February 15, 2018

Activism: Recap of ’17’s Second Half Campaigns

This Gibson Dunn memo reviews the state-of-play in shareholder activism during the second half of 2017.  The firm surveyed activist campaigns targeting NYSE & Nasdaq companies with a market cap of at least $1 billion from July 1, 2017 to year end. Here’s a summary of some of the key findings:

– Activists most frequently sought to influence target companies’ business strategies, with this being an objective in 63% of campaigns
– Changes to board composition and M&A-related issues were targeted in 41% and 35% of campaigns, respectively.
– Changes to corporate governance practices (including de-staggering boards and amending bylaws) were the subject of 24% of campaigns
– Changes in management and requests for returns of capital were each the subject of 11% of campaigns.

For the full year, changing business strategies remained the top activist priority – it was an objective in 61% of campaigns. Changes in board composition were an objective in 57% of campaigns, while M&A issues were targeted in 40% of campaigns.  Activists targeted governance practices in 27% of campaigns, and sought management changes in 21%.  Demands for returns of capital were included in 9% of campaigns for the full year.

During the second half of 2017, 39 companies were targeted by activists.   Seven campaigns involved proxy solicitations, and five of those reached a vote.  Smaller companies were targeted more frequently, with 64% of activist targets having market caps of less than $5 billion.

John Jenkins