Among the many thought-worthy insights shared by experts in Toppan Merrill's "Shareholder Activism Trends in 2019" are these from Russell Reynolds on how companies' defensive tactics are evolving, as activism becomes increasingly mainstream and nondiscriminating as respects the demographics of targeted companies:
- Companies are regularly engaging with their advisors on potential activist campaign scenarios in recognition that every company is vulnerable.
- Boards are proactively conducting director vulnerability analyses so that they are prepared to respond if/when targeted.
- Boards are employing outside expertise to assist in evaluating the strengths & weaknesses of activist director nominees to better articulate why the company's slate is more qualified.
Also noteworthy: Per Schulte Roth and Zabel, while activists are rarely appeased by a target company's proactive change in board composition in response to activist threat (i.e., activists want their own nominees), companies are increasingly pursuing this avenue as a defensive tactic, and it is often effective vis-a-vis other shareholders and proxy advisors, who are inclined to give change a chance.
See our recent report: "Shareholder Activism Preparedness," Lazard's "Profiles of Selected Shareholder Activists," Barron's "‘Corporate America Had Better Take Note.’ Fund Managers Are the New Activist Investors," and additional information & resources on our Shareholder Activism page. This post first appeared in the weekly Society Alert!