June 18, 2018

T. Rowe Price Speaks on Shareholder Activism

Here’s the intro from this blog by Davis Polk’s Ning Chiu (also see this Wachtell Lipton memo):

T. Rowe wants to make clear that activists and other investors do not speak for them, in its June ESG Spotlight, as they share their investment philosophy on shareholder activism. Activism is defined as proxy contests, campaigns to influence management and boards on strategy, capital allocation and/or governance and unsolicited hostile bids.

While the investor believes that companies tend to be better informed about their businesses and will afford management a certain amount of deference, they also stress that management and their boards should “exhibit openness, curiosity, and intellectual honesty” regarding serious and sustained ideas from outsiders.

T. Rowe’s internal policies prohibit their investment professionals from initiating activism campaigns indirectly, such as discussing or pitching ideas to activist investors or other third parties. The investor outlined its roles and responsibilities as engaged investors, to the point where they may help facilitate compromise between the parties, which they believe is usually a better outcome than a contested vote.

Broc Romanek