Your CEO is Under Attack - Is Your Communications Strategy Up to the Task?
Like some feeding frenzy, an ever greater number of minority shareholders, deftly casting themselves as reform-minded “activists” looking out for the interests of the majority, are waging public campaigns against CEOs for failing to increase shareholder value and lift the stock price. Failures in corporate governance are often cited, which then targets the Board of Directors. Time Warner and General Motors are recent high profile cases. Dozens of medium-sized public companies have been similarly attacked and have far fewer resources, let alone experience, to deal with the attacks.
Some of the target companies deserve the criticism. Some don’t. Some of these campaigns are legitimate efforts to win board seats and affect important changes. Others are thinly disguised initiatives to prompt the sale of a company “on the ropes” and realize big takeover premiums on the stock. And the jury is still out on whether or not such activism actually benefits shareholders more than the individual activists themselves. No comprehensive study of the matter has been done which proves that these campaigns increase shareholder value. (Although, one recent study by the Hermes UK Focus Fund claims to prove otherwise for its portfolio of investments.) Whatever the motive or outcome, the challenge this poses for CEOs, and their communications counsel, is significant. The communications strategy you craft and execute on could mean professional “life or death” for the CEO. Still, there’s no magic bullet solution in this type of corporate competition. There are, though, six critical imperatives communications counsel should be mindful of.