-Investors restless? Call Abe Friedman
BOSTON Feb 28 (Reuters) - As corporations draw more heat from their investors, Abe Friedman aims to put out some fires.
His San Francisco start-up, CamberView Partners, advises companies on how top shareholders make voting decisions and how to frame company messages.
Lately Friedman has been on a roll, adding clients like Sprint and staff like former corporate governance chiefs from State Street Corp and Wellington Management Co.
Friedman once held a similar job at BlackRock Inc before moving to the other side of the table to help companies grasp shareholder expectations on issues like mergers, board structure or executive pay.
"Companies have not really understood how investors think about governance issues," Friedman said. "The reason we exist is the changes in the investor landscape," he said.
Friedman works at the confluence of two trends: rising pressure on public companies from activist investors, and new attention to governance from top mutual fund firms.
On the activist side, investors like Nelson Peltz and Carl Icahn have made names for themselves agitating for changes at the likes of PepsiCo Inc and eBay Inc,, to name just two current examples.
The money flowing to activist funds promises to raise the number of proxy contests, said Patrick McGurn, special counsel for proxy adviser Institutional Shareholder Services. That could boost demand for Friedman's services, he said.
ISS data shows there were 35 of these contests among U.S. companies in 2013, up from 27 in 2012 and 18 in 2011.
"CamberView hopes to capitalize on the rising tide," McGurn said.
GETTING A HEARING
Mutual fund firms are also flexing their muscles as their own investors pay more attention to how companies run themselves. Firms have put new energy into the votes they cast in corporate elections and told companies to clean up their acts.
Vanguard Group Inc fund controller Glenn Booraem said it sent out letters late last year to more than 300 companies - he declined to name any - asking for changes like adopting majority voting for directors, and some have already moved to do so.
Booraem and his counterparts at other asset managers get a quick hearing from company executives because the fund firms are often among companies' top shareholders. Those same governance leaders are the talent that Friedman has targeted to work for his firm.
Recent hires include Andrew Letts, who joined CamberView from State Street Corp in January; Rob Zivnuska, hired from BlackRock in 2013; and Krystal Gaboury, from Wellington Management Co, also last year.
Friedman also picked up Eileen Rominger, once director of the division of investment management at the U.S. Securities and Exchange Commission, and Ken Bertsch, previously of Morgan Stanley and TIAA-CREF.
Friedman declined to discuss many financial details but said CamberView's clients include 20 of the Fortune 100. One client, Sprint Corp, last year faced questions about its plan to be taken over by Japan's Softbank Corp.
Friedman helped Sprint understand what asset managers would look for in areas like how the plan would protect shareholder rights, said Sprint executives, including Chief Financial Officer Joseph Euteneuer. "He has that special niche," he said.
Friedman tries to keep a lower profile compared with the proxy solicitors and public-relations firms that companies also hire to fend off activists or sway investors.
Spokespeople for BlackRock, State Street and Wellington declined to comment, as did representatives for organizations that had challenged Sprint, including private funds and telecommunications firm Dish Network Corp.
Some skeptics wonder if CamberView can provide much insight into the workings of institutional investors other than those from which it has hired executives, or if companies will need to hire CamberView more than once.
Friedman said his lineup of governance gurus knows plenty, and makes a good fit for companies that need to reach out to shareholders more than in the past. "Our success really does show there's this change in the capital markets," he said.