Ele Klein, chair of Schulte’s Global Shareholder Activism Group, spoke to The Deal for an article that discusses how activist investors are increasingly targeting underperforming companies with aging, long-tenured CEOs and board members — especially when there’s a perceived opportunity for a sale or leadership transition.
Ele noted that, for activists, persuading an aging CEO to sell the company is often more feasible than attempting an operational turnaround, especially when leadership is entrenched.
“There are situations where there happens to be an underperforming company and older CEO who isn’t getting out of the way. A possible easier task at an
underperforming company with an older founder-CEO could be to get the company to sell itself, rather than fix performance and get a better return.”
However, Ele emphasized the distinction between simply being old and being both old and underperforming. He pointed to Warren Buffett — despite having been the oldest CEO in the S&P 500, avoided activist pressure due to Berkshire Hathaway’s consistently strong performance.
“There’s a reason activist investors never talk about Warren Buffett. Berkshire Hathaway isn’t underperforming, and he’s a superstar.”