What’s a CEO to do?
Recognize that no company is safe from a rising activist tide. Activists have the money and the analysis to go after lagging companies. Poor financial returns are the prime reason activists get involved.
CEOs should enlist the board in developing a dispassionate evaluation of the company and the board’s vulnerabilities.
Understand the issues. What is the current performance and what is the potential? Look at the board, it’s structure, how it’s elected, how it compensates management incentives. Do they reflect that the board is doing right by shareholders?
How involved is the board in strategy? Has the board sought additional analysis to more fully vet the underlying assumptions about the strategy?
What are your shareholders telling you?
Activists have raised the bar. Smart CEOs are looking for board member who can help him and his management team succeed.