CONFIDENTIAL JANUARY 2020 LAZARD'S SHAREHOLDER ADVISORY GROUP 2019 Review of Shareholder Activism Lazard has prepared the information herein based upon publicly available information and for general informational purposes only. The information is not intended to be, and should not be construed as, financial, legal or other advice, and Lazard shall have no duties or obligations to you in respect of the information. 2019 REVIEW OF SHAREHOLDER ACTIVISM Key Observations on the Activist Environment in 2019 Activist Activity 187 companies targeted by activists, down 17% from 2018’s record but in line with multi-year average levels 1 Returns to Aggregate capital deployed by activists (~$42bn) reflected a similar dip relative to the ~$60bn+ level of 2017/2018 Multi-Year Trend A record 147 investors launched new campaigns in 2019, including 43 “first timers” with no prior activism history After Record 2018 Elliott and Starboard remained the leading activists, accounting for more than 10% of global campaign activity Activism against non-U.S. targets accounted for ~40% of 2019 activity, up from ~30% in 2015 Multi-year shift driven both by a decline in U.S. targets and an uptick in activity in Japan and Europe Activism’s For the first time, Japan was the most-targeted non-U.S. jurisdiction, with 19 campaigns and $4.5bn in capital deployed in 2019 2 Continued Influence (both local records) Outside the U.S. Overall European activity decreased in 2019 (48 campaigns, down from a record 57 in 2018), driven primarily by 10 fewer campaigns in the U.K. Expanded activity in continental Europe – particularly France, Germany and Switzerland – partially offset this decline A record 99 campaigns with an M&A-related thesis (accounting for ~47% of all 2019 activity, up from ~35% in prior years) were launched in 2019 Record Number of As in prior years, there were numerous prominent examples of activists pushing a sale (HP, Caesars) or break-up (Marathon, M&A-Related 3 Sony) or opposing an announced transaction (Occidental, Bristol-Myers Squibb) Campaigns The $24.1bn of capital deployed in M&A-related campaigns in 2019 represented ~60% of total capital deployed The technology sector alone saw $7.0bn put to use in M&A related campaigns 122 Board seats were won by activists in 2019, in line with the multi-year average1 Consistent with recent trends, the majority of Board seats were secured via negotiated settlements (~85% of Board seats) Activist Influence on 2 4 Boards Continues 20% of activist Board seats went to female directors, compared to a rate of 46% for all new S&P 500 director appointees Activists nominated a record 20 “long slates” seeking to replace a majority of directors in 2019, securing seats in two-thirds (67%) of the situations that have been resolved Outflow Pressure on Actively managed funds saw ~$176bn in net outflows through Q3 2019, compared to ~$105bn in 2018 over the same period 5 Active Managers The “Big 3” index funds (BlackRock, Vanguard and State Street) continue to be the primary beneficiaries of passive inflows, Intensifies collectively owning ~19% of the S&P 500 – up from ~16% in 2014 ESG focus continues to grow: over the past two years, the AUM represented by signatories to the UN’s Principles for Responsible Investment increased ~26% to ~$86tn, and the number of assets in ESG-related ETFs increased ~300% Other Noteworthy The Business Roundtable’s “Statement on the Purpose of the Corporation” emphasized the importance of companies 6 Observations incorporating the interests of all stakeholders, not just shareholders, into their decision-making processes The SEC’s guidance on proxy advisors sought to increase accountability and oversight standards in their company evaluations Source: FactSet, ETFLogic, UN PRI, Simfund, press reports and public filings as of 12/31/2019. Note: All data is for campaigns conducted globally by activists at companies with market capitalizations greater than $500 million at time of campaign announcement. 1 1 Represents Board seats won by activists in the respective year, regardless of the year in which the campaign was initiated. 2 According to Spencer Stuart’s 2019 Board Index. 2019 REVIEW OF SHAREHOLDER ACTIVISM 1 Campaign Activity and Capital Deployment ($ in billions) Annual Campaign Activity Companies Targeted Annually by Region 1 1 # of Companies Targeted1 # of Campaigns Initiated # of Companies Targeted 226 248 Campaigns in line 205 212 209 with historical 5 20 188 6 188 187 187 226 activity but below 168 6 30 8 188 187 2018’s record pace 12 23 Mean: 193 188 27 39 15 54 U.S. targets account 168 36 49 44 for ~60% of companies targeted, compared to ~70% in 2015 131 111 111 122 108 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Rest of World APAC Europe U.S. Capital Deployment in New Campaigns Capital Deployment by Sector in 2019 Aggregate Value of New Activist Positions2 Aggregate Value of New Activist Positions2 $66.4 Lower capital $63.8 deployed following 23% $57.7 heightened activity in 22% 7.8 13.5 2017 and 2018 11.4 16% 18.7 8.7 $42.2 12% 17.6 6.1 11% $30.5 19.0 11.5 6.0 20.9 4% 3% 3% 13.2 3% 3% $1.1 12.8 13.0 $1.1 $9.9 $9.3 $6.7 $5.1 $4.8 $1.7 $1.5 $1.1 25.3 6.0 16.5 15.4 11.7 5.7 Retail Media Telecom Financial Industrials 2015 2016 2017 2018 2019 Consumer Institutions Healthcare Power, Real Estate Technology Q1 Q2 Q3 Q4 Energy & Infra. Above/Below 2015-18 Avg.3 Source: FactSet, press reports and public filings as of 12/31/2019. 