In a recent in-depth panel discussion hosted by The Financial Executives Networking Group (FENG) Banking Special Interest Group, a group of respected professionals shared their experiences and strategies for dealing with shareholder activism, illustrating the complexities and necessary precautionary measures required in today’s corporate environment. The assembly of legal counsel, proxy solicitors, financial printers, and corporate governance specialists provided a holistic view of the challenges and solutions associated with activism.
The dialogue highlighted that approximately a quarter of Russell 3,000 companies now recognize shareholder activism as a potential risk, underlining the growing prevalence of this issue within the corporate sphere. A significant insight from the discussion was the high cost and complexity of proxy fights, many of which are resolved before they even reach the voting stage, indicating a preference for negotiation and settlement over public disputes.
Panelist Paul Ferdenzi, Vice President, General Counsel and Corporate Secretary at Curtiss-Wright Corporation shared valuable tactics on engaging with activists, drawing comparisons between the approaches of prominent activist groups like Starboard and Saddle Point. Meanwhile, Gabby Wolf, Director of Innisfree M&A Inc. and Reuben Zaramian, Partner in Sidley’s New York office, discussed the operational challenges companies face, from managing multiple campaigns simultaneously to the pitfalls of insufficient investor engagement and a lack of awareness of company vulnerabilities.
Adele Hogan, Partner and Head of Securities, Otterbourg offered strategic advice for corporations aiming to avoid proxy contests altogether. By focusing on governance, personnel, and solid business strategies, companies can better prepare themselves against unsolicited activist advances. Hogan cited Disney’s successful navigation around Trian’s activist maneuvers as a testament to the effectiveness of these strategies. Jason Booth, Shareholder Activism, Activism Vulnerability Editor at Diligent Market Intelligence elaborated on Disney’s experiences, noting the company’s history as a target for activist investors, thus providing a compelling case study on proactive management and engagement to deter activist campaigns.
The discussion also shed light on the pivotal role of technology in modern proxy fights, advocating for companies to collaborate with printing partners that possess the necessary technological capabilities. Another key point raised was the impact of universal proxy cards on proxy contests, emphasizing the need for companies to rationalize their board composition.
Educating boards and companies on the nuances of activism was unanimously viewed as critical for advance preparation and strategic planning. The panelists, sharing a consensus on the importance of readiness, highlighted scenario planning and the cultivation of strong relationships with external advisors as essential components of an effective defense strategy.
Furthermore, the panelists advocated for the use of tabletop drills as practical training exercises to foster team cohesion and response efficiency during live activist engagements. This preparedness, coupled with maintaining updated response playbooks, solidifying advisor relationships, and ongoing training, was underscored as vital for effectively managing and mitigating the impact of shareholder activism.
This comprehensive discourse not only shed light on the challenges associated with shareholder activism but also offered actionable strategies for companies aiming to fortify themselves.
About the Panel
Jason Booth, Shareholder Activism, Activism Vulnerability Editor at Diligent Market Intelligence
https://www.linkedin.com/in/jason-booth-b5a94213/
Editor and lead writer for Diligent Market Intelligence’s shareholder activism and activism vulnerability news and analysis. Provide staff training on financial analysis, shareholder activism and financial writing. Over 25 years’ experience in shareholder activism, M&A, restructuring, litigation and financial markets as a journalist, strategic communications adviser and university lecturer. Ten years in Asia.
Paul Ferdenzi, Vice President, General Counsel and Corporate Secretary atCurtiss-Wright Corporation
https://www.linkedin.com/in/paul-ferdenzi-140bb06/
Paul joined Curtiss-Wright Corporation in June 1999 as an Associate General Counsel responsible for the Corporation’s legal needs in the areas of employment, securities, and real estate law. In May 2001, the Board of Directors appointed Mr. Ferdenzi to the office of Assistant Secretary of Curtiss-Wright Corporation and in November 2011, the Board of Directors appointed him to Vice President of the Corporation.
Gabrielle Wolf, Director of Innisfree M&A Inc.
https://www.linkedin.com/in/gabrielle-wolf-349407a/
Ms. Wolf advises companies and investors on all aspects of shareholder engagement, with a focus on proxy contests, shareholder activism, hostile and friendly acquisitions, contested shareholder meetings, corporate governance and other proxy solicitation matters.
Tony Lind,Partner, Command Financial
https://www.linkedin.com/in/tony-lind-7b00b926/
Tony is a partner at a leading publishing and content management conglomerate. “The Command Companies”.At Command, Tony focuses on the distribution and the SEC filings of public companies’ shareholder materials. Particularly, he has a keen interest in contested proxy battles and has worked on many name brand contests including: Disney, Exxon, Target, P&G, DuPont and Bristol Myers to name a few. He brings over 40 years of experience to the industry.
Reuben Zaramian, Partner in Sidley’s New York office.
https://www.linkedin.com/in/rzaramian/
Focuses his practice on shareholder activism and corporate governance. Reuben advises public companies on investor engagement, takeover defenses, board matters, governance practices and ESG issues. Reuben also frequently advises on Section 13 and Section 16 reporting and liability matters. Over the past decade, Reuben has been involved in 100+ shareholder activism engagements, including many of the most notable late-stage campaigns and settlements. Prior to starting at Sidley, Reuben was an associate at a law firm with a prominent shareholder activism practice, where he represented leading activist hedge funds in high-profile shareholder activism mandates.
Adele Hogan, Partner and Head of Securities, Otterbourg
LinkedIn: https://www.linkedin.com/in/adelehogan/
