6 Questions You Should Address Before An Activist Does

Activists today are professionals who know your company inside and out—sometimes better than management. Here are 6 questions the board and management should answer internally before they find themselves on the defensive with an activist.

1) How does the company’s performance compare with its peers? How do valuation metrics compare, as well as executive compensation programs?

2) What does the buy side think of your strategy and operational prowess (not what you’d like to hope they think)?

3) What does the competition say, and what do its leaders think are your company’s strengths and weaknesses?

4) How are your incumbent directors and management vulnerable?

5) What guidance has the management team provided that proved too optimistic?

6) What are impediments to board self-evaluation and refreshment?

Gregory Taxin is the Managing Member of Spotlight Advisors, which advises in activist shareholder situations, including in six proxy fights that went to a vote in 2017. He is a former investment banker, lawyer, activist investor and CEO of proxy advisor Glass, Lewis & Co. Betsy Atkins has served on more than a dozen public company boards, is a three-time CEO, serial entrepreneur, and author of “Behind Boardroom Doors.” She currently sits on the boards of Cognizant, HD Supply, Schneider Electric, and private company, Volvo.