Extreme Value Hedging: How Activist Hedge Fund Managers Are Taking on the World

Chapter 20

Hedge Activists in Western Europe, Asia, and Canada

Guy Wyser-Pratte, who considers himself a “corporate vigilante,” has little respect for a growing number of European CEOs.

Lack of proper corporate governance codes and a very limited market for corporate control—fewer mergers and acquisitions compared to the United States—have made many European CEOs, in his opinion, complacent. Many European institutions and government regulators have sought to prohibit any serious shareholder activist efforts. The result: corporate boards in Europe continue to be made up of “old boy” clubby networks that aren't keeping management teams accountable to shareholders.

Referring to Greek mythology, Wyser-Pratte says European executives are missing the “Sword of Damocles” hanging over their heads. In other words, despite being in a position of power, executives in countries such as Germany and France aren't worried about losing their jobs. In Wyser-Pratte's view, they should have that concern. At least, they should consider themselves more responsible to shareholders. Only the occasional activist that comes to “try and upset the apple cart” keeps European executives in line, Wyser-Pratte says. “There are lots of obstacles to the free market in Europe,” he says. In Wyser-Pratte's analysis, these corporate realities have diminished the share value of many European companies and given the United States and other markets a competitive edge in the global marketplace. This situation, Wyser-Pratte ...