Shareholder Activism Is On The Rise – Is Your Board Ready?

SHAREHOLDER ACTIVISM ON THE RISE

Over the past few years, there has been a substantial increase in the amount of interaction between shareholders and boards of directors of North American companies. One of the early notable examples occurred in 2007 when Pfizer announced that its board of directors was inviting its largest institutional shareholders to a meeting to give them an opportunity to provide comments on the company's governance and compensation practices. This action was criticized by some, including Marty Lipton of Wachtell Lipton who said in a memo sent to clients that this meeting was "another example of corporate governance run amuck."¹

In recent years, shareholder engagement has been more frequently initiated by shareholders and has resulted in, or contributed to, changes such as increased disclosure regarding executive compensation, "say on pay" and majority voting. Many shareholders will no longer hesitate to engage with boards and will do so in a