CLS Blue Sky Blog

Wachtell Lipton Discusses the State of Play in Activism

As we approach the 2019 proxy season, developments since September 2017 prompt a brief updated review of the state of play.

As we recently noted, with the (1) embrace of corporate purpose, ESG, and long-term investment strategy by BlackRock, State Street and Vanguard, (2) adoption and promotion by the World Economic Forum of The New Paradigm:  A Roadmap for an Implicit Corporate Governance Partnership Between Corporations and Investors to Achieve Sustainable Long-Term Investment and Growth, (3) enactment of a benefit corporation law by Delaware and some 30 states, (4) introduction of legislation by Senator Warren to achieve stakeholder corporate governance by way of mandatory federal incorporation, and (5) the activities of Focusing Capital on the Long Term, Coalition for Inclusive Capitalism and Investors Stewardship Group, it is clear that we are reaching a new inflection point in corporate governance.

However, it is unlikely that today’s elevated level of activism will be curbed by legislation, regulation or market forces in the near term.  Companies will have to follow closely activist developments and the opinions of their major investors.  Companies should perfect and maintain their engagement activities.  Companies should regularly review and adjust their plans designed to avoid an activist attack and to successfully deal with an activist attack if one should occur.

This post comes to us from Wachtell, Lipton, Rosen & Katz. It is based on the firm’s memorandum, “Activism: The State of Play,” dated October 9, 2018.

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