2 Note: All data is for campaigns conducted globally by activists at companies with market capitalizations greater than $500 million at time of campaign announcement. 1 Companies spun off as part of campaign process counted separately. 2 Calculated as of campaign announcement date. Does not include derivative positions. 3 4-year average based on aggregate value of activist positions. 2019 REVIEW OF SHAREHOLDER ACTIVISM 1 Notable 2019 Public Campaign Launches and Developments—U.S. ($ in billions) Launch Company / Launch Company / Date Market Cap Activist Highlights Date Market Cap Activist Highlights Icahn disclosed a stake in HP and urged the Company to merge with Xerox, citing cost In October, Aramark announced a settlement synergies with Mantle Ridge, appointing six new 11/19 $29.8 5/19 Directors, including a new CEO, while also HP rejected the takeover proposal, criticizing $8.6 agreeing to lower its threshold to call a special Xerox’s “hostile” actions, but noted it saw meeting potential in a deal $8.4 D.E. Shaw released a white paper criticizing Emerson’s cost structure and organization, In August, Occidental completed its acquisition urging an independent strategic review of Anadarko 9/19 Emerson reached an informal settlement with 5/19 In November, Icahn signaled its intent to D.E. Shaw in November, appointing an nominate a slate of 14 Directors to replace $39.5 independent Director and agreeing to review its $44.0 Occidental’s Board compensation program Following Elliott’s demand for Marathon to Starboard and Wellington separately came out break itself up, the Company announced that it against the Company’s planned $74bn would spin off its Speedway unit acquisition of Celgene, citing pipeline risks, 9/19 In December, Marathon announced a 2/19 with Starboard also nominating Directors settlement with Elliott, agreeing to replace an $39.6 $81.4 Starboard withdrew its campaign after ISS and outgoing Director with one approved by Elliott; Glass Lewis recommended in favor of the deal Marathon also agreed to declassify its Board Following Elliott’s initial letter, AT&T sold off Elliott and Starboard separately pushed eBay several assets in pre-planned transactions to divest non-core assets like StubHub and its In late October, AT&T announced long-term Classifieds business, with each settling 9/19 financial targets, the addition of new 1/19 separately for Board representation $268.8 independent Directors and a delay in its CEO $31.7 The Company’s CEO resigned in September succession, which Elliott issued a press after disagreements with the Board, and eBay release in support of later sold StubHub for ~$4bn Starboard sent a letter to AECOM in June In December, ValueAct and Citi extended their 2019, urging it to launch a full strategic review information sharing agreement through 2021, and sell its Construction Services business with ValueAct complimenting Citi’s leadership 6/19 In November, Starboard and AECOM settled, 5/18 ValueAct and Citi had first entered into an information sharing agreement in January $5.8 with AECOM adding three new independent $173.2 Directors, including a Starboard Partner, to its following the disclosure of ValueAct’s position Board and splitting the Chairman / CEO roles in May 2018 Source: FactSet, press reports and public filings as of 12/31/2019. 3 2019 REVIEW OF SHAREHOLDER ACTIVISM 1 Notable 2019 Public Campaign Launches and Developments—Rest of World ($ in billions) Launch Company / Launch Company / Date Market Cap Activist Highlights Date Market Cap Activist Highlights Following months in which Elliott said that it Oasis sent a letter to Seven & i in September would not tender its shares in Capgemini’s and demanded the divestment of non-core 11/19 7/19 buyout of Altran, Elliott released a presentation $34.1 units, improved governance and greater capital $4.2 in November detailing its opposition to the deal return and urged Capgemini to increase its offer price In October, Prosus announced a separate bid for Just Eat beyond Takeaway.com’s existing offer, which had received opposition from In September, Ferguson announced that it Eminence but support from Cat Rock would spin off its U.K.