Jeffrey Kochian Quoted on How Financial Executives Can Fend Off Activist Investors
Jeffrey Kochian, a partner in Akin Gump’s corporate practice, is quoted in Financial Executives International on how financial executives can stay out of the crosshairs of activist investors.
Kochian said some leaders will put their companies at risk by “building up capital not for acquisitions, but because you don’t want any leverage.” Those individuals, he noted, “should not be surprised when the activist investor calls.”
There are two common activist investor targets in the market today, Kochian said: Mid-cap companies that have gotten bigger, but whose CEO has a “cozy” relationship with board members, and companies where earnings go to management outside the usual corporate structure, such as REITs. For those executives who would try to return capital through buybacks and dividends in order to placate activist investors, Kochian said that’s a worthless tactic: “If you couldn’t think of anything to do with your cash, why weren’t you returning it to shareholders in the first place?” In the end, he added, financial executives need to think like activist investors if they want to understand their exposure.
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