaigns.
Forum Selection Clause. Section 11.1 of the Bylaws designates the Court of Chancery of the State of Delaware as the exclusive forum for intra-corporate disputes, including claims arising under the Delaware General Corporation Law (the "DGCL"), the Company's Certificate of Incorporation, or the Bylaws. Any litigation arising from the proxy contest — including potential challenges to Board actions, bylaw interpretation disputes, or Section 220 enforcement actions — would be brought before the Delaware Court of Chancery. This is a favorable forum for the Company, as the Delaware courts have extensive experience adjudicating proxy contest disputes and have developed a well-established body of precedent governing director elections and defensive measures.
Incorporation and Listing. AGMG is incorporated in the State of Delaware (Certificate of Incorporation originally filed September 14, 2009; Delaware File Number 4827193). The Company is registered as an overseas company in England and Wales. AGMG's ordinary shares are dual-listed on the New York Stock Exchange (ticker: AGMG) and the London Stock Exchange Main Market, premium segment (ticker: AGMG.L). The dual listing subjects the Company to both SEC and FCA regulatory regimes, a consideration that permeates several aspects of the proxy contest strategy discussed in this memorandum.
B. Corvus Peak's Campaign Platform
Corvus Peak first communicated its demands to the Board in a letter dated February 12, 2024, which was subsequently filed as an exhibit to Corvus Peak's amended Schedule 13D. The letter set forth three principal demands:
(i) The appointment of two new independent directors with relevant media and technology industry experience, to be nominated by Corvus Peak subject to Board approval;
(ii) A comprehensive strategic review of the Company's business segments, capital allocation, and potential strategic alternatives, including asset dispositions and partnerships; and
(iii) A formal, transparent CEO succession plan that includes a commitment to an externally oriented, board-led search process and that does not presume the appointment of any internal candidate.
The Board responded to the February 12 letter on February 19, 2024, acknowledging the correspondence and noting that the Board was already engaged in a CEO succession process and would consider Corvus Peak's views. Corvus Peak characterized this response as "inadequate and dismissive" in a subsequent public letter dated February 26, 2024, and announced its intention to nominate a full slate of three director candidates.
Activist Narrative. Corvus Peak's campaign rests on a core narrative that the Board has been slow to address the CEO succession, has presided over a period of meaningful financial underperformance relative to sector peers, and that the Board's decision to designate Priya Nair-Whitfield as Interim CEO represents, in Corvus Peak's words, a "predetermined outcome" that signals the Board's intention to install Ms. Nair-Whitfield as permanent CEO without conducting a genuinely open search. This characterization appeared prominently in Corvus Peak's public letter to shareholders dated April 15, 2024.
Corvus Peak's proxy materials argue that AGMG's Streaming & Digital Content segment, which represents approximately 42% of the Company's $4.37 billion in total revenue (or approximately $1,835.4 million), has underperformed comparable peers in terms of subscriber growth, content return on investment, and margin expansion. The materials further assert that the Company's consolidated EBITDA margin of approximately 18.6% (approximately $812 million on $4.37 billion in revenue) trails media industry medians, which Corvus Peak cites as approximately 22-24% for companies of comparable scale and business mix.
Corvus Peak's Nominees. Corvus Peak has nominated the following three candidates:
• Malcolm Trask (age 58): Former Chief Executive Officer of Archway Digital Holdings Inc., a digital media company with approximately $1.8 billion in annual revenue at the time of his tenure. Mr. Trask served as CEO of Archway Digital from 2015 to 2022 and is credited with leading the company's digital transformation. He currently serves on the boards of two private technology companies.
• Vanessa Loring (age 44): Managing Director at Corvus Peak Capital Partners LP, where she has served since 2018. Ms. Loring leads Corvus Peak's media and telecommunications investment practice and has been the primary portfolio manager responsible for the Corvus Peak position in AGMG. She holds an MBA from the Wharton School and previously worked as a media industry equity analyst at Aldwych Partners.
• Dr. Raymond Chu (age 61): Former President of Helix Media Networks Inc., a cable and digital media company. Dr. Chu served in various executive capacities at Helix Media from 2008 to 2021. He holds a Ph.D. in Electrical Engineering from Stanford University and has extensive experience in media technology and network infrastructure.
Stake Accumulation. Corvus Peak's position in AGMG has grown rapidly. At the time of its initial Schedule 13D filing on January 18, 2024, Corvus Peak disclosed a 6.1% ownership stake. In its amended Schedule 13D filed February 26, 2024, Corvus Peak disclosed that it had increased its position to approximately 8.7%, or 35,896,200 shares, at an average cost basis of approximately $20.97 per share, representing a total investment of approximately $752.8 million. Corvus Peak's total assets under management are approximately $7.2 billion, making the AGMG position one of the largest single-name positions in its portfolio as a percentage of fund capital. The speed and magnitude of this stake accumulation underscores the seriousness of Corvus Peak's engagement and its commitment to this campaign.
