Do “Golden Leashes” Conflict with Directors’ Fiduciary Duty?

Some activist shareholders want to make side payments to the directors they put on boards. Is that good or bad for the other shareholders? Gregory H. Shill writes: Traditionally, activist hedge funds identify a company ripe for improvement, acquire a toehold position in the company’s stock, and then launch a campaign to convince shareholders to…

At BlackRock, Vanguard and State Street, ‘Engagement’ Has Different Meanings – WSJ

Sarah Krause writes in the WSJ about large institutional investors’ differing views of “engagement,” noting that they also differ on their analysis of particular engagement/activism opportunities. The biggest passive money managers all like to use some version of the word “engage” when describing how they hold their portfolio companies accountable behind the scenes. They differ on…

Do Activists Turn Bad Bidders into Good Acquirers?

A new paper documents the beneficial impact of activist investors in optimizing corporate transactions. In our new working paper, Do Activists Turn Bad Bidders into Good Acquirers?, available on SSRN, we uncover a new role of activists in the market for corporate control. We present evidence that activists curb incentives to engage in empire building…

The Legal Validity of Oral Agreements with Activist Investors

This one reads like a law school case study. In the 21st century, it is highly unusual that parties, especially adverse parties, would enter into an agreement without putting it into writing. It is even more unlikely that a dispute over an oral agreement would go all the way to trial. And yet that is…

Impact of Shareholder Activism on Board Composition/Tenure

IRRCi has a new report: The Impact of Shareholder Activism on Board Refreshment Trends at S&P 1500 Firms   It concludes: Activism drives down director ages. Dissident nominees and directors appointed via settlements (hereinafter Dissident Directors) were younger, on average, than directors appointed unilaterally by boards (hereinafter Board Appointees) in connection with shareholder activism. Study…

Investor activism is surging in continental Europe

Leave it to the Americans to besiege European companies in August, when the entire continent is on holiday. It emerged this month that Corvex Management, an American hedge fund, had built up a $400m position in Danone, a French food giant. AkzoNobel, a Dutch paints-and-chemicals firm which has been under heavy fire from Elliott Advisors,…

Danone can stomach new activist investor – Breakingviews

Carol Ryan writes approvingly about a small stake by an activist investor in a previously entrenched French company: Danone can stomach a new activist investor. A stake reportedly taken by U.S. hedge fund Corvex Management in the French yoghurt maker may be small, but would bring welcome pressure on management to meet its new margin…

Activism in Germany | Ethical Boardroom

Shareholder and hedge fund activism has become an influential force in German corporate life over the past 15 years or so, both in terms of corporate governance improvements and value creation, with approximately 400 campaigns launched by 100 (predominantly foreign) activist hedge funds against 200 of the country’s 650 public corporations. Until recently, it was…

Nell Minow on Daniel Loeb and Activism

VEA Vice Chair Nell Minow commented on Daniel Loeb’s new position at Nestle on NPR’s “Marketplace.” Activist investor Daniel Loeb announced over the weekend that his hedge fund, Third Point, has taken a $3.5 billion stake in the Swiss food conglomerate Nestle, and he wants some changes at the company. That may sound like a…

Investors expect to meet with Exxon on climate-impact report | Reuters

Exxon Mobil Corp investors will push to meet with oil company officials this summer to hash out elements of a climate-impact analysis following a shareholder vote calling for studies of technology and climate-related risks to its business.Exxon has said that it will reconsider its opposition to the request, not that it would begin discussions or…

IR Magazine | Shareholder activism outside of US increases fivefold since 2010

A strong US dollar, undervalued asset prices and increased global scrutiny of corporate governance practices are contributing to an uptick in shareholder activism incidents around the world.According to the Global Shareholder Activism map from FTI Consulting, there were 342 activism campaigns outside the US in 2016, compared with only 70 in 2010. Over the same…

Why Passive Investing Increases Corporate Activism

In a new paper, the authors of the award-winning “Passive Investors, Not Passive Owners” show how passive investing also leads to more aggressive shareholder activism than there would be otherwise, as passive fund firms add their clout to campaigns waged by activist investors. Their paper is titled, “Standing on the Shoulders of Giants: The Effect…