Activist investors tend to cause headaches for CEOs and company directors, yet it appears that many of them don't seem to mind all the extra scrutiny,
Wells Fargo announced last week that it would pay $5 million to customers and $185 million in penalties to settle a fraud case where regulators said the bank pushed customers into fee-generating accounts they never requested.
It's become axiomatic among small- and mid-market CEOs and their advocates that the Dodd-Frank financial reforms of 2010 disproportionately hampered the community banks on which these companies so rely for capital. Meanwhile, another piece of legislation made it more difficult for startups to use credit-card financing to bootstrap their way through infancy.
When it comes to the cash that American businesses still have sitting on the sidelines, one thing is abundantly clear, and another important matter is as muddy as the Mississippi River.
The world is suffering from a global disorder: a Trust Deficit Syndrome. Trust is declining for all established institutions. Trust Deficit Syndrome is a debilitating business disease. Addressing this disease should be a high business priority. Here’s the reason.
Firms are boosting the automatic retirement-savings rate—and finding little pushback from employees
How do middle-market companies secure the funds they need to grow without taking on too much debt?
No company, regardless of size, profitability or cash stockpile, is immune from an activist investor attack. Power players like Apple, Pepsi, Microsoft and Netflix with tons of cash and generous dividends that outperform their peers have successfully been attacked and forced to change course. Proctor & Gamble’s attacker owned less than 1% of the firm and orchestrated an event that ousted the CEO and forced a change in corporate strategy.
Before launching an all-out offensive against an activist investor, both sides should consider a middle path. No one has a monopoly on wisdom, and often an activist will have a worthwhile suggestion. Moreover, being willing to listen to properly presented ideas from a significant shareholder is part of a CEO’s and a board’s fiduciary responsibility.