Activist Investors
Wachtell Lipton Discusses How to Deal with Activist Investors
Activism has fully rebounded from the brief pandemic dip, with the past eighteen months seeing increased activity. As we have previously noted, regardless of industry, size or performance, no company is too large, too popular, too new or too successful …
Contests Under Universal Proxy Rules Have Produced Mixed Results
There have been 12 proxy contests that have gone to a vote under the SEC’s universal proxy rules, which became effective on September 1, 2022. A review of these contests reveals several themes.
Overall Results: Activists obtained a board seat …
Can Shareholder Lawsuits Police Companies’ Climate Disclosures?
In March 2022, the SEC proposed mandatory climate disclosures for public companies.[1] While climate activist investors applauded the proposed rules, opponents lamented their scope and cost, arguing that the SEC lacks the authority to promulgate such rules. But the …
Proxy Tactics Are Changing: Can Advance Notice Bylaws Do What Poison Pills Cannot?
Military strategy and takeover strategy share a few things in common. At some point, generals and M&A lawyers each must recognize that the old technology no longer works as it did in the past and can no longer dominate the …
What the Language of Shareholder Stewardship Can Teach Us
Stewardship has, along with sustainability, social equality, biodiversity, and climate risk management, emerged in recent years as a favorite buzzword in corporate governance and investment management circles. But the language used by investors to express stewardship objectives and practices varies …
Why the SEC’s Proposal for “Modernization of Beneficial Ownership Reporting” Is Flawed
Last February, the Securities and Exchange Commission proposed to “modernize” the reporting of beneficial ownership of a company’s stock under section 13(d) of the 1934 Securities Exchange Act. As I explained in a recent comment letter to the SEC, the …
Universal Proxy Cards and the 67 Percent Solution
The upcoming Universal Proxy Card (UPC) presents activist investors with only one potentially significant new burden: solicit two-thirds of the shares in a proxy contest at a portfolio company. Everything else in the new rule, including the new proxy card …
Gibson Dunn Discusses SEC Rules Mandating Use of Universal Proxy Card
On November 17, 2021, the Securities and Exchange Commission (SEC) approved amendments to the federal proxy rules to mandate the use of a universal proxy card in public solicitations involving director election contests. After the rules become effective on August …
Wachtell Lipton on Dealing with Activist Hedge Funds and Other Activist Investors
Despite a short dip at the outset of the pandemic, activism has rebounded and now continues at an ever-growing intensity. As we have previously noted, regardless of industry, size or performance, no company should consider itself immune from activism. No …
Investor Relations, Activism, and Engagement
Activist investors once limited their targets to mostly smaller, less known firms. Now, though, they increasingly target large, household names like Procter & Gamble, DuPont, and Berkshire Hathaway, aiming to influence company actions, replace management, or even purchase the company.…
The Financialization of Corporate Governance
Members of the academic community, the business world, and law firms have long been debating shareholder primacy, stakeholder governance, and corporate purpose. In a forthcoming essay, I outline these arguments but suggest that reform of corporate governance should be focused …
The Causes and Consequences of Increased Cross-border Shareholder Activism
In a recent working paper, we look at what drives shareholder activism around the world and focus specifically on the role of corporate governance reforms.
Overview
While shareholder activism has been a force in U.S. capital markets for some time, …
Beyond “Going Dark:” The SEC’s 13F Proposal and Hedge Fund Activism
This past summer, the Securities and Exchange Commission (SEC) proposed eliminating quarterly disclosures for 90 percent of institutional investment managers by raising the reporting threshold under Section 13F of the Exchange Act from $100 million to $3.5 billion. The proposal …
Wachtell Lipton Offers Thoughts for Boards of Directors in 2020
The past six months have been marked by a profound upheaval that has accelerated the growing focus on both the purpose of the corporation and the role of the board in overseeing and leading the corporation in ways that promote …
Shining a Light on Strategically Leaked Plans of Activist Investors
On October 12, 2015, an activist hedge fund we’ll call John Doe Management filed a Form 13D, disclosing 5.5 percent ownership and an intent to pursue an activist campaign in a target firm we’ll call Industrial Corp (IC). The next …
The Case for Institutional Investors’ Collective Engagements
Shareholder cooperation is on the rise as a tool for active corporate ownership and a way to effectively voice concerns about corporate governance and performance. While “wolf packs” of activist hedge funds that aim to bring about significant corporate change …
What Comes After Shareholder Primacy? Employee Empowerment
In corporate law, the U.S. academic elite stubbornly clings to shareholder primacy as the foundational principle of the field. The concept is simple, even elegant: Shareholders should be given ultimate control of the corporation because they are entitled to the …
Activism and Informed Trading
Hedge fund activism has transformed the corporate governance landscape – possibly for better, possibly for worse. But as activist funds emerge as the newest and most potent players in corporate governance, there is one certainty: New agency costs also arise. …
How Investor Activism Affects Corporate Social Responsibility
Prominent activist investors such as hedge funds, pension funds, and influential individual shareholders and families increasingly aim to reshape corporate policies and strategy. In our paper “Shareholder Engagement on Environmental, Social, and Governance Performance”, we use a proprietary …