FORGE Shareholder Engagement Highlights

On April 18, 2016, NYSE Governance Services assembled a group of investors, CEOs, board members and advisors to discuss the shareholder activism landscape. The conversation was fueled by observations that activism is creating stronger companies, better governance and increased long term value for shareholders.

Activist Investor View

"We don't think we'll be successful in garnering the votes we need if we end up in a proxy contest unless we're pursuing ideas that will create long-term sustainable value."

Advice if an activist buys stake in your company:

- Be happy, it means your business in undervalued.

- You have someone who is keenly interested in your success.

- They may have ideas on how to make the business more valuable.

Institutional Investor View

"What we really care about is long-term wealth creation for fund shareholders. That's what's driving all of our decisions."

Five big issues of interest to fund shareholders:

1. Proxy access – what's the right level?

2. Board composition - what's the ideal type of board?

3. Board tenure – age limits vs. term limits

4. What's short-term vs. long-term?

5. Engagement – not just management engagement, but board engagement

 

Board View

"I've come full circle from someone who thought it was the dark side to actually believing it can bring a lot of enlightenment in the boardroom."

Rules of engagement for an activist-appointed director:

- You are not in the activist's pocket, true independence is essential.

- Find a midpoint between the activist and company views.

- Preserve the respect of the activist.

CEO View

"I think there is a profound difference between an active investor and an activist."

Reflections on dealing with an activist:

- Stiff-arming activists creates a much worse situation – choose instead to collaborate.

- Don't allow the board to abdicate to advisors – listen to advisors and then make a sound business decision that's best for all stakeholders.