Article

Can a Woman Be a Corporate Raider?

By Herb Rubenstein

Introduction 

Today, only 16% of the board of directors’ seats are held by women in Fortune 500 companies. Companies with women on boards in terms of stock performance generally perform better than their competitors without women on their boards. (For an excellent article on this topic, click here.)

Yet, the question which represents the title of this article, seems never to have been asked, at least in an printed material on the internet. A Googleâ search, as of October 7, 2014 shows that the question of a woman potentially being a corporate raider has never even been asked on the internet: (No results found for “Can A Woman Be A Corporate Raider”). The purpose of this article is to finally ask and answer this question.

The history of Hetty Green of “Wall Street” fame around the turn of the century shows great business acumen on Wall Street by a woman.  Many women have been very successful both in companies and in investment houses.  Further, evidence clearly shows that having excellent women on boards makes a positive difference in many essential key performance indicators that companies strive to achieve.  This article discusses the ways a person generally becomes a member of a board of directors of a significant company, and asks the provocative question: “Can A Woman Be A Corporate Raider?”

 

Methods of Becoming a Member of A Board of Directors

There are five recognized methods of becoming a member of a board of directors of a corporation.

1. By merit and experience: Develop a career in corporate American rising to the level of CEO or some “C” level position and develop a reputation for great business acumen. Good areas to have expertise include finance, mergers and acquisition, audit, technology, raising capital, and marketing.

2. By rising through the ranks in University administration, large nonprofit organizations, and publishing extensively so that you are considered a thought leader who can positively contribute to board level discussions and decisions.

3. Be a family member of a family that runs a privately held business and gain stature in the family such that the power brokers in the family business invite you to participate at the board of directors level in business.

4. Serve in some high level political or governmental capacity, or be a lawyer, with extensive experience in a sector, and be viewed as having knowledge, contacts, and business acumen of great benefit to the corporation.

5. Be a corporate raider who controls enough capital to purchase a significant stake in a company and demand one or more board seats, create shareholder resolutions that seek to improve the company, and dig your teeth in for a fight for company control.

This article only discusses the fifth method of how to become a member of a board of directors, by buying your way in, forcing your way into a board that does not want you, a corporation that may not be ready for your ideas, and requires a thorough understanding of the target company,  the industry sector, the personalities of the current company and board leadership, and the potential value of the company under a reform regime that the corporate raider is seeking to put into action in the company.

 

Current High Profile Corporate Raiders

A quick look at some of the current high profile corporate raiders shows that seven white men dominate this space:

Carl Icahn has bought shares in Kerr-McGee Corp, Chesapeake Energy, Motorola, Blockbuster among many other companies where he sought to have a major influence on the strategy of the company. He may be the most famous corporate raider in America today.

Ralph Whitworth, a former protege of T. Boone Pickens, and founder of Relational Investors has been involved in some major corporate shakeups, including Home Depot.

Nelson Peltz who who runs Trian Partners hedge fund has raided PepsiCo, Inc. and other companies.

David Einhorn, founder of Greenlight Capital has taken huge stakes in Apple Inc.  and Micron Technology.

Bill Ackman of Pershing Square Capital Management has fought battles with Herbalife, Ltd., Target, Proctor & Gamble and many other companies.

Barry Rosenstein of Jana Partners has worked on numerous activist campaigns including Oil States International and Ashland.

Dan Loeb, Investor in Sony and many other companies buys into companies and quickly tells the company explicitly how to change the company to improve corporate value.

Each of these corporate activists or raiders uses publicly advertised strategies to purchase significant elements of companies, inform management of their desire for one or more corporate board seats, tell management and the public their strategy for improving the value and stock price of the company, and aggressively seeking public support for their positions to influence the company.

 

Could a Woman Be A Corporate Raider/Activist?

First, to do this takes a lot of money under management, and I see no reason why a woman could not amass a large enough “stash of cash” to have billions at her beck and call to make bets and demands the way the all male denominated corporate raiders have done. Second, while being a corporate raider requires aggressiveness, I find no reason why one or more women could not take on this role. As observers of the Barry Rosenstein model have observed, many of his suggestions are so spot on for improving corporate value and stock prices, that the corporation often readily agrees to his recommendations.  Third, the corporate raider needs to be able to negotiate in the “public arena” and have substantial credibility with the investing and business press to be taken very seriously.  I find no reason why women in the US, and women from all over the world, could not build this credibility and learn the ropes in dealing with the press.

 

Conclusion

I am shocked this question “Can A Woman Be A Corporate Raider” has never been asked on the internet.  The glass ceiling only comes down when someone points out that a) it is operating as a ceiling, and b) it is really made of glass.  I recommend that women get together and form an investment pool of billions of dollars and become corporate raiders.  They won’t win every time, but over time, they will gain important board seats for women, will attack those companies whose current management is taking such a large share of profits that the stock price is artificially low, and they will find ways to unleash great profits for the companies where there are successful.  In addition, they might reduce corporate fines, restatements of earnings, improve the sustainability of the company, improve working conditions for employees, increase transparency, and help establish women as central players in the US economy and in the world economy.  I think all of those results are worth the significant effort it will take for women to be successful as corporate raiders.  Onward.

 

This article was reproduced with permission from its author. Herb Rubenstein is a lecturer in Strategic Management at the University of Colorado Denver’s Graduate School of Business, Global Energy Management Program and the author of 21st Century Standards for Boards of Directors. He has authored and co-authored many other books, plus over a 100 articles on boards of directors, business strategy, entrepreneurship, leadership, and improving how organizations govern themselves, function and deliver value. The opinions and experiences expressed by the author or subjects do not necessarily reflect those of Women in the Boardroom.

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