Credit crunch breeds investor activists

Listed companies, particularly those affected by the credit crunch, should prepare for a strong investor backlash, turning the heat on boards of listed companies to lift their performance, a newly released report from Deloitte UK shows.

The key findings of the report, based on a survey of UK’s 57 investor relations leaders, shows two-thirds of investor relations professionals found investor activism had increased as a result of the credit crunch; more than half said investors were increasingly ‘short-termist’; an average 20% said chief executive chairmen and chief financial officers' time was spent on investor relations activity; and two-thirds of the companies surveyed did not have a specific plan in place to deal with activist investors.

Margaret Ewing, Deloitte partner and vice-chairman, said pressures in the UK had grown to the extent many CEOs and CFOs now spent more than one-fifth of their time liaising with investors and their representatives.

‘Whilst it is clearly very important for shareholders to take an engaged interest in their investments, managers have to be careful not to lose focus on driving the success of their enterprises in these difficult times,’ she said.

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