Activism Swarms

It seems we are in the cycle of a significant amount of shareholder activism.

There is an increased phenomenon of multiple activist companies coming together to pursue large cap public companies. This is now being characterized as an “activism swarm”.

Walt Disney Co. has received interest from two activists; famed investor Nelson Peltz of Trian Partners is expected to mount a proxy fight for a seat on the board.

Salesforce is facing at least 4 activists after a slowed growth and significant executive turnover.

According to Lazard Capital Markets Advisory Group, in 2022 there were 17 companies that faced more than one activist situation. This number has grown significantly from 9 in 2021 and 7 in 2020. According to Lazard, there were 135 activist campaigns in the U.S. in 2022, a 41% jump from 2021.

It is expected that this uptick in activist campaigns will continue throughout the year as a down market for stocks creates an ideal environment for activism.

As a board member who has experienced an activist attack from both sides of the table as well as having been a member on an activist slate, I thought I would share some of my learnings.

First of all, there is a wide range of activists. There are activists who are often referred to as being short term and disruptive.  The press sometimes characterizes Carl Icahn in this way.

They are a longer-term activist, who partner with the company and take a long-term position like Value Act, for example. They amassed a 1% stake in Microsoft and G. Mason Morfit, President of ValueAct, joined the board for 5 years. Some activists aim to be a longer-term collaboration partner.

One of my learnings has been that when engaging with an activist you need to identify and understand what their theory/thesis is for improving your business.

Many activists are very thoughtful and do deep research on how they think they can unlock value in a company. Sometimes it is a near term unlock, sometimes it’s a longer-term operational set of changes.

One of the first key decisions that must be made is who from the company will engage with the activists. I recommend that the CEO be the one and only single point of communication. Perhaps additionally a non-exec chairman of the board/lead Director, only+ if needed.

There can only be one voice negotiating with the activist. This must be pre-discussed with the board and agreed upon. The Board of Directors will likely be contacted individually through reach outs. The activists are very engaging, and they very often find private cell numbers and call directors unannounced. It is important to be able to thank that activist for their interest, and ask them to please work with the designated spokesman i.e. the CEO.

It is important to have your investor relations team, CFO, and proxy advisors alert you when an activist is beginning to take a position in your stock.

Simultaneously, it’s very important to have ongoing outreach to your shareholders.

Identify the top 12 shareholders. It is essential to actively work with them and communicate your views. Collaborate with your top 12 shareholders so that you have an ongoing relationship and can tell your side of the narrative as you will need their votes.

You can absolutely be assured that the activists are working on your biggest shareholders and persuading them that their thesis is best for the business. They will have already done their pitch and begun persuading your top 12 to vote with them before you ever hear from the activist.

Throughout my own career I have dealt with different activists at different companies. Here is a brief overview:

  • One of my own personal experiences in dealing with an activist was at the Darden board. It was the first time in American history all 12 board members were replaced by an activist slate, led by Starboard. A new board was voted in and I was brought in as governance chair.

    In this scenario, Starboard had spent significant funds/time to develop an in-depth business plan / thesis on how to improve the operations in the business and reduce overhead / expense. The plan was put in place, and it drove significant upside for shareholders in the stock performance.


  • Another activist situation I was involved in was at Home Depot Supply where I was lead director. Activist Jana took a sizable stake in the stock. The lead investor from Jana was extremely thoughtful, balanced, and collaborative. At HD Supply we were pleased to invite him on to the board. This had the benefit of “locking down” the Jana stake so it would not be traded. It also repelled interest from other potential activist investors.


  • I also previously served on the board of Cognizant which also encountered an activist. In this situation the outcome was a negotiated settlement. The company made consistent and measurable improvements quarter after quarter. The activist was a catalyst for foundational operational improvement. This was a positive compromise.

Every activist situation is different. Each scenario must be evaluated individually. The goal should be to learn and gain insights from the activist. This will enable you to either negotiate and compromise or disagree and be able to persuade shareholders that your view for stewarding the company is better than the activists’.

In my opinion, the dated view of several decades ago of strong arming the activists, and refusing to engage, is not successful. It is an evitable that you will have to engage and the sooner you do it, and the more professional you are in listening, and understanding the value of what may be suggested, the better your chance of reaching a successful outcome.

Objectivity, data, and open discussions are my recommendations if your board is faced with an activist.

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