Corporate battles are given added drama when institutional investors become vocal about what they think are the shortcomings of the investee companies' managements. 2003 saw a raft of well-publicised shareholder revolts that used PR and media exposure to make clear who was boss. Joe Lepper names the key players

Shareholder activist: Fidelity Investments

Recent target: Granada/Carlton merger

During the merger of Granada and Carlton, Fidelity Investments and its senior fund manager Anthony Bolton were thrust into the spotlight, emerging as key players during last year's wave of shareholder activism.

From July 2003, stories emerged that Bolton was seeking to gain support among shareholders who wanted an independent chairman to be appointed to lead the new merged ITV company.

This contrasted with the wishes of the firms' non-executive directors, who wanted to keep Carlton chairman Michael Green as chairman of the new broadcasting giant.

The media were soon reporting that an ultimatum had being given by Bolton and a number of other institutional investors, including UBS Global Asset Management, Morley Fund Management and Legal & General Investment Management, that Green should walk before he was pushed. The campaign appeared to have been a resounding success when Green was forced out.

Nevertheless, according to Fidelity executive director of corporate communications Paul Kafka, although the firm was happy to achieve its goal, it was disappointed the saga had been carried out in such a public and personal way. He says: 'We were frustrated that the everyday part of our business had become so public. This was not down to us.'

Kafka adds that Bolton, who now refuses to talk to the media about the issue, had been left dissatisfied that the merger was presented as such a personal battle between him and Green. Media reports that he is known in the City as the 'silent assassin' particularly rankled, according to Kafka.

As for the future, Kafka says that further negotiations with the new ITV company will take place behind closed doors. He concedes that this could be difficult with this particular case, however. 'There are two aspects to this,' he argues. 'First, the media love to personalise stories such as these; and, second, it loves to write about itself.'

Shareholder activist: Tweedy Browne

Recent target: Hollinger International

Although the current investigation into millions of pounds-worth of unauthorised payments at newspaper publisher Hollinger International is largely a US story, the fact the firm owns The Daily Telegraph means the UK media has, inevitably, shown great interest in it.

This can mainly be put down to the fact that a number of robust investors, including its two biggest institutional shareholders, Cardinal Capital Management and the US-based Tweedy Browne, are seeking answers about the payments. The story also involved personalities such as Conrad Black, who has now resigned as chief executive, and the managing director of Tweedy Browne, Christopher Browne.

Although the media will inevitably seek to personalise the story and focus on the characters of Browne and Black, Hollinger is keen to play down this angle. A source close to Hollinger said the firm wants to emphasise how it is working with Tweedy Browne, not against it, in its investigations into possible financial wrongdoing.

One example of Tweedy Browne's success as a shareholder activist has been getting Hollinger to agree to a special committee to investigate the allegations. Hollinger, in turn, is using the existence of this investigation, which is yet to conclude, as an example of how seriously the firm is taking the matter.

Further evidence that Hollinger was taking its reputation seriously, especially in the UK, was the temporary hiring of Chime Communications chairman Lord Bell, to ensure the media concentrated on the issues rather than attacking Black personally.

In contrast, Browne, who was unavailable for comment as PRWeek went to press, would appear to be helping journalists to maintain the personal angle.

In an interview carried in the Financial Times on 10 December last year, he said that if any of the payments were deemed inappropriate, board members would be forced to repay the money. If they were unwilling or unable to do so, he said, 'any board member who served in this period could well be liable'.

Shareholder activist: National Association of Pension Funds

Recent target: BSkyB

The National Association of Pension Funds (NAPF) has good reason to ensure its members' voices are heard in the City: £600bn of pension fund assets for more than 15 million people depend upon it.

The NAPF's key player in shareholder activism is corporate governance strategic adviser Geoff Lindey, a former MD at JP Morgan Fleming Asset Management.

One recent Lindey campaign was the association's battle with BSkyB. The NAPF produces reports on the UK's top 350 firms, timed to coincide with their AGMs, and its verdict on BSkyB in November 2003 was particularly damning. It heaped criticism on the firm's remuneration report and procedure for recruiting a chief executive, a process that has led to allegations of nepotism because it brought the appointment of James Murdoch, son of Rupert, whose News Corporation owns 35 per cent of BSkyB's shares.

