|  | | 2007 News and Press Releases | | |
HEADLINE NEWS:
Boards Feel the Heat as Investor Activists Speak Up
Julia Werdigier
The New York Times. May 23, 2007
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EXCERPT: London, May 22 —The occasional activist has stirred up a revolt at an annual general meeting, led a no-confidence vote against management and even taken executives to court. Those have been the extreme cases. But in Europe, shareholder activism — a term that brings to mind Carl C. Icahn or Kirk Kerkorian, unseating directors and forcing spinoffs with elbows-out tactics — now seems to be moving toward Main Street and into the hands of ordinary investors. These no-frills activists are changing the dynamics at the top, their measured but pointed agitation pitting previously passive shareholders, who are used to expressing displeasure by simply selling their shares, against senior management. In many cases, the shareholders are gaining the upper hand, nudging up share prices and sometimes forcing out an executive or forcing the sale of the company. Most recently, the Children’s Investment Fund turned dissatisfaction into deal-making at ABN Amro, leading to rival bids for the bank, the largest in the Netherlands. … Activism was further fueled by a realization among shareholders that selling shares, often at a loss, to protest unsuccessful management did not really change anything. It simply meant the investment was now weighing on someone else’s portfolio as the company continued to underperform. “Activist shareholders are giving more confidence to those who felt in the past that they had no say and remind managers of their duties to account for shareholders’ interest,” said David Brooks, head of mergers at the advisory firm Grant Thornton in London. The recent explosion of private equity wealth and the rising appetite for takeovers are adding to the pressure on management to listen to shareholders. Analysts say shareholder activism is also focusing on a growing distrust of senior management that can be traced back to corporate scandals like those at Enron and Parmalat. |
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