Protecting Board Directors in the Age of Activist Investing

The dynamics of board elections have fundamentally shifted since the SEC adopted the Universal Proxy Rules in 2022. Now, it’s much easier for activist investors to punch above their weight and secure critical positions with little warning. To gain an edge, companies must proactively protect their leaders from the inevitable activist uppercut.

Haystack Needle has worked successfully on both sides of proxy fights, tweaking and tailoring our strategies to account for changes in rules, technology, and investor expectations. The latest evolution in these fights puts individual directors in the crosshairs and calls for another rethink: how can we make the shareholder-to-board relationship activist-proof?

We’ve learned from years of experience in these fights, having worked with many partners, and our answer to surging investor activism is proactive activism mitigation. The time to take action is now, long before proxy season, with professionally produced investor days, proactive social media, regular email campaigns, and video profiles of each board member. For now, let’s focus on this last tactic.

Selective Sharing for the Win

Today’s shareholders are accustomed to the warts-and-all directness of social media, and no amount of pedigree or experience will satisfy constituents if directors stay hidden behind the frosted glass of a boardroom. More and more, investors expect access and communication, so anyone who falls short is suspect and becomes vulnerable to attack.

Selective sharing by board members helps bridge the gap and build trust with shareholders. Board member video profiles offer the perfect vehicle for that crucial introduction and insight. During proxy season, this helps shareholders understand who they’re voting for and why those individuals deserve their vote.

Board Directors Are People Too

Videos must be strategically executed to create the kind of connection that could save a director from activist ire. These bite-sized biopics should play on the power of personal narrative by sharing humanizing details while touting accomplishments. When the company vision is supported by personal context (family interactions, heartfelt colleague testimonies, and quick mentions of memorable events of the past), a more intimate portrait emerges that can win shareholders’ hearts and minds.

Balancing the need for selective sharing with board members’ private lives can be tricky. In other words, this is a peek behind the curtain, not an exposé. Focus on sharing professional perspectives and company commitment. Then, strategically reveal personal elements that align with company values. This honors investors’ rights to know the people making decisions impacting their investments while protecting directors’ privacy.

The goal is to build enough trust and credibility among investors that they’ll have your board’s back no matter what activists throw at them. The authenticity conveyed through video narratives has a lasting impact on shareholder loyalty, which is especially important when a director’s seat at the table is at stake.

The Best Defense is … Well, You Know.

When profile videos are well-produced and used effectively, they define and fortify a board's overall narrative and vision. Investor relations teams can re-edit, repurpose, and promote these assets across marketing channels, platforms, and traditional press/PR efforts.

The hard-won trust between boards and shareholders isn’t built overnight, and it’s exceedingly challenging to forge when fending off an activist attack. So, don’t wait until it’s too late to build investor trust and confidence.

If you’re a public company, your proxy fight countdown clock is ticking. The sooner you proactively mitigate investor activism, the better your chances of defending yourself and protecting your board.

With the shifting sands of proxy voting rules and professional expectations, boards can no longer assume the confidence of their constituents. Video profiles featuring board members aren't just a defense tactic to be teed up in response to a threat; they’re the cornerstones of rock-solid investor relationships built to withstand storms and celebrate wins for years to come.

Let us help you get started. Reach out and say [email protected].