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Shareholder Activism Report for 2008

By Harvard Law School Program on Corporate Governance

(Editor’s Note: This post comes to us from Glenn Curtis, Director of Strategic Research at Thomson Reuters.)

Thomson Reuters has recently released its Strategic Research Report on Shareholder Activism for 2008. The report focuses on activist situations that have taken place from October through December 2008. It also details success and failure rates and other data pertaining to activist situations in 2007 and 2008. The source for this data was Thomson?s SDC Platinum? database, the SEC, and various press releases.

Highlights from the report include the following:

? For the full year 2008 Information Technology and Consumer Discretionary companies were among the top targets for activist firms. This is consistent with previous research. In fact, Consumer Discretionary companies have been among the top targets for the last two years.

? The average target company in the fourth quarter of 2008 had a market capitalization of just $28.2 million. That was a significant decline from the $4.93 billion that was recorded in the third quarter. A decline in the share prices of the targeted companies may be one reason for the low market cap. However, it is worth noting that the companies that were targeted were smaller cap companies to begin with.

? The most common demands that activists made for the year were for board seats and to buy/sell the target company. Board seats have consistently been a top demand according to our prior research.

? The number of cases where activists were successful in achieving their goals declined from 2007 to 2008, while the number of compromise situations increased. More specifically, for the full year 2008 activists achieved their goals 29% of the time and compromise was reached 38% of the time. In 2007 activists were successful 41% of the time and compromise was reached in 12% of cases.

? Big name activists such as Carl Icahn and Pershing Square and others were notably absent from new activity in the fourth quarter. However, both were active throughout 2008 in several high profile cases.

? If historical patterns hold true, look for an uptick in activism cases in Q1 2009. Companies should be on high alert!

The report is available here.

Full post as published by The Harvard Law School Corporate Governance Blog on May 07, 2009 (boomark / email).