The Changing Nature of Activist Investing – 5 Takeaways from NIRI 2018

The Changing Nature of Activist Investing – 5 Takeaways from NIRI 2018Eric Koefoot, President & CEO, PublicRelay

Last week, I spoke at the annual NIRI conference addressing the changing role of the activist investor and how the IR function needs to evolve to keep up with these changes. As the rise of activists continues, so must strategies to monitor and engage across the media landscape and proactively manage brand (and investor) perceptions. A critical piece of being prepared for a brand crisis is building consistent and accurate data about your brand and reputation before a problem arises.

1. THE LANDSCAPE HAS SHIFTED – SOCIAL MEDIA HAS MADE LEADING THE NEWS CYCLE VERY IMPORTANT – ALBEIT MORE DIFFICULT

The Trump Era has ushered in a period where leading the news cycle with a narrative and message can commandeer the perception of truth. This “direct narrative of the truth” is often driven or amplified by direct communication on social media.

There can be many indications that an activist is targeting a stock – a regulatory filing, a phone call from the fund manager, or a newspaper headline. However, indications can also include questions from a junior analyst at a fund, a private meeting request or now increasingly a rumor on social media. Today, it is imperative that IR teams are aware of the impact of unregulated social activities in addition to all online conversions so that they can get in front of that “truth narrative”.

IR is no longer about surveillance and is now quickly shifting to proactive management. You need to not only understand how things are spreading on both traditional and social media, but more importantly, understand the entire media landscape and its key players to quickly react.

2. ACTIVISTS ARE NOW USING SOPHISTICATED PR STRATEGIES TO ENGAGE THE SHAREHOLDER BASE – AND SO SHOULD YOU.

The growth of passive shareholders has given companies more stable shareholder bases and made them accountable for delivering results, hence the need for proactive marketing and messaging. The need is further enhanced with the rise of Activist Investor movements and fast-moving market volatility. To carry out this proactive engagement, a richer partnership is required between IR and PR.

Here are some things you need to be thinking about now:

  1. Different investors will react to various types of information and weigh various reputational aspects of a brand uniquely. It is important to determine how your brand drivers are resonating with key audiences. How are these key elements being captured in the media and in social conversations? Where is there a need for improvement?
  2. Brands need to identify their weaknesses and their comparative advantages versus the competition at all times. Then you need to build the right messages to correct misguided perceptions with investors.
  3. It is critical to understand your “influencers” – those that drive the perception of your stock as a place to invest. Not all influencers are created equally; it is not just about the Wall Street Analysts anymore. You need to know who the right influencers are, be it a government regulator, money manager, journalist, or simply an influential blogger, and engage those that matter.

3. GENERIC TRACKING OF THE MEDIA CONVERSATION WILL NO LONGER PROTECT YOU – GO DEEP TO GET SMART.

Analyzing media is extremely important because media sentiment has been proven to be correlated with stock price. But, you need to go beyond simple keyword tracking to get accurate and actionable data – the “why”.

For media analysis to be successful, you can no longer rely on simply tracking your company name, executives and focusing on financial sites.  Old-school keyword-driven tracking and analytics will likely leave you blindsided. Instead, it’s time to understand the “reputational conversation”. Reputational data can help you break down your public perception and understand what is driving it. You can also know how to pitch content that will positively impact your image it by identifying authors and outlets that are pushing certain messages and receiving a lot of social traction. Benchmarking your reputational data can pinpoint areas for targeted, effective message improvement.

4. THE WORLD HAS MOVED TO DATA-DRIVEN DECISIONS. DON’T GET LEFT BEHIND.

When making decisions, a simple opinion does not cut it. You need to work with numbers now – fight fire with fire – and get savvy fast. Interestingly, the best defense is a good offense. Hedge funds have huge data capabilities, but IR often does not. So you need to ask yourself: are your technologies and data analytics giving you an advantage versus your adversary?

You need to make sure you have the proper resources working reliably to generate quality data to back up your decisions.   And should a crisis hit, use that data to move smartly, quickly and in a proactive manner instead of chasing the issue.

5. SPEED OF AI IS INCREASING, BUT AI STILL STRUGGLES WITH ACCURACY AND CAN LEAD US ASTRAY.

Use of artificial intelligence (AI) in IR is growing at a rapid pace. Enterprise IR solutions (Bloomberg CMi2i, Q4 Activism Alarm, Nasdaq IR, and others) apply machine learning to big financial data sets to predict vulnerable companies, investor trends and behavior, and overall investor sentiment towards specific industry sectors.

This information is useful as a baseline for a company to understand investors and identify when their company is being viewed as vulnerable. But repeated studies continue to prove that unsupervised machine learning is still missing the mark with media analysis.  Changing zeitgeist, linguistic nuances, sarcasm, and a variety of company perspectives and priorities greatly limit the effectiveness and accuracy of machine-only solutions.

In addition, automated story-writing on company earnings has taken off.  In 2014, Associated Press started to publish automated earnings stories. In Q1 of 2014, 300 of these stories were published. Fast forward to Q1 of 2018 and 4,700 stories were published. Clearly, the speed of AI is increasing, but at what cost? Neil Hershberg, SVP at Business Wire states, “While they certainly provide greater visibility to small and mid-sized companies that were previously excluded from editorial coverage, the template format of these reports can often result in material information being left out of stories.”

So if you are responsible for investor relations, your world is changing fast.  Social media, data analytics, artificial intelligence, and a rapidly changing investor landscape seem to have conspired to make your job more difficult.  So how are you going to regain control?

Discover our Analytics Solution for Investor Relations.




2017: The Year of the Activist Investor

If your company is not fast, creative, and adaptable, you may well be the next victim of an activist investor. Strategy consultant Amanda Setili explores what happened to some big names during the past year — and offers advice to help the rest of us avoid similar upheavals.

Activist investors were really busy in 2017. General Electric, AIG, Arconic, CSX, Pandora, and Buffalo Wild Wings are among the companies whose CEOs resigned under pressure from activist investors. Activist investors single out underperforming companies, then force changes, which may include giving the activist a seat on the board, replacing company leaders, divesting a division, or simply cutting costs.

These relentless shaker-uppers are going after bigger and bigger companies, and both sides are spending more money than ever in proxy battles. Procter & Gamble, the biggest company ever targeted this way, made headlines in 2017 when Nelson Peltz of Trian Partners demanded, and ultimately won, a seat on its board. The two sides spent $60 million combined during the months-long proxy battle.

One thing’s for sure: No company is immune to activist investors, notes strategy consultant Amanda Setili. That’s why all C-suite leaders need to heed the lessons of 2017.

“Because the 10 largest shareholders in a typical Fortune 500 company own almost half the stock, it’s not difficult for an activist investor with a good presentation and a compelling story to convince others that his way of thinking is correct,” notes Setili, author of Fearless Growth: The New Rules to Stay Competitive, Foster Innovation, and Dominate Your Markets (Career Press, 2017, ISBN: 978-1-632-65107-5, $17.99).

“Frankly, the only real protection from activist investors is to consistently turn in an excellent performance,” she says. “And to achieve that, you must be bold, agile, innovative, asset-light, and incredibly in sync with your customers.”

Admittedly, this is no small task. But you’ve got to start somewhere, so Setili suggests starting with a look at what went wrong with some of the 2017 activist investor targets.

Procter & Gamble

Lesson 1: Adapt constantly.

Procter & Gamble was the gold standard for consumer products marketing for decades, but as the market has shifted from “mass market” TV and print ads and big brands to digital marketing and smaller brands, P&G failed to adapt.

The company’s brands have massive market share—over 60 percent for Cascade dishwasher detergent and Gillette razors—but that share has been slowly shrinking. Consumers now make buying decisions based on peer reviews and social media and have shifted to smaller, newer brands that have a direct digital relationship with their consumers. These more digital-savvy companies then get up-to-the-minute input on customer preferences. P&G hasn’t kept up with these changes and is paying the price.

“If what made you successful isn’t working anymore, don’t wait for an activist investor to force the shift to a new way of competing,” says Setili.

Lesson 2: Make bureaucracy your enemy.

During the proxy battle with P&G management, Trian’s Nelson Peltz traveled the country making his pitch to institutional investors: The world has changed, and P&G has not changed with it. The company suffered from “suffocating bureaucracy” and short-term thinking, Peltz said. Its shareholder returns were in the bottom quartile vs. its peers. It had aging brands and little innovation, and was closed-minded and insular.

It wasn’t hard for Peltz to convince investors that P&G needed faster decisions and greater responsiveness when he showed them the data. P&G’s biggest brands, like Cascade and Gillette, are losing market share, while smaller brands, like Dollar Shave Club, which is owned by competitor Unilever, are growing three times faster.

“When you see signs of bureaucracy in your company, such as slow decision-making, inordinate time spent on internal issues, risk aversion, and excessive management layers, don’t hesitate to take action,” advises Setili. “Delayer and eliminate cumbersome processes. Set up flexible, focused teams to tackle those strategic priorities for which speed and agility are crucial, and empower these teams to take fast action.”

General Electric

Lesson 3: Make sure your strategy story holds water.

Former GE CEO Jeff Immelt spoke frequently about a key element of GE’s strategy: establishing the company’s Predix platform as the backbone of the industrial Internet of things. It was a nice story, but somehow it didn’t add up, given the disappointing financial and share price results. (GE shrank, rather than grew, under Immelt, and share price fell 38 percent during Immelt’s 16-year reign, while the Dow Jones Industrial Average doubled.)

Activist investor Nelson Peltz of Trian was particularly skeptical of Immelt’s strategy. Peltz’s white paper entitled “Transformation Underway…But Nobody Cares” and his continued pressure on GE to cut costs and repurchase shares led to Immelt’s resignation in October 2017.

The new CEO, John L. Flannery, will reduce cost and spin off or sell off non-core parts of the company. His strategy story will be clean and simple.

“Shareholders will accept a grand vision for only so long if the financial performance isn’t there to back it up,” says Setili. “To avoid being the target of activist investors, make sure your strategy delivers the hard numbers that investors demand.”

CSX Railroad

Lesson 4: When the market is tough, take the hard medicine.

When, over a period of six years, CSX Railroad experienced a 51 percent drop in its biggest revenue source—coal—margins dropped to the lowest of the major railroads. Management promised huge efficiency improvements that never came. Seeing an opportunity, activist investor Paul Hilal of Mantle Ridge brought about the installation of railroad veteran Hunter Harrison as CEO.

Harrison spent nine months in an intense overhaul of CSX before passing away in December. He was said to be “ripping off the Band-aid” of CSX, boldly shifting it from a hub-and-spoke model to a point-to-point model. The new model, Harrison said, will eliminate long stops and enable faster delivery, smaller fleets, and less labor. The transition has been painful. Some customers had to halt operations, and 37 percent switched freight to competitor Norfolk Southern.

Harrison liked to quote oil magnate J. Paul Getty, saying, “In rapidly changing times, experience is your worst enemy.” To be sure, many of CSX’s top leaders, who had operated for decades in a hub-and-spoke model, disagreed with Harrison’s approach and have left the company. Harrison was determined to restructure, even knowing it would disrupt both his own and his customers’ businesses. The prior regime was unwilling to take this hard medicine. It will be up to the new management team, and whomever the board installs as CEO-successor, to continue this process. The jury is out on whether CSX will, in the end, fully implement the transformation Harrison envisioned, or instead adopt a hybrid model, tailored to the markets CSX operates in.

“When you experience permanent market shifts, as the decline in coal revenue was for CSX, don’t be afraid to make employees, and even customers, unhappy,” instructs Setili. “Make bold moves before an activist investor forces you to do so.”

Honeywell

Lesson 5: Consider the activist investor’s recommendations and take action.

When Dan Loeb, of Third Point hedge fund, pressured Honeywell to shed its aerospace business, Honeywell’s management team, under CEO Darius Adamczyk, tested Loeb’s theories, modeling various scenarios for slimming and refocusing the company. In the end, Honeywell management kept the aerospace business, choosing to spin off the car parts and home systems businesses instead. The spin-off created two best-in-class companies that were better off independent.

“Activist investors want your business performance to improve, and if they can do this without taking control of your company, they are often satisfied,” notes Setili. “So when an activist investor makes a recommendation for how you should be running your company differently, consider their point of view. Often you’ll find that you can improve performance and retain control by implementing some or all of their recommendations.”

Buffalo Wild Wings

Lesson 6: Partner with others and go asset-light.

When activist investor Mick McGuire of Marcato Capital evaluated restaurant chain Buffalo Wild Wings’ financial performance and strategy, he saw a major flaw: The brand wasn’t earning its cost of capital, largely because it owned its own stores. The solution, McGuire pointed out in a richly detailed 48-page presentation, was to franchise, rather than own, its restaurants. Increasing the franchise ratio to 90 percent from 49 percent by selling stores to franchisees, McGuire said, would improve returns and allow faster growth, especially in international markets, where local expertise was key.

Internal managers pushed back hard against McGuire’s approach, believing that the way they had always approached the business was superior. After a proxy battle, Marcato won three of the board seats it sought and pushed out Buffalo Wild Wings CEO Sally Smith. Five months later, in November, Roark Capital, a private equity firm with deep expertise in franchising, announced that it would acquire Buffalo Wild Wings.

“Teaming with business partners, especially if those partners have capabilities or expertise you do not, can enable you to accomplish growth initiatives that would be impossible or costly to achieve on your own,” says Setili. “To keep activist investors at bay, consider how you can employ partnerships to improve your company’s growth and profitability.”

ADP

Lesson 7: Drive out unnecessary cost.

Bill Ackman of Pershing Square Capital went after ADP in 2017, making the case that costs should be substantially reduced. ADP’s 130 locations were chosen during a time when having physical locations close to clients was important. ADP’s newer, cloud-based competitors are able to be located anywhere, regardless of where their clients are. This keeps competitor costs low and enables faster decision-making and better collaboration, because key decision-makers can be consolidated at a single location.

