Shareholder activism is the way in which shareholders leverage their equity stake to put public pressure on a corporation’s behavior. In his keynote address at the 2014 Berkeley Center for Law, Business and the Economy, and Berkeley Business Law Journal Shareholder Activism Symposium, Larry Sonsini, Chairman of Wilson Sonsini Goodrich & Rosati, declared that there has been a noticeable shift from a director-centric model to a shareholder-centric model. Until recently, shareholders were fighting defensive measures and managerial successions. Nowadays they are engaged in battles over corporate sales, spinoffs or corporate sustainability.
Poison Pills in the Era of Shareholder Activism
Corporate Law Experts Agree: Shareholder Activism Here to Stay
While the corporate law experts at Berkeley Law’s April 4 conference on shareholder activism offered different opinions about causes and impacts, they all found a patch of common ground: it’s here to stay.
Active shareholders assert their power as owners of a public company in order to change its behavior and encourage corporate responsibility, and their actions have increased dramatically in recent years. Triggering factors include sub-par share price performance, overly conservative financial strategies, and conglomerate business models. Since 2009, activist hedge funds have outperformed traditional hedge funds and other markets—forcing board rooms to take notice.
The conference, co-sponsored by the Berkeley Center for Law, Business and the Economy and the Berkeley Business Law Journal, illuminated this shifting landscape. Keynote speaker Larry Sonsini ’66, chairman of Wilson Sonsini Goodrich & Rosati, described how companies must adjust to these changes.
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2014 Symposium: Keynote Address from Larry Sonsini on Shareholder Activism
During the 2014 BCLBE and BBLJ Shareholder Activism Symposium, Larry Sonsini delivered the keynote address directed at the change in the activist climate and how this change should be interpreted.
“Shareholder activism will be around for a while,” Sonsini declared because there has been a shift from a director-centric model to a shareholder-centric model. In this shareholder-centric model, shareholder activists agendas’ have become broader. They are no longer only concerned with battles over defensive measures (e.g., poison pills and staggered boards) and CEO successions, but are now addressing corporate sustainability—taking into account social, environmental, economic, and governmental measures—and are attacking companies on their merits.
2014 Symposium: Panel Explores the Hot Button Issues Surrounding Shareholder Activism
On Friday April 4, the Berkeley Business Law Journal and the Berkeley Center for Law, Business and the Economy hosted the 2014 Symposium on Shareholder Activism. With the rise in shareholder activism in publicly traded companies, activist campaigns are “perceived by various stakeholders as threats to be avoided, part of the current landscape, and powerful sources motivating social responsibility.” The Symposium explored this topic through hosting panel discussions with regulators, attorneys, academics and business professionals all sharing their thoughts on shareholder activism.
2014 Symposium: A Bird’s–Eye View of Shareholder Activism
From the first panel of the 2014 BCBLE and BBLJ Shareholder Activism Symposium: Three professors give a “bird’s-eye view” of shareholder activism.
Panelist:
- Eric Talley, UC Berkeley, School of Law
- Paul Rose, Ohio State University Moritz College of Law
- Adair Mores, UC Berkeley, Hass, School of Business
- Moderator: Joseph Santiesteban, Berkeley Business Law Journal
2014 Symposium: A Panelist’s Review of Shareholder Activism Discussion
Eric Talley at Berkeley, and the Berkeley Business Law Journal, put together a great conference on April 4, 2014 on shareholder activism, and I scratched out the following thoughts for our panel. We were supposed to talk about the prospects for further regulatory and legal developments governing or motivating shareholder activism. First, though, consider what legal rules facilitate activism – and when you do that, you discover that any change is likely to be marginal at best. Given my working definition of shareholder activism – using share ownership to promote concerted action, by large numbers of shareholders, to exercise the legal rights of shares – the following are key legal rules that enable this to occur.
Shareholder Activism: Improving Board-Shareholder Relations
Shareholder activism is playing an increasingly important role in corporate America and the world. Major activism campaigns involve board representation, shareholder rights, and M&A matters, mainly including mergers and spin-offs. According to a publication by Linklaters, since 2010 shareholder activism rose by 80% and 62% in the U.S. and Europe, respectively. Corporate governance and shareholder activism has recently been in the spotlight as a result of various high profile activist campaigns including Carl Icahn’s push for eBay to spin off PayPal. Amended U.S. Securities and Exchange Commission (“SEC”) rules concerning shareholder engagement and the Dodd-Frank Act have also brought shareholder activism into the public eye. Several independent agencies are taking interest and publishing guidelines to that effect. The Shareholder-Director Exchange and the Conference Board have recently released a set of suggestions to improve investor relations.