Shareholder activism / investor activism

Shareholder activism (also called investor activism) is the intervention by shareholders in the running of a company.

A listed company is usually run by the directors, and shareholders usually have little real impact on the running of the company. Shareholders usually simply vote at AGMs and EGMs, and even those votes are largely cast in line with management recommendations.

Activist investors are likely to vote against the management, possibly at EGMs forced by themselves. Activist shareholders are also likely to put pressure on management to take (or refrain from) various actions. Things activist shareholders may do include:

  • Force the spin-off of business, or even the complete breakup of a group.
  • Block take-overs, or limit the price at which the occur.
  • Limit directors pay and fire directors.
  • Force a change of strategy.
  • Impose CSR policies

Most of these can be seen as a way of dealing with agency problems. This is also why shareholder activism is disliked by directors.