Overview
Based on the IPOHub article, how is shareholder activism defined?
What is: Activism in the corporate world is characterized by a shareholder or group of shareholders that advocate for change within a company?
What did the portfolio manager or members of management mainly focus on in earlier years?
What is: Company performance?
Are all companies immune from shareholder activism campaigns?
What is: No?
Who is primarily responsible for preparing and responding to shareholder activism?
What is: Management
What are key factors that may attract a shareholder to join an activist campaign?
What are:
Total shareholder return
Organizational complexity
Inefficient balance sheets
Problematic corporate governance
Environmental and social issues
Who are shareholder activists?
What is: Activist investors could be subject matter experts, hedge funds, powerful individuals, large investment firms, or even just common stockholders?
What was the name given to activists that brought significant change within companies in the 1980s?
What are: Corporate Raiders?
What is the ultimate “weapon” for a shareholder activist?
What are: Proxy contests?
How long do index investors generally hold their investments for? What about active managers? What about activists?
What are:
Institutional investors: Indefinite holding period
Active managers: 5-7 years
Activists: Shorter than both of these
Emerging from the heart of the pandemic, what is one group that will be especially vulnerable to activist demands?
What are: Pandemic laggards. Companies that lagged behind their peers.
What are the two different types of activists based on the goals they have?
What are: Performance-driven activists and corporate governance activists?
One of the articles mentions the dollar amount of growth in assets under management by hedge funds. What dollar amount was under management in 2009 and what dollar amount is under management today?
What is:
1. 2009: $39 Billion?
2. 2021: $130 Billion?
Sustained underperformance and unaddressed governance concerns attract shareholder activists to target what part of a company?
What is: Corporate Governance?
How should boards view their responsibilities with respect to shareholder activism?
What is: Boards should treat shareholder activism the same way they treat their management development strategies and their execution of company strategy.
What issue ranks highest among BlackRock investors?
What is: Climate change?
When shareholders support an activist campaign, what is it that they are supporting?
What is: A general call for change, new blood in the boardroom, and new/increased dialogue?
A shift in shareholder activism has been attributed to higher levels of transparency. What is one type of disclosure that has increased by companies?
What is: Compensation disclosures?
What was the percentage decline in companies being publicly subject to activist demands due to the pandemic?
What is: An 11% decline?
What steps should the board consider in responding to shareholder activism?
What are:
Understand shareholder activism developments
Oversee the identification of activism risks
Address the risks
Consider direct engagement with key shareholders
Oversee a response plan
Conduct a simulation
Planning for a better outcome
What are industries that will be the specific target of activists' M&A practices?
What are: Energy, Manufacturing, Out-of-home Entertainment, and Commercial Real Estate.
What was a fear that activists had as the COVID-19 pandemic began to become more problematic early on?
What is: Activists did not want to appear insensitive or opportunistic?
What two acts changed the way in which boards were composed and how often they had to meet? What were the three changes that were created?
What are: Sarbanes-Oxley and Dodd-Frank?
What are: Changes in board composition, meeting frequency, and qualifications?
What does Larry Fink suggest is the benefit of companies delivering value to its customers/shareholders?
What is: Companies will be able to compete and deliver long-term durable profits for shareholders?
What is the advantage to a shareholder activist gaining a seat on the board?
What is: It gives an activist the ability to apply pressure to the company from within the boardroom. They can pressure the board to take initial action, or follow through on actions that have already been initiated.
ESG not only relates to climate change and the environment, but also includes diversity and inclusion topics. Besides environmental disclosures, what other disclosures does BlackRock encourage companies to disclose in their sustainability reports?
What are: Disclosures concerning long-term plans to improve diversity, equity, and inclusion as appropriate by region?