Glossary

Shareholder Activism: It refers to the use of shareholder rights to influence corporate decision-making, governance practices, and performance. Shareholders may use their ownership stake to advocate for changes that benefit their interests.

Activist Campaign: refers to a strategy pursued by activist investors to influence the management or operations of a company. The campaign typically involves taking a large stake in the company and then leveraging that ownership to effect changes that will increase shareholder value. These changes can range from board and management shakeups to corporate restructuring or other strategic initiatives.

Proxy Contest: It is a process by which a shareholder or group of shareholders attempt to replace the board of directors of a company with their own nominees. This is done by soliciting proxies from other shareholders to vote in favor of their nominees.

Shareholder Proposal: It is a proposal submitted by a shareholder for a vote at a company's annual meeting. These proposals can cover a range of issues, from governance and executive compensation to social and environmental issues.

Proxy Access: It is the ability of shareholders to nominate their own candidates to the board of directors and have those nominees included in the company's proxy statement. This gives shareholders a greater ability to influence the composition of the board.

AGM: An Annual General Meeting is a mandatory event that a company must hold every year, as stipulated in its Articles of Association. The meeting is held to enable shareholders to discuss the company's performance, vote on significant matters, and elect or re-elect board members. For details on AGMs of listed companies globally access agmcalendar.com.

Shareholder Engagement: It is the process by which shareholders communicate with a company's management and board of directors to advocate for changes that benefit their interests. Engagement can occur through meetings, letters, and other forms of communication.

Poison Pill: It is a tactic used by companies to prevent hostile takeovers. A poison pill is a provision in a company's bylaws that allows existing shareholders to buy additional shares at a discounted price in the event of a hostile takeover attempt.

Greenmail: It is a practice where a company buys back its own shares from a hostile shareholder at a premium price to prevent a takeover attempt.

Activist Investor: It is an individual or group of investors who seek to influence a company's decision-making, governance practices, and performance. Activist investors typically take large positions in companies and advocate for changes that benefit their interests.

Staggered Board: It is a board of directors that is divided into multiple classes, with each class serving a different term length. This makes it more difficult for shareholders to replace the entire board at once.

Dual-Class Stock: It is a capital structure in which a company issues two classes of shares with different voting rights. This allows founders and insiders to retain control of the company even if they own a minority of the economic interest in the company.

Bumpitrage is a shareholder activism strategy of buying shares and pushing for a merger or acquisition to increase the stock price. The goal is to profit from the increase, but it's criticized for neglecting the company's long-term interests.

Golden Parachute: It is a type of compensation arrangement for executives that provides them with significant financial benefits if the company is acquired or undergoes a change in control. Golden parachutes are often criticized for being excessive and not aligned with shareholder interests.

ESG: It stands for Environmental, Social, and Governance, which are the three main areas of focus for responsible investing. Shareholder activists often use ESG criteria to evaluate companies and advocate for changes that promote sustainability, social responsibility, and good governance practices.

Poison Put: It is a provision in a company's debt agreement that allows the bondholders to demand repayment of the full value of their bonds if there is a change in control of the company. Poison puts are used to deter hostile takeovers and protect bondholders' interests.

Empty Voting: It is a tactic used by shareholders to gain more influence in a company without increasing their economic interest. Empty voting occurs when a shareholder votes with borrowed or hedged shares, which do not carry the same economic risk as the shareholder's actual holdings.

Hostile Takeover: It is an attempt by an outsider to gain control of a company against the wishes of the current management and board of directors. Hostile takeovers can be achieved through a variety of tactics, including proxy contests, tender offers, and litigation.

Institutional Shareholder: It refers to an organization, such as a pension fund or mutual fund, that holds shares in a company on behalf of its clients or members. Institutional shareholders have significant influence in corporate decision-making due to their large ownership stakes.

Shareholder Resolution: It is a proposal submitted by a shareholder for a vote at a company's annual meeting. Shareholder resolutions can be used to express opinions or concerns about a company's policies or practices.

Stakeholder: It is a person or group that has an interest in a company's operations, such as employees, customers, suppliers, and the community. Shareholder activists often advocate for changes that benefit stakeholders as well as shareholders.

Proxy Card: It is a card provided to shareholders by a company or dissident shareholder group that allows them to vote by proxy in a shareholder meeting or contest. Shareholders can indicate their voting preferences by marking the card and returning it to the company or proxy solicitor.

Proxy Solicitor: It is a third-party firm hired by a company or a shareholder to assist in the solicitation of proxies for a shareholder vote. Proxy solicitors use various methods, such as mailings, phone calls, and online campaigns, to encourage shareholders to vote in favor of a particular resolution or nominee. Proxy solicitors must comply with legal and regulatory requirements related to shareholder voting and disclosure.

Proxy Advisory Firm: It is a third-party firm that provides research and analysis to institutional investors, such as pension funds and mutual funds, on how to vote on proxy issues. Proxy advisory firms can have significant influence on the outcome of proxy contests, as their recommendations are often followed by institutional investors.

Schedule 13D: It is a form required by the Securities and Exchange Commission (SEC) to be filed by anyone who acquires more than 5% of a company's voting shares. Schedule 13D provides information about the investor's intentions with respect to the company and can signal the start of a shareholder activism campaign.

Standstill Agreement: It is a contract between a company and a potential acquirer that limits the acquirer's ability to acquire more shares or launch a hostile takeover for a certain period of time. Standstill agreements can be used to give a company time to implement defensive measures or negotiate a more favorable deal.

Withhold Vote: It is a voting option available to shareholders in a proxy contest that allows them to indicate that they do not support a particular director nominee or proposal. Withheld votes are typically counted as votes against the nominee or proposal.

Majority Voting: It is a corporate governance practice in which directors are elected by a majority of votes cast. Majority voting is intended to increase accountability of directors to shareholders and can be a target for shareholder activists who want to improve board independence and oversight.

Shareholder Rights Plan: It is another name for a poison pill, which is a defensive measure adopted by a company's board of directors to deter hostile takeovers. Shareholder rights plans typically involve the issuance of new shares or other securities that make it more expensive or difficult for an outsider to gain control of the company.

Dissident Shareholder: It is a shareholder who is dissatisfied with the performance or direction of a company and seeks to effect change through a proxy fight or other means of activism.

White Knight: It is a friendly acquirer that steps in to acquire a target company in order to thwart a hostile takeover by an activist investor or other hostile bidder. White knights are often seen as a more favorable alternative to a hostile takeover, as they can provide more value to existing shareholders and employees.

Activist Hedge Fund: It is a type of hedge fund that takes an active role in the management of a company in which it has invested. Activist hedge funds use their ownership stake to push for changes in the company's strategy, operations, or management team.

Shareholder Value: It is the value that a company creates for its shareholders, typically measured by the company's stock price or dividend payments. Activist hedge funds often argue that a company should focus on creating shareholder value above all else.

Event-Driven Investing: It is an investment strategy in which an investor seeks to profit from specific events, such as mergers and acquisitions, spinoffs, or bankruptcies. Activist hedge funds often use event-driven investing to identify companies that are undervalued or have hidden value.

Short Selling: It is an investment strategy in which an investor bets that the price of a stock will go down. Activist hedge funds often use short selling to bet against companies that they believe are overvalued or mismanaged.