SHAREHOLDER ACTIVISM MANUAL PREPARING FOR AND RESPONDING TO SHAREHOLDER ACTIVISM For more information, contact: Patrick Forrest Vice President, Litigation & Deputy General Counsel
[email protected] Christina Crooks Director, Tax Policy
[email protected] Written by Scott H. Kimpel, Partner Hunton & Williams Introduction This Shareholder Activism Manual is designed to assist public labor—use the shareholder proposal process to advance political companies and their boards of directors, policymakers and and labor-related objectives. other interested parties in better understanding the many facets of shareholder activism. “Shareholder activism” is a broad Investment-focused activists come mostly from the ranks term used to describe various shareholder efforts to influence of the hedge fund industry2, though a handful of wealthy corporate actions and corporate governance through a wide individual investors are also players in the space. While this range of methods. The goals of these efforts are as diverse as Manual includes a brief discussion of the issue-focused activist, the parties that engage in activist campaigns, and may include a because the stakes are so high in an investment-focused activist more rapid return of capital to investors, a change in composition campaign, the primary focus of this Manual is the investment- of management or the board of directors, a fundamental focused activist. Investment-focused activists usually purchase restructuring of the business, or change in corporate behavior on a significant but far less than controlling percentage of company a particular social issue. stock, and then use the overt or implied threat of a proxy contest3 to press for change that the activist believes will increase the Though shareholder activism has existed on the margins for stock price or otherwise return value in the relative near term.