Harvard ouster is a win for activists, not activism

Herbalife

05/01/2024 17:07

(The author is a Reuters Breakingviews columnist. The opinions
expressed are her own.)
    By Lauren Silva Laughlin
       NEW YORK, Jan 5 (Reuters Breakingviews) - Bill Ackman
went for the jugular at Harvard University. A crusade against
the school’s President Claudine Gay ended this week with her
resigning from her role. At first glance it looks like Ackman,
founder of investment firm Pershing Square, has plied his
corporate activist trade in a new field with marked success.
But those who target institutions like Harvard could find
themselves on shaky ground.
    Gay isn’t the first individual Ackman has attacked
personally. He has gone after the heads of retailer JCPenney and
supplement maker Herbalife  HLF.N , among others. But one way
the Harvard campaign differed from corporate cage-rattling is
that activists irked with company chieftains tend to aim their
brickbats at the system – represented by the board of directors
– rather than the person nominally at the top. Just this week
three different groups of investors took on entertainment giant
Walt Disney  DIS.N . All of them have gripes about the company;
all of them are trying to work with the board.
    There’s good reason for this. Institutions are more than the
individual that runs them, and altering an organization
wholesale requires more than just a change of leader. Placing a
few moles on the inside gives an activist intel on a broader
range of issues and, importantly, space to be thoughtful. If
anything, Ackman has softened his approach in recent years.
    Boards at universities are different from those of listed
companies, of course – and have different triggers and pressure
points. Directors at such institutions, which are generally
non-profit organizations, typically work pro bono. Instead of
cash they get prestige. That could make insiders more resistant
to change, and harder to dislodge than their corporate
counterparts.
    Still, Gay’s ouster underlines how university governance
could change more broadly. In response to the recent backlash on
college campuses, law professor Steven Davidoff Solomon laid out
a blueprint, including the suggestion that university boards not
be self-selecting. Instead, he argues for a process in which all
stakeholders have a say in choosing representation.
    Ackman’s victory really just shows that persistence and a
platform – in his case his social media presence on X, formerly
Twitter – can enact change. There’s no guarantee that the next
powerful person who targets Harvard or its fellow institutions
will share Ackman’s agenda. Companies involve a much more
orderly and multilateral process. Their investors, and
activists, should be glad of it.
    Follow @thereallsl on X
    
    CONTEXT NEWS
Harvard President Claudine Gay said she would resign from her
position on Jan. 2 after allegations of plagiarism and a
backlash over congressional questioning about campus
antisemitism. Gay, who had been president at the 387-year-old
university for six months, wrote an op-ed in the New York Times
saying that the campaign to oust her “recycled tired racial
stereotypes about Black talent and incompetence.”

 (Editing by John Foley and Aditya Sriwatsav)
 ((For previous columns by the author, Reuters customers can
click on  SILVA/ 
Lauren.SilvaLaughlin@thomsonreuters.com))