Some 46% of public company boards have no plan in place to respond to a challenge from an activist investor, said in a National Association of Corporate Directors report released Monday.
Of the 1,034 public companies that responded to a survey conducted from March through May, 19.3% had approached by an activist investor in the past 12 months.
Among companies, those with plans in place to respond to an activist challenge range from 42% for microcap companies with a market capitalization of less than $300 million to 54% for midcap companies with market capitalizations between $2 billion and $10 billion.
Companies approached by an activist investor in the past 12 months range from 13% for small-cap companies with market caps between $300 million and under $2 billion and 35% for microcap companies.
Among other findings detailed in the report, the most common board responses to shareholder pressure were 35.6% expanded compensation explanations in the proxy statement; 27.6% revised executive compensation plans; 18.4% altered or implemented dividends or stock buybacks or both; 14% considered the sale or divesture of the company or a division; 12.6% revised director compensation; 6.4% altered board composition to increase diversity; 5.1% declassified the board; 4% altered social, consumer, environmental policies; 3.3% introduced term limits, age limits or other director tenure policies; 3.2% revised the ability of shareholders to call election; and 2% began disclosing political expenditures.
On 41.1% of boards, at least one representative has met with institutional investors in the past 12 months, down from 43% in the 2014 survey results. Of those boards in 2015 that had a representative meet with institutional investors, the most frequently cited board representative was chair, 65.3%; investor relations office, 24.3%; compensation committee chair, 19.5%; lead director, 15.1%; general counsel or chief legal officer, 13.9%; audit committee chair, 10%; corporate secretary. 6.4%; nominating or governance committee chair, 6%; and other, 24.3%.
The most frequently cited topic of discussion at the meetings were executive compensation philosophy and pay plan design, 23.7%; oversight of financial matters, external audit, internal audit and financial controls, 20.4%; setting performance metrics and goals for the CEO, 19.2%; and CEO and executive team succession, 17.1%.
Some percentages add to more than 100% because respondents could choose more than one type of response.