As a CEO coach, I’ve witnessed many times when activists have orchestrated the ousting of a chief executive, often with a board that is anything but surprised. Behind closed doors, I’ve had many directors tell me they quietly agreed with a transition. These activist investors secretly strike terror in the hearts of boards and CEOs, seeking to profit quickly by buying stakes in companies to influence management and strategic decisions. Their goal is to unlock shareholder value that the activists claim is trapped—by complaining loudly in public about their point of view. They often push for what companies see as radical change: leadership shake-ups, operational overhauls, financial engineering, or strategic pivots they insist will capture that “hidden” value.
And I’ve seen things escalate quickly. If the idea of a sudden, bloody purge at the top of a company—a decapitation, French Revolution-style, gains traction with vocal investors, then a coup can quickly follow. This can disrupt, or even brutally accelerate a succession process that you thought you were managing. And it doesn’t take billions to derail a peaceful transition, either.
Activists who want to shake up a company’s leadership often escalate to a proxy fight—and they don’t need a mountain of shares to start the brawl. Take Engine, a relatively small activist hedge fund that held only a 0.02% stake in ExxonMobil, but still launched a campaign and walked away with three seats on the board. That sent a chilling message to every CEO in America: if they can do that to Exxon, with almost no skin in the game, they can do it to anyone.
