DelhiDesk Shareholder activism is increasingly important in corporate governance, with campaigns by activist hedge funds becoming more frequent at some of the world’s largest firms. Activist campaigns are essential for shareholder capitalism, as they remind managers that firms should be run in the interest of owners, rather than managers. Activists are also becoming more important due to the rise of passive investing, which replicates returns rather than surpassing them, and the need to boost profits by applying discipline. New rules in America should make it easier for activists to obtain board seats, with more battles between activists and complacent managers expected.

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๐Ÿ‘‰ Shareholder activism is a major concern for the C-suite, as it can lead to critiques of their leadership and decisions.

๐Ÿ‘‰ During this year’s proxy season, many executives have avoided votes on dissident nominees to their boards.

๐Ÿ‘‰ However, some of the world’s largest firms, including Alphabet, Bayer, Disney, and Salesforce, have had to deal with activists.

๐Ÿ‘‰ Activist hedge funds are often seen as villains, but they play an essential role in shareholder capitalism.

๐Ÿ‘‰ The rise of passive investing has led to an increasingly idle corporate electorate, as passive asset managers are not designed to spot poor management.

๐Ÿ‘‰ The buy-out industry is roiling from the effects of higher interest rates, and is unlikely to recover fully for some time.

๐Ÿ‘‰ The need to boost profits by applying discipline has grown, as profits are more important than growth.

๐Ÿ‘‰ The demand for managers to respond to environmental, social, and governance (ESG) concerns has also grown, but the danger of firms losing focus and wasting money has increased.

๐Ÿ‘‰ Activists are a welcome reminder that firms should be run in the interest of their owners, not managers.

๐Ÿ‘‰ New rules in America should make it easier for activists to obtain board seats, and more battles between activists and complacent managers would be beneficial.

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