Please enable JavaScript.
Coggle requires JavaScript to display documents.
Member activism - Coggle Diagram
Member activism
Investor activsm
Shareholder activists are typically investment funds and although making a significant investment in the target company would rarely be the largest shareholder
They invest in companies where they think change is needed to realise increase in shareholder value and actively seek to disrupt the status quo and current corporate strategy
They engage publicly and privately, often aggressively with the management and use the full range of shareholder rights to promote their agenda for change
Such shareholder rights include campaigns to vote directors off the board, putting forward contrary resolutions at AGMs and calling for information shareholder votes/meetings
-
-
Strategic transactions
M&A - promote, complicate, frustrate
-
For companies and their company secretaries, investor engagement is key to managing their investors, be they traditional hands off investor or an activist hands on investor
-
It is important to know the company's advisory team, be familar with the corporate processes, review and identify any vulnerabilities in the coproate strategy and the company's record at keeping to that strategy
The investor relations messages must be in sync with the corporate strategy and actual progress along that path
Monitoring the shareholder base and engaging at an early stage with new investors is a key role for the company secretary and keeping the board updated with changes in investors and their agenda
Member and investor trust can be greatly enhanced by making proper, meaningful disclosure, being transparent and clear with communications and providing accurate information in those communications
These disclosures and communications must also be aligned to the corporate strategy and accountability mechanisms of the directors
Pressure group activism
Although rarely an issue for private companies, traded public companies often have another type of activist shareholder in the form of pressure groups who often purchase only nominal numbers of shares in order to attend and disrupt shareholder meetings with the intention of gaining publicity
The motivation for these pressure groups is to attempt to force a company to change its behaviour or strategy in relation to a particular topic and to draw attention to their campaign
Over the years, there have been protests on topics such as animal welfare, fossil fuel usage, climate change, environmental issues, gender diversity and equal pay
There are a number of practical steps that can be taken firstly to prevent or minimise any disruption at the meeting and either the meeting can be adjourned or the distrptuing members can be ejected if there is persistent disruption during the meeting
-
Unlike directors who have a duty to manage the company for the benefit of its members as a whole while also considering the interests of other stakeholders, shareholders need only take account of their own interests and aims
Traditional corporate governance is focused on what has been referred to as vertical corporate governance and aligning the interests of senior managers and shareholders, this is an impossible aim to fulfil as shareholders have differing reasons to become and remain as shareholders
Management will often rely on discussions with their largest shareholders to form a view of what is in the interests of the wider shareholder base
In the UK, institutional investors will usually invest in companies whose strategy they agree with and are not looking to change, in most instances are supportive of management and while not actively looking for change are prepared to listen to the ideas of activists