The Rise of Shareholder Activism in Australia

We are living in uncertain times and seeing things that we have never before seen. Such is the case with the rise in shareholder activism throughout Australia in so many different instances. In a time when industry leaders are calling for more transparency amongst the board, there are some that are not adhering to these new and more apparent terms. This is causing so much unrest on boards and amongst shareholders and leading to the downfall of leaders and companies alike. So how is this coming to be reality within Australia? It’s time to learn why things are changing so dramatically, and not in a good way for everyone involved.

Too many boards are not sharing in the idea of transparency: If you think about the mission of somebody like Stephen Mayne a respected shareholder activist, the founder of Crikey and a Director of the Australian Shareholder Association, his mission has become to force this very issue. His thoughts are that not enough boards are sharing the ins and outs of the companies that they represent. It is a boards’ job to be transparent, to have open and honest communication, and to deal with leadership, employees, and other companies in a respectful manner. When that doesn’t happen then somebody like Mayne calls this out to the mainstream. There is no way that a board can successfully exist in the long run if they don’t keep things on the up and up. They will be found out and the impact can be devastating, not only to the board but to the companies and the employees that work for them. Thanks in large part to somebody like Mayne, there is a push for a true transparency to prevent poor business practices.

Too many leaders are taking the fall when it’s not their fault: If you look at the case of Bellamy, you saw a founder and a good leader go down when the market share went down. When sales were not where the board expected them to be in China, it was very easy for the board to put pressure on Laura McBain to step down. When she did it became a focal point for so many shareholders universally. If a board could have this power to pressure somebody to step down to circumstances beyond their control, then could this become a new standard? Shareholders from all over Australia saw this example and several others like it and this has fuelled their movement. The fall of good passionate leaders should not become an accepted norm for it hurts everyone.

Shareholders and employees are tired of the corruption: The case of McBain and Bellamy and the sometimes harsh but truthful words of Mayne have helped to fuel this evolution. Employees are tired of not knowing what the board is doing. They are tired of a good company falling due to under-performing board members and the wrong business decisions. Shareholders get a say and they are not happy with the trends happening all throughout Australia. The answer is for shareholders to take an active role in changing things for the better. They will not accept what is given to them and so you see the very obvious and necessary rise in shareholder activism. They want to overthrow the leaders being thrown at them and the poor business decisions that are driving a company into the ground. Though the tactics to elicit change may not be the most desirable, they are getting things done and forcing things to be more ethical in the long run.

It’s no wonder that shareholder activism and a push for different methods are becoming our reality: Sure it’s very possible that shareholders are not always in the right. In the case of Bellamy the approach by majority shareholders and the tactics to overthrow the board of directors may not be the best choice only time will tell. There is a movement however to change things and to improve the way that companies do business. Without full transparency, shareholders know that the negative trends will continue to occur. They will not take what is given to them and therefore they know that going to extremes now may be necessary to get things done. Hopefully through the actions of people like Stephen Mayne and the examples of the board spill this week at Bellamy, things can change for the better for all parties involved. This is a trend that nobody wants to see in the business world. It’s not to say that the approach is the right one in either case, but something must be done. Though it is a leaders job to enjoy the rise and fall of their company, shareholders want to push for big changes that benefit them and all the people within their company as a whole as well.

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