Employees often ‘collateral damage’ when activist investors come calling

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University of Toronto professor Richard Powers says employees often suffer the fallout when companies come under pressure from an activist investor to improve their financial performance

which has been facing an ongoing campaign by U.S.-based Elliott Investment Management, said Thursday it will make the job cuts in an effort to reduce costs and improve its competitiveness.

Powers said activist investors such as Elliott target companies where they believe there is unrealized value, so it would be naive for workers to assume they won’t be affected when one has their employer in its sights. He says employees are low-hanging fruit, so a CEO under pressure from an activist to reduce costs will often cut jobs as one of his or her first moves.

Elliott Investment Management made waves last year when it announced it had acquired a 3.4 per cent economic interest in Suncor and was pushing for changes, including a strategic review of the company’s Petro-Canada retail chain and new management.Checking box will enable automatic data updates.

 

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