Bob Lamm, co-chair of Gunster’s securities and corporate governance law practice, outlines the reforms and changes sought by empowered shareholders and why Florida business owners and executives need to prepare now before it happens to your company.
Shareholder empowerment can change your company – are you prepared?
We live in a time of unprecedented shareholder empowerment.
I’m not talking about activist investors, who have been around in one form or another for many years.
Rather, I’m talking about long-term institutional shareholders who want to effect change in the companies in which they invest.
These empowered shareholders often focus first on governance reforms, such as majority voting for directors, eliminating staggered boards, and giving shareholders greater rights to call special meetings.
Over time, some have gone for more fundamental changes in operations, second-guessing managements and boards.
These empowered shareholders’ early targets were generally large cap companies, but they’ve now begun to focus on mid- and smaller-cap companies, like many of those in Florida.
And of course, it’s much less expensive to acquire a position of influence in a mid- or small-cap company.
So Florida’s mid- and small-cap companies need to be on the lookout for empowered investors and to implement strategies to deal with them before they find empowered shareholders on the other side of the table.
Like the Boy Scouts say, “be prepared!”