Comprehensive course analysis
Who should attend
This program is designed for individuals wishing to increase their finance knowledge and value assessment skills for use in shareholder activism, including but not limited to:
- Stock investors seeking to understand and assess activist campaigns and their impact to make better investment decisions and to understand how to vote in the annual general meeting (AGM)
- Corporate board members and C-suite executives at publicly traded companies and individuals new to those positions
- Hedge-fund portfolio managers seeking to develop activism capabilities
- Private equity professionals who might be expanding into public equities
- Chief investment officers and investment analysts for family offices, pension funds, and large institutional investors who invest in or with shareholder activists
- Attorneys who represent corporations or shareholder activists
- Investment bankers
- Corporate public relations and investor relations professionals
About the course
Shareholder activism is not a neutral topic in finance. Some view shareholder activists as a source of value creation and a necessary check on publicly traded companies’ excesses or bad C-suite management, while others view these same activists as too aggressively focused on pushing for change for short-term gain. But whichever role or side of the fence you’re on — activist, corporate board member, investment banker or lawyer, or PR advisor — this unique, real-world program will help you to understand how and why activist shareholders select their target companies and how companies in turn prepare for, and deal with, an activist campaign.
Shareholder Activism and Corporate Governance will shed an objective light onto the features of a company, including its governance structure and strategic and management approaches, which make it an attractive activist target. While distinguishing good from bad corporate governance is an art form, we will discuss the typical identifiers that are associated with value destruction and that attract activist attention. We will consider the steps and processes utilized by the activists in a campaign and identify those areas critical to unlocking, or potentially destroying, value.
Highlights and Key Outcomes:
In Shareholder Activism and Corporate Governance, you will:
- Acquire a powerful conceptual foundation for what it means to create value
- Develop the fundamentals for both value investing and value-based management
- Discover the frameworks and tactics used by shareholder activists to identify and move on target companies
- Recognize where and why shareholder activism may create or destroy value, and be better able to distinguish which is more likely in a given case
- Learn how corporate boards and leadership prepare for activist campaigns directed at their company, and effective solutions for managing the process when it occurs
- Become more knowledgeable about the roles of the various parties in shareholder activism beyond the activists, including proxy advisory firms, public relations firms, lawyers, and investment bankers.
Experience and Impact
Shareholder activism is a market response to the principal-agent problem which, arises when there is arms-length ownership, such as in publicly traded companies. The essence of this problem is that the principal (in this case, the shareholders) hires an agent, (comprising the members of the board and top management) whose interests fail to align perfectly with those of the principal. Legally, it is the board of directors and management who are responsible for managing the company, and the shareholders have limited ability to influence these individuals. However, with natural conflicts of interest, and with the rise in passive shareholding over recent decades, the potential for management to deviate significantly from the interests of the shareholders has grown. This phenomenon has created a role for shareholder activism to reduce the principal-agent problem and keep the board and management focused on maximizing shareholder value. At the same time, many would assert that shareholder activists similarly exploit the arms-length ownership situation for personal benefit, to the detriment, rather than benefit, of the shareholders of the targeted companies.
Rather than taking sides, Shareholder Activism and Corporate Governance offers an objective assessment of the impact of shareholder activism and considers the possibilities for both benefit and detriment from this activity. The goal of this program is to familiarize participants with the competing perspectives and develop an understanding of the various tactics available to both shareholder activists and corporations targeted by the activists. By the end of the program, participants will have a framework for assessing effective corporate governance, will understand and have practiced the application of the value investing toolkit used by shareholder activists, and will be better able to assess the value impact of a given campaign.
The program is essential for boards of directors and those aspiring to boards, since in today’s environment no public company — no matter its size — is immune from activism. You will get inside the mind of the activist to understand their processes and formulate an effective response.
