Activist investors are increasingly using ESG (environmental, social, and governance) concerns to force change. That means human capital management (HCM) issues such as pay equity, diversity, and health and safety are also in the sights of activists. They’re using these issues to launch campaigns and gather support among other shareholders.
Despite the emergence of HCM as an activist tool, most companies targeted by activists still limit the response team to top management and directors. They leave their own HCM experts out of the room, even when HR issues are front-and-center.
We believe HR professionals are as critical in the response to activists as finance, legal and other members of the corporate team. HR experts have the knowledge and experience to:
- Proactively address potential areas of concern that could capture the attention of activist investors.
- Participate in the response to activists who raise issues and request information on diversity, equity and inclusion (DEI), corporate ESG, compensation, and other programs.
- Engage with employees to counter the uncertainty and turmoil of an activist campaign.
In this paper, we discuss how incorporating HR expertise into activist investor relations planning and strategy helps mitigate potentially negative impacts and contributes to a well-rounded and more successful response.