Shareholder activism down 15 percent globally so far this year
Worldwide, there has been a 15 percent drop in the number of companies publicly subjected to activist demands so far this year, according to Activist Insight data on campaigns to the end of May.
Even so, more than 500 companies globally have been publicly subjected to activist demands so far in 2019, ‘although that is down from 619 in 2018’s record-breaking start to the year,’ notes Activist Insight.
The decline in activism this year has actually picked up pace slightly, with year-to-date numbers at the end of May standing at 14.9 percent, compared with 13.7 percent a month before. ‘[But] the US, Canada, and Asia are all down proportionately less year to date than they were a month ago,’ Activist Insight states.
Within the numbers, certain trends have emerged. Looking at activist demands by type, board-related campaigns are up 4.4 percentage points to 47.4 percent year to date, while those related to governance are interestingly down by the largest amount. Despite the growth of interest in ESG – and more specifically governance – in recent years, so far this year there has been a 2.5 percentage-point drop in governance-focused activism campaigns, down to 21.3 percent.
‘I think the decline in other governance comes from there being no clear theme in terms of shareholder proposals dealing with shareholder rights this year,’ Josh Black, editor-in-chief at Activist Insight, tells IR Magazine. ‘While CalPERS has been pushing a majority vote standard, it has otherwise been a relatively quiet year after all those proxy access and right-to-call-special-meeting proposals.’
Even as board-related campaigns have grown slightly so far this year, the number of board seats gained by shareholder activists is down 27.4 percent to 222 year to date from 306 during the first five months of 2018.
In fact, activists have gained fewer board seats across every geography studied by Activist Insight – apart from the UK where numbers climbed from just six board seats to the end of May 2018 to 14 so far this year: a 133 percent increase. While the US has seen activists gain 22.7 percent fewer seats in the boardroom so far this year, campaigns have still won activists 126 board seats year to date, down from 163 during the same period last year.
There’s also more going on behind the scenes, notes Black. ‘Activism has picked up a bit over the last couple of months but it appears some things are happening behind closed doors,’ he says, citing Elliott Management, which Black says has made some new investments with no demands, or at private companies: ‘see ValueAct’s Spring Fund’.
‘I think with the macro environment so uncertain – oil down, gold up, tariffs – activists are taking the time to look further afield and test the waters in Asia or Europe, which may take a bit more time to come to fruition,’ he adds.
Globally, the number of active activists is also down so far this year, with Activist Insight noting a drop of 20 percent from 469 in the first five months of last year to 373 active activists year to date in 2019.