Tag Archives: board structure

10 Tips for Dealing with Shareholder Activism

By Maureen WolffPresident and Partner, Sharon Merrill Associates

For many companies, a looming activist shareholder is no longer the exception – it’s the rule. One reason is that an increasing number of hedge funds are using activism as a standalone strategy. Assets managed by activist hedge funds increased 42% in 2013 to $93 billion from $65.5 billion in 2012, according to Hedge Fund Research, Inc.

The swirl of activism has the C-suite and the board concerned. In a poll of executives for its recent Capital Conference Barometer, Ernst & Young reported that nine of 10 executives acknowledged that issues raised by shareholders have influenced boardroom agendas, with cost reduction and operational efficiency identified as the most pressing concern over the next 12 months.

The threat of activist investors encircling your company can be intimidating – unless you understand how to engage, respond and communicate. Here are 10 strategies to help you prepare. Continue reading

2 Comments

Filed under Shareholder Activism

Developing an Investor Relations Program for an IPO Company [Video]

By Maureen Wolff, President and Partner

Companies planning to go public need to be able to hit the ground running on the day of the IPO pricing with an investor relations program.  In order to prepare, Sharon Merrill President and Partner Maureen Wolff provides tips on what to do before and after the S-1 filing in the videos below. Continue reading

Leave a comment

Filed under Investor Relations, IPO

A Curious Tale from the Annals of Shareholder Activism

By Maureen Wolff, President and Partner

Nothing has more power to change a boardroom’s dynamics than the election of dissident directors – especially when they arrive as a twosome. I had the honor of moderating a panel discussion on shareholder activism at the National Association of Corporate Directors New England Chapter breakfast event earlier this month, where seasoned board members talked about the lessons they’ve learned in battling high-profile proxy contests over the years.

One of the stories, told by a former board chairman, involved the legendary corporate raider Carl Icahn. A manufacturing glitch had resulted in a steep drop in his company’s share price. After repeated attempts, Icahn was finally successful in having two of his nominees elected to the board. This occurred not long after the principal of another activist institution had been elected as a director, and not long before the company received an unsolicited tender offer at a substantial premium to the then-current share price.

The former chairman painstakingly recreated the scenarios that unfolded over the next few months as the board considered the takeover offer. At first, he focused on the gulf in interests and motivations between the newly elected “directors” and long-time members of the board. Unlike the established directors, who had long been personally committed to the company’s vision, mission and business strategy, the dissidents’ only interest was in immediately monetizing the company’s value for shareholders, he said. Predictably, these conflicting goals led to tremendous stress and friction on the board. Continue reading

1 Comment

Filed under Crisis Communications, Shareholder Activism

Prepare for Proxy Access Now – Avoid an Activist Horror Story Later

Hello again.  We took a bit of a hiatus from blogging this summer, but we are now back to share a Halloween story sure to scare you straight! 

Unless you are one of the 33 Chilean miners that were trapped underground for the past two months, you have likely been watching the drama unfold on Capitol Hill as the Business Roundtable and the U.S. Chamber of Commerce challenged the legality of the SEC’s new proxy access rule 14a-11, which allows qualifying shareholders to nominate directors for election at shareholder meetings and requires the corporation to include those nominees in the standard proxy statement.  The petitioners claim that the new rules are subjective and violate federal and state law and the United States Constitution, and that the SEC did not assess the effect of the rules on efficiency, competition and capital formation.  As a result, implementation of the rule has been delayed pending a resolution of the Court of Appeals.  So the new proxy access rules will most likely not be implemented until the 2012 proxy season, at the earliest.  Upon hearing this news, public corporations across the nation let out a collective sigh of relief. Continue reading

Leave a comment

Filed under Crisis Communications, Shareholder Activism

Winning the Gunfight at the Proxy Corral – Four Steps to Prepare for Shareholder Activism

The term “shareholder activism” can sometimes send a shiver down your spine and conjure up all kinds of unwelcome events – unhappy shareholders, proxy contests, shareholder proposals, 13D filings and withhold vote campaigns, to name just a few.

I recently moderated a NIRI Virtual Chapter webinar on “Shareholder Activism Trends.”  The participants, consisting mainly of IROs at mid- and small-cap companies, were polled on several questions.  The first question was, “Do you have a detailed plan in place for dealing with shareholder activism?”  The majority answered “no.”

It may not be feasible to have a detailed plan for dealing with a threat that can take so many different forms.  The lawmen and bandits who fought it out at the infamous O.K. Corral in 1881 had no idea how the showdown would play out – and neither will you if your company becomes an activist’s target.  But that doesn’t mean you can’t be prepared.  Here are four steps. Continue reading

2 Comments

Filed under Crisis Communications, Shareholder Activism

To Split or Not to Split – That is the Question Boards Should Be Asking

With proxy season on the horizon, a new SEC rule will be requiring companies to justify the structure of the board’s leadership.  That could have some companies thinking about whether the roles of chairman and CEO should be separated – an issue that’s been hotly contested for years.

Proponents of taking an axe to the two positions contend that combining them puts too much power in the hands of one person and creates an inherent conflict of interest.  Their preference is to seat an outside director as chairman to ensure the board stays truly independent from management.  The CEO can then focus on running the business while the chairman is tasked with protecting the interests of shareholders, including evaluating management’s performance. Continue reading

1 Comment

Filed under Board of Directors, Crisis Communications, SEC