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    INVESTMENT BANKING | INNOVATION EDGE

    5 trends in shareholder activism that have emerged in 2023

    19 Jul 2023

    Recession worries, elevated inflation, rising interest rates and lower corporate transaction volumes have not been enough to slow shareholder activists this year, according to Barclays’ Shareholder Advisory Group H1 2023 Review of Shareholder Activism Report. They identify 5 trends that have emerged thus far.

    19 Jul 2023

    Record pace of activist campaigns continues into 2023

    To receive a copy of the full report on shareholder activism in H1 2023, please email: ShareholderAdvisoryGlobal@barclays.com

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    1. Global campaign activity resilient, despite uncertainties, led by Europe and Asia

    Despite uncertainties, activist shareholders continue to pressure companies around the world, with the number of newly launched global campaigns holding above the four-year average.

    Record pace for shareholder activism

    There were 133 new campaigns initiated globally in the first half of 2023, in line with the first half of 2022 but remains well above the four-year average of 108.

    Taking a broader view, there have been 240 new campaigns over the past four quarters, a 16% increase from 207 campaigns in the prior period.

    Industrial, Technology and Financial institutions

    In Europe, activity jumped 41% year over year in the first half to 41 campaigns, but in the U.S., activity fell by 23% to 54 campaigns. Canada saw the largest increase, 333%, with 13 campaigns.

    Most of the increased activity, however, came in the first quarter of the year, which set a new quarterly record with 78 campaigns. By comparison, 55 new campaigns were launched in the second quarter.

    2. Technology, Industrial and Healthcare companies caught in the crosshairs

    M&A objectives

    In the first half of 2023, 59% of all activist campaigns targeted three sectors: Technology (25%); Industrials (21%); and Healthcare (13%).

    Companies with market capitalisations above $10 billion were the target of 24% of the campaigns, a record share of the total. This included 12 campaigns in the US, 10 in Asia, 9 nine in Europe, and one in Canada.

    3. Activists agitate for deals

    Increase in activist boards

    An increasing number of campaigns came with M&A demands in the first half of 2023.

    Despite slower deal activity and financing markets, 46% of all campaigns pushed for some sort of M&A (including an outright sale or a company division). That’s above the four-year average of 42%.

    4. Getting on board

    Universal proxy impact

    Activists continue to win board seats at an aggressive pace. In the first half of 2023, they took 81 director seats, a tick above the four-year average of 78.

    Only 10 contested proxy fights went to a vote, in line with the nine that went to a vote in the first half of 2022. These results suggest both companies and activists continue to perceive contested votes as high risk.

    The first half of 2023 provided an early indicator that new universal proxy rules are making it easier for activists to win board seats. Activists won seats in 80% of contested votes in H1 2023 vs. just 33% in H1 2022, and proxy advisory firm ISS successfully got 75% of the dissidents it recommended elected.

    5. Update on legal and regulatory developments

    Universal proxy impact

    New universal proxy rules that took effect in the US in August 2022 are heightening anxiety levels among corporate boards. Many companies amended charters and bylaws in anticipation of the rules, and some have faced litigation as a result.

    Activists, on the other hand, may face stricter security-based swap disclosure requirements under proposed Rule 10-B1.

    In the meantime, companies and investors are still waiting for definitive guidance from the US Securities and Exchange Commission on climate-disclosure rules, due later this year.

    Through all the macroeconomic challenges and the changing regulatory landscape, it appears shareholder activists will continue launching campaigns at a healthy pace, and companies will need to be increasingly on guard.

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