Activists and Boards Share Common Ground on Communications

by Maureen Wolff for Sharon Merrill Associates Blog, November 23rd,  2010.

When it comes to corporate governance, board members and shareholder activists are usually on opposite ends of the spectrum.  But at separate conferences in New York and Boston this month, the two camps expressed a surprisingly similar view about the most effective way to deal with the anticipated increase in shareholder activism in 2011: better communication.

According to a study by law firm Schulte Roth & Zabel (SRZ), 76% of activists surveyed identified “dialogue/negotiations with management” as the most effective activist strategy to achieve desired results.  None of the other proposed strategies – shareholder resolutions, publicity campaigns, proxy contests or litigation – received more than 16% of the vote.

Results of the study were highlighted at SRZ’s Shareholder Activism Conference in New York, which I attended as part of an invited group comprised mainly of hedge fund and private equity fund managers.

In response to the question of the most effective activist strategy, one activist summed up his answer this way: “Open communication is critical, and it is less contentious than other options.  It is our experience that fruitful dialogue works best when you are trying to achieve a settlement.” (continue reading… )

 

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