Shareholder Activism in the Digital Age — corporate control

Here’s a social cause attracting attention in the alternative investment space: boosting shareholder returns. Several hedge funds and activist investors have taken to social media to build support for contested proxy contests. One notable campaign that leveraged social media was investor Erik Jackson’s efforts to shake up management at Yahoo in the late 2000’s. Jackson, a minority shareholder with less than .01% ownership in the company, generated significant noise on Twitter about his dissatisfaction with the management team at that time. Some attribute these efforts as a coordinating device that brought media attention and a greater spotlight on Yahoo’s leadership team, ultimately resulting in a management shakeup that took down the CEO of the company.

Indeed even Carl Rubenstein, founder of private equity firm Carlyle Group, recently commented on his vision for the future of activism, a world where both employees and shareholders can gather to weigh in on the merits of an acquisition.

Consider social media a new tool in the activist toolkit, also extending to microsites, where activists like Carl Icahn have created public data rooms making the case for changes at companies like Lionsgate.

The net impact of these efforts could be quite positive, pushing companies to increase transparency surrounding corporate strategy, execution plans and benchmarks for success. Companies can also disseminate or amplify this information through similar channels and enable a more robust and transparent dialogue around maximizing shareholder value.