Spencer Stuart’s recent director pulse survey on shareholder activism revealed a high degree of awareness and experience with activist investors and activism generally among public and private company directors.
Among the key takeaways:
Engagement—Of the 65% of public company directors surveyed whose boards have been approached by an activist investor, 91% engaged with the investor; 44% added activist-suggested directors; and 40% reached some sort of settlement. Even taking into account private company directors, a majority of boards represented by the 360+ respondents have been approached by an activist director.
Advisors—The vast majority of boards engage an investment bank / outside financial advisor and/or outside law firm when approached by an activist investor, at 86% and 81%, respectively, although more than half consult a communications firm.
Preparedness—Nearly two-thirds of public company directors say their boards are prepared for shareholder activism, while just 7% indicated activism vulnerability. Boards most commonly prepare for potential activism by identifying advisors and enhancing their shareholder engagement practices, at 63% and 62%, respectively. Less common but still notable are conducting tabletop exercises (43%), enhancing proxy disclosures (37%), upgrading board assessments (30%), and changing board composition (28%).
Directors as activists—The survey results include interesting data on whether and under what circumstances directors consider joining an activist slate, with nearly half of all directors surveyed willing to consider such a move (58% private company directors vs. 44% public company directors), particularly if they support the activist’s strategy for the company or see an opportunity to drive meaningful change. An activist with a clear and compelling value creation plan is a key consideration for most directors.