Finding Friends Is Hard: Long-Term Investors’ Relationship with Proxy Advisers, Activists, and Equity Funds

Institutional investors are howling for US public companies to focus more on the long-term.[1]  This is unsurprising. Long-term focused companies produce significantly better results over time, reporting far greater revenue growth with less volatility, far higher levels of economic profit, and greater total return to shareholders.[2] So if you are holding stock for a long time, a long-term focus for your portfolio companies is critical.

And as every new dollar flows from actively managed funds to passive strategies[3], reducing the ability of funds to trade nimbly in and out of stocks, long-term stewardship naturally emerges as … Read more

Cleary Gottlieb Discusses Long Term Investors’ Duty to Revive the Staggered Board

Beyond the cacophonous din of voices calling for companies to serve a “social purpose,” adopt a variety of governance proposals, achieve quarterly performance targets, and listen to (and indeed even “think like”) activists, there is now, most promisingly, a call from genuine long term shareholders for public companies to articulate and pursue a long term strategy.[1]  This latest shareholder demand directly supports the achievement of traditional corporate purposes, and seems, more than any other shareholder demand of the last decade, the most likely to increase shareholder value.  Yet in current circumstances, where all corporate defenses have been stripped in … Read more