Activism, Whole Foods, Etsy and Benefit Corporations

Shareholder activism is everywhere. In May, hedge fund Jana Partners pushed Whole Foods Market to overhaul its board, fix its operations and pursue “all avenues to shareholder value creation,” following a slump in its share price and stiff competition from other grocers entering the organic food market.

Etsy, a path-breaking online marketplace, laid off nearly a quarter of its employees this spring and hired a new chief executive officer in May after shareholder complaints of weak growth.

As often happens in these situations, the shareholder pressure led Whole Foods to sell itself in June to the highest bidder, Amazon, as the premium that accompanies a sale is almost always a sure bet to boost a company’s share price in the short term.

It wasn’t always this way. It used to be that when shareholders didn’t like a company, they sold their shares and moved on. They did not write letters or conduct proxy contests. But investors have spent decades fighting for a stronger hand in corporate governance.

Shareholders now have power to negotiate for change, and this has led to an explosion in campaigns that push companies to increase their current share price, even if it means selling the company, and even if it means laying off loyal workers who created the value being harvested.

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Frederick H. Alexander, “Activism, Whole Foods, Etsy and Benefit Corporations,” Thomson Reuters (August 7, 2017)


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