Ackman pointed out that ADP’s labor productivity is 28 percent worse than its competitors, and that companies that ADP formerly owned, such as Solera and CDK, were able to double margins after being spun off from their corporate parent. In Ackman’s view, ADP was bloated, inefficient, and behind the times. In November, he lost his bid for ADP board seats, but only after causing a high-profile proxy fight.

“Activist investors look for low-hanging fruit—companies whose costs are out of line with their industry,” says Setili. “Don’t be one of those companies. Be bold in keeping costs competitive, even if that requires difficult restructuring.”

Ultimately, says Setili, activist investors look for companies that haven’t fully embraced the need to move quickly and intelligently in response to the changes unfolding around them.

“These investors spot companies that haven’t adapted effectively to shifting markets and customer demands, that have let bureaucracy and costs balloon, that have failed to make the hard choices that are needed,” she says. “Proxy fights are expensive, distracting, and unpleasant, so make the needed changes in your business before an activist investor forces you to—or, for that matter, before competitors or market disruptors put your business at risk.”




#6 MOST-VIEWED EVENT in 2017: How the Trump Administration May Impact Shareholder Activism – Part II (Webinar On-Demand)

 

shareholder_640x480 on demand

Webinar Overview

As President Donald J. Trump continues to build out his administration, it remains far from clear how activists will fare under a Trump administration and whether a Trump administration will foster a climate that is more or less facilitative of shareholder activism.

On Thursday, February 16, 2017, CommPRO hosted a webinar, moderated by Keith Gottfried, leader of the Morgan Lewis shareholder activism defense practice and featuring a panel of professionals with experience in the shareholder activism and political arenas,  that will discuss how a Trump administration and its policies could impact the climate for shareholder activism, the types of campaigns that activists look to pursue and the companies and industries that are targeted.

Moderator

Gottfried_Keith_200x200

Keith E. Gottfried
Partner & Shareholder Activism Defense Practice Leader
Morgan, Lewis & Bockius LLP

Keith E. Gottfried, a corporate partner with the global law firm of Morgan, Lewis & Bockius LLP and the leader of its market-leading shareholder activism defense practice. Morgan Lewis was recently ranked No. 1 among all law firms for legal defense of public companies against activist shareholders in the Thomson Reuters Global Shareholder Activism Scorecard for the first half of 2016 (as of August 18, 2016), No. 2 in the Factset SharkRepellent 2016 year-to-date activism defense league table (as of January 26, 2017) and No. 2 in the Activist Insight Magazine activist defense league table (as of December 5, 2016), in each case based on the number of publicly disclosed activist defense matters that Morgan Lewis has been involved in. 

Over the course a legal career that spans almost 25 years, Keith has been involved in defending numerous public companies against high-profile proxy contests, special meeting demands, consent solicitations and unsolicited acquisition proposals. Frequently quoted by the national business media on issues relating to shareholder activism, Keith publishes and presents regularly on the strategies companies and their boards of directors can apply to make themselves less vulnerable to activist investors as well as strategies for shareholder engagement. Keith is listed in Chambers USA which ranks him as a leading corporate/M&A lawyer. As activist campaigns closely resemble political campaigns, Keith also brings to his activism defense clients substantial political insight gained as a U.S. Senate confirmed political appointee in the administration of President George W. Bush.

 

Panelists

StevenBallet200x200Steven Balet
Managing Director – Strategic Communications
FTI Consulting, Inc.

Steven Balet is a managing director in the FTI Consulting Strategic Communications segment and is based in New York. He is part of the Financial Communications and Capital Markets practices.

For the past 20 years Mr. Balet has advised public companies and hedge funds of all sizes on mergers & acquisitions, contested proxy campaigns and corporate governance issues. Mr. Balet’s experience includes providing strategic counsel to both corporates and dissidents in proxy contests all around the world.  He has also worked on many contested cross border mergers and acquisitions transactions.

Mr. Balet has extensive experience working with issuers to develop the most effective message for delivering the vote. He routinely counsels issuers on how to engage third party advisory groups such as Institutional Shareholder Services as well as providing background information on various activist stockholders and the techniques they employ. Mr. Balet has spoken on numerous panels discussing shareholder activism as it relates to both merger activism and board proxy fights.

Mr. Balet has been involved in some of the largest contested situations in the past decade including representing Sanofi-Synthelabo in their acquisition of Aventis, Rio Tinto in its defense of BHP Billiton’s hostile tender, and Oracle in its hostile acquisition of Peoplesoft. Most recently, Mr. Balet advised in tow large hostile defenses: Allergan in its defense against Pershing Square Capital Management and Valeant Pharmaceuticals, Perrigo Company in its defense against Mylan N.V.; and he currently advises Monsanto Company.

Mr. Balet joined FTI Consulting in April 2013. Prior to joining the company, Mr. Balet’s experience included 15 years at MacKenzie Partners, including three years as head of their London Office.

 

Stephen L. BrownStephen L. Brown
Senior Advisor
KPMG Board Leadership Center

Stephen L. Brown, a Senior Advisor at KPMG Board Leadership Center, is a globally recognized governance expert, thought leader and trusted adviser to corporate boards and C-suites.  Mr. Brown founded The Edgerton Group, a boutique consulting firm that advises boards and management on critical corporate governance issues.  Formerly, he was the CEO of the Society of Corporate Governance.  Prior to the Society, he led the corporate governance group at TIAA.  Prior to TIAA, Mr. Brown practiced securities law at WilmerHale and Skadden and was an analyst with Goldman Sachs.  Named by NACD as one of the 100 most influential people in corporate governance and the boardroom, he is also an adjunct professor at the McDonough School of Business at Georgetown, Yale College, and the Colin Powell School at CCNY.   Mr. Brown received his B.A. with honors from Yale and his J.D. from Columbia University Law School where he was a Harlan Fiske Stone Scholar.

 

Arthur CrozierArthur B. Crozier
Chairman
Innisfree M&A Incorporated

Arthur B. Crozier, the Chairman of Innisfree M&A Incorporated of New York and of Lake Isle M&A Incorporated, Innisfree’s wholly-owned UK subsidiary. Art’s practice includes the representation of U.S. and international clients in a wide variety of transactions and proxy contests, as well as annual and special meetings. In addition, he counsels an international roster of clients on corporate governance and executive compensation issues. Art has written numerous articles and spoken extensively on the subjects of corporate governance, proxy contests, hedge fund activism, executive compensation and international voting practices.

 

 

DuncanHerrington200x200Duncan Herrington, CFA
Managing Director | Head of Activism Response & Contested Situations
Raymond James

Duncan Herrington is a Managing Director at Raymond James and the Head of its Activism Response and Contested Situations Practice. He previously served in Credit Suisse’s contested situations team, where he was responsible for advising both domestic and international clients on shareholder activism, takeover defense, contested M&A transactions and corporate governance matters. Prior to Credit Suisse, Mr. Herrington was an M&A lawyer based in the London office of Paul Weiss Rifkind Wharton & Garrison, where he specialized in structuring and executing cross-border transactions. Combined, he has more than 12 years of investment banking and M&A experience with a specialty in advising on shareholder activism and other contested matters. Mr. Herrington holds a JD from Harvard Law School and an MBA from London Business School. A CFA charterholder and a member of the State Bar of California, Herrington is based in Raymond James’ New York office.

 

Register Now




Primer: Preparing for Shareholder Activism (DOWNLOAD)

Shareholder Activism Preparedness - Download NowGeorgeson is the leader in helping clients prepare for and respond to shareholder activism, one of the most urgent topics in corporate governance today.  Download this primer to help understand these three components of activist preparation:

  • Vulnerability assessment. Identify issues that could attract activist interest and tactics that may be used.
  • Shareholder analysis. Evaluate your shareholder base and assess potential support.
  • Shareholder engagement. Create a plan to rally support among current shareholders and influential proxy advisory firms.

 

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Shareholder Activism in the Trump Presidency: A Canary in the Coal Mine Moment for Boards and the C-Suite

By Andrew Ricci, Vice President, LEVICK

We’re now at the point where we can count the number of weeks until Donald Trump assumes the presidency on one hand. Over the past month, since Mr. Trump’s stunning upset in the Presidential race, we’ve gotten a lot of information about what his cabinet will look like and what his approach to economic and foreign policy will be.

trumppresidency640x480ondemandLast week, CommPRO convened a panel of investment and political experts to discuss how a Trump Presidency might impact Shareholder Activism – a webinar that followed up on a pre-election discussion on the similarities that exist between an activist shareholder effort and a political campaign. I was honored to participate on both panels as a political and campaign expert and was happy to share my perspectives with those who tuned in.

Truth be told, we don’t have a lot of details on whether shareholder activism campaigns will be significantly different under a Trump administration. He will have the opportunity to appoint commissioners to the Securities and Exchange Commission (SEC), which will undoubtedly give us additional insight into his thinking on the issue when the time comes.

Through his appointments thus far, though, we do know that President-elect Trump has chosen perhaps the most business-friendly cabinet we’ve seen in recent history, with many of his agency leaders coming from the business world rather than the political one. This leaves no lack of board or C-Suite experience at the upper echelons of the federal bureaucracy.

Much was made over the course of the campaign about Mr. Trump’s relationship with billionaire investor Carl Icahn, who has made headlines for his attempts to impact companies. In the early days of the Trump transition, Mr. Icahn was allegedly in the running for the top spot at the Treasury Department or as an economic advisor in the Trump administration. Mr. Icahn however, repeatedly demurred, and though he will have no formal role, may still serve in an informal capacity. Either way, it appears that both activists and traditional board types may have a seat at the table and thus, the President’s ear.

What I think is more interesting, though, is the way that activist shareholders might emulate Mr. Trump’s methods of building a major platform and using it expertly to create influence. In past weeks, Mr. Trump has used his platform on Twitter – and the media’s fascination with every one of his tweets – to take aim at individual companies. After blasting Lockheed Martin Corp.’s fighter jet program on Twitter last Monday morning, it took less than four hours for $4 billion to be wiped off the company’s value. As of this writing, Lockheed Martin’s stock price is still down 14 points from where it was just ten days ago and still down more than 7 points from its closing price before the tweet.

President-elect Trump has also taken aim at Boeing, and it is unlikely that these two companies will be the only ones in his cross hairs. In a POLITICO story after the Lockheed Martin incident, BMO Private Bank’s Chief Investment Officer Jack Ablin identified “a new type of risk, call it presidential tweet risk.” Mr. Ablin also noted that “everyone now has to keep their Twitter feed right next to their Bloomberg terminal.”

With the continued prevalence of social media sites like Twitter that give everyone a voice, it is a not-unrealistic expectation that the biggest activist investors may be able to build a platform on par with Mr. Trump’s and use it to impact share prices in the same way that the President-elect has demonstrated.

Fortunately, for companies, this is unlikely to happen overnight, but boards and C-Suites must start to account for these new types of risk in their preparations. In short, this should be a canary in the coal mine moment, and boards that ignore the present opportunity to prepare for such events open themselves to the potential for major – and lasting – damage to their companies and brands.

In the first webinar on this topic before the election, we noted the similarities between activist shareholder efforts and political campaigns. In a political campaign, challengers to an incumbent must build a platform that can compete on a level playing ground and get the message out. In this case, the incumbent tends to have an advantage through an already in-place media and messaging organization. Publicly-traded companies would be remiss to fail to build this platform, engage it regularly, and have it at the ready when the time comes. Otherwise, someone with a louder megaphone – whether the President-elect or a shareholder looking to make an impact – can easily rule the day.

About the Author: Andrew Ricci, Vice President at D.C. communications firm LEVICK.  Andrew, an experienced media relations expert, content-creation specialist, and public affairs strategist, started his career working on political campaigns and on Capitol Hill, serving as a senior communications aide to Rep. Zack Space (D-Ohio) and as the Congressman’s official spokesman during his reelection campaign. At LEVICK, Andrew now counsels a wide range of clients navigating reputational challenges in the public eye. 

 




Free Webinar: How A Trump Presidency May Impact Shareholder Activism

CommPro.biz News AlertCommPRO.biz News Alert

WHAT: CommPRO.biz – a B2B digital publisher and professional development site serving the public relations/investor relations, marketing, advertising and corporate communications sectors—will offer a free webinar on Tuesday, December 13, at 2 p.m. ET, exploring the topic “How A Trump Presidency May Impact Shareholder Activism.”

The panel of industry experts will take a deep dive into what activist investors and shareholders may expect to see in the coming four years.

Moderator Keith E. Gottfried , Partner and Shareholder Activism Defense Practice Leader at Morgan, Lewis & Bockius LLP, will be joined by:

●Steven Balet, Managing Director – Strategic Communications, FTI Consulting, Inc.
●Stephen L. Brown, Senior Advisor, KPMG Board Leadership Center
●Arthur B. Crozier, Chairman, Innisfree M&A Incorporated
●Daniel Kerstein, Managing Director, Head of Strategic Finance, Barclays Investment Bank
●Andrew S. Ricci, Vice President, LEVICK

Topics to be explored will include:

●How activists will fare under a Trump administration
●Whether a Trump administration will foster a climate that is more or less friendly to shareholder activism
●How a Trump administration’s policies could impact the types of campaigns that activists look to pursue and the industries that are targeted

WHEN: 2 p.m. ET, Tuesday, December 13, 2016
WHERE: Register Here
MEDIA: Media are welcome to attend.

ABOUT: With less than forty days remaining until Donald J. Trump is inaugurated as the 45th President of the United States, it remains far from clear how activists will fare under a Trump administration and whether a Trump administration will foster a climate that is more or less friendly to shareholder activism. For this timely webinar, we have assembled a panel that combines experts from the political and shareholder activism arenas to discuss how a Trump administration and its policies could impact the climate for shareholder activism, the types of campaigns that activists look to pursue and the companies and industries that are targeted

 




How A Trump Presidency May Impact Shareholder Activism (Webinar On-Demand)

trumppresidency640x480ondemand

Webinar Overview 

With less than sixty days remaining until a new U.S. president is inaugurated and a new administration takes over the executive branch of the U.S. government, it remains far from clear how activists will fare under a Trump administration and whether a Trump administration will foster a climate that is more or less friendly to shareholder activism.

