Women CEOs more vulnerable to attacks by activist investors: HBR

Bichsel brings more than 40 years of experience in the hospitality industry, having held executive management positions at several notable companies.
When boards come under fire by activists, it is more likely the CEO will be a woman.

It doesn’t get any easier for women once they take the CEO seat.

They are more frequently targeted than men CEOs by activist investors, according to an article in the Harvard Business Review by three university professors who focus on finance and corporate governance.

The professors—Vishal K. Gupta, Sandra Mortal and Daniel B. Turban—discerned that female CEOs face a greater threat of shareholder activism than male CEOs.

They found that companies led by male CEOs were targeted by an activist 6% of the time during their study period, versus 9.4% when the CEO was female. Wolf pack attacks—when more than one activist is involved—were carried out against male and female CEOs 1% and 1.6% of the time, respectively.

Even though the differences appear small, this means that firms with female CEOs were 50% more likely to be targeted by activists and approximately 60% more likely to be targeted by multiple activists.

“People tend to take action with bias even if they don’t realize it,” Joe Solmonese, former president of the Human Rights Campaign, told FierceCEO. “There is a stereotype with women CEOs that they are more empathetic, softer, and it could be thought they would be more willing to give in to the activists.”

The findings “don’t startle me at all,” he said. “To me it says there is a perception women are more easily bullied.”

The fact that female CEOs are targeted more than male CEOs could be troubling, since it may perpetuate negative gender stereotypes of female executives. People perceive activism to be an indicator of how well a company and its CEO are performing, so greater activism against female CEOs may reinforce the notion that they are not able to manage companies as well as men.

“This speaks to gender bias in a big way,” said Julie Kampf, CEO of executive search firm JBK Associates International. “There is a bias that men activists feel women don’t know as much as men in this arena. It’s not sinister or planned. It’s unconscious.”

There may be the perception that female CEOs are targeted more often because investors have a “think manager, think male” mentality. Many attributes associated with the CEO role (decisiveness, aggression, competitiveness) are often antithetical to those associated with women. These kinds of gender stereotypes may lead to the perception that women are not fit to be managers, resulting in more activism being directed at firms led by female CEOs.