July 31, 2017

Shareholder Activism: Part of the Mainstream

This recent blog from Davis Polk’s Ning Chiu reviews a recent J.P. Morgan study on shareholder activism during the 2017 proxy season – and highlights the fact that activism can no longer be regarded as merely a niche strategy.

As this excerpt notes, maybe the best evidence of how mainstream activism has become is that institutions are not only more willing to support activist campaigns – but to initiate them as well:

Institutional investors are increasingly joining the activist fray, launching campaigns themselves. 44 campaigns this year were initiated this season by mutual funds, investment advisers and pension funds. Governance issues are usually the target, but more than half of the campaigns were focused more generally on maximizing shareholder value. Institutional investors also agitate for higher prices in M&A transactions, and may partner with activist funds in proxy contests or side with activists seeking leadership changes.

Page 10 of the study includes an exhibit detailing how frequently the 15 top institutions support activist proxy campaigns involving full and partial director slates.

John Jenkins