Proactive strategies for communicating about activist investors

Last Wednesday, Disney prevailed over activist investor Nelson Peltz’s  Trian hedge fund in his widely publicized fight for two seats on the company’s board of directors. The contentious proxy battle played out in op-eds and celebrity endorsements for both Peltz and Disney CEO Bob Iger, and via paid media pieces programmatically fed to Disney shareholders and fans alike, ensuring that even those without a financial stake were aware of Peltz’s crusade.

The Disney proxy battle was a high-profile example of a larger trend in activist investing— Macy’s finds itself closer to a deal with investor Arkhouse Management after it put in a bid with Brigade Capital to take the retailer private, while Norfolk Southern is currently battling against activist investor Ancora’s push to add eight directors to its board and oust Alan Shaw as CEO.

Each of these proxy battles contains lessons for communicators. We caught up with Ted Bikhahn, managing director at financial PR agency Vested, to learn how communicators who find themselves in a similar situation can strategize from a proactive place.

Before the proxy battle

As with any crisis communications strategy, being prepared starts with scenario planning—in this instance, planning around the specific risks that investors can pose.

“One of the things I see with a lot of companies is a lack of preparedness,” Birkhahn said. “It’s almost as if ‘it won’t happen to us’, then if and when it does happen to them, they’re immediately behind the 8-ball, playing catch up.”

Thinking through what events might occur because of activist shareholders, and how your organization will handle it, will naturally reveal potential solutions.

These solutions can also extend to your wider community and help you activate your advocates—as Disney did when names like George Lucas, Josh Gad and Walt Disney’s heirs spoke out in support of Iger’s leadership.

“Practice scenario planning to the point of asking, ‘How can we deploy ambassadors to fight and defend on our behalf so we’re not the only ones out there?’” recommended Birkhahn.

Scenario planning should also acknowledge another fundamental crisis comms truth—if you don’t tell your story, someone else will.

“If you don’t have the ability to move with speed and create a surround-sound effect, then the activist side is going to tell your story and it’s obviously not going to be favorable,” Birkhahn continued. “The ability to pull the trigger allows you to get the narrative out to the market in a very efficient way.”

Disney earned its mouse ears for demonstrating this strategy during its proxy battle, with pro-Iger op-eds in the New York Times to counter op-eds in the Wall Street Journal supporting Peltz. The House of Mouse picked its battles and relied on high-profile brand advocates to evangelize its positions. That Disney did so through a mixture of paid, earned, shared and owned media is impressive—especially for a company its size.

The case for integrated comms    

The larger companies get, the more their marketing and communications functions can be siloed. Proxy battles demonstrate how comms functions often don’t work with partners in marketing and across business lines to run integrated campaigns.

“I even see that some companies don’t control social,” Birkhahn said. “So they’re just focused on the earned media landscape or building out thought leadership platforms for executives, but they do not own and have day-to-day control over other channels outside earned media.”

While this differs from company to company, many marketing and communications departments still operate in silos, so the PR teams have little control over paid channels.

“It’s a major problem because you’re sitting in a war room trying to figure out how you deploy this message, when and where, and you only have control over some of the channels”

The case for integrated comms is exemplified in artful strategies like that deployed by Disney because it demonstrates what it means to truly take control of an omnichannel narrative as one team.

“The speed at which companies up and move to deploy these messages in the market matters, because their enemy is fighting and moving with speed and precision,” Birkhahn said. “Having those inter-department relationships and connections in advance, articulating a clear and concise      message and working with marketing to decide the best place to deploy it depending on the audience you’re trying to reach is the best practice.”

Creating accountability with response mechanics

All the scenario planning and collaboration in the world won’t prepare you for every scenario — after all, do you think AMC and GameStop were prepared when activist investors combatted the short-sellers in 2021?

Birkhahn recommended thinking less about having every response ready to ship and instead focusing on putting the mechanics in place to respond effectively.

“That’s where you can do most of your planning,” he said, “making sure that when the crisis actually does hit, you’re ready to move and not encumbered by bureaucracy, red tape or a siloed reality.”

It also helps offset the paralysis some experience when faced with a scenario they’ve only trained for in theory, not practice, Birkhan said. These “mechanics” create accountability at every level of the org chart, especially the top. In a crisis, even a seasoned CEO can start making rash decisions.

“Even if they’re not well-versed experts in crisis response communications,      they find it hard to resist the urge to respond quickly, so they start to dictate what they’re you’re going to do because they need action,” Birkhan said. “They’re getting massive pressure from investors, the board and other stakeholders, so in their minds doing something is better than nothing even though it sometimes exacerbates the issue at hand.          ”

When activist investors are in the mix, this is especially careless—their points are often informed by an intimate knowledge of business operations and leadership strategies, requiring an added level of nuance and discretion over what issues to engage with. This is where the legal and the PR team should collaborate closely.

“Some organizations have a very progressive general counsel who really understands the impact and value of reputation as you go through something like this,” said Birkhahn. “And then you have ones that are just locked in, don’t really care or can’t really comprehend the court of public opinion.”

Suffice to say, communicators want more of the former and not the latter, but between the extremes, there is a whole spectrum of partnerships between comms and legal. There’s no one-size-fits-all practice, which means there’s no proxy battle where it always makes sense to get in the weeds with specific criticisms. The right balance starts with a transparent conversation about the validity of your activist investor’s claims.

“Before you say anything, do anything or make any decisions publicly, have an honest conversation about the validity of the activist shareholders’ claims and accusations,” advised Birkhahn. “What is reality and what’s hyperbolic?”

Resisting the urge to go on full defense

Decades ago, it was more common for leaders to refute all criticisms about their business operations and go on offense. But for today’s shareholders and the general public, that isn’t necessarily the best course of action.

“There’s no better way to disarm a very vocal, powerful voice than to lean into it and show how you’re already addressing some of the concerns they’re raising. You can pick your battles and go toe to toe on them, but finding common ground can assuage your investors that change is already happening          .”

If detractors are always wrong and leaders can never admit the need to change or improve, you run the risk of coming off as inauthentic. This can be common among general counsels, who are reluctant to go on record and don’t appreciate how the court of public opinion can be a strong counterweight to the court of law.

“Sometimes the best way to disarm the activism is to convince shareholders that you’re doing a lot of what they’re arguing for already,” continued Birkhahn.

Going toe to toe on every issue can actually hurt your credibility. “It becomes almost unbelievable that these activist shareholders are spending all this time and money doing this, and you’re telling people they’re completely wrong,” Birkhahn said. “As a shareholder, that’s very hard to believe.”

For more on communicating with shareholders and board members, consider joining Ragan’s Communications Leadership Council.