With shareholder activism on the rise, it’s more important than ever for corporate officers and directors to be thinking ahead about how to address shareholder concerns and manage shareholder activists whose interests may not align with the company’s core business strategies and values. Our colleague Joel Papernik, a member in the firm’s Corporate & Securities Practice, has written this “primer” for companies on shareholder activism and its many forms, both positive and negative. He urges companies and their boards of directors to employ a “‘toolbox’ of methods to ensure they remain prepared to respond” to shareholder activists, including “continuously reviewing their own efforts to increase shareholder value,” which when successfully executed can deter adversarial activism.
The overview for companies also covers:
• Specific demands and approaches of activists
• Prevention methods – corporate self–due diligence on strategy, investor outreach, and constituent documents, as well as activist test runs for boards of directors
• What to do when faced with activists
• Mitigating impact – working with shareholder activists, including communications with shareholders and obtaining third-party valuations and assessments
• Defending against adversarial activists, such as through a shareholder rights plan, staggered board, outreach to proxy advisory firms, and continued communications with shareholders and activists
• What are a company’s options when (and if) it reaches an impasse with an activist
• Hot-button issues for shareholder activists
You can read Joel's thorough and thoughtful review of these issues here.