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Volume 11, Number 1 •
January 2014
A New Golden Age
For activists, yes — but for directors, too.
By Jim Kristie
“Activist
investing has entered a new golden age,” trumpeted
Barron’s in its November 30,
2013 issue [click here].
Activists did reap a lot of gold last year, certainly if you count
board seats. As reported in the
Financial Times in a late-December article titled “Activist
Hedge Fund Managers Get Board Welcome” [click
here],
ISS has calculated that 68% of proxy fights for board representatives
resulted in success for activists in 2013 — “and that does not include
cases where the agitators were invited on to the board before
launching a fight.”
And activists sure reaped a lot of media coverage last year. I have
not seen any studies on this, but if some intrepid researcher were to
measure column linage devoted to shareholder activists, I would bet
2013 was a banner year for activism as a newsprint-hogging subject.
Two of my touchstones in this regard:
• Again from the FT, a Dec. 12
article that reports that “The heads of some of America’s largest
companies are preoccupied by an unusual question: what would Carl
Icahn do?”
[click here]
• And the Wall Street Journal,
in a Dec. 10 article headlined “Companies, Activists Declare Truce in
Boardroom Battles,” states that “Activist investors are increasingly
encountering an unusual reception when approaching corporate targets:
an open door.”
[click here]
This sounds golden agey to me, at least for the activists and
potentially their investors.
But let’s spin this on its head and suggest that we have the makings
of a new golden age for board members, too. Smart, savvy and strong
directors — the three S’s — will be valued more than ever as they help
navigate their companies in an era roiled by investor activism.
To this point, I am reminded of something Jeffrey Sonnenfeld said at a
Yale CEO Summit about 10 years ago. (Quick plug: These summits, which
Jeff runs as founder of the Yale
School of Management Chief Executive Leadership Institute, are one
of the most stimulating gatherings of top executives; I have just
returned from the most recent summit held last month at New York’s
Waldorf-Astoria.) Jeff shared with those of us who participated in
that decade-ago summit — many of whom were leaders still working
through the devastating dot-com collapse — what he called an old
Jewish saying: “I ask not for a lighter burden, I ask for broader
shoulders.”
The burden is not going to get lighter for directors in 2014 —
activists will see to that. So let’s add a fourth S — broader
shoulders — to the qualities that distinguish valued directors. If
management and the board have a bevy of 4S directors, great. If not,
it better get them, so that the new golden age is enjoyed by all, not
just the activists.
As always, I welcome your comments at
jkristie@directorsandboards.com.
Jim
Kristie is the editor and associate publisher of
Directors & Boards.
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