SHAREHOLDER ACTIVISM IN THE COVID-19 ERA
R&C: How would you describe the extent to which the coronavirus (COVID-19) pandemic has impacted the threat of shareholder activism for companies and their boards?
Berg: One of the few silver linings of coronavirus (COVID-19) was its effect on shareholder activism at the beginning of the pandemic. For many companies under siege at the time, COVID-19 turned out to be a highly effective ‘poison pill’ in the 2020 proxy season. The enormous uncertainty and volatility at the time caused most activists to either terminate or suspend their campaigns.
Zaba: Activists faced an extremely difficult prospect of pursuing a campaign in the middle of the biggest humanitarian and economic catastrophe of our generation. They needed to convince investors and proxy advisory firms like ISS and Glass Lewis as to why their campaigns were so urgent that they could not wait a few more months. After all, every management team and board was working round the clock to protect their employees, customers and businesses from the ramifications of COVID-19. Distracting them with an activist campaign could have put lives and livelihoods at risk. Most activists realised they could not win and waited. In some cases, investors essentially told the activist to stand down if they could not arrive at a settlement with the company.
Apr-Jun 2021 Issue
Sidley Austin LLP