For this webinar, we have assembled a panel that combines experts from the political and shareholder activism arenas to discuss how a Trump administration and its policies could impact the climate for shareholder activism, the types of campaigns that activists look to pursue and the companies and industries that are targeted.

Moderator

Gottfried_Keith_200x200

Keith E. Gottfried
Partner & Shareholder Activism Defense Practice Leader
Morgan, Lewis & Bockius LLP

Keith E. Gottfried, a corporate partner with the global law firm of Morgan, Lewis & Bockius LLP and the leader of its market-leading shareholder activism defense practice. Morgan Lewis was recently ranked No. 1 among all law firms for legal defense of public companies against activist shareholders, both in the Thomson Reuters Global Shareholder Activism Scorecard for the first half of 2016 and in the Factset SharkRepellent 2016 year-to-date activism defense league table. Over the course a legal career that spans almost 25 years, Keith has been involved in defending numerous public companies against high-profile proxy contests, special meeting demands, consent solicitations and unsolicited acquisition proposals. Frequently quoted by the national business media on issues relating to shareholder activism, Keith publishes and presents regularly on the strategies companies and their boards of directors can apply to make themselves less vulnerable to activist investors as well as strategies for shareholder engagement. Keith is listed in Chambers USA which ranks him as a leading corporate/M&A lawyer. As activist campaigns closely resemble political campaigns, Keith also brings to his activism defense clients substantial political insight gained as a U.S. Senate confirmed political appointee in the administration of President George W. Bush.

 

Panelists

StevenBallet200x200Steven Balet
Managing Director – Strategic Communications
FTI Consulting, Inc.

Steven Balet is a managing director in the FTI Consulting Strategic Communications segment and is based in New York. He is part of the Financial Communications and Capital Markets practices.

For the past 20 years Mr. Balet has advised public companies and hedge funds of all sizes on mergers & acquisitions, contested proxy campaigns and corporate governance issues. Mr. Balet’s experience includes providing strategic counsel to both corporates and dissidents in proxy contests all around the world.  He has also worked on many contested cross border mergers and acquisitions transactions.

Mr. Balet has extensive experience working with issuers to develop the most effective message for delivering the vote. He routinely counsels issuers on how to engage third party advisory groups such as Institutional Shareholder Services as well as providing background information on various activist stockholders and the techniques they employ. Mr. Balet has spoken on numerous panels discussing shareholder activism as it relates to both merger activism and board proxy fights.

Mr. Balet has been involved in some of the largest contested situations in the past decade including representing Sanofi-Synthelabo in their acquisition of Aventis, Rio Tinto in its defense of BHP Billiton’s hostile tender, and Oracle in its hostile acquisition of Peoplesoft. Most recently, Mr. Balet advised in tow large hostile defenses: Allergan in its defense against Pershing Square Capital Management and Valeant Pharmaceuticals, Perrigo Company in its defense against Mylan N.V.; and he currently advises Monsanto Company.

Mr. Balet joined FTI Consulting in April 2013. Prior to joining the company, Mr. Balet’s experience included 15 years at MacKenzie Partners, including three years as head of their London Office.

 

StephenBrown200x200Stephen L. Brown
Senior Advisor
KPMG Board Leadership Center

Stephen L. Brown, a Senior Advisor at KPMG Board Leadership Center, is a globally recognized governance expert, thought leader and trusted adviser to corporate boards and C-suites.  Mr. Brown founded The Edgerton Group, a boutique consulting firm that advises boards and management on critical corporate governance issues.  Formerly, he was the CEO of the Society of Corporate Governance.  Prior to the Society, he led the corporate governance group at TIAA.  Prior to TIAA, Mr. Brown practiced securities law at WilmerHale and Skadden and was an analyst with Goldman Sachs.  Named by NACD as one of the 100 most influential people in corporate governance and the boardroom, he is also an adjunct professor at the McDonough School of Business at Georgetown, Yale College, and the Colin Powell School at CCNY.   Mr. Brown received his B.A. with honors from Yale and his J.D. from Columbia University Law School where he was a Harlan Fiske Stone Scholar.

 

Arthur CrozierArthur B. Crozier
Chairman
Innisfree M&A Incorporated

Arthur B. Crozier, the Chairman of Innisfree M&A Incorporated of New York and of Lake Isle M&A Incorporated, Innisfree’s wholly-owned UK subsidiary. Art’s practice includes the representation of U.S. and international clients in a wide variety of transactions and proxy contests, as well as annual and special meetings. In addition, he counsels an international roster of clients on corporate governance and executive compensation issues. Art has written numerous articles and spoken extensively on the subjects of corporate governance, proxy contests, hedge fund activism, executive compensation and international voting practices.

 

 

daniel-kersteinDaniel Kerstein
Managing Director M&A
Global Head of Strategic Finance Group
Barclays

Daniel is the Global Head of Barclays’ M&A Strategic Finance Group. He is based in the New York office and directs teams in New York and London.  Strategic Finance is responsible for delivering strategic advice to the firm’s corporate clients with regards to shareholder activism and defensive situations.  The group works closely with management teams and Boards of Directors to prepare for and defend against the involvement of activist investors.  Notable engagements include the defense and financial advisory to Hertz, defense and capital structure advisory to Juniper Networks, and defense and financial advisory to Axiall.

Daniel joined Barclays from Lehman Brothers in 2008 and was previously the head of the Product Development Group, where he assisted on structuring the IPOs of several alternative asset managers, including Blackstone and Fortress.  Prior to joining Lehman Brothers, Daniel was a Vice President in Corporate Finance at Merrill Lynch, where he worked on and developed a number of convertible bondproducts, including contingent convertible and contingent payment bonds.

Daniel has a B.A. in English Literature from Queens College and J.D. from Harvard Law School.

 

 

andrewr200Andrew S. Ricci
Vice President
LEVICK

Andrew S. Ricci, a Vice President at LEVICK, a Washington, DC based communications and public affairs firm. Andrew is an experienced media relations expert, content-creation specialist, and public affairs strategist who helps brands, organizations, companies, and foreign governments tell their story to the audiences that matter and in a way that maximizes impact. Prior to joining LEVICK, Andrew served as a senior communications aide to Rep. Zack Space (D-Ohio) in his Capitol Hill office and during the reelection campaign. He developed the overall communications strategy and messaging; produced all written materials; engaged national, state, and local media; and served as the Congressman’s official spokesman. He also served as an aide to Rep. Harry Mitchell (D-Ariz.).

 

 Join us for this important event…

Presented by:

morganlewis_logo




Election Season Special Webinar: Shareholder Activism Viewed As A Political Campaign (On-Demand Recording)

election-and-shareholder-activism-on-demand-recording 

 

Webinar Overview

There are now less than 50 days left to U.S. election day, Tuesday November 8, 2016, the day that a new U.S. president will be elected. As one of the most interesting presidential election cycles in this history of the U.S. winds down, the media is replete with news and analysis regarding the political campaigns being waged by the two principal contenders for the U.S. presidency. Coincidentally, at the same time as the U.S. presidential election season comes to a close, the 2016 proxy season, which included 230 campaigns by activist investors, will also be close to winding down.

During the course of the most recent presidential election cycle, CommPRO has provided our site visitors with extensive content related to both the pending U.S. presidential election contest and the past year’s activist investor campaigns. In our continuing effort to provide new and exciting content for our site visitors, and given that we are in the home stretch of election season, the editors at CommPRO thought we should do something different that would be timely and of great interest to our site visitors.

In this webinar, we will focus on the numerous parallels between an activist investor campaign that seeks to replace one or more members of a public company’s board of directors with a political election campaign, such as the pending presidential election contest. Some of the similarities between an activist investor campaign and a political campaign are striking as an activist campaign is ultimately about “winning the hearts and minds” of as many voting shareholders as possible and the support of key voting blocks, including those that follow the recommendations of the major proxy advisory firms, and many of the strategies and tactics followed in political and activist investor campaigns are very similar. In both types of campaigns, messaging and media play significant roles as does opposition research, third party endorsements, pre-vetting of candidates, ability of candidates to engage with voters, balancing of the slate to appeal to different constituencies, “dog-whistle” politics, voting projections, attacks on the incumbent, platforms based on calls for change, rapid response teams, voter outreach and understanding the voting blocks that are in play versus those that are committed or expected to vote a certain way (e.g., in presidential campaigns, recall the notion of “red” and “blue” states).

For this webinar, we have assembled a panel that combines experts from the political and shareholder activism arenas. We also have as our moderator someone who not only has extensive experience in the shareholder activism arena but also, as a former high-level White House appointee, has substantial insight into the political world as well.

Moderator

Gottfried_Keith_200x200

Keith E. Gottfried
Partner & Shareholder Activism Defense Practice Leader
Morgan, Lewis & Bockius LLP

Keith E. Gottfried, a corporate partner with the global law firm of Morgan, Lewis & Bockius LLP and the leader of its market-leading shareholder activism defense practice. Morgan Lewis was recently ranked No. 1 among all law firms for legal defense of public companies against activist shareholders, both in the Thomson Reuters Global Shareholder Activism Scorecard for the first half of 2016 and in the Factset SharkRepellent 2016 year-to-date activism defense league table. Over the course a legal career that spans almost 25 years, Keith has been involved in defending numerous public companies against high-profile proxy contests, special meeting demands, consent solicitations and unsolicited acquisition proposals. Frequently quoted by the national business media on issues relating to shareholder activism, Keith publishes and presents regularly on the strategies companies and their boards of directors can apply to make themselves less vulnerable to activist investors as well as strategies for shareholder engagement. Keith is listed in Chambers USA which ranks him as a leading corporate/M&A lawyer. As activist campaigns closely resemble political campaigns, Keith also brings to his activism defense clients substantial political insight gained as a U.S. Senate confirmed political appointee in the administration of President George W. Bush.

 

Panelists

StevenBallet200x200Steven Balet
Managing Director – Strategic Communications
FTI Consulting, Inc.

Steven Balet is a managing director in the FTI Consulting Strategic Communications segment and is based in New York. He is part of the Financial Communications and Capital Markets practices.

For the past 20 years Mr. Balet has advised public companies and hedge funds of all sizes on mergers & acquisitions, contested proxy campaigns and corporate governance issues. Mr. Balet’s experience includes providing strategic counsel to both corporates and dissidents in proxy contests all around the world.  He has also worked on many contested cross border mergers and acquisitions transactions.

Mr. Balet has extensive experience working with issuers to develop the most effective message for delivering the vote. He routinely counsels issuers on how to engage third party advisory groups such as Institutional Shareholder Services as well as providing background information on various activist stockholders and the techniques they employ. Mr. Balet has spoken on numerous panels discussing shareholder activism as it relates to both merger activism and board proxy fights.

Mr. Balet has been involved in some of the largest contested situations in the past decade including representing Sanofi-Synthelabo in their acquisition of Aventis, Rio Tinto in its defense of BHP Billiton’s hostile tender, and Oracle in its hostile acquisition of Peoplesoft. Most recently, Mr. Balet advised in tow large hostile defenses: Allergan in its defense against Pershing Square Capital Management and Valeant Pharmaceuticals, Perrigo Company in its defense against Mylan N.V.; and he currently advises Monsanto Company.

Mr. Balet joined FTI Consulting in April 2013. Prior to joining the company, Mr. Balet’s experience included 15 years at MacKenzie Partners, including three years as head of their London Office.

 

StephenBrown200x200Stephen L. Brown
Senior Advisor
KPMG Board Leadership Center

Stephen L. Brown, a Senior Advisor at KPMG Board Leadership Center, is a globally recognized governance expert, thought leader and trusted adviser to corporate boards and C-suites.  Mr. Brown founded The Edgerton Group, a boutique consulting firm that advises boards and management on critical corporate governance issues.  Formerly, he was the CEO of the Society of Corporate Governance.  Prior to the Society, he led the corporate governance group at TIAA.  Prior to TIAA, Mr. Brown practiced securities law at WilmerHale and Skadden and was an analyst with Goldman Sachs.  Named by NACD as one of the 100 most influential people in corporate governance and the boardroom, he is also an adjunct professor at the McDonough School of Business at Georgetown, Yale College, and the Colin Powell School at CCNY.   Mr. Brown received his B.A. with honors from Yale and his J.D. from Columbia University Law School where he was a Harlan Fiske Stone Scholar.

 

Arthur CrozierArthur B. Crozier
Chairman
Innisfree M&A Incorporated

Arthur B. Crozier, the Chairman of Innisfree M&A Incorporated of New York and of Lake Isle M&A Incorporated, Innisfree’s wholly-owned UK subsidiary. Art’s practice includes the representation of U.S. and international clients in a wide variety of transactions and proxy contests, as well as annual and special meetings. In addition, he counsels an international roster of clients on corporate governance and executive compensation issues. Art has written numerous articles and spoken extensively on the subjects of corporate governance, proxy contests, hedge fund activism, executive compensation and international voting practices.

 

 

DuncanHerrington200x200Duncan Herrington
Vice President | M&A, Contested Situations
Credit Suisse Securities (USA) LLC

Duncan Herrington, CFA, a Vice President in Credit Suisse’s Contested Situations practice, is responsible for advising clients on shareholder activism, takeover defense, contested M&A transactions and corporate governance matters.  According to Thomson Reuters’ Global Shareholder Activism Scoreboard, for the first half of 2016 Credit Suisse was the top financial advisor globally to companies defending against activist campaigns.  Prior to joining Credit Suisse in 2010, Duncan was an M&A lawyer at Paul Weiss Rifkind Wharton & Garrison, based in its London office, where he specialized in structuring and executing cross-border transactions.  Combined he has over 10 years of transactional experience, with a specialty in contested situations.  Duncan holds a JD from Harvard Law School and an MBA from London Business School.

