ALLYING WITH THE ACTIVISTS IN THE BOARDROOM
The corporate boardroom is an arena like no other. Populated by an organisation’s top echelon, it is the scene of complex deliberations and determinations – the sanctity of which is expected to remain inviolate.
Accordingly, should a rogue element be introduced into this rarefied environment – an activist shareholder, say – the potential for disruption is obvious. Yet this is a scenario that is increasingly coming to pass, with activist shareholders reaching the summit of an organisation by winning proxy challenges or obtaining settlements that allow them to designate a member of the board, and sometimes more.
Although historically a US phenomenon, in recent years the issue of activists acquiring influence in the boardroom has become more prevalent across the world. Figures compiled by Activist Insight show that, beyond the borders of the US, the number of companies targeted by activist campaigns increased from four to 28 in Asia between 2011 and 2015; in Australia over the same period the jump was two to 57; and across Europe the rate (which has been high for a number of years) was 28 targeted companies in 2011 to just under 50 in 2015.
“Over the last three years the number of activist campaigns has grown dramatically worldwide,” confirms Josh Black, a spokesman for Activist Insight. “Activist investors are now driving many of the foremost priorities for public companies, from buybacks to margin improvements or M&A. If issuers are not regularly reviewing these options there is a high probability that they will be pushed to do so by a shareholder before long, whether current or new to the share register.”
Jan-Mar 2016 Issue
Fraser Tennant