November 12, 2019
Activism: Review of 2019 Shareholder Activist Campaigns
This Sullivan & Cromwell memo reviews U.S. shareholder activism during 2019. Here are some of the key themes identified in the memo:
– Board seats obtained per announced campaign remain at elevated levels, as activists on average obtained 0.7 board seats per 2019 campaign (a 35% increase from 2017)
– Despite the recent focus in shareholder discourse on “purpose” and maximizing value for all stakeholders, institutional investors appear to give activists a pass on ESP topics
– Active managers are increasingly adopting activist tactics, highlighted by Neuberger Berman’s proxy contest at Verint Systems
– Activists are focused on M&A in record numbers, either by agitating for sales or divestitures or by intervening to break up previously announced transactions
– Almost 50% of issuers that added activist designees to their boards in 2017 or 2018 have since either sold themselves or engaged in a meaningful divesture
– Activists continue to hone in on issuers without a permanent CEO or with impending CEO retirements, evidenced by several prominent 2019 campaigns.
The memo says that activism levels in 2019 have been consistent with prior years. There were 205 new campaigns launched through the end of August and activists won 76 board seats. During the comparable period in 2018, there were 203 new campaigns and activists won 113 board seats. Starboard has been the most active investor this year, launching 10 new campaigns, while Icahn launched 4 & Elliott launched 3.
– John Jenkins