 

andrewr200Andrew S. Ricci
Vice President
LEVICK

Andrew S. Ricci, a Vice President at LEVICK, a Washington, DC based communications and public affairs firm. Andrew is an experienced media relations expert, content-creation specialist, and public affairs strategist who helps brands, organizations, companies, and foreign governments tell their story to the audiences that matter and in a way that maximizes impact. Prior to joining LEVICK, Andrew served as a senior communications aide to Rep. Zack Space (D-Ohio) in his Capitol Hill office and during the reelection campaign. He developed the overall communications strategy and messaging; produced all written materials; engaged national, state, and local media; and served as the Congressman’s official spokesman. He also served as an aide to Rep. Harry Mitchell (D-Ariz.).

 

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Shareholder Activism as a Political Campaign: Referendums on the Incumbent

andrewr224By Andrew Ricci, Vice President, LEVICK

Every four years, the United States has to evaluate its direction and make a choice whether to maintain the current political rule or upend it through the presidential election process. Challengers and incumbents alike are forced to wage campaigns to hold on to – or wrest away – governance and power.

A political campaign, at its heart, is not entirely different from the efforts of an activist shareholder and a company facing an activist shareholder threat. At the end of the day, both are looking to impose or maintain control over the levers of governance, whether of a country or of a publicly traded company. Both are beholden to a group of voters, whether the electorate at large or the shareholders who have a vote in governance issues. Both have a key “decision day” on which votes are counted and the decision is locked in, and both, at the end of the day, are seeking to come out on top by reaching the magic “50 percent plus one” number that means victory. 

Whether an activist shareholder is looking to replace key members of the C-Suite, obtain influence through seats on the corporate board, or implement a specific proposal that changes how a company does business, there are similarities between their efforts and a political campaign that are worth exploring.

One of these similarities is that political campaigns generally fall into two broad themes which also apply to activist shareholder efforts: referendums on current leadership or a dynamic vision for the future. No moment better sums up the campaign-as-referendum motif than Ronald Reagan’s knockout punch in the 1980 Presidential Election’s only debate. Held one week to the day before the election, Reagan, the challenger, used his closing statement to ask the audience,

campaigns-and-elections“Are you better off now than you were four years ago? Is it easier for you to go and buy things in the stores than it was four years ago? Is there more or less unemployment in the country than there was four years ago? Is America as respected throughout the world as it was? Do you feel that our security is as safe, that we’re as strong as we were four years ago? And if you answer all of those questions ‘yes’, why then, I think your choice is very obvious as to whom you will vote for. If you don’t agree, if you don’t think that this course that we’ve been on for the last four years is what you would like to see us follow for the next four, then I could suggest another choice that you have.”

This was a masterful use of stagecraft and rhetoric from which Carter, the incumbent, never recovered. Politically, Carter was already reeling from a divisive primary process that saw him lose 12 states (the last time an incumbent president lost a state’s presidential primary). And nationally, high energy prices and unemployment, coupled with security concerns, led to a dissatisfied and restless electorate. Reagan’s rhetorical questioning forced this agitated voter base to confront Carter’s record and a week later, Ronald Reagan was the President-elect by a landslide.

 We have seen many of these referendum-type elections since, and it is not the case that the challenger always starts from a position of strength. Some of these campaigns have seen the challenger succeed (Clinton in 1992, Obama in 2008) where others have seen the incumbent prevail (Clinton in 1996, Bush in 2004, Obama in 2012). While the Carter-Reagan race is among the most notable examples of a challenger upsetting the political order, there have been many situations since where the electorate decides that yes, indeed, we are better off than we were four (or eight) years ago.

There is an important parallel here for activist investors looking to mount a campaign against a company and for companies who are forced to respond. All shareholders of a company are looking to maximize their value, and if management can be portrayed as ineffective, complacent, weak, or incompetent, they will likely face an uphill battle not dissimilar to Mr. Carter’s. Just like an incumbent candidate, a company’s management has to be prepared to defend their record before the voters and demonstrate that the current course is the real key to value, growth, and profitability.

When an activist shareholder is launching a campaign to target a company’s management, the “are you better off now than you were four years ago” question should lay the foundation for their playbook. And just like that question has been used in some form in nearly every subsequent election, it is one that activist shareholders should continue to ask – and companies facing an activist campaign should be ready to address.

 About the Author: Andrew Ricci is a Vice President at LEVICK, a crisis communications firm.  




Thomson Reuters Global Shareholder Activism Scorecard Ranks Morgan Lewis #1 for Shareholder Activism Defense

By CommPRO Editorial Staff

Thomson Reuters Global Shareholder Activism Scorecard Ranks Morgan Lewis #1 for Shareholder Activism DefenseMorgan Lewis was ranked No. 1 among all law firms for legal defense of public companies against activist shareholders in the Thomson Reuters Global Shareholder Activism Scorecard for the first half of 2016. The ranking is as of August 22, 2016 and is based on the number of publicly-disclosed activism defense matters that Morgan Lewis has advised on.

The firm retains its No. 1 ranking among all law firms for legal defense of public companies against activist shareholders in the 2016 year-to-date activism defense league tables compiled by FactSet SharkRepellent and included in the Wall Street Journal-FactSet Activism Scorecard. That ranking is as of August 18, 2016 and is based on the number of publicly-disclosed activism defense matters that Morgan Lewis has advised on.

In the past two years, the firm’s market-leading shareholder activism defense practice, led by partner Keith Gottfried, has advised more than two dozen global public companies in a wide array of industries, including, among others, apparel, automotive, banking, casual dining, consumer goods, energy, life sciences, manufacturing, pharmaceuticals, real estate, retail, shipping, software, technology and waste management, with respect to preparing for and/or responding to high-profile proxy contests, special meeting demands, withhold campaigns, shareholder proposals and other activist shareholder campaigns as well as contests for corporate control and contested M&A situations. The practice also advises public companies and their boards of directors on the latest techniques for making a company less vulnerable to activist shareholders, best practices for engaging with shareholders, corporate governance issues, and board advisory matters.




Sneak Preview: How Shareholder Activism Is Affecting The 2016 Proxy Season (ON-DEMAND RECORDING)

ProxSeason-On-Demand

Webinar Overview

In 2015, there were 375 activist campaigns against public companies according to the research firm FactSet. As 2016 marches forward, and activists begin to run up against the advance notice of nomination deadlines that most public companies have in place, we are starting to see that 2016 will likely rival, if not exceed, 2015 in the number of activist campaigns that are expected to be waged. What remains to be seen is how activist campaigns and company responses will be different in 2016 compared to 2015.

Key questions to be answered:

  • How will the activist playbook differ in 2016 compared to 2015?
  • Have activists become sophisticated in their ideas for value enhancement?
  • Will companies respond to activists differently than last year?
  • Are companies engaging more with activists than in years past?
  • Will the trend of more large caps being targeted continue?
  • Will we continue to see more than a majority of activist campaigns end in a settlement?
  • Will companies be emboldened to fight by last year’s victory by DuPont in its proxy contest?
  • Will we see more situations where multiple activists target the same company?
  • Is activism evolving into a year-round activity that extends way past proxy season?
  • Will activists continue to receive significant support from institutional investors?
  • How will the significant losses that some hedge funds suffered in 2015 affect activism activity in 2016?
  • How much money do we expect to flow into activist funds in 2016?

For this webinar, hosted by CommPro.biz Contributing Editor Gene Marbach, we have assembled a panel of shareholder activism experts, all of whom bring to the discussion extensive experience in advising both large-cap and small-cap companies on how to prepare for and respond to shareholder activists and the campaigns they may wage.

Our Panel

 

Dan's Headshot 2Daniel H. Burch, the Co-Founder, Chairman and Chief Executive Officer of Mackenzie Partners, Inc., one of the country’s leading and most well-known proxy solicitation firms. Dan develops strategies and campaigns for clients involved in proxy contests, tender offers, mergers, financial restructuring and other complex corporate transactions.  Dan’s particular focus is on advising clients on shareholder activism and corporate governance matters and is a veteran of numerous proxy contests.  For close to three decades, Dan has led MacKenzie’s efforts on behalf of its clients in campaigns in North America and Europe. Dan is a member of the Society of Corporate Secretaries and Governance Professionals and the National Investor Relations Institute.

 

 

 

 

Gottfried_Keith_74159_4x5Keith E. Gottfried, a Partner with the global law firm of Morgan, Lewis & Bockius LLP and the leader of its very busy shareholder activism defense practice. For 2014 and 2015, Morgan, Lewis & Bockius LLP was ranked No. 5 among law firms in the year-end league tables for legal defense of companies against activist shareholders that are compiled by FactSet SharkRepellent. Keith concentrates his practice advising public companies and their boards of directors and special committees on such matters as proxy contests, activist shareholder campaigns, unsolicited offers and other contested control situations.  Over the course a legal career that spans almost 25 years, he has been involved in defending numerous public companies against proxy contests, consent solicitations and unsolicited acquisition proposals.

 

 

 

maureen-wolffMaureen T. Wolff, the President & Partner of Sharon Merrill, an investor relations strategic advisory firm focused on counseling clients on critical communications that resonate with stakeholders and deliver desired results in virtually any situation an enterprise may confront. Practice areas include investor relations, crisis communications, transaction communications, reputation and issues management, and presentation and media training. A national thought leader in investor relations and corporate communications, Maureen is a trusted advisor to CEOs, CFOs and boards of directors on critical communications issues related to corporate governance, shareholder activism and proxy contests, and Regulation FD. She is a past chairman and board member of the National Investor Relations Institute (NIRI), a member of the Senior IR Roundtable and vice chairman of NIRI’s IR Certification committee. 

 

 

Our Host

genemarbach150x150Gene Marbach, a CommPro.biz Contributing Editor. Gene focuses on communications and business-related topics with insights informed by his more than 30 years of experience in investor relations and corporate communications, most recently as group vice president at Makovsky + Company, an investor relations and public relations firm. Gene is a prolific commentator on issues relating to investor relations and corporate communications and a frequent speaker and moderator at webinars and seminars focused on best practices in investor relations and corporate communications as well as evolving practices such as the use of social media to communicate with investors, whether in the context of a company’s routine quarterly earnings announcements or less routine events such as planning for an IPO, responding to an activist shareholder, executing an M&A strategy or responding to a crisis.

 

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Build and Protect Your Business with Purpose: Lessons from Whole Foods

Jay Coen Gilbert and Alexander McCobin 

One of the most visible examples of the rising power of short-term shareholder activism was that of Jana Partner’s against Whole Foods Market last summer. What the storied grocer did right for over 30 years prior, and what its co-founder and CEO, John Mackey, wished he had done in advance of the activist siege provide three valuable lessons for business leaders: 1) Companies built on a higher purpose beyond just profit often become industry leaders; 2) be very careful choosing investors or risk losing your dream; and 3) ingraining that purpose into a company’s legal structure, can potentially stave off even the most aggressive activist shareholders. 

1. Build Your Business on Purpose 

Ask any founder why she or he started a business. The answer rarely will have anything to do with money. You’re most likely to hear: To solve a problem; to build a better mousetrap; to help a group of people; to make the world a better place. From Patagonia and Cotopaxi seeking to reconnect people with nature to Stonyfield and Happy Family Organics raising the bar on the quality of food we put in our bodies to Kickstarter and Amalgamated Bank helping us put our money to work for good, companies founded on a higher purpose beyond just profit are proving that the adage of “doing well by doing good” is just good business. 

In fact, such purpose-driven companies often achieve extraordinary financial success. The book “Firms of Endearment: How World-class Companies Profit from Passion and Purpose” spotlights the performance of companies like these that outperformed the S&P 500 by 14 times over a period of 15 years. 

Similarly, Whole Foods’ success stems from pursuing a higher purpose along with other tenets of a business philosophy outlined in Mackey’s book “Conscious Capitalism: Liberating the Heroic Spirit of Business” (co-authored with “Firms of Endearment” author Raj Sisodia). Mackey’s focus on creating value for all stakeholders impacted by his business—workers, suppliers, communities, and the environment, not just shareholders— helped turn his dream of bringing better food options to people into the world’s largest natural and organic foods supermarket. 

2. Be Conscious that Investors are typically Not Focused on Purpose

But even the noblest of businesses can fall prey to a diseased element in today’s financial sector. It’s called “short-termism,” and its pervasiveness in our capital markets is proving to be cancerous. Among the culprits driving short-termism is the practice of financial shareholder activism; specifically, the amassing of equity in a publicly-traded company, often by a hedge fund or institutional investment firm, with the intent of forcing its sale to the highest bidder. 

Lessons from Whole FoodsWhen Whole Foods began facing market challenges, it became the target of one such activist institutional shareholder determined to implement short-term profit measures and sell it to the highest bidder. Jana didn’t care that its tactics would decimate the very corporate culture that made Whole Foods a favored place to shop and work. Jana didn’t care to whom it sold Whole Foods—competing chains that previously eschewed the organic movement were among its known targets—just as long as it maximized the return on its investment. 

In the end, Mackey, was able to sell to a more strategic partner he believes will be more mission-aligned: Amazon. But while Mackey sees Amazon as preferable to the other buyers Jana pursued, finding one’s company at the end of an activist shareholder’s gun barrel is a scenario any CEO or business owner pursuing a higher purpose would prefer to avoid. 

3. Build Your Purpose into Your Company’s Legal DNA 

What the Whole Foods’ experience shows us is that even the most successful purpose-driven companies need protection. Unfortunately, creating long term value for all stakeholders doesn’t hold cache with unconscious capitalists who possess a myopic mindset of strictly maximizing short term value for shareholders at any cost on people, communities, and the natural world. Luckily, there is a viable option for saving conscious businesses from such aggressive activist shareholders: B Corporations. 

Unlike traditional businesses, B Corps have been inoculated against the virus of short-termism. B Corps make a simple yet powerful legal change to require their board of directors to consider the impact of their decisions on all their stakeholders. LLCs can do this with a simple amendment to their operating agreement; corporations can do this by adopting benefit corporation governance, now available in 35 US states, including Delaware where the vast majority of publicly-traded and venture-backed companies are incorporated. The B Corp legal framework helps companies protect mission through capital raises and leadership changes and gives entrepreneurs and directors more flexibility when evaluating potential sale and liquidity options. 