Corvus Peak's Advisors. Corvus Peak has retained Falconer Strauss LLC as its proxy solicitor. The engagement is led by Derek Huang, a Partner at Falconer Strauss with extensive experience in contested director elections. Falconer Strauss is widely regarded as one of the premier proxy solicitation firms serving activist investors. Its involvement signals that Corvus Peak is prepared to wage a well-funded and professionally managed campaign.
C. Board's Defense Platform
The Board's defense rests on the following key messages, which have been refined in consultation with Calderwood & Harkness, Citrine Advisory Group, and the Company's communications team:
(i) Orderly Succession Process. The CEO search is already underway and is being conducted by an independent Special Committee (Kessler, Farrow-Grant, Llewellyn) with the assistance of Hargrove Tate Partners LLC, a best-in-class executive search firm retained on March 15, 2024 and led by Christine Aldridge. The search is genuinely open and is considering both internal and external candidates. The designation of Ms. Nair-Whitfield as Interim CEO was a procedural necessity to ensure continuity of leadership, not a signal of a predetermined outcome.
(ii) Board Expertise and Track Record. The Board possesses deep industry expertise and has overseen significant value creation over the past several years, including the launch of the Luminos streaming platform in 2019, the Company's pivot to e-commerce and direct-to-consumer distribution, and the diversification of revenue streams across four business segments. The Company's share price has appreciated over the medium term, and the Board's strategic decisions have positioned the Company for continued growth.
(iii) Nominee Independence Concerns. Corvus Peak's nominees are not truly independent. Vanessa Loring is a current employee of Corvus Peak (Managing Director), which raises fundamental questions about her ability to serve as an independent director. Moreover, the known relationship between Jonathan Hale — an external candidate who has been publicly discussed as a potential CEO — and Damien Solberg, Corvus Peak's Founding Partner and Chief Investment Officer (the two served together on the board of Keystone Digital Ventures Ltd.), raises concerns about whether Corvus Peak has a preferred CEO candidate and whether board reconstitution is intended to facilitate the installation of that candidate.
(iv) Disruption Risk. Reconstituting the Board at this critical juncture would disrupt the ongoing CEO search process, create operational uncertainty, and potentially delay the appointment of a permanent CEO by six months or more.
AGMG's Advisors. The Company has assembled a comprehensive advisory team:
• Proxy Solicitor: Citrine Advisory Group Inc., led by Sandra Eriksson, Managing Director. Citrine was engaged on February 28, 2024, and is responsible for shareholder identification, vote tracking, proxy solicitation logistics, and coordination of the retail and institutional outreach campaigns.
• Financial Advisor: Stonebridge Crane & Co., led by Anil Kapoor-Mehta. Stonebridge Crane was engaged by the Board on April 22, 2024 to advise on strategic alternatives, including potential asset dispositions, partnerships, and other value-enhancing transactions. The engagement terms include a monthly retainer of $250,000 and a transaction fee of 0.25% of enterprise value in the event a transaction is consummated.
• Standing Outside Counsel: Ashworth Velmoran LLP, led by Martin Cho. Ashworth Velmoran has served as the Company's primary outside counsel for corporate matters. Corvus Peak has characterized Ashworth Velmoran as "management-aligned," which was one of the factors precipitating Calderwood & Harkness's engagement as independent governance counsel to the Board.
• Independent Governance Counsel: Calderwood & Harkness LLP (this firm), engaged to provide independent advice to the Board on proxy contest strategy, fiduciary duties, settlement negotiations, and governance matters.
III. Shareholder Base Analysis
A. Ownership Composition
A thorough understanding of AGMG's shareholder base is critical to the development and execution of an effective defense strategy. Based on the most recent SEC filings, shareholder identification data provided by Citrine Advisory Group, and publicly available ownership disclosures, the following is a summary of AGMG's major shareholders:
Total Shares Outstanding: 412,600,000
The top five disclosed holders collectively represent approximately 27.7% of shares outstanding (Corvus Peak 8.7% + Thorne Capital 6.3% + Ridgeway 5.1% + Windermere 4.4% + Insiders 3.2%). It is important to note that Hugh Pemberton, one of the three contested incumbent directors and a co-founder of the Company, personally holds approximately 2.1% of shares outstanding (approximately 8,664,600 shares), which represents the vast majority of the insider ownership position. Mr. Pemberton's shares will be voted in favor of the incumbent slate.
The remaining institutional ownership — estimated at 50-55% of shares outstanding — is composed primarily of large index funds (including those managed by major passive investment complexes), diversified mutual funds, and smaller active managers. These institutional holders, together with the identified swing voters, will determine the outcome of the contested election.
Retail shareholders are estimated to represent approximately 18-22% of shares outstanding. While retail participation rates in proxy contests are typically lower than institutional participation, the absolute number of retail shares is meaningful, and aggressive outreach to this constituency can make a material difference in a close election.
B. Voting Tendencies and Key Swing Voters
1. Corvus Peak Capital Partners LP (8.7%)
Corvus Peak will vote its 35,896,200 shares FOR its own nominees (Trask, Loring, and Chu) and will vote AGAINST or WITHHOLD on the three contested incumbent directors (Kessler, Pemberton, and Delgado-Ríos). This is a locked vote that is not subject to persuasion. Corvus Peak has a strong track record in activist campaigns and is running a well-resourced, professionally managed contest. There is no realistic possibility of splitting Corvus Peak's vote.
