Activists are Knocking

By Julie Neitzel

Over the years, changes in regulations and the public marketplace have prompted investors to voice their concerns in the boardroom. Shareholder activism is an established asset class with constant growth, and activist investment funds comprise an asset base in excess of $200 billion. While it might seem as though activism is a recent phenomenon, it has been underway for more than nine decades.

The first credited case of activism took place in 1927, when Benjamin Graham pressured Northern Pipeline Co. to distribute excess cash to shareholders. He ran a proxy fight to put himself on the board of directors at a time in which intervening in a company’s governance was a unique path for fund managers. Graham won his proxy battle the next year and eventually became one of Warren Buffett’s mentors.

Activism generally involves shareholders of a publicly traded company who want to instigate corporate change. That can include “light activism,” such as submission of a shareholder resolution, or “heavy activism,” which can entail changes in board members or corporate strategy.

Institutional activists include hedge funds such as Elliott Management Corp., which has undertaken campaigns for decades against major organizations like Hess, Comcast and Samsung, and the country of Argentina. BlackRock Capital Investment Corp., an asset management firm with more than $5 trillion in assets, maintains a dedicated investment stewardship group that centralizes annual proxy voting. That creates a powerful voice in more than 150,000 proxy votes each year, with a mission to enhance and protect the long-term value of client assets. Institutional investors—such as BlackRock, Vanguard and the California Public Employees’ Retirement System—own more than 70 percent of U.S. large-cap stocks, which enables significant impact in the proxy voting process.

While the most-prominent activism involves large companies such as Apple, Herbalife and Clorox, nearly 75 percent of it is directed at smaller companies, those with market capitalization of less than $1 billion, says Keith Gottfried, a Morgan Lewis partner who leads a national activist defense practice. He says activism is a complex phenomenon and that boards should be aware of it and prepared for it.

Activists generally focus on unlocking value for shareholders by identifying misaligned executive compensation, ineffective management and governance, financial underperformance, lack of proper communication of long-term strategy and other operating issues.

It is largely a U.S. phenomenon, but it’s spreading. Recent high-profile cases in Europe include AkzoNobel and ThyssenKrupp. The challenge with international activism is that corporate law varies by country. Mastering the local rules of the activism game will create new opportunities across the globe.

Given the expected continued growth of shareholder activism, corporate boards can most effectively prepare by practicing good corporate governance, effective shareholder communications and appropriate financial performance, and “thinking like activists.”

Julie Neitzel is a partner and adviser with WE Family Offices in Miami and a board member of the Miami Finance Forum, The Miami Foundation, the Florida chapter of the National Association of Corporate Directors, and Heico Corp. Contact her at julie.neitzel@wefamilyoffices or 305.825.2225.

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Drew Limsky

Drew Limsky



Drew Limsky joined Lifestyle Media Group in August 2020 as Editor-in-Chief of South Florida Business & Wealth. His first issue of SFBW, October 2020, heralded a reimagined structure, with new content categories and a slew of fresh visual themes. “As sort of a cross between Forbes and Robb Report, with a dash of GQ and Vogue,” Limsky says, “SFBW reflects South Florida’s increasingly sophisticated and dynamic business and cultural landscape.”

Limsky, an avid traveler, swimmer and film buff who holds a law degree and Ph.D. from New York University, likes to say, “I’m a doctor, but I can’t operate—except on your brand.” He wrote his dissertation on the nonfiction work of Joan Didion. Prior to that, Limsky received his B.A. in English, summa cum laude, from Emory University and earned his M.A. in literature at American University in connection with a Masters Scholar Award fellowship.

Limsky came to SFBW at the apex of a storied career in journalism and publishing that includes six previous lead editorial roles, including for some of the world’s best-known brands. He served as global editor-in-chief of Lexus magazine, founding editor-in-chief of custom lifestyle magazines for Cadillac and Holland America Line, and was the founding editor-in-chief of Modern Luxury Interiors South Florida. He also was the executive editor for B2B magazines for Acura and Honda Financial Services, and he served as travel editor for Conde Nast. Magazines under Limsky’s editorship have garnered more than 75 industry awards.

He has also written for many of the country’s top newspapers and magazines, including The New York Times, Washington Post, Los Angeles Times, Miami Herald, Boston Globe, USA Today, Worth, Robb Report, Afar, Time Out New York, National Geographic Traveler, Men’s Journal, Ritz-Carlton, Elite Traveler, Florida Design, Metropolis and Architectural Digest Mexico. His other clients have included Four Seasons, Acqualina Resort & Residences, Yahoo!, American Airlines, Wynn, Douglas Elliman and Corcoran. As an adjunct assistant professor, Limsky has taught journalism, film and creative writing at the City University of New York, Pace University, American University and other colleges.