I have written before about how leaders in business are coming to resemble leaders in government. Like the latter, the former are increasingly vulnerable to those who would challenge or even revoke their ability to lead.
The cast of characters – of CEO challengers – is large. It includes, for example, newly impatient and emboldened boards, newly impatient and emboldened customers, and newly impatient and emboldened shareholder activists.
Shareholder activism is a recent phenomenon and shareholder activists were, until recently, easy to identify. Now though things are changing. Now familiar shareholder activists are being joined by unfamiliar ones – further expanding the pool of those ready, willing, and able to take on even the most vaunted of chief executives.
Previously most shareholder activists were titans of hedge funds, men such as William Ackman and Daniel Loeb who gained further fame and (usually) additional fortune by taking on companies they judged mismanaged or undervalued. Now they are joined by a new group – single individuals acting in their own interest, who happen to own great gobs of a single stock.
A man by the name of David Sokol is an example. He owns 27% of an American community bank, Middleburg Financial. Recently Sokol pressured the bank to put itself on the chopping block – pressure that Middleburg has so far resisted. Instead Middleburg’s board offered Sokol a seat – which Sokol has so far similarly resisted. Stand-off between the bank’s leadership on the one side, and a single shareholder on the other.
Activism is clearly creeping, seeping, easing almost imperceptibly from the public sector into the private one. As one observer put it, “Activism has gone from being frowned upon, something that marks you out as a rogue or a maverick, to almost socially responsible…. Everyone else is respected for getting involved, so it is good that this is changing for shareholders too.” *