2. Thorne Capital Management LP (6.3%)
Thorne Capital Management is a passive long-only fund based in Boston, Massachusetts. The fund is managed by Oliver Thorne, who has historically maintained a low public profile in governance disputes. Thorne Capital's voting history indicates a pattern of generally voting with management in contested elections, but with a strong tendency to follow ISS recommendations when ISS takes a clear position on a contested slate.
Calderwood & Harkness Assessment: Thorne Capital is a likely swing voter. In the absence of an adverse ISS recommendation, Thorne Capital is probable to vote with management. However, if ISS recommends in favor of Corvus Peak nominees, we assess that Thorne Capital is likely to follow the ISS recommendation. This makes Thorne Capital's 6.3% (25,993,800 shares) a critically important constituency.
Outreach Recommendation: We recommend direct engagement by Dame Greenvale (as Independent Non-Executive Chair) and Garrett Voss (as Chief Financial Officer) with Oliver Thorne at the earliest practicable date. The engagement should emphasize the integrity and independence of the CEO search process, the Special Committee's composition and mandate, and the Board's governance reforms (including declassification). Citrine Advisory Group should coordinate scheduling and provide background materials.
3. Ridgeway Asset Management Ltd. (5.1%)
Ridgeway Asset Management is a traditional asset manager based in London, United Kingdom. The firm's Head of Governance, Fiona Ashcroft, has a reputation for independent governance analysis and does not automatically follow U.S. proxy advisory firm recommendations. Ridgeway applies the principles of the UK Stewardship Code to its governance assessments and may bring a somewhat different analytical framework to the contested election than U.S.-based institutional holders.
Calderwood & Harkness Assessment: Ridgeway is a potential swing voter. Ms. Ashcroft's governance philosophy is generally supportive of board refreshment, particularly where financial performance has lagged and board tenure is long. We assess that Ridgeway may support a partial Corvus Peak slate — i.e., vote in favor of one or two Corvus Peak nominees while retaining support for one or two of the incumbent directors. This "split the ticket" approach is consistent with Ridgeway's historical voting patterns in comparable situations.
Outreach Recommendation: We recommend leveraging Calderwood & Harkness's London office at 25 Bishopsgate for an in-person engagement with Fiona Ashcroft. Engagement should emphasize the dual-listed governance considerations, the Board's compliance with both U.S. and UK governance standards, and the FCA Disclosure Guidance and Transparency Rules (DTR 5) implications. Ms. Ashcroft may also be receptive to arguments regarding the importance of board continuity during the CEO search process.
4. Windermere Pension Trust (4.4%)
Windermere Pension Trust is a U.S. public pension fund with a governance-focused investment philosophy. The fund's Chief Investment Officer, Bernard Napier, is known to be sympathetic to activist campaigns at companies that have experienced sustained underperformance. Windermere has historically supported activist nominees in contested elections where both ISS and Tarrant Partners LLC have recommended in favor of the activist slate.
Calderwood & Harkness Assessment: Windermere is at meaningful risk of supporting the Corvus Peak slate. If ISS and/or Tarrant Partners LLC recommend FOR Corvus Peak nominees, we assess that Windermere is likely to follow those recommendations. However, if the Board can present a compelling strategic narrative — particularly around the streaming platform trajectory and the strategic alternatives review — there may be an opportunity to retain Windermere's support for at least a portion of the incumbent slate.
Outreach Recommendation: Early and direct engagement is critical. We recommend that Dame Greenvale and Garrett Voss engage with Bernard Napier no later than mid-May 2024. The engagement should emphasize the Company's long-term value creation strategy, the Luminos streaming platform's growth trajectory, and the Board's decision to engage Stonebridge Crane for a strategic alternatives review. If possible, the Board should also provide Windermere with a concrete timeline for the CEO search, including expected completion milestones.
5. Index Funds and Passive Holders (estimated 25-30%)
The largest single bloc of shares is held by index funds and other passive investment vehicles. These holders — including the major global index fund complexes — tend to follow ISS and/or Tarrant Partners LLC recommendations, particularly in contested elections where the fund's governance team does not have the resources to conduct independent analysis of every proxy contest. In our experience, adherence to proxy advisory firm recommendations among passive holders ranges from approximately 70-90% in contested elections of this nature.
This bloc is crucial. If both ISS and Tarrant Partners LLC recommend FOR the Corvus Peak nominees, the passive fund bloc will shift decisively toward the activist side, making it extraordinarily difficult for management to prevail. Conversely, if one or both advisory firms support the incumbent slate, the passive funds provide a substantial base of management support.
Traditional investor outreach — i.e., phone calls and presentations by Company management — is generally ineffective with passive fund complexes, which rely on their centralized governance teams and external advisory firm recommendations. Accordingly, the most effective way to influence this bloc is through the written submissions to ISS and Tarrant Partners LLC discussed in Section IV.C below.
