Source: Schulte Roth & Zabel, Activist Insight and Okapi Partners
In a letter dated Sept. 28, Third Point called upon fellow shareholders to promote their new host of board candidates while also disparaging the company’s current leadership.
“The dismal stock performance is a report card on the Company’s leadership, which has made a series of blunders,” Third Point wrote at the time. “We believe the past year has been particularly disastrous. Campbell’s key brands are rapidly losing market share.”
But with activists circling the remaining consumer names, fund managers seeking to effect change at the board level are discovering it isn’t as easy as convincing a few institutional bigwigs like in other sectors.
In fact, retail investors may be the key if Peltz and Loeb hope to have a chance in the space.
Of the 2 billion votes cast in the Procter & Gamble clash, the Trian founder had just over 40,000 more votes than a P&G director he ran against, or a margin of 0.0016 percent of the shares outstanding at the time.
And for Wall Street’s oldest and most complex companies like P&G – where retail investors own about 40 percent of floating shares – reaching hordes of individual investors will likely become crucial.
“As activists continue to gain a level of legitimacy in the market and design more effective ways to reach shareholders with their message, retail participation in the voting process should increase,” Bruce Goldfarb, CEO of Okapi Partners, wrote in the report.
In the 2017 proxy season, retail shareholders voted just about 29 percent of their shares, while institutional investors voted about 91 percent of their shares, according to the Securities and Exchange Commission.
“Retail voter apathy is one of the most important challenges we have to overcome when working on a campaign. We find that many retail shareholders will vote their shares, but they require direct and indirect outreach, which takes time and resources,” Goldfarb added.