Ireland Ripe for Activist Investors - Industry Experts
" The Independent (Ireland) (09/25/16) McLoughlin, Gavin"
Irish companies represent an opportunity for activist investors, experts say. Executive pay is coming under increasing scrutiny, they note. And Brexit may be a factor, says Peter Reilly, a senior research manager at Glass Lewis. Steven Galet, head of corporate governance and activist engagement at FTI Consulting's strategic communications unit, say Ireland's regulatory environment is favorable, such that an activist may want to engage. "The activists are slowly starting to say in our survey results that it's getting a bit tighter in the U.S. market for them to operate," Galet points out. "You're seeing more than one activist involved in a company, sometimes three or four. So they have to look abroad, and you've seen the first wave come in terms of Valueact [which has obtained a seat on the board of Rolls Royce] and Elliott setting up an office. There'd be no reason for them to exclude Ireland. They're probably looking for the right company to make the first activist foray with, and also they want to understand the economy."
Bill Ackman’s Bite of Chipotle Is Part of a Larger Trend
" Fortune (09/23/16) Kell, John"
Shareholders at Buffalo Wild Wings (BWLD) and Chipotle Mexican Grill Inc. (CMG) must decide whether they want to embrace engagement by Marcato Capital Management and Bill Ackman's Pershing Square Capital, respectively. At Buffalo Wild Wings, same-store sales are falling after years of consistent growth; Marcato is advocating a change in management and a keener focus on the core brand. At Chipotle, its “Food with Integrity” image became a liability after a prolonged E. Coli crisis, and revenue has fallen 20% to $1.83 billion for this year. Pershing Square hasn’t disclosed its plan for change. However, in the past activists have successfully engaged restaurant chains. Still, observers say activism should be viewed on a case-by-case basis—not judged by industry. “Activists don’t do anything but offer shareholders a choice,” says Ken Squire, founder of 13D Monitor. Squire says activists can help both Buffalo Wild Wings and Chipotle, but he notes that both situations are “totally different.”
Activist Investors Double Chance of CEO Exits, Study Shows
" Bloomberg (09/21/16) Basak, Sonali; Jinks, Beth"
Activist hedge funds settled for, or won, board seats in 46% of the more than 300 contests monitored from 2011 to 2015, according to advisory firm FTI Consulting. "When activists attain board seats, we found that CEOs leave their posts at twice the normal rate," said Steve Balet, head of corporate governance and activist engagement at FTI. Average CEO turnover was 16.6% within a year for a firm without such an investor, and 30.9% over two years, FTI said, using a set of 2,500 companies, and data provided by S&P Capital IQ and PriceWaterHouseCoopers. When an activist gained board seats, CEOs left their firms 34.1% and 55.1% of the time in those respective periods. "It seems natural that there would be an increased rate of CEO turnover, but activists generally don’t publicly target the CEO for replacement," Balet said. "Even in cases where activists do not gain board seats, CEOs leave their post 71 percent greater than the normal rate."
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