Successful private investor activism
in an emerging market
Suzette Viviers and Nadia Mans-Kemp
Purpose –Institutional investors in emerging markets are increasingly under pressure to integrate
environmental, social and corporate governance considerations into their investment analyses and
ownershippractices. Old Mutual Investment Group(OMIG) is a South African-based institutionalinvestor
that has long been regarded as a pioneer in responsible investing. The purpose of this study was to
examinethe nature and effectiveness of OMIG’s privateshareholder activism endeavours over theperiod
1 January2014 to 30 June 2018.
Design/methodology/approach –A unique databasewas constructed using proprietary, point-in-time
data for 69 listed companies covering 283 private engagements. Binary logistic regressions were
conductedto test the hypothesised relationships.
Findings –The majorityof the private engagements centred on executiveremuneration. This finding was
not unexpected given the large and growing wage gap in South Africa. Close to two-thirds of OMIG’s
private deliberations were successful. Engagement success was positively associated with a targeted
company’scapacity to change and desire to protectits reputation.
Research limitations/implications –This study only investigatedthe private shareholder engagement
actionsof a single, well-resourced institutionalinvestor.
Practical implications –The findings serve as an encouragement to other investors who are
contemplating a more active approach to change unethical and unsustainable corporate policies and
Originality/value –This unique analysis sheds light on the determinants and success of private
shareholderactivism in an emerging market.
Keywords South Africa, Corporate governance, Executive remuneration, Wage gap,
Active ownership, Private shareholder activism
Paper type Research paper
“The activist is not the man who says the riveris dirty. The activist is the man who cleans up
the river” (Ross Perot quoted in Roush, 2009).
Although Perot referred to activism in general, his quote also applies to institutional
investors. Growing numbers of these investors are actively integrating environmental, social
and corporate governance (ESG) considerations into their investment analyses and
ownership practices (Principles for Responsible Investment, 2018). Corporate governance
concerns, in particular executive remuneration, are receiving more attention from
shareholder activists globally (Stathopoulos and Voulgaris, 2016) and in South Africa
(Viviers et al.,2019).
Activist investors can use exit or voice mechanisms to raise their concerns, hold boards of
investee companies accountable and transform selected corporate policies and practices
(Hoffmann et al.,2016). An exit strategy entails that a shareholder sellssome or all of his/her
shares in an investee company (Goodman et al.,2014). This mechanism is unlikely to result
Suzette Viviers and
Nadia Mans-Kemp are both
based at the Department of
Stellenbosch, South Africa.
Received 29 November 2019
Revised 11 July 2020
5 October 2020
Accepted 6 October 2020
The authors wish to extent a
special word of thanks to OMIG
for providing them with their
proprietary engagement data.
The study would not have been
possible without the assistance
of Messrs Robert Lewenson
and Jon Duncan. Our gratitude
is also extended to Ms Lizelle
Coetzee for collecting and
organising some of the data,
Prof Martin Kidd and Dr
¨hn for their
assistance with the statistical
analysis and Prof Eon Smit for
acting as a critical reader. The
two anonymous reviewers are
also thanked for their valuable
PAGE 92 jCORPORATE GOVERNANCE jVOL. 21 NO. 1 2021, pp. 92-110, ©EmeraldPublishing Limited, ISSN 1472-0701 DOI 10.1108/CG-11-2019-0366