An interview with Lauren Gojkovich, founder of LDG Advisory

LDG Advisory works with activist investors. What are your focus areas?

At LDG Advisory, we help the market’s most engaged investors succeed in their highest stakes investments. We are a key strategic adviser to investors navigating some of the most hotly-contested proxy fights and contested M&A situations over the most recent proxy seasons in the U.S. and more recently, also in Europe and Japan. First and foremost, we focus on ensuring our clients’ campaign for change resonates across the diverse set of stakeholders that make the voting decisions in today’s market. It’s a unique lane of strategic advice for the investor community that provides a multi-layered, multi-phased, investor-by-investor approach focused on smart messaging and excellent tactical planning to ensure our clients execute best-in-class shareholder and proxy advisory firm engagement.

How did your career path lead you to launch your own advisory service?

It’s a bit of a winding path, but with a clear north star of a passion for providing strategic advice to clients who are navigating the most challenging questions regarding corporate governance, M&A, and shareholder activism. My passion for the markets began right out of college on the trading desk at a top-tier bulge-bracket investment bank and followed me through law school when I joined one of the leading M&A law firms as a corporate attorney, where my favorite deals during my tenure were our activism defense mandates. I later returned to that same investment bank as part of the legal team advising their own public company board of directors on its corporate governance, which provided a deep understanding of the nuts and bolts of corporate governance and how important good governance is to building a high functioning organization.

I then joined a top shareholder advisory practice, where I had the opportunity to work alongside former leaders of the key investor stewardship teams and proxy advisory firms. As the head of that firm’s U.S. activism defense practice, our clients relied on us to provide a uniquely-informed investor perspective to our activism defense strategy.

Over time, it became increasingly clear to me that an investor-focused, nuanced approach to shareholder engagement is the only way to win in today’s evolving shareholder activism landscape. There was a strong demand for that type of strategic advisory support across the aisle on the investor side, which is why I founded LDG Advisory. It has certainly been exciting to see the uptake in the investor community for this lane of advice.

And on that topic, how do you win the vote? Arguments have been made that the universal proxy card will make minority slates easier to bring forward for some investor groups. What is your view?

Investors and proxy advisory firms have been clear that the UPC doesn’t change their analytical framework for contested situations. It remains the same that investors (and the proxy advisory firms) will take a hard look at whether the dissident has made a convincing case for change, and then will ask who on the board of directors is best situated to effect that change.

That said, the UPC does introduce tactical considerations around that fundamental framework. There is a real risk that the use of the UPC’s “pick and choose” mechanism by individual investors will dilute the impact of broad-based shareholder agreement that change is needed. To mitigate this risk, investors must be specific about which incumbent directors they recommend investors vote against.

It will also require dissidents to be thoughtful about right-sizing the size of their slate to the case for change. Too many dissident nominees may spread the dissenting vote too thin and ultimately end up with no dissident candidates winning a seat. It’s a complex calculus that requires a deep, nuanced understanding of how the shareholder base will react to the case for change and the nominees.

If you could make one corporate governance change, what would it be?

If I could make one governance change in boardrooms across the country, I’d set up a framework to ensure directors have on-going, substantive, exposure to the active investor perspective on their company. There has been a major push to have directors engage directly with shareholder stewardship teams, and I believe companies are increasingly well informed and supportive of responding to their investors’ ESG expectations.

However, I do think boards of directors would benefit from receiving ongoing, robust, independent assessments of the company’s performance. Perhaps a dashboard could be delivered with each board meeting’s materials, setting forth relative share price and key operational metrics’ performance over various time frames (including the CEO’s tenure) and versus the appropriate index and peer group. I’d also benchmark that performance against the CEO’s realizable pay. And I’d be certain to include sellside research reports – for both the company and its closest peers. Finally, I’d set up an executive session for independent directors to invite a top five active investor into the boardroom to share their perspective once a year.