6. Retail Shareholders (estimated 18-22%)
Retail shareholders are estimated to hold approximately 18-22% of AGMG's outstanding shares. In contested elections at NYSE-listed companies of AGMG's size, retail voting participation rates typically range from 40-50%, which is meaningfully lower than institutional participation rates (which typically exceed 90%). However, the retail bloc is important for two reasons. First, in a close election, every marginal vote matters, and the absolute number of retail shares is substantial. Second, retail shareholders who do vote in contested elections are statistically more likely to return the management proxy card than the activist's card, provided they are reached by the proxy solicitor.
Citrine Advisory Group's multi-channel retail solicitation campaign — including telephone outreach, direct mail, and digital advertising — is critical to maximizing the retail vote. The cost estimates for this enhanced campaign are discussed in Section VI.A.2 below.
7. Management & Board Insiders (3.2%)
Management and Board insiders collectively hold approximately 3.2% of outstanding shares (approximately 13,203,200 shares). These shares will be voted in favor of the incumbent slate and represent a reliable base of management support. Hugh Pemberton's personal holding of approximately 2.1% (8,664,600 shares) is the most significant component of this bloc. It is noteworthy that Mr. Pemberton is one of the three contested incumbent directors; his personal stake gives him a meaningful economic interest in the outcome independent of his Board position.
C. Estimated Share Distribution by Voting Bloc
Based on the foregoing analysis, we have segmented the shareholder base into four voting blocs for the purpose of our vote projection model:
Typical contested election turnout at NYSE-listed companies of this size and institutional ownership profile is approximately 80-90%. We have used a base assumption of 85% turnout, which corresponds to approximately 350,710,000 shares voted. This assumption is consistent with turnout rates observed in the comparable contested elections summarized in Appendix C.
The critical takeaway from this analysis is that the swing/undecided bloc — driven primarily by ISS and Tarrant Partners LLC recommendations — will determine the election outcome. Management's core loyal base is insufficient to win the election without substantial support from the swing constituency.
IV. Proxy Advisory Firm Analysis
A. ISS
1. Applicable Policies
ISS evaluates contested director elections under a multi-factor framework that considers: (i) the relative long-term and short-term performance of the company as compared to appropriate peer groups and sector benchmarks; (ii) the quality and composition of the competing slates of nominees; (iii) the responsiveness of the incumbent board to shareholder concerns and governance best practices; and (iv) the credibility and specificity of the competing strategic plans. ISS does not apply a formulaic test but rather conducts a holistic assessment of these factors.
With respect to board refreshment, ISS has generally been supportive of adding new perspectives to boards, particularly where the average board tenure is long, the board's composition has been relatively static, and the company's financial performance has lagged sector peers. AGMG's Board has an average director tenure of approximately 8.4 years, which is above the ISS-identified median for S&P 500 companies and may draw scrutiny.
On the CEO succession issue, ISS may view the Board's immediate appointment of Priya Nair-Whitfield as Interim CEO as potentially limiting the search process and creating a perception of insider favoritism, notwithstanding the procedural rationale for the appointment. ISS has historically given weight to activist arguments that boards have failed to conduct genuinely open CEO searches, and Corvus Peak's "predetermined outcome" narrative aligns with this concern.
2. Predicted ISS Recommendation
Based on our analysis of ISS's framework and its historical recommendations in comparable media-sector proxy contests, Calderwood & Harkness assesses that ISS is likely to recommend FOR at least two of the three Corvus Peak nominees.
This assessment is driven by several factors:
• AGMG's consolidated EBITDA margin of 18.6% trails sector medians cited by ISS in comparable recommendations (typically 22-24% for diversified media companies of comparable scale);
• The Streaming & Digital Content segment's subscriber growth rate has lagged major peers, and ISS has been attentive to streaming-related underperformance in recent contested elections in the media sector;
• The perception of a predetermined outcome on CEO succession, driven by the Interim CEO designation of Ms. Nair-Whitfield, aligns with ISS concerns about board responsiveness;
• The average tenure of AGMG's Board exceeds ISS benchmarks, supporting the board refreshment narrative; and
• Corvus Peak's nominees — particularly Mr. Trask and Dr. Chu — bring credible and relevant industry experience that ISS is likely to view favorably.
ISS may, however, distinguish among the Corvus Peak nominees. In particular:
• Malcolm Trask has strong credentials as the former CEO of Archway Digital Holdings Inc. and brings directly relevant digital media experience. We assess that ISS is highly likely to recommend FOR Mr. Trask.
• Dr. Raymond Chu has credible media industry experience as the former President of Helix Media Networks Inc. We assess that ISS is likely to recommend FOR Dr. Chu, though with somewhat less certainty than for Mr. Trask.
• Vanessa Loring is a current employee of Corvus Peak (Managing Director), which raises independence concerns under ISS's nominee evaluation framework. ISS has historically been skeptical of activist employees serving on company boards, viewing such nominees as potentially serving as conduits for the activist's economic interests rather than as truly independent directors. We assess that ISS may decline to recommend FOR Ms. Loring on independence grounds.
Most Probable ISS Outcome: ISS recommends FOR two of three Corvus Peak nominees (Trask and Chu) and AGAINST Loring.
