SHAREHOLDER ACTIVISM BOARD STRATEGIES
RC: Could you provide an overview of the most significant recent developments to have taken place within the shareholder activism space over the last 12 months or so? What issues are regularly raised by activists concerning a company’s affairs?
Frankl: Two developments have clearly defined 2016 for shareholder activism: willingness to settle and the rise of the new activist. Companies agreed to settle in 49 of 109 proxy fights this year, according to FactSet. Instead of risking an expensive and potentially unsuccessful proxy fight, companies allowed one or more dissident directors onto their board or acquiesced to activist demands. It remains to be seen whether these settlements result in improved operating results and total shareholder return (TSR). Secondly, we have seen a rise in non-conventional, smaller funds joining the activist arena. In 2016, nearly 20 proxy fights were spearheaded by funds with little to no sophisticated activist experience. Commonly, these types of shareholder engagements point out displeasure with CEO pay packages, board independence and a desire for companies to reallocate cash balances.
Jan-Mar 2017 Issue
FTI Consulting