2015 Shareholder Activist Landscape
Institutional Investors share their perspective on shareholder activism in 2015
What explains the seemingly sudden prominence and success of activist investing? Activist investing is not a new phenomenon. In fact, some of today’s most prominent activists – including Elliot Management, Jana Partners, Starboard Value, Pershing Square Capital Management, Third Point Management, and Carl Icahn – have been aggressively pushing for capital, managerial and operational changes in companies since at least the 1990s. The answer very well may be the growing support of institutional investors for activist campaigns. FTI Consulting surveyed over 100 institution investors representing almost $1.7 trillion in assets under management and asked them a series of questions relating to how they view activism. The results show that institutional investors view activists in a positive manner and are increasingly supportive of the nomination of independent directors for board seats by activists.
Many institutional investors subscribe to proxy advisory services such as Institutional Shareholders Services (“ISS”) and Glass Lewis (“GL”). Even so, institutional investors are increasingly conducting their own proxy research as well, using their own designated corporate governance personnel or establishing proxy voting committees that have ultimate decision making authority for proxy voting. Portfolio managers and analysts may have a voice in the decision, but their recommendations do not necessarily carry the weight they once did.
Notwithstanding these voting dynamics, institutional investors have become increasingly “active” in their engagement of portfolio companies and through their approach to proxy voting decisions, are becoming more supportive of activists.