Posts Tagged 'Shareholder Activism'

How to Be an Activist Investor

by Alex Davidson for The Wall Street Journal

You, too, can be an activist investor.

Just ask hedge-fund manager Eric Jackson, who started a crusade for change at YahooInc. more than seven years ago armed with only a blog post and YouTube.

“It’s never been easier for an individual shareholder to express a point of view,” says Mr. Jackson, who used social media to galvanize support for shareholder-friendly changes at Yahoo and against members of the compensation committee responsible for approving executives’ pay packages. At the time, he and his supporters collectively owned 0.2% of Yahoo’s shares outstanding.

Conventional thinking has been that ordinary individual investors, too busy with their own work and families, don’t have the time or desire to agitate for change. With the stock market in a six-year bull market and index funds proliferating, many people have, in fact, been content to sit back and be passive investors.

But some individual investors, buoyed by the belief that good corporate governance leads to improved returns, are showing a greater interest in engaging with companies on issues such as executive pay and board structure. And shareholders—even those with limited resources—have plenty of options when it comes to being heard.

So how does one go about becoming an activist?

As with any other activity or sport, there are different levels at which investors can get involved. Read more here.

Shareholder Activism: How Will You Respond?

by Bob Lamm and Chris Ruggeri for The Wall Street Journal

If it seems like activist investors have had a more visible and powerful presence over the last few years, it’s because they have. Just under three-quarters of public company CFOs say they have experienced some form of shareholder activism—most often in the form of communication with management or the board, and sometimes in the form of proposals that have gone directly to shareholders, according to the results of Deloitte’s first-quarter 2015 CFO Signals™survey of nearly 100 CFOs of large North American companies. Moreover, about half say they have made at least one major business change specifically because of shareholder activism (share repurchases, leadership changes and divestures being the most common).¹

The trend also shows no signs of abating. In the wake of the financial crisis, Dodd-Frank and Say-on-Pay votes, shareholders have become more assertive in expressing what they want from the companies they invest in. And for CFOs, this new dynamic between public companies and shareholders presents an evolution in corporate governance that may need to be addressed.

There are several steps that CFOs can take to prepare their companies to manage increasingly vocal and influential investors. In this excerpt from CFO Insights, Bob Lamm, senior advisor, Center for Corporate Governance, Deloitte LLP, and Chris Ruggeri, principal; U.S. M&A leader, Deloitte Transaction and Business Analytics LLP, discuss how finance chiefs can identify and address company financial issues that could attract activist attention; why a more proactive engagement with the investment community is needed long before an activist campaign begins; and what some of the key components of a playbook are for responding to an activist campaign. Read more here.

Activist investors actually protect the status quo

by Eleanor Bloxham for Fortune

Shareholder activism can lull us into a false sense of security and make us forget that there are bigger corporate governance fish to fry.

The annual corporate shareholder-voting season is primarily a rite of spring. Although Apple, Disney, Deere, and Hewlett-Packard have already produced their voting materials, over 70% of Fortune 100 public companies that file these documents with the SEC send out their ballot notifications in March or April.

Although most votes by shareholders are not binding, the vociferous hyperbole around shareholder activism relies on war and sports analogies—lots of “them” and “us”—which sells newspapers and belies the very notion of “investor relations.”

But does this springtime ritual have any substance, as it does in the animal kingdom when males (or females,depending on the species) put on displays of strength, mark their territory, and secure dominance over their resources? And does the process really reform wayward companies and improve public trust in business and capitalism?

Robert A.G. Monks, co-author of the book Corporate Valuation and founder of Lens Governance Advisors, told me that there is a mythology around corporate governance and that the right questions don’t seem to be addressed amid the spectacle of proxy season. Consider the issues around corporate domicile or the responsibility of firms for the costs they impose on society, he says. Read more here.

Indian companies facing wave of shareholder activism

by Amy Kazmin for Financial Times

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Diageo is the latest in a string of companies to feel the force of investor displeasure in India, as the country experiences a surge of activism by minority shareholders.

Last week the world’s largest spirits group was dismayed when minority shareholders of United Spirits, its recently acquired Indian subsidiary, rejected a proposal to make, sell and distribute spirits with some of the brands of its UK-based parent company. Critics said the plan lacked the financial details needed for a genuine assessment. Read more here.


Shareholder activism, stringent disclosures helps India improve corporate governance score

By Rajesh Naidu & Ashutosh R Shyam for The Economic Times

Increasing shareholder activism and stringent disclosure requirements under the new Companies Act have helped India improve its corporate governance score.

While the score has improved three percentage points to 54% in 2014 from 2012, India’s rank has remained seventh on the 11-nation list topped by Hong Kong, a CLSA report has said.

The brokerage and investment group’s corporate governance report is based on a study conducted by the Asian Corporate Governance Association. The scores are based on parameters such as corporate governance rules and practice, enforcement, political and regulatory environment, accounting procedure and corporate governance culture.  Read more here.

New Dutch Company Law Rules Effective 1 July 2013

by Christiaan de BrauwGeert Raaijmakers and Petra Zijp, 4th July 2013, Mondaq

On 1 July 2013 a number of important amendments to the Dutch company law rules will take effect. The underlying aim is to strengthen the corporate governance of listed and unlisted companies by curbing shareholder activism and promoting the dialogue between shareholders and the management board. To this end, the Corporate Governance Act and the Financial Markets Act 2013 provide for the following new rules:

  • The threshold for the right of shareholders of both listed and unlisted public limited liability companies (‘NVs’) to have items placed on the agenda of the general meeting of shareholders will be raised: in future only shareholders who have a holding of 3% or more will have this right. The current limit is 1%.   Continue reading…

Investors increasing their scrutiny of corporate governance systems

May 22 2013, IW Financial

Jamie Dimon, the prolific chairman and CEO of JPMorgan Chase, recently received approval from shareholders to retain both of the top offices at the bank, which is the nation’s largest with $2.3 trillion in assets.

Although the proposal to split the top roles received only 32 percent of the vote at the company’s annual shareholder meeting—down from 40 percent last year—the outcome of the event is still being seen as somewhat of a rebuke for the bank’s management. Three members of the board of directors were re-elected by slim margins, garnering the support of less than 60 percent of shareholders.

Glass Lewis, an influential shareholder advisory firm, had recommended that JPMorgan shareholders vote against the three directors, who were on the bank’s risk policy committee when it lost billions of dollars in a trading scheme that went bust. Speaking after the vote, Dimon said the bank’s leadership team was taking shareholder dissatisfaction “very seriously.” Continue reading…

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