Certified B Corporations (companies that not only adopt stakeholder governance, but also meet rigorous standards of third party verified overall social and environmental performance) include notable brands spanning virtually every industry, including Patagonia, Athleta, Cascade Engineering, KeHe, Eileen Fisher, Kickstarter, Natura, New Belgium Brewing, Method, Ben & Jerry’s, Hootsuite and many more. And many companies with disruptive business models such as data.world, Cotopaxi, Lemonade, Ripple, and REBBL are finding B Corps to be an advantage in raising venture capital. 

The value proposition for B Corps is straight forward. “If someone is looking to take shares in a corporation and work as an activist shareholder, then whether the company has adopted benefit corporation governance would likely factor into the decision,” says Rick Alexander, former chair of the Corporations Law Section of both the Delaware and American Bar Associations and current head of legal policy at B Lab. “It’s harder to wrestle with this company than one that hasn’t declared its purpose outside of increasing share price. It should be a powerful deterrent; a CEO with a long-term plan to include sustainability would mean the legal argument an activist shareholder would be making wouldn’t resonate. That has to carry some weight.” 

Would becoming a B Corp have prevented Jana’s siege on Whole Foods? Unfortunately, we’ll never know. What is known, however, are Mackey’s thoughts on the matter as he stated at last year’s B Corp Champions Retreat: 

“I always thought B Corps were a good idea . . . I saw it as a fellow traveler with Conscious Capitalism, but I really didn’t think it was necessary. You know, you have this stakeholder model, you take care of your stakeholders, what do you need this legal form for?” he said. “We had activists come into our stock. … They wanted to take over our company; they wanted to force us into a sale. … Boy oh boy oh boy, did I wish we were a B Corp. … I would have loved to have tested the idea of shareholder activists versus the legal form of a B Corp.” 

If such a lesson isn’t enough to at least get you exploring the idea of becoming a B Corp, then maybe recent developments among the world’s largest investors and most powerful players in the capital markets may nudge you to reconsider. From BlackRock’s “Sense of Purpose” letter to CEOs earlier this year calling on businesses to create more social value to Goldman Sachs launching its new JUST Capital ETF this summer, purpose-driven capitalism is establishing itself as the way of the future.

That future will undoubtedly belong to leaders of companies who embrace the importance of pursuing profit not as an end in itself, rather as a means to an end toward achieving a higher, more noble purpose. Running a company on the principles of Conscious Capitalism and with the legal structure of a B Corp will prove to be the most optimal way to not only help your business thrive but to protect it from financial activist shareholders with unconscious motivations.  


Build and Protect Your Business with Purpose-Lessons from Whole FoodsAbout the Authors:

Jay Coen Gilbert is co-founder of B Lab, the nonprofit organization governing B Corps and serving a global movement of people using business as a force for good.

Alexander McCobin is Chief Executive Officer of Conscious Capitalism, Inc., the nonprofit dedicated to elevating humanity through business.




The Tipping Point

 

“Look at the world around you. It may seem like an immovable, implacable place. It is not. With the slightest pushin just the right placeit can be tipped.”

–Malcolm Gladwell

So much of history occurs not with a bang, but a whimper. If we listen closely enough and watch carefully, we can witness it, the moment when the scales tip in the other direction.

With the near-meltdown of the Three Mile Island nuclear reactor – amazingly, 12 days after the release of the anti-nuclear power movie China Syndrome in March 1979, creating one the greatest movie coincidences of all time – a national movement was born.

Suddenly, everyone was talking about energy. Primed by several summers of hours-long gas lines made possible by the OPEC oil embargo starting in 1973, America and other parts of the world started looking at energy not as something too cheap to meter, but instead as a central part of national sovereignty, foreign policy, household budgets and political campaigns.

Looking to capitalize and leverage the nascent movement, Ralph Nader, Musicians United for Safe Energy and others organized a series of benefit concerts at New York’s Madison Square Garden and a protest on September 23, 1979, attended by 200,000 people in Battery Park. Energy and the environment had become a movement.

The previous spring, Mr. Nader would play a key role in helping to negotiate some of the big-name musical talent. Ecstatic, late one night in California, having just closed a big deal for one of the hottest artists in the music industry, he called Donald Ross, an extraordinary New York-based community organizer, someone I had the honor to know and a close confidante of Mr. Nader.

A very sleepy Donald Ross answers the phone to learn that Mr. Nader had just secured the services of Jackson Grey. “Jackson Grey?” Mr. Ross, asks, incredulous. “Don’t you mean, Jackson Browne?” “No, it’s Jackson Grey. All the kids love him!” Convinced that Mr. Nader knew what he was talking about, Donald goes back to sleep and the next day, asks dozens of young people, “Have you ever heard of Jackson Grey?” It was, of course, Jackson Browne, who would be joined by Bonnie Raitt, Graham Nash, Pete Seeger and many others and the rest, as they say, is history.

May and June of this year have been similarly seismic for the energy industry. It seems to be the moment when climate change and the green energy movement has become not something happening to the industry, but with it.

European energy giant Total has been has acquiring a combination of solar, wind and storage projects at an average rate of 1 Gigawatt per month since January 2020. This past January it acquired a stake in India’s Adani Green Energy, a move that will ultimately include nearly 15 Gigawatts of energy – the equivalent of over 45 million solar panels.

In late May, 61% of Chevron’s shareholders voted in favor of a proposal to cut emissions.

That same week, activist hedge fund Engine No. 1 won a remarkable three seats on the Exxon board.

Also that week, the Hague District Court in the Netherlands ordered Royal Dutch Shell to cut its CO2 emissions by 45% by 2030, compared to its 2019 levels.

The Court’s landmark ruling draws on the growing series of climate change agreements – such as the Paris Agreement – along with human rights standards such as those in the UN Guiding Principles. It is a new day in the energy industry.

On the daily podcast In House Warrior that I host for the Corporate Counsel Business Journal, I interviewed Julianne Hughes-Jennett, a partner with Quinn Emanuel, and Marjun Parcasio, an associate, both in Quinn’s London office, for insights into what all of this means and what’s next.

It may not be quite as melodic as Jackson Grey, but it’s well worth the listen.

As David Frost would say, “That was the week that was.”

Enjoy the listen.

Richard Levick

Listen to the podcast




Richard Levick Asks: ‘What’s a Director to Do?’

“Are directors even relevant anymore?”
– Fortune 150 Board Member

 

Today we release the fourth eBook in our series on challenging issues facing companies and institutions, this one on our thoughts about Diversity, Equity & Inclusion. We are planning a number of additional broadcasts soon, including a new series we have developed with CommPRO and the Museum of Public Relations entitled Conversations with America’s Legends, kicking off with Ambassador Andrew Young, which will be added, along with others, to the eBook.

Over the years, I have had the honor of working with and speaking to many boards, public and private, and with many individual board members. Never was I simultaneously impressed and surprised by a question more than the one above. And that was three years ago. The world has only gotten faster, transparency more weaponized, political challenges more divisive. Into the breach, though always there, come sexual and racial issues. Certainly, there is no going back, nor should there be. There’s not even hiding. Leading is the only option.

The number of Diversity, Equity & Inclusion speeches, matters and meetings we have participated in has only escalated in the past number of months, resulting in this new eBook. At each meeting, executives and, particularly, directors, are asking, “What should we be doing?” I find that when I speak about history, trends and what’s next, it all seems too big. Understandable, as we have reduced so many of our board responsibilities down to lists, so here is one to make it more tactical, though these actions all require wisdom, grace and indefatigability, as DEI is not a destination but a journey that never ends.

Crisis Abhors a Vacuum – There are three notable periods in American history prior to the current pandemic where the federal government has utterly failed to assert leadership (James Buchanan, et al., on secession, Andrew Johnson on Reconstruction and Herbert Hoover on the Great Depression). When leadership is absent, others will or are forced to fill it, among them governors, mayors, city councils and CEOs. Companies are now expected to lead on the public health and social issues of the day. Covid-19, #MeToo, #BLM, climate change. As in 1909, corporate neutrality is dead and mercantile activism is expected.

#BLM is Here to Stay – As a director, do not think “this too shall pass.” The Black Lives Matter and associated new Civil Rights movement inspired the largest series of demonstrations in the history of the United States, with 12 to 26 million Americans taking to the streets – during a pandemic – in over 500 cities, far overshadowing the street protests of the anti-war movement in the 1960s and 70s. Activity on social media is 12 to 120 times greater than any of the other high-profile political issues of the day such as climate change, #MeToo, immigration and abortion. Inactivity in the face of an immovable object is a miscarriage of responsibility.

Prepare Rather Than Respond – As challenging as this moment is, it is far easier at this very moment than it will be when the klieg lights are on your company, board or you. Prepare now for leadership.

It Is Not About Symbolism – A diverse advertisement, hire or CSR donation won’t work anymore. Instruct executives to conduct an audit of the full spectrum of the company’s engagements, all the things that make up its profile. This includes political donations, advertisements, brand and social activities, IR, CSR, ESG, legislative priorities, etc. Failure of consistency in one area (e.g., financially supporting a hostile politician) will overwhelm much if not all of the corporate good works.

527s Are No Longer Opaque – Companies have long enjoyed a more neutral approach to political funding activities and, in more recent years, “527” funds (so named for their IRS designation) when a funding position is more likely to be controversial. Until very recently, 527s were hard to track. No longer. When you are doing your corporate housecleaning, fully appreciate that 527s will become transparent.

Ask Simple Questions – I am always amazed at the amount of code used in large companies for critically important decisions. Rather than engage in an open discussion about risks, acronyms and buzz speak takes over and everyone assumes all is well. Digital is but one example. It speaks its own language that few board members understand yet most are reluctant to ask for clarity for fear it will expose what they don’t know. The same is true for other enterprise risks, and this sea change, if not addressed, will certainly turn from opportunity to risk. Ask simple questions and demand simple answers. “Why is our DEI recruiting healthy and yet fails to dent our executive ranks in any meaningful way? How do we fix that with a long-term, institutionalized approach?”

Offer Real Help – Tweets about DEI commitment are powerful and useful, but hollow when not combined with more. Ask executives how they are leading through this challenging period. Are we recommending meaningful financial and mental health recommendations? Have you conducted the audit recommended above so that the company commitment is consistent? Are we showing, not telling?

This Is Going To Get Personal  Change activists – Gandhi, Martin Luther King, Jr., Saul Alinsky – never wasted their time in jail. Gandhi wrote My Experience with Truth; King wrote Letter from a Birmingham Jail, and Alinsky wrote Rules for Radicals which, whether they realize it or not, has become the rule book for a new generation of change activists. “Make it personal.” Doxing, call-outs on social media and protests at the homes of executives and board members. You are likely to get called into the public fight one way or the other. If you are standing on the right side of history, bolster your courage and stand firm; if you are standing in the way of history, similarly bolster your courage and lead the change.

It is Now About Stakeholders, Not Just Shareholders – Whether you are publicly traded or not, you have shareholders and stakeholders. Measuring profit through maximization is a great strategy for the quarter, but it increasingly leaves companies antiquated in the future – likely the very near future. What investments, financial and otherwise, can companies make in their expansive view of communities to empower the brand and its evangelists, which build for the future? An expansive view of this is provided below in an article I co-authored with former Monsanto general counsel and private attorney Bill Ide.

Don’t Rush In With “Fixes” – Don’t rush in with the thought of a “fire sale” on DEI. These problems took hundreds of years to get to where we are today. They will not go away with instant fixes, command authority and a few hires. This will take time. And you will get it wrong along the way. Plan for an institutionalized approach that is as sensitive to people who fear they will be displaced as those you are welcoming. This is really difficult stuff where even the language is so loaded and trust so low that missteps are easier than modest leaps forward.

Recruitment and Advancement – We will not fix the DEI challenges with hiring opportunities alone. Saying you recruit from the “Ivies” is a brand, it’s also exclusive. Look at the world differently. Challenges are historic and deep rooted. Look to form close, deep and long term relationships with Historically Black Colleges and Universities (HBCUs) and develop training and support programs for years. As directors, don’t just ask about diversity numbers, break them down and study the patterns, then lead.

Silos are Dead – For over 70 years companies have operated as silos – HR, GR, PR, Legal, Brand, etc. But problems, particularly social justice challenges, are fully integrated. Activists look for the weakest point and leverage. As media coverage escalates a recruitment problem, heretofore assigned to HR alone, is now a legal, brand, GR and PR problem, to name a few. Directors should be looking for ways for their companies to integrate their silos so companies think holistically, just like their critics.

If Biden Wins – I am not going to prognosticate, but it is a scenario well worth considering as there is at least a 50% likelihood this may happen. If there is a sweep and the Senate turns over for an entirely Democratic alignment, it creates a moment that occurs only once or twice in a generation. I am not speaking of political power, but the historical kind. Change comes in waves. Prior to 1964, Lyndon Johnson was no Civil Rights leader. Yet, in the wake of the Kennedy assassination and the televised Civil Rights movement, the mood of the country changed radically and quickly. It became Johnson’s raison d’être. The 1964 Civil Rights Act, the 1965 Voting Rights Act, the 1968 Fair Housing Act. Over 240 new laws were enacted during the first few years of the Johnson Administration because the country was ready. We may be entering a similar moment; as directors, you should be considering it, if not expecting it.

No Company is Exempt – Business-to-Business and Business-to-Government companies luxuriate in the opaqueness of what they do because their customers aren’t usually also activists-citizens. If Takata and Foxconn taught us anything, operating in this sector is no longer a shield to citizen activism. Expect to be in the limelight and act now to do the right things.

Have a Strategy, Not Whack-A-Mole – Think long term and proactively. Develop an approach that will put you in a leadership role. Responding to one problem after another without the systemic approach leads to bad decisions and weaker boards. Activists – unions, #BLM, plaintiffs, etc. – need the Internet to build alliances, support and to communicate direction. Ask questions about how the company is tracking these trends and, just as importantly, how they are evaluating it. Are there potential allies? Thoughtful critics who can provide opportunities? Nascent but critical information that can be corrected before it passes for “truth”? The Internet is where social movements are born. Why wait until they are adults to address them?

