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When Activists Come Hunting: How CEOs Should Respond

 


Chief Executive | July 3, 2017



The Chief Executive article, “When Activists Come Hunting: How CEOs Should Respond,” quoted Russell Reynolds Associates Consultant Jack "Rusty" O'Kelley III about some of the ways CEOs can respond to activists shareholders. The article is excerpted below.

Shareholder activists have more and more heads on their wall—behold those of General Electric’s Jeffrey Immelt and Uber’s Travis Kalanick, of the most recent vintage—and more CEOs and boards are focusing energy on how not to be their next victims.

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“Activists have learned that it works and they have been very successful at driving change, or at least changes that enhance their returns,” said Jack “Rusty” O’Kelley, managing director of the New York office of Russell Reynolds recruiters. “And institutional investors have determined that this is something they’re willing to partner with to drive change in cases where boards and CEOs weren’t being responsive to them.”

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How should CEOs respond?
 So what should CEOs and board members do? How should they act before they’re targeted by activists and once they are? Here are 6 pointers.

1. First, listen. Once approached, boards and CEOs “need to genuinely listen to what activists have to say,” O’Kelley said. “These are smart people with very good teams who have spent a lot of time analyzing the company.”

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And in fact, boards and CEOs often have been considering the very prescriptions made by activists. But sometimes, O’Kelley said, they can’t disclose that to the investors—at least not yet.

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5. Regularly engage all shareholders. If CEOs don’t have a regular plan to inform and engage shareholders beyond annual meetings and quarterly reports, O’Kelley said, they should create one. “Shareholders are aware if you’re trying to avoid engaging with them,” he said.

To read the full article​, click here.

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When Activists Come Hunting: How CEOs Should Respond