VIVENDI SA
NYSE Euronext Paris:  VIV          Meeting Date: 4/17/2015

It seems like a win-win for the now reconciled management of Vivendi and dissident shareholder P. Schoenfeld Asset Management (PSAM) at the upcoming annual meeting. Other institutional shareholders and advocates of good governance, on the other hand, are likely to be somewhat disappointed.

After an unusually vociferous public debate over Vivendi’s management strategy in which PSAM accused the company of hoarding cash unnecessarily and Vivendi, in response, threatened to sue shareholders who backed PSAM, the two have apparently found some common ground. In a very surprising move, the two announced a compromise on April 8th pursuant to which Vivendi will increase its dividend payout and PSAM will, in return, withdraw its two shareholder proposals seeking an even higher payout. Perhaps more surprisingly, PSAM appears to have strayed from its earlier complaints about Vivendi’s governance. While it had initially backed a shareholder proposal from another investor seeking to force Vivendi to maintain a one-share-one-vote principle, rather than adopting double voting rights for certain long-term shareholders, PSAM has now agreed to vote against this proposal.

This may be shocking for shareholders who read PSAM’s earlier statements, which accused Vivendi’s largest shareholder, chairman Vincent Bolloré, of trying to gain more control over the firm by building up his family’s equity stake in advance of the implementation of double voting rights. Since the agreement between the former foes, Mr. Bolloré and family have further increased their shareholdings to just over 14% of issued shares, giving credence to PSAM’s previously stated concerns. Meanwhile, Vivendi, having done an about face from its previous threats and indignations, now claims to have taken the high road in finding a compromise with a minority shareholder. To many observers, it might look more that Vivendi and PSAM found a mutually beneficial position that ignores the plight of public shareholders, who are unlikely to be able to comply with the conditions necessary to benefit from double voting rights.

 

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