Read – This may sound passive, but understanding the historical swings – the Hegelian Dialectics – of business and politics, gives us both understanding and vision. We are in 1918, 1929 and 1968 all at once. We might as well learn from them – reducing errors along the way – and have them serve as our guides.

Courage – Patience, vision, integrity, honesty. These are all needed to exhibit courage. Be willing to question and if necessary sacrifice the board member who stands in the way; the short-term profits that will lead to future exposure; the self-righteous and inflexible leaders; and those that counsel hiding. There is time for reasoned, wise and calm discussion followed by action. Overwhelmingly fear is an emotion which rules us. Fortunately, courage is needed in short supply. But it is, of course, needed now.

Happy reading.

Richard Levick

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Corporations Must Look to Adopt a New Paradigm

 

Bill Ide, III, Partner, Corporate Governance, Akerman

Richard Levick, Esq., Chairman & CEO, LEVICK

Late one night during the financial crisis of 2008–2009, when working around the clock was the order of the day in the AIG war room, a team member left the building to grab takeout for dinner. Having forgotten to remove his AIG badge, he was punched by an irate passerby, a man incensed by the unfairness of it all. That financial gulf has only gotten bigger and more lethal in the past decade.

From that day on the two of us, as longtime corporate counselors, wondered, “Did the financial crisis last long enough to teach corporations its critical lessons?” Companies no longer serve just customers and shareholders, but a much broader audience that is as much impacted by the doings of large companies as those that they serve directly. When they sneeze, we all get colds.

A forthcoming article by Harvard Law Professors Lucian Bebchuk and Roberto Tallarita, both experts in corporate governance, spotlights how this country’s contentious debate over social justice and inclusion has cascaded into C-suites and boardrooms. Their essay explores whether publicly held companies should continue basing decisions on the interests of shareholders, or whether there’s been a paradigm shift, meaning that corporate executives should take into greater account the views and aspirations of such stakeholders as customers, employees, and community leaders.

As we can attest, the shareholder vs. stakeholder dynamic is not new and long predates the AIG and Wall Street experience. What is new is the urgency of the debate and an abiding belief in many quarters that now — more than ever — corporations must practice what we call “mercantile activism” to address societal ills and enhance their brand while they do it. If all companies are doing is maximizing profits for this quarter, what are the liabilities they are creating for the next? Even if the perfect storm of the pandemic and its financial devastation could not have been precisely predicted, down markets and their associated unrest could be. Historically, when the federal government becomes inactive in addressing societal problems, Wall Street steps into the void — at least to a degree. J.P. Morgan, Andrew Carnegie and even John D. Rockefeller eventually understood that.

After breaking down the arguments and volunteering some positive perceptions of shareholder capitalism, Professors Bebchuk and Tallarita conclude that the conventional model — shaping corporate actions around the (generally) short-term pecuniary desires of shareholders — is still the smartest path for publicly traded companies to pursue.

While they concede that a substantial number of corporate leaders support “stakeholderism” because it enables them to insulate themselves from short termist hedge fund activists and investors, they argue that stakeholderism “would impose substantial costs on stakeholders and society, as well as on shareholders.” Based on their analysis they counsel, “If stakeholder interests are to be taken seriously, stakeholderism should be rejected.” As if maximizing profits now doesn’t create liabilities later. Sometimes not much later at all.

We’d like to register a partial dissent. In our view, shareholders are stakeholders. To be sure, they’re at the top of the list, but their desires should not subsume those of other stakeholders. It’s difficult for many shareholders to see beyond the next quarter and the next stock dividend, which too often hamstrings corporations from recognizing longer-term or strategic imperatives.

Between us, we have advised hundreds of companies over the years, protecting their brand reputation through good times and bad, through tough crises and recoveries. We can distinguish between a “moment” and a “movement.” And we believe that what is happening in America today is a genuine paradigm shift, a movement toward transparency, accountability and inclusion that is not likely to abate until real change occurs. If companies do not substantially invest in diversity, equity and inclusion or sustainability today, will they soon be written off as not relevant going forward?

The world is changing — and we maintain that corporate America must adapt or be left behind.

In our estimation, the shareholder primacy paradigm for corporate governance should be redefined to include other constituencies, not only customers, shareholders and employees, but at least include a critical look at the holes in society and anticipate where investments in constituencies are sound and advisable. Companies don’t need to serve all of society, replacing the declining federal government, but they do need to at least look forward and do the math. Several states have had so-called “other constituencies” statutes on the books for many years, but Delaware (the home of most publicly traded corporations) does not, a reality that needs to change.

Not long ago, both Delaware and California enacted laws allowing for the incorporation of businesses with explicit social or public benefit purposes — an encouraging development that we hope gets emulated elsewhere.

Meanwhile, the Business Law Section of the California Lawyers Association has approved formation of a working group to study stakeholder capitalism. Bebchuk and Tallarita’s article should be required reading, but more compelling to us is the work of the Business Roundtable (BRT) in recent years listening to institutional investors and other thought leaders calling for stakeholder capitalism which the BRT then endorsed.


About the Authors:

Bill Ide, III

A veteran corporate strategist and trusted advisor to public and private companies, nonprofits, and public sector agencies, clients turn to William “Bill” Ide for counsel on crisis response, corporate stewardship, reputation and risk management strategy and corporate governance.

With an extensive history of representing boards and senior leadership in crisis and risk situations, Bill’s practice focuses on providing independent counsel to clients by investigating facts, providing critical legal guidance and, when appropriate, objective remediation recommendations. A leader in the business and legal communities, Bill previously served as Senior Vice President and General Counsel at Monsanto Company, counsel to the United States Olympic Committee and president of the American Bar Association. 

Within the business community, he serves on the boards of MetaJure and Rimidi Diabetes and previously served as a member of the Board of Directors of Albemarle Corporation (NYSE, ALB) where he chaired the Governance Committee and served on the Audit and Compensation Committees. He also served as a member of the Board of Directors of Popeyes Louisiana Kitchen, Inc. (NASDAQ: PLKI), where he chaired the Executive and Governance Committees, while also serving on the Audit Committee.

Committed to thought leadership and education,  Bill is co-chair of the Advisory Board to the Conference Board’s Governance Center and Program Chair for the Conference Board Chief Legal Officers Council. Bill was a senior fellow and co-founder of Emory University’s Directors Institute. He currently serves on the Audit and Governance Committees of the Clark Atlanta University Board of Trustees and is General Counsel and Secretary of the EastWest Institute, where he also is chair of the Executive Committee.

 

Richard S. Levick

Richard Levick, Esq. is Chairman & CEO of LEVICK, representing countries and companies in the highest-stakes global communications matters – the Venezuelan crisis; Qatar; the Chinese trade war; the Gulf oil spill; Guantanamo Bay, the Catholic Church and many others. 

Mr. Levick was honored multiple times on the prestigious list of “The 100 Most Influential People in the Boardroom” and has been named to multiple professional Halls of Fame for lifetime achievement. 

He is the co-author of four books and is a regular commentator on television and in print. Mr. Levick speaks all over the world; at West Point, The Army War College and teaches at Fordham Law School.




LEVICK 2019 Year in Review

“The past is never dead. It’s not even past.”
— William Faulkner

Richard S. Levick, Esq., Chairman & CEO, LEVICK

LEVICK 2019 Year in ReviewIn 1790, George Washington referred to the new American government as “…the last great experiment in promoting human happiness.” Through nearly two and a half centuries it has been tested by every generation, sometimes more than others, though one would be hard-pressed to find too many threats to our democracy greater than today. The Civil War, the Great Depression, Pearl Harbor and World War II — this current period will surely find its way to that list in testing this “Great Experiment.”

The United States is the confluence of three great systems: democracy, capitalism and theology (or non-theology, as the case may be). The perfect imperfection of our government — for the longest-lived national constitution in the world — is how it struggles to keep these three systems in balance.

Our rose-colored rearview mirrors make history appear well ordered, while the present is almost always messy. Rather than genuflect daily, we take history for granted. Of course: General Washington would surprise the British at Trenton; General Rommel would run out of oil in North Africa; Senator Joseph McCarthy would be undone; and President Johnson would pass the Civil Rights and Voting Rights Acts. History’s arc progresses in one direction, pointing ever-upward — or so the thinking goes. Yet as the Mayans learned almost 2,000 years ago, an Iron Age can, and often does, follow a Golden Age.

What happens when the federal government largely stops working, as it has in the United States for the past 30 years? When the federal government falters, business leaders historically have stepped in. In 1909, when a period of federal inaction occurred, J.P. Morgan and Wall Street literally created the Federal Reserve. Harriet Tubman rescued slaves; Cornelius Vanderbilt established shipping; Clara Barton founded the Red Cross; John D. Rockefeller built the oil business; Andrew Carnegie gave rise to the steel industry, and Henry Ford mass-produced cars, all changing America dramatically. Crisis abhors a vacuum; when the federal government is static for long enough periods of time, industry has stepped in. But what now? Who will be the great leaders to step up and provide the vision that the federal government no longer seems capable of supplying?

For our entire professional lives, businesses have largely stayed out of politics. The steadfast rule has been: Focus on shareholders and customers.

There were always exceptions and controversies, but the bright lines between business and government were, well, bright. No more. Nearly 40% of Americans — and two thirds of Millennials — expect their brands to be “woke.” They expect companies to stand for something beyond the product, to take just political positions, to be sensitive and diverse in advertising, to be minimalist in its carbon footprint and to engage in sophisticated corporate social responsibility. What’s a company to do?

Over the past year, the most common theme in our columns was “Mercantile Activism” — the new age of activist corporations. How do companies lead — or follow adroitly — in an age of heightened ESG (Environmental, Social, Governance) expectations and instantaneous and viral online judging?

How is it that Modelo can advertise its beer on television with a strong “hire an immigrant” message but Peloton is penalized $1.7 billion in value in a week over a television advertisement that online critics considered sexist?

How can Dick’s Sporting Goods execute a ban on handgun sales nationwide and quickly recover while WeWork — “Do what you love” — crumbles?

How does Uber go from cool to clueless and Lyft, sensing the void, markets “woke” but quickly appears unresponsive and hypocritical over female passenger safety?

Why do people largely forgive Chick-fil-A for their historical anti-LGBT stance while other companies are excoriated for not being diverse enough in a single advertisement?

There are rules and case studies, and we covered many of them in 2019 to help guide companies during this increasingly damning — and judgmental — time. With apologies to William Faulkner, the past may not be dead — but it can provide some prologue.

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Trending at Davos: Ketchum’s Barri Rafferty Previews Key Topics at the World Economic Forum 2020

Barri Rafferty, Global CEO & President, Ketchum

As more than 30 heads of state and nearly 120 billionaires descend on Davos, Switzerland, for the World Economic Forum’s 50th Annual Meeting, the schedule is shaping up with some predictable themes and some that are newer to this Alpine landscape. As I return for my seventh Davos experience, I’m eager to participate in discussions about some of the issues that are capturing the world’s attention and others that will be in the near future.

 

Trending at Davos - Ketchum’s Barri Rafferty Previews Key Topics at the World Economic Forum 2020

 

Some of the themes that I predict will be taking center stage this week include:

Stakeholder capitalism over shareholder capitalism. The concept of stakeholder capitalism is not new – in fact, WEF founder Klaus Schwab proposed the model in the 1970s. The concept was pushed aside in favor of shareholder capitalism, which puts the interests of its investors before the needs of its employees, customers, suppliers, vendors, the environment and society at large. That model has come under intense scrutiny in recent years and now even leaders of the largest companies in the world are proposing a shift to a broader view of business success, as evidenced by the Business Roundtable’s redefinition of an organization’s purpose and BlackRock CEO Larry Fink’s influential annual letter. This year’s Annual Meeting theme of “Stakeholders for a Cohesive and Sustainable World” reflects this focus, as does the creation of a new Davos Manifesto, which defines the universal purpose of a company. At Ketchum, we regularly counsel clients who are evolving to or have fully embraced being a purpose-driven organization, and the most important advice we give is to ensure there is no gap between what your organization claims to be and what it actually is. So it will be interesting to see how businesses embrace this shift and whether they are paying attention to the “say-do gap.”

Climate change is impossible to ignore. At least it is in Davos. The World Economic Forum has instituted new sustainability measures and the Annual Meeting will be climate-neutral for the fourth straight year, but it hasn’t stopped the large group of activists we drove past on the way up the mountain who are marching for three days from Landquart to Davos to protest the lack of action by world leaders. Many of us also entered the town seeing a poignant message of “No Planet B” scrawled into the snow. With wildfires raging in Australia, there’s more emphasis on climate change at the Annual Meeting than any other topic this year. Last year Greta Thunberg  took Davos by storm, showing no fear as she spoke on behalf of the world’s youth while admonishing politicians and business leaders for their lack of accountability. This year she is not alone – she will be joined by a contingent of other young climate change activists to make a plea to world leaders. Those activists include 15-year-old Autumn Peltier from Canada’s Wikwemikong First Nation, who advocates for clean water for indigenous people; Ayakha Melithafa, a 17-year-old South African who was inspired by water shortages in Cape Town to advocate for low-carbon development; Fionn Ferreira, an 18-year-old from Ireland who invented a new method of extracting microplastics from the water; and 19-year-old Melati Wijsen who convinced lawmakers to ban single-use plastics in her native Bali. These individuals were invited as part of a new group called the Teenage Changemakers, who are certain to make an impact on Davos this year and for years to come.

A focus on physical and mental health. Healthcare is a topic at every annual meeting, and this one is no exception. But aside from the expected conversations around areas like robotic medicine, cancer breakthroughs and increasing life expectancies, there is an increasing focus this year on mental health. Congress Center sessions like Protecting Mental Health in Youth, the Science of Addiction, and Leading a Mentally Healthy Organization are aimed at leading discussion about this often-stigmatized topic and tackling it with as much fervor as other medical conditions. Mental health is a key area of interest for us at Ketchum, with our London office leading the way developing an awareness program, including mental health first aid training among our leadership, onsite screenings and regular workshops.

