June 28, 2023

The Stats on the First Season of UPC

Leading up to the 2023 proxy season, there was much debate about how universal proxy would change the game. With a more level playing field and possibly lower costs, would companies see a spike in activism?  In this M&A update, Kirkland analyzed all of the activist campaigns at US-listed companies from September 1, 2022 through June 16, 2023 and compared the data to prior periods. As detailed further below in the key takeaways from the article, UPC did not result in a significant spike in activism in the 2023 season — its impact was more nuanced:

– Activity levels: Activism levels remained high, but fewer campaigns resulted in proxy fights while more settled
– Target size: Activism campaigns targeted companies of all sizes, but the vast majority of proxy fights occurred at smaller companies
– Number of nominees: Activists did not nominate more candidates per slate
– Proxy fight costs: While universal proxy theoretically lowered the cost of entry for an activist, proxy fight costs did not come down and there was no surge in bare-bones campaigns
– Proxy advisor recommendations: While ISS and Glass Lewis continue to require that activists make a case for change, they are placing greater emphasis on individual director qualifications
– Litigation: In a highly litigious proxy season, companies challenged the validity of activist nominations at unprecedented levels
– Success level: Universal proxy may be increasing the odds of at least some activist success, but it has not opened the floodgates

– Meredith Ervine