September 14 Shareholder Activism

Shareholder Activism – A Good or Bad Thing

By Johnson Manyakara Shareholder activism generally occurs when the activist is dissatisfied. The targeted company is then pressured to make significant changes, more often than not, to increase stakeholder value. Is this good or bad for public-company boards generally or for the targeted company? For Public- Company Boards The growing influence of shareholder activists on capital markets has transformed how public-company boards interact with investors. This is particularly evident in the role of the board in the areas detailed below. Role of the Board in Investor Relations Progressive boards are now directly involved in investor relations with the following positive outcomes: There is now a growing realisation by most boards that shareholder relations are now a board duty, the board becoming a central player in shareholder engagement; Boards and executives now frequently review their investor bases in order to come up with a game plan for responding to  shareholder activism;

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September 7 Shareholder Activism

Shareholder Activism – Whither Board Leadership?

By Johnson Manyakara Simply put, a shareholder activist is an investor who attempts to use his/her rights as an owner of a publicly-quoted company to seek dialogue and/or change in an entity-attempts to gain control of the entity and even replace management. Typically, the focus is on corporate strategy, balance sheet issues, operations, boards of directors, senior management and M&A activity. In the 1980s and 90s, the term “activist shareholder” was synonymous with “corporate raider”-scary stuff indeed. How Shareholder Activism Presents? Shareholder activism is increasingly coming from mainstream institutional investors who engage companies through- Voting at AGMs or by proxy; Writing letters to Investor Relations Departments or to Corporate Secretaries; Filing Resolutions (e.g. petitioning companies for AGM agendas); Having In-Person meetings/dialogues; and Divesting-sending a message by selling their shares. Hedge Funds are the most ruthless, focusing on financial engineering, while active Mutual Funds focus on securing their long-term investments.  

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