WNYC Studios and The New Yorker: A Former C.E.O. Says Activist Investors Are Killing American Business

Ron Shaich is one of the most successful executives in the restaurant industry. He developed his business from a four-hundred-square-foot bakery into the chain Panera Bread, which he sold for nearly eight billion dollars. Panera, and Shaich, became instrumental in creating the “fast casual” niche of the restaurant market, which now represents a fifty-billion-dollar sector of the two-hundred-billion-dollar market. But while he was the C.E.O. of Panera, he was targeted by activist investors who had better plans for running his business. Their goal was to increase revenue quickly, by cutting costs and raising prices. Long term, Shaich thought it was a bad idea, but activist investors don’t hold stocks long term; they only want to pop the stock price and then sell their shares. Layoffs—even in successful businesses—are a favorite tactic of activists. Shaich tells the staff writer Sheelah Kolhatkar that activist investing isn’t just a headache for C.E.O.s. It destroys the ability of executives to make long-term bets and to take risks, and that makes all of American business less innovative. Businesses need to curb the influence of short-term investors, he says, and there are ways to do it.