How to Address Shareholder Activism

Dear Friend,

This month’s Comp & Gov Spotlight focuses on the theme of shareholder activism, and how it impacts corporate boards and managers. Activist shareholders come in different forms; they can be fund managers seeking business model and/or management changes to maximize shareholder value, or they can be nonprofit groups urging greater focus on ESG issues. Institutional investors and proxy advisors, meanwhile, may be more beholden to both types of activists than they were previously. In this issue, we examine different types of activism and how boards have (and should) respond to them. 

I hope you find the articles interesting.

Sincerely,
Marc Hodak

Hot Off The Press From Farient

Think Tank Criticizes Activist Influence as Having ‘Negative’ Impact on Shareholder Value

Following testimony to a U.S. Senate committee by a critic of the influence of ESG-focused groups over shareholder proposals, I offer insights on why institutional investors and proxy advisors embrace these causes – and weigh-in on the prospect of regulatory challenges to such activism.

Biggest Fund Managers Continue to Support ‘Excessive’ CEO Pay Deals

After a nonprofit criticized fund managers for approving CEO compensation deemed excessive, I provide my own take on why institutional investors have a high rate of executive comp approval: they are getting the alignment of pay and performance they want, by and large.  

Interesting Articles on Shareholder Activism

Shareholder Activists Vs. Shareholders

A recent report from a wealth management research firm indicates wide disagreement between shareholder activists and general shareholders over proposals with social or political goals. Should the SEC consider reining in activists’ abilities to make such proposals?

Shareholder Activism Stats

Statistics compiled by data firm Activist Insight indicate a slow start for shareholder activism in the first quarter of 2019. According to the firm, 295 companies worldwide were publicly subjected to activist demands in the first quarter, the lowest since 2015.

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Meet Marc Hodak 

Mark Hodak is a Partner at Farient Advisors with more than 20 years of experience as a compensation and corporate governance consultant. He has developed executive and board compensation programs for global companies, both private and public, including extensive work around goal setting, performance and perverse incentives.