3. Strategic Implications
If ISS recommends FOR two Corvus Peak nominees, a significant portion of institutional shareholders will follow that recommendation. Based on our analysis of ISS influence among AGMG's shareholder base, we estimate that an ISS recommendation in favor of Corvus Peak nominees would shift approximately 15-20% of total shares voted toward the activist side. This shift would be driven primarily by index funds and passive holders, as well as governance-oriented active managers such as Thorne Capital.
If ISS were to recommend FOR all three Corvus Peak nominees — which we assess as less likely but possible — the proxy fight would become extremely difficult for management to win. In that scenario, the combined weight of ISS influence, Tarrant Partners LLC influence (discussed below), and the activist's own share position would likely produce majority support for all three Corvus Peak nominees.
B. Tarrant Partners LLC
1. Applicable Policies
Tarrant Partners LLC's framework for evaluating contested director elections overlaps with ISS's in many respects but differs in several important ways. Tarrant Partners LLC tends to be more aggressive than ISS in supporting board refreshment and activist nominees in contested elections. The firm places significant weight on total shareholder return analysis relative to peers and sector benchmarks and gives comparatively less credit to management's assertions that "plans are in progress" — i.e., Tarrant Partners LLC tends to evaluate the Board's track record based on results rather than intentions.
Tarrant Partners LLC also has a strong focus on board independence but applies a somewhat different analytical framework to the question of activist-affiliated nominees. In particular, Tarrant Partners LLC has historically been more willing than ISS to recommend in favor of activist employees serving as director nominees, provided the nominee has relevant industry experience and the activist's concerns about the target company have a reasonable factual basis. Accordingly, we expect that Vanessa Loring's status as a Corvus Peak employee may receive less scrutiny from Tarrant Partners LLC than from ISS.
2. Predicted Tarrant Partners LLC Recommendation
Based on our analysis, Calderwood & Harkness assesses that Tarrant Partners LLC is more likely than ISS to recommend FOR all three Corvus Peak nominees.
Tarrant Partners LLC is likely to view the entire Corvus Peak slate as warranted board refreshment given the underperformance narrative, the contested CEO succession process, and the Board's average tenure. Tarrant Partners LLC's emphasis on total shareholder return analysis, combined with its generally more activist-friendly posture, suggests that the firm will view the case for board-level change as compelling.
Most Probable Tarrant Partners LLC Outcome: Tarrant Partners LLC recommends FOR all three Corvus Peak nominees (Trask, Loring, and Chu).
3. Strategic Implications
A combined ISS and Tarrant Partners LLC recommendation in favor of some or all of the Corvus Peak nominees would make management's position very difficult to sustain. We estimate that approximately 30-40% of shares voted in a contested election at a company of AGMG's size and institutional ownership profile follow one or both proxy advisory firms' recommendations. When both firms agree on a recommendation — as they are likely to do with respect to at least Trask and Chu — the influence is at the higher end of that range.
The divergence between ISS and Tarrant Partners LLC on Loring may create an opening for management. If ISS recommends against Loring while Tarrant Partners LLC recommends in her favor, the management team can emphasize the independence concerns in its supplemental proxy materials and may be able to peel off enough votes to defeat Loring even if Trask and Chu are elected. This "partial defense" strategy is discussed further in Section VI below.
C. Counter-Messaging Strategy for Proxy Advisory Firms
Calderwood & Harkness recommends that AGMG prepare detailed written submissions to both ISS and Tarrant Partners LLC. These submissions are a critical component of the defense strategy, as they represent the most effective mechanism for influencing the proxy advisory firms' recommendations and, through those recommendations, the votes of index funds and other passive holders.
The submissions should emphasize the following key points:
(i) CEO Search Integrity. The CEO search is genuinely open and is being conducted by an independent Special Committee composed entirely of independent directors (Kessler, Farrow-Grant, Llewellyn), with the assistance of a nationally recognized, independent search firm (Hargrove Tate Partners LLC, led by Christine Aldridge). The search is considering both internal and external candidates, and no predetermined outcome exists. Ms. Nair-Whitfield's Interim CEO designation was a procedural necessity required to ensure continuity of operations following Mr. Vane's unexpected resignation; it does not reflect a substantive decision about the permanent CEO role.
(ii) Interim CEO Designation. The Board's decision to designate Ms. Nair-Whitfield as Interim CEO was consistent with best practices for crisis management and leadership continuity. Ms. Nair-Whitfield was the most senior operational executive in the Company and was the logical choice to maintain day-to-day operations while the Special Committee conducts a thorough search. The Board can provide to ISS and Tarrant Partners LLC details regarding the search process timeline and the number and caliber of candidates being considered, without compromising the confidentiality of specific candidate identities.
(iii) Corvus Peak's Relationship with Jonathan Hale. The known relationship between Jonathan Hale, an external candidate whose name has been publicly discussed in connection with the CEO search, and Damien Solberg, Corvus Peak's Founding Partner and Chief Investment Officer — the two served together on the board of Keystone Digital Ventures Ltd. — raises significant concerns about Corvus Peak's true agenda. If Corvus Peak has a preferred CEO candidate, its demand for an "open" search process is disingenuous, and the board reconstitution may be intended to facilitate the installation of that candidate rather than to improve governance.
