Shareholder Activism

Corporate websites and proxy statements provide detailed biographical information about executive officers, board directors, and nominees for board positions. Maybe that is all the background information that the market needs.

Or maybe it’s not. In corporate contests, when a company’s future hangs in the balance, a heightened level of scrutiny can be expected. Suddenly, it matters very much whether someone has exaggerated their accomplishments, omitted unflattering portions of their professional background, or engaged in activity that calls their judgment or integrity into question. It certainly matters if they have undisclosed conflicts of interest or are otherwise not as independent as they claim to be.

When tensions are running high, and time is running out, GCI’s investigative research plays an essential role by arming its clients with new facts and valuable insights. The aim is not to “dig up dirt” for its own sake. Instead, we conduct deep research and analyze findings within the context of what will matter most to shareholders.

Activism Defense and Self-Diligence

For companies facing activist pressure, and the counsel representing them, GCI investigates activist principals and proposed board nominees to assess credibility, independence, and governance risks. Our thoroughly researched dossiers help companies build compelling arguments in favor of the incumbent board and leadership team.

GCI also encourages companies to prepare for activist pressure, and, hopefully, prevent it entirely. By proactively conducting “red team” self-assessment evaluations, or “self-diligence,” GCI can identify potential vulnerabilities before they are publicized by an activist.

Supporting Activist Campaigns

GCI also supports activist investors seeking to drive improvements at a company or enhance a focus on shareholder interests. Investors rely on GCI’s research to explain to other shareholders why corporate governance changes are urgently needed. Activists also call on GCI to vet their own nominees before putting names forward. This ensures that nominations can withstand intensive scrutiny, even in a hotly contested environment.

GCI’s Competitive Edge

GCI is uniquely positioned to provide market-leading shareholder activism support because of our team’s extensive experience working on high-stakes proxy contests. At GCI, engagements are led by senior investigative researchers who work directly with clients to ensure intelligence needs are met in fast-moving situations.

Our methodology includes thorough research of public records, traditional media, social media, and digital investigation. When appropriate, GCI also conducts confidential interviews with human sources who provide additional insights and context.

Case Study - Allegations Discovered in Court Records

When a major shareholder activist was proposing a slate of candidates for the board of a publicly traded company, GCI was hired to vet these candidates and find potential red flags. One candidate, who had served on public boards in the past, seemed to have a clean record. However, diving deep into the text of old court documents, we found multiple allegations related to improper personal conduct.

The candidate had not been a named defendant in the lawsuits, so standard name-based database searches would not find the allegations. Past diligence may have missed the integrity risk issues, but GCI used advanced research techniques to uncover them. Ultimately, the activist placed just one director on the board, not including the nominee in question.

Case Study - Human Intelligence about Activist

In the context of a high-profile proxy contest, GCI was engaged to provide bespoke human intelligence (HUMINT) support. We conducted discreet interviews with several individuals who had special knowledge and expertise about an activist investor’s track record, leadership, and overall approach.

Sources told us that the investor has an aggressive style of activism, a history of positive value creation, and no major reputational concerns or red flags. The client used this intelligence to help formulate a strategy for navigating the contested situation.