Other items that are sure to make the news this week:

  • All eyes were on U.S. President Donald Trump Tuesday morning, who opened the Annual Meeting with an address just hours before his impeachment trial began in the Senate. His last address here in 2018 focused on his “America First” agenda, so it was interesting to see how he connected with this audience this year, particularly in light of recent geopolitical conflicts.
  • In addition to political and business leaders, other famous faces including Sheryl Crow, Jason Derulo, will.i.am and Mark Ronson are here to educate, to advocate for causes they care about, and in some cases, simply to entertain. I’m attending an event where Priyanka Chopra Jonas will discuss ways to tackle some of the world’s biggest challenges.
  • Food sustainability is a new area of focus for WEF this year, which will use A.I. to verify the provenance and ecological footprint of all food products served. Nearly 90% of the week’s menu will feature seasonal ingredients, and Wednesday is designated “Future Food Wednesday,” with a menu that is rich in protein but free of meat and fish. WEF has also partnered with a Swiss startup that will monitor food waste through specialized waste bins which will help inform food operations at future events and reduce food waste.

Like every year, major decisions take place in this mountain village that impact the world ahead. I look forward to sharing my learnings with you this week. Please follow along on our blog, on my social channels (@barrirafferty), and join us for our annual webinar next week!


Barri Rafferty - DavosAbout the Author: As President and CEO of Ketchum, a top-five, global communications consultancy, Barri Rafferty oversees Ketchum’s offices and affiliates in more than 70 countries.

Outside of Ketchum, she participates in a number of groups including the sustainability task-force for the World Economic Forum and is a member of Arthur W. Page Society Page Up program. Rafferty sits on the board of StepUp, an organization with the mission of empowering girls from under-resourced communities to become confident, college-bound, and career focused and she is also a member of the governing body of OmniWomen, Omnicom’s Leading Women’s Network, for which she holds quarterly panel discussions featuring prominent women. She is the recipient of the Plank Center Milestones in Mentoring Award.

Barri is a graduate of Boston University (M.A) and Tulane University and enjoys watching soccer, volleyball, and dance – especially when her son and daughter are involved! Connect with her on Twitter: @barrirafferty




5 Ways Media Analysis Is a Game Changer for Strategic Investor Relations Teams

Leslie Stefanik, Vice President, Marketing, PublicRelay

With the rise of activist and ESG investing, corporate brand reputation is more important than ever to strategic investor relations teams. Your team needs to understand the media narrative around your company – and try to guide it. To do this, IR teams must now proactively monitor and engage the media landscape to manage brand reputation and investor perception.

You need access to accurate media analysis around brand reputation that will allow you to identify looming issues early, engage your shareholder base, guide the narrative on the Street, and optimize strategies.

5 Ways Media Analysis Is a Game Changer for Strategic Investor Relations TeamsHere are 5 ways media analysis can be a game changer for strategic investor relations teams:

1. Proactively Manage Issues

Indications that activist investors are targeting a stock can now come from a variety of sources including unregulated activities. Red flags might come in the form of a question from a junior analyst at a fund, a private meeting request, or increasingly – social media rumors. It’s important that your team proactively manages these conversations and is aware of the impact of unregulated social activity and all online conversations to stay ahead of the narrative. In an era when leading the news cycle often commandeers the perception of truth, proactive issue management is vital.

2. Engage Your Shareholder Base

The growth of passive shareholders has given companies a more stable shareholder base, but made them accountable for delivering results, hence the need for proactive marketing and messaging. The need is exasperated as Activists are savvy and using sophisticated PR strategies to sway your shareholder base.

To proactively engage your shareholders, a richer partnership is required between IR and PR.

Different investors have their own priorities and will react to news uniquely, weighing various aspects of your brand reputation more heavily. It’s important to understand how your messages resonate with key audiences.

Measuring the pull-through of your messages in the media, the tone towards them, and their social media pick up will show you which messages are resonating and where you need to focus your efforts to better influence the conversation.

3. Glean Deep Reputational Insights that Guide Strategic Investor Relations Decisions

Media sentiment has been proven to be correlated with stock price. But you must move beyond keyword tracking to get actionable data and understand what people are saying about your stock.

Don’t rely on simply tracking your company name, executives, and focusing on financial sites.  Keyword tracking only will likely leave you blindsided. You need to understand the “reputational conversation.”

Reputational data will help you break down public perception and understand what is driving it. If analysts and the media raise a concern that your company is not innovating for the future, build a plan to change that perception. Benchmarking your reputational data can pinpoint areas for targeted, effective message improvement.

4. Identify Influencers that Drive Investor Perceptions

It’s critical to understand your “influencers” – those that drive the perception of your stock as a place to invest. But not all influencers are created equal. Wall Street Analysts aren’t the only ones with authority anymore. You need to know who the right influencers are, whether it’s a government regulator, money manager, journalist, or simply an influential blogger, and engage those that matter most.

Media analysis breaks down influencers by topics they’ve written about or been quoted on in the past, their social media pick up, and audience reach to prioritize your outreach. When trying to highlight your ESG initiatives or correcting a misguided perception put out there by an Activist, reach out to your top influencers to create the most impact.

5. Play on the Same Field as the Rest of the Company with Data-Driven Decisions

When making decisions, a simple opinion doesn’t cut it. Other departments are using data to defend their decisions – from finance and legal to HR and marketing. Your C-suite has come to expect this kind of data-driven decision making and you can bet activists investors and other critics will leverage data in their arguments. Hedge funds have powerful data capabilities, but IR often does not. Ask yourself: do you have the technology and data analytics to give you an advantage over the critics?

Ensure you have the right systems in place to generate quality data to back up your decisions. And if an issue arises, use data to move smartly, agilely, and proactively instead of trailing the issue.


About the Author: Having worked on both the agency and industry sides of marketing and communications, Leslie brings extensive corporate communications, branding and demand generation practice and understanding to the team at PublicRelay. Formerly the VP of Digital Marketing for Optymyze, Leslie holds a Bachelor’s of Business Administration in Marketing from Youngstown State University.




What Does “Truth on Trial” Mean to You?

Wendy Glavin, Founder & CEO, Wendy Glavin Agency

Politics aside, for the moment, do you feel you can speak up and speak out without fear of being attacked, called out or judged both online and offline?

On February 26, 2019 “Truth on Trial” hosted by the Schar School of Policy & Government at George Mason University in Arlington, VA welcomed high-ranking legal, communications, and media experts to discuss the divide in our country and how the democratic process has changed.

Strategic Communications Expert Michael Caputo said, “Everything has changed. It used to be you didn’t say anything against your judge and you didn’t post on Instagram. Traditionally, communications stayed positive. In the last three years, things have evolved. Today, if someone is an adversary you call them out on it. Now, to win a court case, a seat at the table or a new location for your corporation, people will start defining who their enemy is which is going to be very difficult for those of us in communications to overcome.”

Nike’s Ad and a Debate of Ideas

Take Gillette’s socially-charged ad, “We Believe: The Best Man Can Be,” which addressed social issues, like bullying, sexual harassment, “boys will be boys” and more.  Whether you loved it or hated it, people were talking about it. Consumers have lost trust in our governmental institutions, the media and businesses and place value in purpose-driven rather than profit-driven brands. It’s a risky move to take a position.

“From a strategic standpoint, Gillette was seen as a leader because it initiated a debate of ideas. The climate can’t be categorized in one way with a broad brush. It’s situational and brand-specific. While today, we feel more divided, politics (to a certain extent) has always been about this divide. With social media, people are living and breathing this stuff so it feels more intense,” said Maria Cardona, Principal, Dewey Square Group.

Marketing Land reports that social media buzz is the main driver of the increased sales for brands with these type of ads which applies to negative feedback as well. When ads spark conversation and controversy, much like Nike’s ad featuring Colin Kaepernick, Gillette’s video highlights the risk more brands are willing to absorb by taking a stand on social issues.

“As for Nike, it’s position was very scientific. The campaign demonstrates Nike knows its audience despite the conservative backlash. Online sales surged after the debut of the Kaepernick ad. Nike is selling to millennials who expect their companies to be socially involved,” said Richard Levick, Esq., Chairman and CEO of LEVICK.

 

“But this is difficult stuff, continued Levick. Churchill said, ‘Democracy is the worst form of government, except for all the others.’ For the first time in history, we’re now existing in a democracy, not a republic – that is direct democracy, not representative democracy.

It means that ideas, policy, messages, brands all travel from the grassroots up, not Madison Avenue, Constitution Avenue and 10 Downing Street down. That puts enormous power and responsibility into the hands of citizens. Are we up for it?

Right now, we all find our preferred truth before reason. We agree with a conclusion instantaneously, and then only read and become reinforced by like-minded influencers.

How do we operate in a post-silo era? How do we reverse our epistemology back to where we were, so that we gather facts like rosebuds, where ye may, and then come to conclusions? The tragic and larger question is how capable are we, each of us, to exist in a democracy. We’re willing to rush to judgement so quickly,” Levick added.

Frank Sesno, Professor and Director of the School of Media and Public Affairs, George Washington University said, “There’s more a blurring of opinions, less information and diminished explanatory journalism because that’s what audiences demand. We’re living in a public and digital sphere where accusations and conspiracies travel faster than trust and science.  It’s rapid-fire information and rapid-fire decision-making often driven by ideology and polarization. People hang out with those who agree with them.”

Companies Must Be More Purpose-Driven

Corporations are being pushed to change—to dial down their single-minded pursuit of financial gain and pay closer attention to their impact on employees, customers, communities, and the environment. Corporate social responsibility from the sidelines is no longer enough with a variety of conflicting pressures including investors’ realization that short-term profitability and long-term sustainability are sometimes in conflict. For reasons like these, a growing number of business leaders now understand that they must embrace both financial and social goals. — Harvard Business Review, March – April 2019.

Lisa Osborne Ross, President of Edelman, Washington, D.C . said, “I was struck by the fact that everyone on both panels gave Nike as an example. I was struck by the fact that people  talked about the concept as CEOs being political. We don’t see this as political. We see this as being human.

Now, we work in an environment where the people we work with and the people that buy our products and services are activists and they have an opinion and they express their opinion. Our data shows that seventy-percent of people either buy or boycott based on how they feel about your brand. It’s not political, it’s natural to have a point-of-view. You cannot operate in this environment without having a purpose.”

Today, consumers are no longer investing their time, money and attention in brands that just sell quality products at fair prices. Recent Accenture Strategy research finds that they are making carefully considered choices to buy from companies that stand for a purpose they personally identify with that reflects their values and beliefs. –Forbes, January 2019.

Peter Carson, Managing Director, Public Affairs, North America of Weber Shandwick | Powell Tate said, “The war for talent among companies is extraordinary. And there’s the added piece that not only once you recruit, you have to retain them because it’s a candidate’s market. By 2020, 50 percent of the workforce will be millennials. There’s a lot of conversation about millennials that’s judgmental. But, they’re the largest workforce in history. To add to that, Boomers are reaching retirement which is driving companies to be purpose-driven. The big challenge and you don’t have a set of values or a purpose, people may leave,” Carson added.

 

What Does Truth on Trial Mean

CEOs Need to Be More Accessible

Steven Pearlstein, Columnist, The Washington Post said, “There’s been a generational seat change in terms of media relations at big companies and they’re not set-up to handle anything other than crisis communications with business reporters. CEOs don’t have their phone numbers or emails on their websites, or anything other than a drop box. When you do get a response it’s from a 24-year old who often doesn’t know anything and only wants to know what your deadline is and what your questions are. If you’re lucky. you’ll get a response to the questions you send in an email.”

Lisa Osborne Ross added, “Twenty-four -year-olds are smart, trained and have a role. They’re our future.”

Gabriel Debenedetti, National Correspondent, New York Magazine said, “The question of access is a constant question for reporters in any field. The question now is particularly relevant as we discuss this new business environment because everything feels political. It’s much easier to cover an institution or a person if you get to know them as an individual and truly understand their motivations beyond profit and get to know the decision-makers.

Companies are reaching out more proactively. As long as your not just talking about an earnings call, your going to have to deal with the same group of people talking about and writing about them. it’s a fluid environment.”

Steven Pearlstein added, “ You always want a front-line person. Companies have directors of media relations, and senior directors of media relations and somehow they’re too busy. Media relations is set to keep you away and you’re the problem. It reflects the leadership’s general viewpoint about the media. I think It’s a good reflection of the priority. Some media relations people report to HR, some report to legal, and some report to marketing,  It didn’t used to be that way. There used to be external and community communications.

The reason for press relations is to communicate with my employees, my customers, and my shareholders. But the idea of being part of a system in which we help the world  understand how business works and trust the mainstream media to help get the message across in a general way doesn’t seem to be how businesses view their responsibility anymore. Amazon has very proudly a media strategy, ‘No comment.’ Other companies and have taken a page from that.”

Peter Carson: “It’s a pendulum swing. The whole idea of having owned media is what we want to get our message out. But, that’s what advertising is about. What is doesn’t provide is third-party validation of that message. Companies need both and a mix. Many in the C-Suite say they’re too busy or what if there’s a question I don’t want to answer?  It’s a mistake. You do need the validation because people know when they’re being marketed to. Outreach comes on a proactive side. It’s different on the reactive side.”

Lisa Osborne Ross: “There’s a new type of CEO who understands that he or she is required to be external, have a point-of-view and the media should be unbiased and fair. This new activist CEO has to be reflective of the activist consumer and have a relationship with the media.”

Gabriel Debenedetti added, “Generally, when a brand is reaching out and says, ‘I want to send you a press release,’ there’s a great deal of skepticism. It’s very important to have some degree of transparency and let people let up and down the line talk.  Not everything is decided by the C-Suite. “

Steven Pearlstein: “Newspapers can’t afford business reporters. It is half of our fault, at least. They are few business reporters left that know about companies and we can’t teach them. But, that’s a reality we need to deal with. If someone reaches out we can’t make assumptions that they’re not the right person.”

