Shareholder Activism

Activist campaigns, and particularly proxy contests, are inherently votes of no-confidence in a board and management team.

For most investors, the critical factor in corporate governance is whether a company’s independent directors are asking the right questions and making the right decisions in meetings shareholders will never be in. An activist is effective to the extent it can call that into doubt: it doesn’t have to have the answers, if it can convincingly demonstrate there is cause for concern.

We help boards and management teams make their case more effectively to shareholders and proxy advisors alike, and de-risk their support for the incumbent board.

Prior to an activist’s arrival, SGA can help by:

• Performing a vulnerability assessment to identify issues likely to spur activist interest, as well as ancillary issues which might weaken the support of other shareholders should an activist launch a campaign.
• Helping the company strengthen relationships with institutional proxy voting groups through an effective shareholder engagement strategy.
• Developing an activism preparedness plan and giving management hands-on training through a tabletop exercise.

During an activist campaign, SGA can help by:

• Marshalling facts-on-the-ground into a narrative which will build confidence among both the proxy advisors and the institutional holders who are not aligned with the activist.
• Preparing executives and directors for their engagement meetings with proxy advisors and governance-oriented institutions, including extensive coaching and “live fire” rehearsals with our Managing Partner, Chris Cernich, ISS’ former Head of M&A and Proxy Contest Research.
• Helping the company mitigate critical commentary in the proxy advisor reports, particularly with regard to any questions about the board’s comprehensiveness and stewardship, to reduce the frictional costs of getting shareholders to yes.