Shareholder activism has the potential to affect any publicly traded manufacturer’s business approach. Recently activist investors have impacted companies by persuading them to change executive compensation, accept new directors, update environmental policies, restructure the company, and more.
Furthermore, how the SEC responds to shareholder proposals is of great interest to publicly traded manufacturing firms. Under Rule 14a-8, a shareholder that satisfies the rule’s prerequisites can submit a “recommendation or requirement that the company and/or its board of directors take action” for inclusion in the company’s proxy materials. Manufacturers may deal with such proposals in a variety of ways. For example, manufacturers may raise an objection with the SEC or negotiate with the investors making a proposal. Recently, environmental and sustainability issues have gained support among activist investors, so companies should understand how to adapt to the changing concerns of shareholders.
Regardless of how activist investors raise concerns, what concerns are raised, or who the activist investors are, a manufacturer and its board should have a strategy prepared. In this video, Foley Partner Deepak Nanda discusses steps companies can take to prepare for activist shareholders.