Boardroom Governance with Evan Epstein

Derek Zaba: Partner and Co-Chair of Sidley’s Shareholder Activism Practice.

Episode Summary

Welcome to the Boardroom Governance Podcast. I’m your host, Evan Epstein. In this episode, I talk with Derek Zaba, a partner and co-chair of Sidley’s Shareholder Activism practice. Derek counsels companies on a variety of matters, including activism defense/proxy contests, activism preparedness, takeover defenses, shareholder engagement and corporate governance. Prior to Sidley, Derek was the head of the activism defense practice at Camberview Partners (now PJT Camberview). He also served as a Partner and investment professional at activist and event driven hedge funds. Derek began his career as a corporate associate at a New York-based law firm. In this podcast, we talk about the current state of shareholder activism, the most relevant take-aways from the last proxy season and the rise of ESG in some campaigns. We also discuss the market downturn, hostile M&A trends, the impact of activism in the tech sector and the practice of dual-class share structures in founder-controlled companies. Finally, we address the adoption of universal proxy cards and lessons for directors on how to approach some of these activism trends. If you like this show, please consider subscribing, leaving a review or sharing this podcast on social media. You can find all the show notes on the website and please feel free to subscribe to the Boardroom Governance Newsletter at

Episode Notes

0:00 -- Intro.

1:34 -- Start of interview.

2:04 -- Derek's "origin story". He grew up in Chicago and graduated from WUSTL with a degree in applied math and an MBA in finance. From there he went to Capital One, "at the time it was at the forefront of making decisions with data". He then got his law degree from Stanford Law School (Class of '04). After graduating he joined WLR&K. From there he moved to hedge funds including Scoggin Capital (NY) and then Voce Capital (SF/Bay Area). In 2015, he joined Camberview Partners (now PJT Camberview) to head its activism defense practice. In 2019, he joined as a partner and co-chair of Sidley Austin's shareholder activism practice.

8:03 -- On what makes Derek's practice at Sidley Austin distinctive: "this is all we do." "We've seen over 100 proxy contests over the last 5 years." 

10:05 -- On this year's proxy season and activist campaigns. "We're back at pre-Covid levels, both in amount and mix of activism." "The reported campaigns are just the tip of the iceberg (many situations get resolved before they reach the public's eye)."

14:30 -- The impact of COVID-19 in the activism realm: "it was a very quick slow-down."

16:54 -- Why activists and companies continue to favor settlements over drawn-out proxy fights. (Per Lazard's H1 2022 Review of Shareholder Activism "[C]ontinuing 2021’s trend, a historically high proportion of Board seats (91% of the 75 total Board seats won) were secured via settlement agreements."

21:20 -- Activism in different size of companies (small, mid and large or mega caps). 

23:13 -- Some take-aways from the Exxon Mobil case (generally): "Size is not a defense, and use of ESG by activists as a core thesis." On the influence of the large institutional investors ("only a few individuals that control a big part of the vote.") [See The Future of Corporate Governance Part I: The Problem of Twelve by John Coates, 2018). 

28:53 -- On the impact of the current market downturn in activism. Targeting tech companies.

32:40 -- On activism targeting tech companies that are founder controlled (sometimes with dual-class share structures.) "Independent directors play a big and important role."

35:52 -- On contested M&A (hostile take-overs).

38:34 -- The impact of universal proxy cards in contested director elections. [See Sidley Austin's position on this topic]

42:47 -- Take-aways from shareholder proposals from this year's proxy season. 

44:24 -- Take-aways for directors (generally) from this year's proxy season. "The most important thing is universal proxy and what it will do to shareholder activism: there will be a much deeper focus on skills sets of individual directors (impacting Nom-Gov committee.)" "Be your own activist." 

46:22 -- On board diversity in shareholder activism.

47:13 -- A book that has greatly influenced his life: "Surely You're Joking, Mr. Feynman!"  by Ralph Leighton and Richard Feynman (1985).

48:45 --  A quote he thinks of often or lives his life by:  "Think for Yourself." (a Beatles song).

50:07 --  An unusual habit or an absurd thing that he loves: watching 5min clips in YouTube with his kids (space and astrophysics related). From these, emerged his new favorite animal: Tardigrade.

51:38 --  The living person he admires: Nate Silver (because "he's representative of somebody who uses information, evidence and data to guide decision-making.")

Derek Zaba is a partner in the Palo Alto and New York offices and co-chairs Sidley’s Shareholder Activism practice. He counsels companies on a variety of matters, including activism defense/proxy contests, activism preparedness, takeover defenses, shareholder engagement and corporate governance.


 You can follow Evan on social media at:

Twitter: @evanepstein




Music/Soundtrack (found via Free Music Archive): Seeing The Future by Dexter Britain is licensed under a Attribution-Noncommercial-Share Alike 3.0 United States License