In my experience, the best ways to "deal with" an activist shareholder is:

1. Find out what they want as outcomes from their investment against the criteria of value, benefit, growth and risk. In other words, establish their Metrics based on their perception of value, how they want their benefit, what they want to see grow, and what is their definition of risk.

2. Know what the rest of your shareholders want in quantifiable terms against value, benefit, growth and risk.

3. Construct a curve of these metrics.

4. If the activist is an outlier (extreme high or extreme low) on those metrics, then the organisation's argument is that it satisfies the majority of its shareholders and the activist agenda would harm the majority of shareholders.

5. If the activist metrics align with the majority of shareholders, then the majority of shareholders want what the activist wants but the activist is the most vocal or confrontationalist. Therefore, you better listen as the activist is only saying what the majority of shareholders are thinking.

Most corporate responses to activist shareholders assume a defensive stance rather than accept that the activist has a legitimate right to declare his "outcome expectations". Needless to say, shareholders get really irate when this happens.

The corporation's "defense" is merely to establish whether that activist requirement is with the majority or the minority and then act accordingly.

The distinction must be made between "outcome expectations" and desire to influence strategy. Although all intelligent board and senior management would listen to any strategic or operational suggestions provided by activist or anyone else for that matter, shareholders do not have the depth and breadth of information available to the organisation; so making strategic or operational suggestions is inevitably sub-optimal. In any case, shareholders proxy the board and management of the corporation to manage - that's what they get paid for.

However, it is absolutely the right of shareholders, activist or not, to voice their "outcome expectations"; afterall, that's why they invest in the corporation. And it is the responsibility of the board and management to know what their shareholders want and not to guess what they want or to "give them" whatever management feels is appropriate.

"Activist" is not a dirty word - it is merely legitimate owners pressing for their rightful outcomes (subject to the comments above.)

Remember too, that research has validated that corporate performance is generally better within an activist environment than a non-activist environment.