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24 January 2018 • Articles

IR Magazine

Activist campaign at Xerox indicates company management is at risk

In a week when Xerox’s CEO has been singled out by an activist investor, FactSet data shared with IR Magazine indicates that the number of campaigns targeting company management increased by more than 40 percent last year.

According to data provided to IR Magazine by FactSet, there were 20 activist campaigns in the US last year that targeted company officers – up from 14 in each of the previous three years. The likelihood of a CEO leaving a company doubles within the first year of an activist’s involvement, according to separate research released last year.

Although activists can have a disruptive effect on CEO tenure, they have historically been reluctant to directly target the corner office for fear that removing a CEO would be too destabilizing to the business, according to Charlie Koons, managing director of activism and contested situations at Morrow Sodali.

Koons tells IR Magazine that, although targeting a CEO can also paint an activist as adversarial rather than willing to work with the company management, a campaign against a CEO is increasingly seen as an effective way of getting the board’s attention.

‘In recent years some activists have sought to amplify their message of the need for change by targeting CEOs,’ he says. ‘It is clearly a bold tactic, but given that choosing the CEO is at the top of a board’s responsibilities, voting against the CEO can send shock waves across the entire board.’

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