Yahoo CEO Marissa Mayer faced a barrage of criticism from activist investors leading up to the technology company’s fourth quarter 2014 earnings announcement last month.
She was two and a half years into her attempt to rejuvenate the beleaguered Yahoo, with arguably little to show for her efforts, and activist shareholders made it crystal clear that they would challenge her leadership if she did not grant them the windfall from Yahoo’s 15% stake in Chinese conglomerate Alibaba, worth $37 billion.
Mayer assented. Setting aside her acquisition strategy, which had won Yahoo ownership of hot startups like Tumblr and Flurry, she engineered a tax-free spin-off of the Alibaba stake, plus her company’s 35% stake in Yahoo Japan, exactly as investors had advocated. In the process, she earned herself some breathing room—and a place alongside other women chief executives who have been challenged by activist investors.
At least a quarter of the 23 women leading companies on the Standard & Poor’s 500 have found themselves at odds with activist shareholders over the last year, according to the New York Times. Mayer can count as company Indra Nooyi of Pepsi, Ellen Kullman of DuPont, Meg Whitman of Hewlett-Packard, and Mary Barra of General Motors. Though the sample size is small, activist investors have been targeting female CEOs at a higher rate than their male counterparts, and many are beginning to wonder why.
Patricia Sellers of Fortune argues that the answer is simple: Investors like billionaire corporate raider Nelson Peltz, who has taken aim at three women on the S&P 500, have a “woman problem.” Sellers even goes so far as to point to Peltz’s three marriages—including his most current one, to a former model—as evidence of his bias.
But past research on women in leadership roles across business, politics, and other arenas suggests that a different dynamic may be at issue. According to “glass cliff” theory, boards are more likely to select women to lead organizations in need of turnaround—which in turn makes women CEOs more likely to face investor attacks and job termination.
“Women were appointed to companies that were doing badly, rather than causing bad companies,” psychology professor Michelle Ryan of the University of Exeter, who pioneered the research, told the Boston Globe.
Between 2004 and 2013, according to PricewaterhouseCoopers, 27% of outgoing male CEOs were pushed out; for outgoing women CEOs, the rate was 38%.
As long as women are hired at disproportionate rates to run failing organizations, it should be no surprise to see investor activism follow a similarly disproportionate pattern.
By Ainsley O’Connell