Conducted by J.P. Morgan’s Depositary Receipts Insights team, this Q&A discusses the latest trends in shareholder activism, including the areas where activity is increasing the most. It explains what catalyzes shareholder activists and how these investors identify their corporate targets. It also provides a suggested best practices checklist for senior decision-makers and investor relations professionals to consider when their company attracts activist investor attention.
David Hunker has been with J.P. Morgan since 2004. He is a member of the Mergers and Acquisitions group in New York, where he leads the firm’s Shareholder Activism Defense practice. In addition to advising corporate clients on defense strategies, Hunker’s team also helps clients evaluate their potential to be activist targets and assists them with the creation of an action plan to address vulnerable areas.
He shares some of his insights and experience.
Listen, even to investors with a relatively small ownership stake.
Understand an activist’s position by engaging with them.
Assess, objectively, the merits of shareholder suggestions.
Implement change, if consistent with long-term value creation.
Identify and engage decision-makers at each of your shareholders and how they would vote.
Anticipate the proxy advisors’ likely response.
Weigh the pros and cons of potential settlement/concessions.
Fight/contest if necessary and in the best interest of all shareholders.
Create a robust public relations strategy to be successful.
Potentially provide access to senior management and possibly individual directors, if appropriate.
Articulate a consistent message (directors, management and investor relations functions).
Make activism defense a regular part of management and board dialogue.
Engage advisors early to remain current on activist themes and strategies.
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