Shareholder activism down at half year mark

Jul 29, 2021
But ESG makes headlines during proxy season, according to data from Insightia

The number of companies targeted by an activist during the first half of the year was at its lowest level in more than six years, according to Insightia’s half-year shareholder activism review.  

Between January 1 and June 30 this year, 518 companies were targeted by activist investors. This is a notable decrease compared to the first half of 2020, when 594 companies were targeted, and is a long way short of the all-time high of 2018, when 710 companies were in the crosshairs.

More than half of these campaigns (302) were launched in the United States, with Japan (43) and Germany (31) rounding out the top three countries with the most targeted companies.

Shareholder activists have shown more comfort with launching campaigns at large cap companies in recent years, and that continued during the first half of 2021. More than a third (34 percent) of all activist campaigns launched this year so far have been at large cap companies. The focus on large caps has increased gradually year-on-year; large caps only accounted for 28 percent of all targets during the first half of 2018, for instance.

By comparison, nano caps make up a smaller share of the overall number of companies targeted. In the first half of 2018, 17 percent of companies targeted were nano caps whereas, so far this year, only 9 percent on activist targets are in this bracket.

Changes in M&A activism

Between 2013 and 2020, the majority of M&A-related activism has encouraged deal-making activity, according to a separate report from Insightia. In the first half of last year, for instance, 49 companies were subjected to activist pressure pushing for M&A activity, while only 26 companies faced opposition to their proposed M&A activity.

But this year butts the trend – 37 companies faced opposition to their proposed M&A activity, while only 24 companies faced pressure to initiate M&A activity.

ESG focus this US proxy season

Insightia’s report authors also note that ESG played a prominent role on this year’s proxy season outcomes in the US – most notably in the case of Engine No. 1’s historic victory over Exxon Mobil.

This year, 17 environmental or social shareholder proposals received more than 50 percent support, according to Insightia’s data – which represents a record. On top of that, more than 60 percent of environmental shareholder proposals at energy companies passed.

Writing for Corporate Secretary last month, in the aftermath of the Exxon Mobil proxy meeting, Melissa Paschall, governance manager of the Ceres Accelerator for Sustainable Capital Markets, said: ‘Although ESG experts need to speak the language of business, the full board also needs to be fluent in the fundamentals of sustainability. Material environmental and social issues should not be siloed within individual experts or committees. All directors must have fluency to enable nuanced discussions and make smart decisions.’

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