Majority of retail investors aware of and open to shareholder activism, according to Brunswick Group survey.
New York, July 14, 2015 - As shareholder activism becomes more mainstream, retail investors may begin to play a more important role in proxy fights and companies ignore this group of investors at their peril, according to a new survey of retail investors by Brunswick Group.
The inaugural survey polled 801 U.S. retail investors who are active in their personal investments to gauge the influence and impact of activist investors. The results revealed the majority of respondents are paying attention to shareholder activism, with 74% of investors believing that activists, rather than being disruptive, add value by pushing management to make hard decisions.
Respondents indicate the business environment is ripe for activism, with 77% stating that corporations hold too much cash and should do more to give back to shareholders. Retail investors surveyed also note they would be most persuaded to support an activist’s campaign against excessively high executive compensation, executive compensation not tied to a company’s performance and ineffective management or board composition.
Of course, it’s the large institutional investors who hold sway among most publicly traded companies, but older Blue Chip companies or companies that were employee or privately held may have a greater share of ownership of individual investors.
“As activist shareholders continue to launch public and aggressive campaigns against companies, management teams must engage retail investors and have a proactive strategy to deploy if under attack,” said Steven Lipin, Brunswick’s U.S. Senior Partner. “From the survey, it appears retail investors are more open to the activist appeal than previously thought, and companies will have to fight hard to win the retail vote, much as they do institutions.”
When it comes to influencing retail investors, more than four in five surveyed are interested in hearing from all sides during a campaign, with 88% stating they would read a statement from the company, 84% stating they would read a statement from an activist investor, and 84% stating they would research the situation online themselves.
That said, when it comes to sources that retail investors trust most, third-party channels ranked highest, with respondents highlighting the financial news media, financial advisors and investment professionals, or academic experts as their most reliable sources of information.
“It underscores the critical role of media and highlights that companies need to have an active media engagement strategy,” Lipin said.
Retail investors are also eager to participate, with 44% of respondents stating they have taken action in the past year as a result of an activist investor proposal, including voting on an activist issue, researching the business activities of an investment, increasing holdings or exiting an investment position, or visiting a website dedicated to a proposal. Most notably, 82% of respondents said they would participate in a shareholder vote if an activist initiated a campaign on an issue they cared about.
“While we know a lot about institutional investor perception toward shareholder activism, this survey is a key step in understanding how retail investors are reacting to activists and what they expect from targeted companies,” said Robert Moran, Partner, Brunswick Insight.
The survey was conducted online from June 22-25, 2015 among 801 U.S. retail investors who are somewhat or very active in making decisions in their personal investments. The survey was developed and analyzed by Brunswick Insight, the firm’s specialist opinion research and consulting practice, which focuses on understanding the views of opinion formers around the world.
View the survey results infographic here.
About Brunswick Group LLP
Brunswick Group LLP is an advisory firm specializing in critical issues and corporate relations. Founded in 1987, Brunswick is an organically grown, private partnership with 23 offices around the world.
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