Shareholder Activism: When Should the CEO Go?

Since the turn of the calendar year, Morrow Sodali Australia has witnessed a boom in the frequency of ASX-listed proxy battles, which in almost every case is characterised by the requisitioning of a shareholder meeting to appoint and/or remove non-executive directors. Agitating for board change, having their interests represented through non-executive director oversight, and in some cases, perhaps seeking strategic control without the requirement for initiating a formal takeover offer for shares, are proven to be successful shareholder tactics.

Irrespective of the polarising views that attempt to rationalise the true motivation behind each and every proxy campaign, the fact remains that requisitioning shareholders continue to experience success in exerting their influence through exercising their rights under the Corporations Act.

In this short piece, four individual proxy battles that Morrow Sodali Australia has acted on in 2017 and that share a common thread are profiled: the role of the CEO, the expectation that boards are to hold the CEO accountable for his or her performance, and the CEO’s ability to influence the shareholder base to further their own interests.

In other words, when should the CEO go?