Peter Carson: “Like social media, we can micro-target the media. The question of what am I pitching and what I’m trying to get out about a product may be best pitched to trade reporters. With national reporters, you must do your homework. Why am I talking to the New York Times, The Washington Post, and The Wall Street Journal? Sometimes, for this particular need this isn’t the answer.”

 

Back to Politics: The Current State of the Media

Maria Cardona: “The President has used diversity to divide us. In America, a real leader needs to bring everyone together. Unfortunately, what we have seen in the last two years is somebody who is only interested in focusing on probably about a fourth of the American electorate.”

Michael Caputo: “I like the battle of ideas. There’s not so much of this. The divide is difficult. The media sometimes makes it worse. But, if I don’t go on TV, my views aren’t being heard. But, I get a lot of death threats.”

Maria Cardona: “Politics has always been rough and tumble. Social media magnifies the division more than it does anything else. We’re living and breathing this stuff because of social media.”

Terry McAuliffe: “No one’s going to agree with everyone all the time. I had to work in a bipartisan environment. You must govern and reach out to all sides. There’s a lot of noise and you can’t pay attention to it. The country’s very split. The divide we have as great as I’ve ever seen.”

Michael Caputo: “I would advise people in public relations to never go into politics. I would never again work for another campaign. I lost so much.”

Terry McAuliffe: “But, at the same while corporations are distancing themselves from politics, they’re also embracing it. Take Nike, which turned out to be a really bright move, embracing Colin Kaepernick. Gillette was viewed as a true leader and that’s a good thing. It goes from client-to-client and PR-advisor to PR-advisor.

In the political world, branding is so important. You’re not doing to get Google, Apple, Facebook, Microsoft or Salesforce coming to your state if you discriminate against women and members of the LGBT community. Anytime, when you have negative publicity, it’s devastating to states. But, to govern, you have to have moral leadership,” McAuliffe added.

Too Much Transparency vs. The Public’s Right to Know?

Ty Cobb, Former White House Special Counsel to President Trump said, There should be as much transparency as possible, but it comes in a strict legal setting. Process is simple. A report gets submitted confidentially to the Attorney General and he reports that he received it. There’s no obligation to make the report subject.”

Stefan Passantino, Partner, Practice Group Chair, Government Relations, Political Law & Public Policy, Michael Best said,” Everyone understands the desire for transparency. The public has the right to know. But, the process through which The Mueller probe was able to generate the information it has but it is different, it was compulsory. Everyone likes to read a Bob Woodward book and get different points of views. It doesn’t work that way with the Special Counsel. You are going to go in a talk. The government has the ability to obtain massive of amounts of information there is a natural tension.”

Ty Cobb: “The reality is there are legal considerations. There are two statutes. One involves Grand Jury secrecy and one involves the discretion of the Attorney General. Bob Mueller has done an effective job in the indictments and telling the story he has. On everyone’s collusion meter they want to see where things land.”

Suzanne Rich Folsom, Former General Counsel, Chief Compliance Officer & SVP-Government Affairs, U.S. Steel said, “From a Corporate America standpoint, corporations would just like it to all go away because corporations care about shareholder value. When you leave the beltway, it’s amazing how little attention people pay to how much is going on in Washington. People would just like a resolution.”

The discussion of “Truth on Trial” covered a huge range of topics from legal to politics to corporations, brands, the “public,” public relations, communications and the country’s divide. Depending on your profession, your values, your age, your party and many other factors, there’s not one answer.

For me, truth is a fact-based debate and is a respectful exchange of ideas. The panelists successfully achieved this dialogue and presented enough information for each of us to decide, “What does truth mean to you?” It’s our responsibility to speak up and speak out because every voice counts, (or, your voice matters).


Truth on Trial - Wendy GlavinAbout the Author: Wendy Glavin is Founder and CEO of Wendy Glavin, a NYC full-service agency. Wendy is a 20-year veteran of corporate, agency, consulting and small business ownership. She specializes in B2B2C marketing communications, PR, social and digital media. Her website is: https://wendyglavin.com/. Contact her at: wendy@wendyglavin.com

 




5 Reasons Why Corporate Brand Isn’t Everything, It’s the Only Thing.

Linda Dunbar, Global PR and Corporate Communications Strategist

Much has changed since the sponsorship of Masterpiece Theater by Mobil was considered corporate brand execution. Authenticity and values are now well-established elements of corporate brand but even that is just the beginning. Values are essential to defining who you are as a company. And while stakeholders are looking at values, they are looking for brand connection. Values must be activated to create brand connection, especially if you are consumer-facing.  Companies must live by the values they set out. Especially today when company values are posted on the company website for all to see and a social media crisis can be just a few tweets away at any time. 

In a world where people are seeking purpose, where everyone wants to make a cathedral, not merely cut stone, customers and employees expect more. Armed with iPhone video, Facebook, Twitter, and Instagram, they are going to get it! The journey of creating and living this narrative against an ever-changing backdrop is corporate branding today. 

1) The Corporate Contract Has Changed

The contract between companies and stakeholders, particularly the critical core triad of investors, employees, and customers has changed.

Companies are being asked to do more. As BlackRock’s Larry Fink pointed out in his 2018 Letter to CEOs, “We also see many governments failing to prepare for the future, on issues ranging from retirement and infrastructure to automation and worker retraining. As a result, society increasingly is turning to the private sector and asking that companies respond to broader societal challenges. Indeed, the public expectations of your company have never been greater. Society is demanding that companies, both public and private, serve a social purpose…Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate.”[1]

“Doing more” for employees, customers, the environment, society, the global community, requires prioritizing corporate commitments outside of selling a product while tying these commitments to the business in a sensical way. Hence the rise in Corporate Social Responsibility, Environmental Sustainability & Governance, and Diversity & Inclusion.  All of these initiatives are embedded in values.  Corporate values clarify what are you committed to, why, and how are you going to go about it. A well-crafted corporate brand leverages those values, becoming a critical differentiator.

Other large asset managers like Vanguard and State Street also recognize the need for companies to change their assumptions about how they do business. When BlackRock, Vanguard, and State Street, representing a combined total of over $13 trillion in assets under management, are pushing companies to rethink how they engage, that changes everything. 

2) Millennials Require It

While still only 35% of the US workforce, Millennials are now 70 million strong and their influence continues to grow. It’s not always a good idea to generalize about that many people but – Millennials want to be proud of where they work.  Everyone wants to be proud of where they work but for many Millennials, feeling aligned with the values of their employer is table stakes.  As customers, they make purchase decisions based on “buy-cotting” and supporting the brands they like based on values. Tom’s Shoes comes to mind.  As investors, they want to invest in values and societal impact.  And they choose employers based on values.  If they don’t feel resonance within a few years, they are going to move on.

In addition to being digital natives living in a e-world that iterates to their needs and wants, Millennials have come into a real world without pensions or job security. There is little personal benefit to sticking around after bonus time, unless they want to. They saw their parents get laid off during their prime working years. They saw the Great Recession wreak havoc.  They reinvented the gig economy.  With mythic entrepreneurial options always looming and the rise of personalized expectations around their interactions with companies and products, they believe they have no time to waste working in or buying from a place that doesn’t make them happy every day.

3) What Plays in Vegas Does Not Stay in Vegas Anymore

The barriers between what goes on inside a company and public access to that information are lower than ever.  Having a coherent, contemporary narrative about your company for employees and customers, investors, media, and other stakeholders is a must.  The inside-out nature of crafting this narrative will ensure internal alignment– which is also a must today, particularly when the membrane between what is internal and external is now highly permeable because of technology, social media, and general expectations. The “incident” that happened on the work floor of that remote factory outpost you inherited in the last acquisition can be on social media and go viral within a day.

Increased expectations of company behavior and adherence to company values juxtaposed against dissolving barriers between internal and external communications make a clear understanding of the corporate brand critical.  As consumer and employee expectations increase and barriers between internal and external communications and information drop, companies need to have a clear understanding of their corporate brands.  A corporate brand is a promise to customers as well as a clear, defined set of values for employees to live by.

4) Values Help When Things Go Wrong

Consumer-facing businesses are on the hot seat today like never before. Not a day goes by without some kind of social media or other crisis.  For companies with many touch points across the country or the world, the risk of incident is high when thousands of employees are interfacing with customers and the general public around the clock.

Case in point: The incident at the Portland, Oregon DoubleTree by Hilton between a security guard, a manager, and a hotel guest talking on his cell phone in the lobby. The security guard and manager were white. The guest was black. He recorded a portion of the incident on his cell phone.

The security guard and manager called the police, for no clearly-articulated reason. When the guest told the hotel security guard that he was staying at the hotel, the security guard replied, on video for all to see, “Not anymore.”  The security guard, manager, and police then forced the guest to remove his personal items from his hotel room and leave the hotel.

According to news reports, this gentleman then checked into a nearby Sheraton hotel. The security guard and manager at DoubleTree by Hilton were fired seven days after this incident was picked up on social media, and within 48 hours of it hitting the press.  The hotel issued the statement that, “Their actions were inconsistent with our standards and values. We reiterate our sincere apology for what he endured and will work with diversity experts to ensure this never happens again.”

The fact is, the incident never should have happened. But things like this can—and do—happen every day to major global companies.

According to the DoubleTree newsroom, “Every hotel brand claims to care about guests, so we know that it’s in our actions that we have to stand apart. Real. Attentive. Cheerful. Flexible. Thoughtful. Honest. Caring.” 

“[Our] core mission is to find ways to make each day more rewarding for every person who encounters and experiences a DoubleTree by Hilton hotel.”

The good news for the DoubleTree is that their corporate values were clear.  The bad news is seven days is too long to respond but it could have been worse. Circling back to current, clearly expressed values allows the company to focus on handling crisis within a pre-defined context.  When you know what you stand for and you are committed to it, you don’t have to spend precious time creating, re-creating, reexamining, or questioning your approach to your corporate reputation. You already know what you promised. The right values make it easier to focus on resolving a potential crisis quickly and in the right way.  

The question remains as to whether DoubleTree has done enough. In the case of the Starbucks incident in Philadelphia in which a white manager called the police and had two black customers removed from the store, for no clear reason, the company closed stores across the country for diversity training. In addition, the CEO met with the two customers to personally apologize and made it clear that this manager’s behavior was in no way aligned with Starbuck’s corporate values.

In contrast, Papa John’s continues to enable a toxic culture of its own making due to its unwillingness to grapple with diversity issues that include racism and sexual harassment. Antiquated corporate values like focus, superiority, and constant improvement are minimum requirements to do business today and woefully miss the mark (https://www.papajohns.com/company/). They also demonstrate a lack of aspiration and humanity which is essential to corporate brand now.

5) Activating Corporate Brand Values is Essential to Differentiation and Brand Preference.

Today, competition for employees and customers (sometimes the same people) is intense.  In the current environment, corporate brand is a critical element of brand preference.  Differentiation is more important than ever and vital in preventing commoditization. And in my opinion, differentiation must be emotional, and must resonate.  To quote Carl W. Buehner, “They may forget what you said — but they will never forget how you made them feel.”[2]

In a world where people are looking for mission and purpose, the notion of “personal benefits” associated with corporate brand has emerged.  According to the Corporate Executive Board, a division of Gartner research [CEB], “personal benefits” are the biggest drivers of brand connection. “Personal benefits” drive three times more brand connection than authentic values do.[3]  Today, corporate values are the foundation of personal benefits, not the final destination.

Brand preference is based on perceived “personal benefits.”They are all about self-actualization and include “sense of meaning and direction in one’s life; certainty about one’s life and surroundings, and freedom to control one’s life”. [4]  Interestingly, these benefits look very similar to what employees expected from companies prior to layoffs and lack of pensions became a routine way of doing business. But now, the expectation of “personal benefits” is held by employees and customers alike as the barrier between internal and external communications and expectations continues to breakdown.

What Is the Payoff for Getting It Right?

Getting corporate branding right is worth the effort and yields tangible results.

According to the CEB, creating and executing against a compelling corporate brand promise translates into a willingness by 55% of recruits to switch employers for a flat salary. If the corporate brand resonates, 64% of customers are willing to pay a premium for a product or service.  If the corporate brand can move people from values like “the brand respects my community’s local values and traditions” to personal benefits like “the brand helps me achieve my goals,” 74% of community members and activists are likely to make decisions that are supportive of the company. In addition, 40% of social media users are willing to promote the company if they feel a connection.[5] 

Summing It Up…

Nowadays, customer preference, employee engagement, and shareholder value is all about corporate brand.  Mission, purpose, values, authenticity and trust are the new corporate brand guidelines. If you get it right, you can mitigate risk associated with prolonged crises and create the virtuous circle of happy customers, dedicated employees, and investor confidence that enhances enterprise value.

What do you think?

If this article resonated with you, please feel free to connect with me directly and also comment or share.


About the Author: Linda Dunbar is a global PR and corporate communications strategist, business enthusiast, and lifelong learner. A story telling architect who provides strategic counsel across functions and levels, she has extensive progressive leadership experience in PR, media relations, corporate communications, and international strategic planning at dynamic, top-tier, global Fortune 500 companies.  Her passion is helping companies tell their stories.  Linda has previously held communications leadership roles at organizations including Sterling Bancorp., Dow Jones, Ford Motor Company, the American Institute of CPAs, and Philip Morris International as well as at entrepreneurial PR ventures. She has a Bachelor of Arts in East Asian Studies from Princeton University and a Master’s in Law and Diplomacy from The Fletcher School, jointly administered by Harvard and Tufts Universities. Linda can be reached at linda@thepurposedrivencompany.com.

[2] 1971, Richard Evans’ Quote Book by Richard L. Evans, (“Selected from the ‘Spoken Word’ and ‘Thought for the Day’ and from many inspiring thought-provoking sources from many centuries”) Quote Page 244, Column 2, Publishers Press, Salt Lake City, Utah. (Verified with scans; thanks to the librarians of Harold B. Lee Library, Brigham Young University, Provo, Utah)

[3] CEB Communications Leadership Council, Winning Preference Through the Corporate Brand, November 30, 2017

[4] Ibid

[5] CEB Communications Leadership Council, Winning Preference Through the Corporate Brand, November 30, 2017