Activist investors are increasingly encountering an unusual reception when approaching corporate targets: an open door.
Instead of pulling up the drawbridge as activists approach, corporate executives and directors more often are engaging, concluding that it is easier and cheaper to negotiate rather than resist and risk a public fight, advisers and executives said.
Even Carl Icahn, long seen as the archenemy of chief executives, is finding the path to the boardroom easier to tread. Mr. Icahn, among the most relentless of activists, secured representatives on more boards this year than he ever has, without resorting to shareholder-vote battles. ...
Others point out that companies are generally becoming more receptive because activists increasingly enjoy the support of long-term institutional shareholders that traditionally allied with management. That relationship means companies who resist activists could risk alienating their broader shareholder base.
A lot of these boards are "receptive" in the same way the Neville Chamberlain was in 1938 or Obama was re Iran and Syria. But Martin Lipton wants boards to show some spine:
For a number of years, as the new year approaches I have prepared for boards of directors a one-page list of the key issues that are newly emerging or will be especially important in the coming year. Each year, the legal rules and aspirational best practices for corporate governance, as well as the demands of activist shareholders seeking to influence boards of directors, have increased. So too have the demands of the public with respect to health, safety, environmental and other socio-political issues. In reviewing my 2013 issues memo, I concluded that the 2013 issues continued as the key issues for 2014 with a few changes in detail or emphasis. My key issues for 2014 are: ...
- Working with management and advisors to review the company’s business and strategy, with a view toward minimizing vulnerability to attacks by activist hedge funds.
- Resisting the escalating demands of corporate governance activists designed to increase shareholder power.