(iv) Board Governance Reforms. The Board has demonstrated governance responsiveness through concrete actions, including the declassification of the Board in 2021, the adoption of an independent chair structure, and the formation of an independent Special Committee to oversee the CEO search. These actions undermine the narrative that the Board is unresponsive to shareholder concerns.
(v) Strategic Alternatives Review. The Board has engaged Stonebridge Crane & Co. to conduct a comprehensive strategic alternatives review, signaling the Board's willingness to explore all value-maximizing opportunities for shareholders. This engagement is a direct and substantive response to Corvus Peak's demand for a strategic review.
The submissions to ISS and Tarrant Partners LLC should be filed no later than ten business days before the respective firms' deadlines for issuing recommendations in contested elections. Based on the June 7, 2024 AGM date, we expect ISS and Tarrant Partners LLC to issue their recommendations on or about May 20-24, 2024, which means submissions should be finalized and delivered by approximately May 8-12, 2024. Calderwood & Harkness will coordinate closely with Citrine Advisory Group on messaging, data presentation, and the preparation of any supplemental proxy materials that support the submissions.
V. Vote Projection Scenarios
A. Methodology
Calderwood & Harkness has developed a vote projection model based on the following inputs: (i) the shareholder base segmentation described in Section III; (ii) estimated ISS and Tarrant Partners LLC influence coefficients derived from historical data on institutional voting patterns; (iii) historical voting patterns in comparable media-sector proxy contests (summarized in Appendix C); and (iv) turnout assumptions based on contested election data for NYSE-listed companies of comparable market capitalization and institutional ownership profile.
Our base assumption is 85% turnout, corresponding to approximately 350,710,000 shares voted. This is consistent with the median turnout observed in the twelve comparable contested elections we analyzed (range: 79.3% to 91.7%; median: 84.8%). Minor variations in turnout within this range do not materially alter the relative outcomes.
The model assigns each identified shareholder bloc a probability distribution for voting in favor of each candidate under each scenario. The scenarios vary based on the assumed ISS and Tarrant Partners LLC recommendations, which are the single most influential variable in the model. The detailed assumptions and calculations for each scenario are set forth in Appendix B.
B. Scenario 1: Management Best Case (ISS Recommends 0 Corvus Nominees)
Assumptions: Both ISS and Tarrant Partners LLC recommend the full incumbent slate and against all three Corvus Peak nominees. Windermere Pension Trust remains neutral or supports management. Thorne Capital follows ISS and votes with management. Ridgeway supports management. Index and passive funds follow advisory firm recommendations and support incumbents. Retail participation rate is 45%, with 65% of voting retail shares returning the management proxy card.
Projected Result: All three incumbent directors — Kessler, Pemberton, and Delgado-Ríos — retain their seats. Corvus Peak nominees receive approximately 35-42% of votes cast, falling short of the plurality threshold.
Probability Assessment: Low. We estimate a 10-15% probability that both ISS and Tarrant Partners LLC will recommend the full incumbent slate. As discussed in Section IV, the Company's underperformance metrics, average board tenure, and CEO succession dynamics make it unlikely that both advisory firms will support management across the board.
C. Scenario 2: Mixed Outcome (ISS Recommends 2, Tarrant Partners LLC Recommends 2-3)
Assumptions: ISS recommends FOR Trask and Chu but AGAINST Loring. Tarrant Partners LLC recommends FOR all three Corvus Peak nominees. Thorne Capital follows ISS and votes for Trask and Chu but retains support for some incumbents. Windermere follows Tarrant Partners LLC and votes for all three Corvus nominees. Ridgeway splits support (votes for Trask and one incumbent, or for Trask and Chu and one incumbent). Index and passive funds generally follow advisory firm recommendations, with a blend reflecting the ISS/Tarrant Partners LLC divergence. Retail participation rate is 45%, with 60% of voting retail shares returning the management proxy card.
Projected Result: This is the most likely scenario and produces a mixed outcome in which the election is closely contested for several seats:
Under this scenario, Trask and Chu are elected with comfortable margins. The contest for the third seat is between Loring, Kessler, Delgado-Ríos, and Pemberton. Loring benefits from Tarrant Partners LLC's recommendation and Corvus Peak's organized solicitation but is hampered by ISS's withhold recommendation. Among the incumbents, Kessler has the strongest chance of survival as Special Committee Chair, while Pemberton — despite his substantial personal shareholding — is the most vulnerable due to his co-founder status and the narrative that he represents the "old guard" on the Board. Delgado-Ríos occupies an intermediate position.
Probability Assessment: Moderate-High. We estimate a 40-50% probability that this general pattern materializes. The precise vote margins will depend on the specific tone and reasoning of the ISS and Tarrant Partners LLC recommendations, the effectiveness of the Company's institutional outreach, and retail turnout.
