Panera Bread Co. founder Ron Shaich's slide-deck title for The Deal's annual corporate governance conference says it all about today's climate for public companies, where a big-name activist investor seems to always lurk.
"Building Companies of Value in a Short-Term World."
There have been 173 proxy fights globally so far this year, down from 202 for all of 2017, according to FactSet. But, that's still an impressive figure considering that more battles are likely still to come.
A total of 18 fights were withdrawn, 44 were settled and activists won 19 that went the distance while management was victorious in 14, as of May end. Two contests split. This suggests that contests that go the distance aren't necessarily trending towards company victories, as they have in previous years, which isn't a shocker in this activist-fueled world.
Since 2012, the number of activist campaigns has surged 18%, according to FactSet.
"Our public markets have become increasingly shortsighted and, indeed, hostile to those companies like Panera competing on the basis of long-term transformation," Shaich said at Thursday's conference. "While hedge funds increasingly trade stocks based on an assessment of the next data point and ͞active money managers focus on short-term performance, as they are now ͞marked to market and incentivized on quarterly returns."
Added Shaich, "The increasing use of high-frequency, algorithm-based trading strategies further magnifies the problem."
Panera Bread found itself in the cross-hairs of activists twice: in 2007 with Shamrock Activist Value Fund LP and in 2015 with Luxor Capital, Fortune reported. The latter battle led Panera to issue $500 million in new debt to buy back shares to appease Luxor.