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This is the era of the activist investor. Although investors prize different things - a hedge fund may seek to force a spin-off or reduce cash reserves, while a public pension fund may seek corporate governance changes - as a group, shareholders have never been more active and aggressive in seeking to influence change. It is perhaps because of this activism that the relative lethargy of other shareholders becomes more pronounced.
Shareholders are increasingly making their opinions known and voices heard when it comes to corporate decision making and issues. They are becoming more forceful and effective than ever across a wide range of business strategy and management related issues. Recent developments in corporate governance policies have reinforced a growing shift in fundamentals when it comes to the balance of influence between boards of directors and shareholders in the corporate decision-making process.
Activism is becoming an increasingly adopted and acceptable asset class in itself. The view of shareholder activism has moved into a more positive light than it was held historically and widespread acceptance is becoming the norm. Shareholders are increasingly making their opinions known and voices heard when it comes to corporate decision making and issues.
The corporate governance landscape has undergone numerous substantial changes over the last few years and this trend is moving forward progressively. As part of this discussion director pay and remuneration policy have become contentious issues of focus. Shareholder activism has understandably grown rapidly since the financial crisis of 2008.
During the proxy season, which is usually in April, numerous companies will hold annual shareholder meetings. The majority of companies tie in the timing of the proxy season to follow the end of their fiscal year so that they may hold the annual meetings to vote on key issues soon after reporting.
The overall success of shareholder activism in the United States is leading to its increase in the U.K. and Europe, and its rise in Asia and Latin America. Recent academic studies suggest that, by and large, activists are good for companies. An analysis of around 2,000 interventions in America during 1994-2007 found not only that the share prices and operating
The dynamic between boards and shareholders of the companies they represent is evolving at a fast pace. This dynamic is now presenting a new set of challenges and these require new tools and techniques in the boardroom. The relationship between boards and shareholders has had to be rethought with a view towards identifying the differences in shareholder and board member perspectives in a timely and appropriate manner.
There is an overall international consensus of opinion that greater protection is needed for the rights of minority shareholders. Regulators around the world have stepped up the controls for such protection, and are in the process of further increasing such controls.
Proxy advisory firms – firms that vote shares for hedge funds or institutional investors that hold shares in many companies -- have been the object of regulatory scrutiny recently. “The Securities and Exchange Commission is planning to review recommendations for possible regulatory action targeting proxy