Be your own activist
Developing an activist mindset
Executives and Boards who understand and apply activist techniques are better placed to meet the demands of activists and simultaneously drive shareholder value. This means they may look to understand the motivation of activists, ask some difficult internal questions about company performance and future direction, and then take concrete steps to improve shareholder returns.
Shareholder activism in South Africa
In 2018, global shareholder activist campaigns hit record highs. The tightening of regulations, along with shifting investor sentiment has provided a platform for shareholders to exercise their power, calling for greater accountability in boardrooms.
Some of the current trends we expect to shape South Africa’s shareholder activist landscape in 2019 include:
Concerns around governance, transparency and accountability will need to be supported by legislative frameworks to equip executives with activist approach tactics.
Employing tactical support strategies from advisors in activist situations will be fundamental to securing a support base for the board to buffer against shareholder activism.
South Africa has strong trade unions and in the past these unions have had profound impact on how deals have been structured. Opposition from labour unions is likely to effect the outcomes of M&A activity, as they contend with employment related risks.
South Africa is likely to deepen its activism in this space, placing more pressure on companies to deliver on organic growth strategies.
Executive pay, performance and shareholder alignment
Deloitte analysis suggest that shareholders do have a valid basis on which to challenge the current construct of pay versus performance.