Tenacious headlines and publications of institutional investor discontent and activism continue to emerge within the world's financial news. Since the concentration and span of ownership by institutional investors is increasing worldwide their influence has grown considerable as well as their willingness to use it. Large potential benefits of their input into the monitoring process of management boards is also recognised and activism is encouraged by various committee reports, such as illustrated by the Combined Code (1998) and the NAPF report of 1995. However despite this, attitudes within large investment institutions can differ greatly with regards to activism and this only mirrors the intense academic debate and controversial evidence probing the merits of activism. Although activism possesses many valuable qualities and has in cases been beneficial to the company and shareholders, it also faces many problems that prevent its wider acceptance into practice. Whether activism adds value or is damaging to a company, for example to its reputation or by driving away talented managers, is yet another controversial area of focus. Before going into detail over such issues, I will first describe some case examples from the media industry that contained institutional investor discontent and their responses.
In the first example, investors were led by Tweedy Browne, the New York investment firm, into forcing Conrad Black to relinquish control of Hollinger International. As chairman and chief executive Lord Black controlled 73% of the votes with only a 30% equity stake. With such large influential power he was able to pay for his private expenses with the firm's funds, awarding himself uncommon "non-compete?fees that are normally given to a board as a whole. Hollinger's ...