D. Scenario 3: Activist Sweep (ISS and Tarrant Partners LLC Recommend All 3)
Assumptions: Both ISS and Tarrant Partners LLC recommend FOR all three Corvus Peak nominees and AGAINST all three contested incumbents. Windermere publicly supports the Corvus Peak slate. Thorne Capital follows ISS and votes for all three Corvus nominees. Ridgeway votes for all three Corvus nominees. Index and passive funds overwhelmingly follow the unanimous advisory firm recommendations. Retail participation rate is 45%, with 55% of voting retail shares returning the management proxy card (management's retail advantage diminishes when advisory firms unanimously oppose the incumbent slate).
Projected Result: All three Corvus Peak nominees are elected with substantial margins:
Probability Assessment: Moderate. We estimate a 30-35% probability that both ISS and Tarrant Partners LLC will recommend the full Corvus Peak slate. This probability is driven primarily by the risk that Tarrant Partners LLC recommends all three (which we view as likely) and that ISS also recommends Loring despite the independence concerns (which we view as possible but not probable).
E. Scenario 4: Partial Settlement (Board Concedes 1-2 Seats Pre-Meeting)
Assumptions: The Board enters into a negotiated cooperation agreement with Corvus Peak prior to the AGM. Under this scenario, one or two Corvus Peak nominees are seated by mutual consent (most likely Trask and possibly Chu), and the remaining election proceeds on an uncontested basis. The terms of the cooperation agreement may include standstill provisions, governance commitments, mutual non-disparagement, and agreed-upon modifications to the CEO search process (e.g., a Corvus Peak observer or committee participant).
Projected Result: The election is converted from a contested to an uncontested election, with the majority-of-votes-cast standard reinstated. The negotiated slate is elected with near-unanimous support. The Board retains influence over the overall composition and avoids the risk of a full activist sweep.
Probability Assessment: This scenario is dependent on the Board's willingness to negotiate and Corvus Peak's willingness to accept a partial victory. Calderwood & Harkness notes that the Board rejected a preliminary settlement concept from Corvus Peak in a discussion on May 10, 2024. However, the dynamics may shift following the release of ISS and Tarrant Partners LLC recommendations, particularly if those recommendations are adverse. Settlement considerations are discussed in greater detail in Section VI.D below.
F. Summary Table
As the summary table illustrates, the combined probability of outcomes in which the Board loses at least two seats (Scenarios 2 and 3) is approximately 70-85%. The probability of a management clean sweep (Scenario 1) is only 10-15%. These projections underscore the importance of simultaneously pursuing vigorous defense and preparing for settlement.
VI. Defensive Strategy Options
A. Proxy Solicitation Campaign — Enhanced Engagement
1. Institutional Shareholder Outreach
The single most important defensive action available to the Board is an aggressive and well-coordinated institutional shareholder outreach program. Calderwood & Harkness recommends that the following individuals lead the engagement effort:
• Dame Elspeth Greenvale, Independent Non-Executive Chair, should lead engagement with the top 10 institutional holders, including Thorne Capital, Ridgeway, and Windermere. Dame Greenvale's stature and independence provide credibility in discussions about governance and Board composition.
• Garrett Voss, Chief Financial Officer, should participate in shareholder meetings to present the Company's financial strategy, streaming platform growth metrics, and capital allocation framework. Mr. Voss can speak with authority to the Company's operational performance and future trajectory.
• Select Independent Directors may be called upon for targeted engagements where a specific director's expertise or background is relevant to a particular shareholder's concerns. For example, if a shareholder raises concerns about the CEO search process, a member of the Special Committee (Kessler, Farrow-Grant, or Llewellyn) may participate in the discussion, subject to appropriate protocols to protect privileged search materials.
Citrine Advisory Group will coordinate scheduling, prepare engagement materials, and manage an outreach tracking database to ensure comprehensive coverage of the top 25 institutional holders (by position size). The engagement calendar should be organized to prioritize the highest-impact swing voters first — specifically, Thorne Capital, Ridgeway, and Windermere — followed by the next tier of active institutional holders.
The messaging in institutional engagements should emphasize the following themes:
• The CEO search process is independent, properly structured, and genuinely open;
• The Special Committee is composed entirely of independent directors and has retained a best-in-class search firm;
• The Board has already demonstrated governance responsiveness through declassification (2021), independent chair structure, and other reforms;
• The strategic alternatives review with Stonebridge Crane signals the Board's proactive approach to value creation; and
• Corvus Peak's nominee independence issues (Loring as an employee; the Hale-Solberg relationship) raise legitimate concerns about the activist's true motivations.
For UK-based holders such as Ridgeway Asset Management, the engagement should also address dual-listed governance considerations, including the Company's compliance with the FCA Disclosure Guidance and Transparency Rules (DTR 5), the UK Stewardship Code, and the Combined Code on Corporate Governance, to the extent applicable to an overseas company with a premium segment listing.
2. Retail Shareholder Campaign
Citrine Advisory Group will deploy a multi-channel retail solicitation campaign designed to maximize voting participation among retail shareholders. The campaign will include:
• Telephone Outreach: Citrine will deploy a team of trained callers to contact retail shareholders directly, encourage them to vote, and assist them in completing and returning the management proxy card. The telephone campaign is the highest-ROI component of retail solicitation and should be prioritized.
