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Bold Activists Will Require Bolder Boards in 2018

December 22, 2017, Agenda

Keir Gumbs is quoted in an Agenda article regarding shareholder activism trends from 2017, and a look ahead at 2018. This year, activists continued to go after companies that have lagged peers in financial performance, are perceived as having underutilized assets, trade at a discount to their intrinsic value, have substantial cash or other liquid assets or are perceived as having management or governance failures, says Gumbs.

Commenting on what to expect in 2018, Gumbs says that the new tax code may result in activists’ pressuring companies to repatriate money to use for share buybacks or dividend increases. He adds that the fact that universal proxies and proxy plumbing are still on the SEC agenda might influence the atmosphere for proxy contests. I would expect the winners and losers under tax reform, as well as from regulatory deregulation, will determine some of the companies that are targeted next year."

Gumbs says companies should do regular assessments of their defenses, the activist market, and how they might be perceived by investors. He says it’s important for boards to be self-critical. “I think a good exercise is having a bank or an analyst look at a company’s profile from an activist perspective."


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