March 23, 2014

Executives take note: activists are sometimes right

McKinsey’s consultants suggest the best strategy is to listen
By John Authers

Executives need to beware of activist investors. They are better armed than ever before, and they are coming after ever bigger targets. As this year’s proxy season in the US comes into view, with annual meetings and board elections on the agenda, heads of big corporations should no longer assume that they are safe.

Not only that but some of the raiders’ ideas actually make sense. No longer barbarians intent on forcing money out of the company through grotesque financial engineering, the current generation of raiders tend to have done their homework. Like business school students diligently working on a case study, they have good ideas to suggest. So it behoves managements to listen to them, rather than move straight into confrontation.

February 13, 2014

Linda Fayne Levinson discusses SDX on This Week in the Boardroom

By Linda Fayne

February 11, 2014

Large Shareholders Join Forces With Corporate Directors to Defeat Hedge Fund Locusts

By Nell Minow

Sam Levenson once observed, “The reason grandparents and grandchildren get along so well is that they have a common enemy.”

The same could be said for a new alliance between groups who have often been at odds and more often had no communication at all: large institutional shareholders and corporate directors. A new initiative called SDX is prompted in part by a mutual interest in combating “activist shareholders” whose short-term pressure for performance is detrimental to both corporations and long-term investors. SDX founders include representatives from Vanguard, BlackRock and the Florida state pension fund as well as directors of JP Morgan Chase, Korn/Ferry and Six Flags. This is the kind of alliance that made it possible for Apple to resist Carl Icahn’s six-month siege pushing the company to use their cash hoard for a $50 billion stock buy-back.

February 10, 2014

A Bold Corporate Proposal: More Talk, Less Action

By Tom Gara

For those who don’t spend their working hours in the board rooms of public companies, it’s easy to assume that talking to your biggest shareholders is a major part of a board member’s work.

In reality, the communication channels between institutional investors and boards are informal and unstructured. Sometimes they’re hardly even open to begin with—a factor keenly exploited by activist investors, who pounce on companies that are deaf or unresponsive to investor concerns.

“In many cases the activists are crystallizing a level of discontent they perceive in the market,” says Michelle Edkins, the head of corporate governance at BlackRock Inc., the world’s largest asset manager. “If mainstream investors feel they can communicate their concerns and be heard, then the board may be forewarned and do something before activists get involved.”

February 05, 2014

Glenn Booraem Discusses SDX on CNBC

February 04, 2014

Jim Woolery and Declan Kelly Discuss SDX on CNBC

February 03, 2014

Leading Public Company Directors and Institutional Investors Join to Launch SDX™ –  the Shareholder-Director Exchange

SDX - A Protocol for Connecting Shareholders and Board Members.

NEW YORK, Feb. 3, 2014 /PRNewswire/ — A working group of leading public company directors, institutional investors and the advisory firms Tapestry Networks, Inc., Cadwalader, Wickersham & Taft LLP and Teneo Holdings, LLC together with Broadridge Financial Solutions, Inc., today announced the launch of SDX – the Shareholder-Director Exchange. SDX is the collective best thinking of a broad group of leading corporate governance practitioners on why, how, and when boards and institutional investors should engage directly with each other. Although the SDX Protocol can be used in the context of a corporate crisis, it is intended to be a broader template for discussing and addressing corporate issues in the normal course of business.

“Market conditions as well as an increasing focus on better and more effective governance practices have demonstrated the necessity of direct communication between directors and shareholders,” said Bonnie Hill, Director, AK Steel Holding Corp., California Water Service Group, The Home Depot, and Yum! Brands. “There is a growing call for directors to engage directly with shareholders, but until now, the circumstances and conditions under which that engagement should take place have been unclear. The SDX Protocol was developed in partnership with investors and directors to help navigate these uncharted waters.”

February 03, 2014

Unlikely Allies Seek to Check Power of Activist Hedge Funds

By David Gelles

Relations between big public companies and their largest shareholders can at times take on the qualities of a long, unsatisfactory marriage. Complaints from the shareholders are many, but they go mostly unspoken, leading to simmering resentment.

In the age of activist investing, this often leaves companies blindsided when traditionally passive investors suddenly side with an insurgent hedge fund pressing management for change.

February 03, 2014

US Directors and Investors Begin Bridging Their Divide

By Anthony Goodman

When a group of long-term institutional investors, including BlackRock and Vanguard, convened last month in New York with public company board directors from businesses as diverse as Hertz, Merck and The Home Depot, they were part of a changing dynamic in director-shareholder relations in the US.

Board directors in the US tend to say they would be more likely to engage with shareholders if they knew how to do so effectively. That is what led to the assembly of a “coalition of the willing” to develop a new protocol for engagement.

December 05, 2013

Shareholder activism forces greater shareholder engagement, SEC chair says

White calls for ‘proactive outreach’ to shareholders and further engagement by boards
By Adam Brown, IR Magazine

Shareholder activism has forced companies to become more attentive to investors in recent years and is prompting greater focus on corporate governance, says SEC chairman Mary Jo White.

Speaking to a conference on governance held by European and US officials and experts, White added that the public perception of activist investors has changed since the 1980s and 1990s and they now receive wider support and more engagement from corporations.

‘I think most would agree that the advice on how to respond to shareholder engagement today is quite different from the advice companies were getting 30 years ago, or even 10 years ago,’ she said. ‘The process has become less defensive and more proactive. We are seeing a concerted effort to persuade shareholders of the wisdom of management’s choices and practices. That is a good thing.’