While this is fundamentally a finance program with a primary focus on how to invest and manage for value creation, some of the legal issues around corporate governance and shareholder activism will need to be raised and discussed. Both activists and board members need to understand the legal environment in which the responsibilities and limitations of the board and shareholder activists are defined. In the context of the activism campaign, both need to understand the process for nominating and approving members to the board, proposing resolutions to be voted on by shareholders in the annual general meeting, or for launching and conducting a proxy contest.
Beyond the tactics for campaigning and the legal environment, which provides the backdrop, it is also essential to understand and be able to evaluate the logic behind the proposed strategic or management changes put forward by the shareholder activist. Behind every activist campaign is a proposal to change essential elements of the company’s financial structure, governance structure, corporate structure, business strategy, or a combination of these. For those participants needing to be able to develop or assess the quality of the activist’s plan, we will delve into these different areas, and identify the many levers for value creation, to enable participants to evaluate the effectiveness of the activist’s plan to unlock value in the targeted company. For board members and senior management, it is essential to be aware of their own business’s vulnerabilities and to be prepared to explain and validate their financial policies and strategic plans to shareholders when challenged by an activist.
Finally, it is also essential to recall that all of this will play out in front of the many retail and institutional shareholders who typically hold the vast majority of shares in a given targeted company. Both the activist and the board will be jockeying for their support, and we will discuss the tactics for doing so while also discussing the role played by proxy advisory firms.
We will consider a variety of real-world cases involving prominent firms such as Yahoo, Procter & Gamble, and Papa John’s Pizza, as well as recent developments due to the COVID-19 pandemic and policy response.
Complete with role-playing exercises and small-group interactions, this valuable program cuts through the controversies around shareholder activism to provide clear-eyed, actionable concepts and tools for all involved.
Session topics include:
- Value Investing and Shareholder Activism — Benjamin Graham set the stage and launched both value investing and shareholder activism
- Current Trends and Market Conditions
- Measuring the Value: Assessing the Potential for Value Creation
- Tactics for Campaigning and Engaging: The Activist Pathway and the Target Defense
- Applying the Activist Toolkit: Creating the Value
- Fireside Chat/Guest Speaker: Investment Banks’ Perspective
- Activism Outside the USA: Case Studies in Canada and Japan
- Activism Campaign Exercise
Wharton LIVE Programming
Real-time, synchronous peer learning
The live, virtual version of Shareholder Activism and Corporate Governance will be taught by the same Wharton faculty who teach in our on-campus finance programs. This program offers, and requires, a high level of engagement through class discussion and faculty interaction. Participants will have direct access to Wharton faculty throughout the program and engage in dynamic group discussions that help reinforce the learning and enable networking among the peer community. This virtual program is a fully immersive and structured learning experience that culminates with new knowledge that can be put to immediate use.
Building Your Network
Shareholder Activism and Corporate Governance will also include opportunities for you to get to know the other participants and build your professional network. These sessions include:
- Q&A Networking Forum
During these sessions, faculty will examine and discuss the most promising opportunities and most significant challenges participants' organizations are facing. Participants act as a sounding board while simultaneously identifying the commonalities that connect the issues across organizations.
- Reflection Tool
Participants summarize key concepts and insights they learn each day and describe how these insights might impact them or their behavior going forward. Participants identify questions they wish to ask the faculty or fellow participants. These reflections are reviewed daily in peer groups to refine and deepen comprehension during the program as well as enabling better recall to apply the learning for maximum impact and value creation.
Education PhD, Princeton University, 2000; B.S., Bogaziçi University, 1991 Academic Positions Held Wharton: 2009present; 19982008. Previous appointment: Stanford University Archishman Chakraborty, Simon Gervais, Bilge Yilmaz (2011), Security Design in Initial Public Offerings , Review of Finance...
Kevin Kaiser joined the finance faculty at INSEAD in 1992 where he is currently Professor of Management Practice and Director of the Transition to General Management programme. Kevin is also Director of the ABN Amro Managing for Value Research Fund at INSEAD, and is active in conducting and shari...
Videos and materials
Because of COVID-19, many providers are cancelling or postponing in-person programs or providing online participation options.
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