Sector News

Why Are Activist Investors More Likely to Target Women CEOs?

February 11, 2015
Diversity & Inclusion
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
 
Source: Fast Company

comments closed

Related News

June 3, 2023

How this first-gen immigrant became a tech executive by finally accepting her differences

Diversity & Inclusion

The biggest career wins often come with risk. On our series, The Big Bet, Chief speaks with some of the most powerful members in our network about that single moment when they bet on themselves — and won. When reflecting on her career, Suman Rao, VP Business Technology Group at HelloFresh, says her journey has been “very checkered yet connected.”

May 27, 2023

When great minds don’t think alike

Diversity & Inclusion

The author, who has more than 50 years of experience in industry and academia, explains how she processes information as a visual thinker and shares how business leaders can harness the power of different kinds of thinkers. Doing so will increase creativity, ignite problem solving, and lead to more cohesive workplaces.

May 21, 2023

How recruiters can attract top talent from different generations

Diversity & Inclusion

In today’s ever-changing job market, recruiters need to focus on innovation and adaptability when it comes to their recruitment strategies. They must keep up with the shifting demands of different generations of candidates and create an attractive work environment that appeals to them. This was the finding of Monster’s recent research.

How can we help you?

We're easy to reach