Activist investor use of social media to Influence companies

During this time, however, not only was tyrannical leaders and despotic regimes in the viewfinder. Quietly, investor activists have been using social media to overthrow advice, oust the embattled CEO and reverse business practices oppose some of the most known American companies. And when it comes to digital savvy, they often leave their counterparts fighting for freedom in the dust.

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Consider the case of the post on dissatisfaction with the performance of the CEO Terry Semel and the need for a reorganization of the management. His position is gone viral and struck a chord with other investors of Yahoo who shared his feelings. Before long, it received thousands of visits per day, interviewed on CNBC and had built a block voting of investors representing over $ 2.6 million of shares in the company (about $ 60 million). Not long after, Mr. Semel resigns and Mr. Jackson online efforts are widely credited as a catalyst in his fall.

Since then, small investors have taken to Facebook and Twitter support for the proposals of proxy and sites such as the search for Alpha, StockTwits and MoxyVote, a social network of companies shareholders and defenders that aggregates the proposals of the investoraccelerates the proxy voting and help investors to support "good causes" in the areas of labour, the environment, animal welfare and corporate governance, to name a few. In particular, investors On2 Technologies has recently turning to MoxyVote to force Google to increase its bid for the company by 25%.

In the same way that revolutionary of half a world away are using social media to swell their ranks and to consolidate their efforts, small investors are building support for their proposals and reach a mass critical simply do business €? t ignore.

Other signs that the use of social media has migrated from the basement to the penthouse, rich investors are also using digital communication tools in their bids for the control of large corporations.

In a battle of proxy against the film Lionsgate last year studio, Carl Icahn (a militant investors known in the world) built a site with content favorable to his plan to "Save" the film studio. He has published a letter to shareholders, urging the elected a new slate of Directors. It shares developments as they arose. It includes the same functionality by which investors could vote their shares. Although his effort eventually failed, it has created a model that is already influencing others.

At the same time, websites such as Affluence.org, the capital of the Pi and family Bhive, called the "Facebook for the chance", come online as arenas for the rich to proprietary networks and wealthy investors. On these sites, they can speak to their counterparts, the influential financial media and investment brokerage houses (which, in most cases, must pay to play) to better understand purchasing decisions and identify opportunities for investment under the radar.

Last summer, a report published by Q4 Web Systems concluded that companies are beginning to understand that they can yield is more control of the digital conversation to activist investors. According to data from 93 per cent of public companies are using LinkedIn for lead awareness of shareholders; 65% use Twitter; 37% use Facebook; 29% are using YouTube. and 10% to use a blog corporate relations with investors (IR).

While increasing adoption rates connote certainly progress, boards of Directors and senior management still have much to do if they are going to catch up with those vying for control of their businesses.

Disclosure rules, the potential for disputes on securities and the speed with which information - and, more importantly, misinformation - reached all corners of the market, the IR programs were naturally among the recent corporate functions to fully embrace the social media revolution. But this dona€ ? t change the fact that investors activists took their game to a new playing field - and these public companies still to come at a huge disadvantage, should materialize a battle for control.