Jefferies

Actionable Ideas for Companies and Sponsors

Corporate Boards Successfully Challenging Activist Campaigns

Activist shareholders have deployed over $45 billion on campaigns in 2017, more than double the total for 2016, and there are no signs of abatement in new campaigns heading in 2018. However, as activists have pursued larger and better-resourced targets, companies have shown an increased willingness to fight back aggressively.

DuPont defeating Trian’s proxy fight with an aggressive investor communication plan focused on reiterating management’s strategic vision in 2015 was a turning point for defending against activist campaigns. ADP and Accorda, both companies with strong, consistent investor communication, also successfully fended off their activists. The playbook became clear – reacting to the specific approach was not a sustainable defense strategy. Management and boards need to maintain a proactive investor communication strategy, involving (i) regular outreach to both institutional and retail shareholders, (ii) clear articulation of the company’s strategic vision, (iii) direct participation by independent board members, along with (iv) real-time monitoring of the shareholder base.