US shareholder activists remain hidebound to an outdated agenda for corporate reform and are in danger of fostering the conditions for further Enron-type collapses, according to a US investor relations adviser.

John Wilcox, vice-chairman of Georgeson Shareholder Communications, the investor relations and shareholder identification firm, says: "The activists' governance agenda is off-track given what we've learned from Enron and all the other scandals." Wilcox fears that the US shareholder activist community has failed to develop its ideas from the hostile takeover boom years of the 1980s, when shareholder rights were frequently circumscribed by a range of takeover defences. Dismantling those defences has been became activists' number one aim since then. Shareholder proposals to eliminate "poison pill" takeover defences are a standard feature of the US annual meeting season, for example. But Wilcox believes that fixation with facilitating control contests helped cause an excessive focus to be placed on short-term results and encouraged the kinds of earnings management and accounting manipulations that floored Enron. He says: "Activists are rooted to some issues that go way back to the 1980s, when it was trendy to think of takeovers as a good form of management discipline. That assumption needs to be re-examined in light of Tyco, Enron and WorldCom. The companies that have had the most serious problems are acquiring companies. "Shareholders have to ask whether they were part of the environment that was creating short-term pressures on companies. Shareholders were rewarding all of these activities that were designed to improve short-term performance." Wilcox asks: "What does the lesson on Enron tell us – that there needs to be a more sophisticated and more long-term oriented form of governance activism. "My challenge to shareholder activists is to come up with an agenda that is going to encourage and reward long-term performance by corporations." Georgeson Shareholder is expanding in Europe; in addition to offices and London and Paris, the firm has recently established a presence in Italy and Spain. Wilcox says the governance challenges facing European companies are very different to those faced by US groups. He says: "Publicly traded companies in European countries want to access capital from the global markets, predominantly from the US and UK. "In order to qualify for capital raising in those places, they must improve their governance arrangements, their communications with shareholders, share voting and the conduct of their AGMs. "Takeover bids and other transactions which require shareholder approval are increasing in Europe, as is shareholder activism and electronic communications. All these trends mean that companies in Europe will have to behave a little differently. "European companies are virtually all paying at least lip-service to these considerations. Some of them may resent it, and some may do little more than try to appease activists and basically continue to do business as they always have. It's to be expected. "But the fact is that regulators and others recognise that in fundamental ways there has to be change."