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Why Communication is Key to Winning Proxy Fights

Axios Article Link

Companies are under heightened scrutiny from a growing band of activist investors who attack a range of issues, including leadership, mergers and acquisition plans, strategy, and ESG policies.

Why it matters: When an activist investor enters a company's stock, clear communication is key.

  • And if an activist takes a campaign all the way to a shareholder vote, a company's communication plan is the most critical component of winning the fight.

Context: Think of proxy fights as political campaigns. The company has a platform, the activists have an opposing platform and each side is campaigning to win shareholder votes.

  • Just like in political campaigns, targeting key voters with a clear message and helping them understand how to vote is critical to winning.

State of play: "The issues activists are raising are more complex, nuanced and multi-faceted than they used to be, granted you are also seeing a rise in single-issue campaigns," says Brian Schaffer, partner at Prosek Partners.

  • Because of this, more companies are acknowledging their vulnerabilities and prioritizing activist preparation.
  • "If you assume that any company is conceivably vulnerable to an activist attack, then doing due diligence in advance of an activist showing up with your legal advisors, financial advisors, and communications advisors can help to avoid some of those fights," added Schaffer.

Read the full article on Axios