Shareholders were urged to vote down the remuneration report and block the re-election of director Lord St John of Fawsley, the man in charge of the recruitment procedure, but stopped short of rejecting James Murdoch's appointment. For the association, Murdoch himself was not the target, just the means by which he was selected.

Despite approval of the remuneration report, Murdoch's appointment and the re-election of Lord St John, the NAPF did score a success in the size of its protest vote, with 80 per cent of non-News Corp shareholders refusing to back Lord St John's re-election.

Lindey believes the size of the protest was a major success because it forced BSkyB to take the issue of corporate governance more seriously, with Rupert Murdoch establishing a special sub-committee to handle it.

NAPF is set to gain even greater prominence and scope this year. The association has teamed up with US firm Institutional Shareholder Services, and is set to use its technology to develop an electronic voting system for shareholders and the capacity to report on 900 UK firms, as well as allow shareholders to access information on 20,000 other firms.

Shareholder activist: Association of British Insurers

Recent targets: GlaxoSmithKline, Freeport

When the Association of British Insurers targeted GlaxoSmithKline's proposed remuneration policy, which could have netted chief executive Jean Pierre Garnier £22m, the body that represents some of the largest institutional investors in the UK made history.

The campaign was so successful at tapping in to opposition among shareholders that, for the first time, a blue-chip boss's pay package was voted down by a shareholder revolt.

Since then the body has carried on in a similar vein, taking a high-profile stance where shareholders feel that money is being spent unwisely. The latest victim was shopping mall developer Freeport. At its AGM in November 2003, an ABI-orchestrated campaign led to an unprecedented 81 per cent of shareholders rejecting Freeport's pay report.

Leading the charge is ABI head of investment affairs Peter Montagnon, who advises and acts on decisions made by the body's investment committee, chaired by Standard Life Investments chief executive Sandy Crombie. ABI corporate governance PRO Leonie Edwards states that 'Montagnon is the person who makes it happen'.

Alan Leaman, ABI head of media and political affairs, says it is vital that any decision by the body is driven by members, who are canvassed before any guidance is given by the investment committee. He says: 'We don't tell them what to do; it's a two-way process.'

Although in the cases of GSK and Freeport the ABI was successful in challenging and changing company policies for the benefit of shareholders, Leaman admits there is still a challenge in handling media coverage of such activism.

He claims that the ABI is a reluctant leader in the battle against corporate fat cats, despite its success in that role.

He says: 'This is not about creating an atmosphere of confrontation between companies and their shareholders, because they have the same interests. The challenge is to explain to journalists, companies and the public that this is not about conflict, but more about working together.'

Shareholder activist: Active Value

Recent target: Cordiant Communications

The long drawn-out collapse and sale of advertising giant Cordiant Communications was one of the media business stories of 2003. At the heart of the tale was Active Value, one of the firm's major shareholders, which is fronted by MDs Julian Treger and Brian Myerson.

Cordiant, which demerged from Saatchi & Saatchi four years ago, appeared to have borne the brunt of the advertising slump and was in freefall.

As a solution was sought, including finding a potential buyer, Active Value's voice became louder.

WPP was waiting in the wings to take it over through the back-door method of buying up Cordiant's debt; more straightforwardly, so was Publicis.

As WPP appeared the most likely new owner, despite Cordiant's debt of around £300m, Active Value attempted to take control. It built its stake up to 28 per cent by July and interested other investors in the notion of changing control, which in turn would stymie WPP's bid and, it was speculated, open the door to a rival bid from Publicis.

Although neither Treger nor Myerson would comment to PRWeek, a source close to Active Value said the message the firm was keen to get out was that it wanted 'to get the best deal for all shareholders'.

Treger and Myerson eventually backed down. Cordiant accepted a WPP takeover whereby shareholders acquired one new WPP share worth 464p for every 205 Cordiant shares. But the pair did manage to unseat the firm's chairman, finance director and chief executive. This, says the source, was seen as a significant success.

Huntsworth-owned Global Consulting Group senior vice-president Michael Oke handled PR for Active Value during the saga. He says: 'This shows that transparency is as important for shareholder groups as it is to the corporate and public sector communities.'

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