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Activist Hedge Funds, “Golden Leash” Special Compensation Arrangements, and Advance Notice Bylaws

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Activist Hedge Funds, “Golden Leash” Special Compensation Arrangements, and Advance Notice Bylaws

The Conference Board,

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Что внутри?

Activist investors use various techniques to drive change in the companies in which they hold positions.

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Editorial Rating

8

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  • Innovative

Recommendation

Activist investors are increasingly making their presence felt in corporate boardrooms. In fact, some of them, like Bill Ackman and Carl Icahn, are in the news more often than the CEOs of the companies they target. Activist shareholders seek to institute changes to a firm, including to its direction, philosophy, stock price and dividend policy. In this compelling examination, professor Jason D. Schloetzer details specific examples of hedge fund activism, the tools these investors used and their results. getAbstract suggests this noteworthy report to investors and executives.

Summary

Hedge fund corporate activism is on the rise. Activist hedge funds seek to drive returns for their investors by identifying companies that they feel are not delivering shareholder value. The results of these efforts beat other hedge fund strategies, racking up returns of 9.3% in 2012, 19.2% in 2013 and 8.5% in 2014.

One of the primary means a hedge fund manager employs to induce corporate change is to seek to fill seats on the organization’s board with “dissident directors.” Several extensively covered board scuffles indicate the effectiveness of this technique: In 2015, after activist investor Harry...

About the Author

Jason D. Schloetzer is an associate professor of accounting at Georgetown University.

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