Metropolitan Corporate Counsel Interviews Jeff Kochian on Shareholder Activism
Akin Gump corporate partner Jeff Kochian was interviewed by The Metropolitan Corporate Counsel for an article that covered his practice as well as his views on shareholder activism.
Among the topics covered in the interview:
- Types of shareholder activists: “Activists fall into two buckets. I put “say on pay” into the first bucket with 14a-8 proposals and other social issues that are raised by pension funds or the so-called corporate gadflies. These groups are not trying to manage the target company or trying to change the way its business is run…The other group of activists…are trying to fundamentally change a company. They’re generally not satisfied with either management’s or the board’s performance. Oftentimes, they think that there are better uses of capital that can generate much higher returns or that capital should be returned to shareholders.”
- Shareholder activism targets: “There are two basic elements that describe a likely target. When you have both of them in one way or another, it is really the ideal situation for an activist. Number one is obviously bad governance, where you can assail the board of directors whether because they are cronies of the CEO, they’ve been on the board too long or are just not sophisticated, or, as is sometimes the case, the business is externally managed, so that the incentives between management and the shareholders are not properly aligned…Number two is the inefficient use of capital in a company.”
- The future of shareholder activism: “I think it’s definitely here to stay. I think it’s going to look very different in five years, since corporations are looking at governance more carefully and will be better prepared from a financial perspective so that they’re ready when a shareholder activist targets them. I think being ready is going to really change the dynamic.”
To read the full interview, please click here.