A “huge problem” exists when investors approach companies with concerns about executive compensation and directors suggest talking to the CEO, Lawndale Capital Advisors founder Andrew Shapiro said.

“Whenever I have a problem with a company’s compensation and I reach out to the board’s compensation committee chair or lead independent director, you know there is a deep problem when they tell you to talk to the CEO about pay,” Shapiro explained on the Activist Investing Today podcast. “The CEO is the compensation recipient. He is the grantee. I want to talk to the directors who are the grantors.”

Shapiro also discussed what he did before activism and how one particular campaign helped to form Lawndale Capital Management LLC, an activist fund that operated for 32 years until it recently matured. The conversation also turned to his new advisory firm, advice he provided to Kent Lake Partners LP at Veradigm Inc. and why corporate boards should put an investor in as a director.

Check out the podcast with Andrew Shapiro below:

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