Are IROs Ready to Confront Shareholder Activism Through Social Media?
For shareholder activists, social media is a godsend, a concept that’s begun to catch on with some high-profile corporate raiders. Carl Icahn is increasingly viewed as the poster boy for how a billionaire activist can use Twitter and other forms of social media to make his viewpoint heard quickly and effectively.
On August 13, Icahn revealed on Twitter that he had a large position in Apple and he then began publicly lobbying the computer giant for a $150 billion share buyback. On October 7, the billionaire tweeted that he had bought approximately 61 million shares of Calgary, Alberta-based Talisman Energy, a roughly $277 million stake. Icahn also told his more than 113,000 Twitter followers that he might soon initiate conversations with Talisman management about strategic alternatives and board seats.
With the Icahns of the world revealing their investment strategies to Twitter followers before their positions are made public through regulatory filings, it’s no wonder that the lion’s share of institutional investors – 80 percent – expect shareholder activists to increasingly leverage social media to target companies, according to FTI Consulting Group’s Digital Engagement Study published earlier this month.
Unfortunately, institutional investors don’t evince the same levels of confidence that public companies are capable of using social media to deflect these threats. In fact, only 11 percent of investors surveyed by FTI said that they are confident public companies could defend themselves using social media platforms.
“It is clear to us that activist investors have staked out a new battleground from which to attack corporate America,” according to Elizabeth Saunders, senior managing director and Americas chairman of the strategic communications segment at FTI, in a November 6 press release. “This is a wake-up call to companies that IR and corporate communications teams can no longer operate as independent silos – particularly in the case of social media, through which information and opinions are so rapidly generated.”
FTI’s survey looked beyond shareholder activism on social media to the places where investors are going to find content. The study found that 40 percent of investors seek content from the media, sell-side analysts, and other third-party influencers. In contrast, a mere 14 percent of investors seek information directly from companies on social media.
To gather information for the digital engagement study, FTI conducted an online survey of institutional investors between October 3 and October 11, 2013. Included in the survey were 201 global analysts and portfolio managers.