• Direct Mail Campaign: Multiple rounds of proxy materials and voting instruction materials will be mailed to retail shareholders. The mailings will include a simplified summary of the Board's key messages, a pre-addressed return envelope, and clear instructions for voting by mail, telephone, or internet.
• Digital Advertising: Targeted digital advertising, including social media and search engine placements, will be deployed to reach retail shareholders who may not respond to traditional mail or telephone solicitation. The digital campaign should be coordinated with the Company's investor relations website, which will host a dedicated proxy contest landing page.
The total cost estimate for the enhanced retail campaign, as provided by Citrine Advisory Group, is approximately $2.8 million to $3.5 million, depending on the number of telephone call attempts, direct mail rounds, and the scope of the digital advertising program. This estimate is within the range of retail solicitation expenditures in comparable contested elections and is a reasonable expense given the significance of the retail vote in the overall election calculus.
3. Supplemental Proxy Materials
Calderwood & Harkness recommends that the Board consider filing supplemental proxy materials with the SEC under Rule 14a-6 to provide shareholders with additional information on the following topics:
(a) CEO search milestones and timeline commitments, including the number of candidates considered, the stage of the search process, and the expected timeline for appointment of a permanent CEO;
(b) Operational improvements achieved under Ms. Nair-Whitfield's leadership as Chief Operating Officer, including specific metrics related to the Luminos streaming platform (subscriber growth, content engagement, customer acquisition costs);
(c) Luminos streaming platform growth metrics, including year-over-year subscriber growth, average revenue per user (ARPU), and content pipeline investment; and
(d) Concerns about Corvus Peak nominee independence, including Vanessa Loring's employment relationship with Corvus Peak and the Hale-Solberg relationship that undermines Corvus Peak's narrative of seeking an "independent" and "open" CEO search process.
Supplemental proxy materials should be filed no later than May 15, 2024 to allow sufficient time for distribution to shareholders and consideration by proxy advisory firms.
B. Messaging Strategy
1. Affirmative Narrative
The Board's affirmative narrative should focus on the Company's transformation story and the Board's track record of strategic value creation. Key elements include:
• Streaming Transformation. The Board oversaw the launch of the Luminos streaming platform in 2019, positioning the Company at the forefront of the industry's shift to direct-to-consumer distribution. Luminos has grown to become a meaningful contributor to the Company's revenue base and subscriber growth trajectory.
• Diversified Revenue Base. AGMG generates $4.37 billion in annual revenue across four business segments, providing diversification and resilience. The Company's e-commerce and digital-first strategy has opened new revenue channels and reduced dependence on traditional advertising.
• CEO Search Integrity. The CEO search is being conducted properly by an independent Special Committee with a best-in-class search firm. The process is on track and will produce a permanent CEO appointment in the coming months. Christine Aldridge of Hargrove Tate Partners is a nationally recognized leader in C-suite executive search and has conducted CEO searches for multiple Fortune 500 companies.
• Governance Reforms. The Board has taken concrete actions to demonstrate governance responsiveness, including declassification in 2021 and the establishment of an independent chair structure. These reforms were adopted proactively, not in response to activist pressure, and demonstrate the Board's commitment to shareholder-aligned governance.
2. Counter-Narrative Against Corvus Peak
The Board should also deploy a targeted counter-narrative that raises legitimate questions about Corvus Peak's motivations and the independence of its nominees:
• Short-Term Orientation. Corvus Peak's rapid stake accumulation — from 6.1% to 8.7% in approximately five weeks (January 18 to February 26, 2024) — suggests a short-term trading orientation rather than a long-term governance commitment. The average cost basis of $20.97 per share implies that Corvus Peak is seeking near-term returns, potentially at the expense of long-term value creation.
• Loring Independence. Vanessa Loring is not an independent nominee. She is a Managing Director at Corvus Peak and the portfolio manager directly responsible for Corvus Peak's position in AGMG. If seated on the Board, Ms. Loring would owe fiduciary duties to all shareholders, but her economic interests and professional loyalties are aligned with Corvus Peak. This inherent conflict undermines the credibility of Corvus Peak's claim that its nominees would bring "independent" perspectives to the Board.
• Hale-Solberg Relationship. Jonathan Hale, an external candidate whose name has been publicly discussed in connection with the CEO search, has a known relationship with Damien Solberg, Corvus Peak's Founding Partner and Chief Investment Officer. Mr. Hale and Mr. Solberg served together on the board of Keystone Digital Ventures Ltd. This relationship suggests that Corvus Peak may have a preferred CEO candidate and that the board reconstitution is intended to facilitate Mr. Hale's appointment. If so, Corvus Peak's demand for an "open" and "independent" CEO search process is disingenuous.
• Disruption to CEO Search. Corvus Peak has demanded that the CEO search be paused pending board reconstitution. This demand, if honored, would delay the appointment of a permanent CEO by at least three to six months and create significant operational uncertainty at a critical juncture for the Company.
3. Media Relations