Power Breakfast: Managing Activist Shareholders

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Shareholders don’t always agree with companies’ business plans or growth models, and some are becoming more active in making their opinions heard. This panel discussed how companies and executive teams can deal with activist shareholders. Referring to Carl Icahn’s recent dealings with Transocean in March 2013, the panel also discussed the importance of shareholder activist response plans and how companies need to have them in place. Understanding how to prepare, research, incorporate, and communicate disclosure strategies through investor relations and communications teams is also essential to effectively managing and dealing with activist shareholders.

1. Historically, large companies with good performance were relatively insulated from activist investors. This has changed dramatically in recent years, with some very high-profile companies becoming the target of activist campaigns. These activists have sought everything from the issuance of a special dividend to a change in strategy or representation on the board.

2. Shareholder activists are not a homogenous group. They have different goals, time horizons, and investment strategies. As such, it’s critical to gain an understanding of the specific activist playbooks, methodologies, strategies, and success rates of those who target the company.

3. Board members have a critical role in dealing with activist situations. But in order to be effective in this role, a game plan must be put in place well in advance. This plan should consider the team of external advisors that will be utilized, which board committees are responsible for what, and under what conditions the board will opt to use a shareholder rights plan (poison pill).

Steven Balet
Managing Director, FTI Consulting

Jason Frankl
Senior Managing Director, FTI Consulting

Jill S. Greene
Associate General Counsel, Transocean Ltd.

Elizabeth Saunders
Americas Chairman, Strategic Communications, FTI Consulting

This summary provided by PricewaterhouseCoopers.

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