February 15, 2024

Activism: “Wolf Pack” Campaigns

Cooley recently blogged about the highlights of 2023 activist campaigns. This excerpt addresses the companies’ experience with activist “wolf packs” in the past year:

In 2023, activists often turned to “wolf pack” tactics (multiple activists pursuing a target with some level of express or implicit coordination) or “swarming” behavior (multiple activists pursuing a target without any express or implicit coordination) to de-risk campaigns. Examples include Salesforce, Disney, Exelixis, Berry Global and Enhabit, among others.

Wolf pack campaigns can significantly ratchet up the pressure on target companies. Wolf packs tend to collectively hold a significant percentage of the company’s voting power, which affords a higher likelihood of success in a proxy contest or “vote no” campaign.

The presence of multiple activists also can lend greater credibility to claims made to key stakeholders (institutional investors, retail investors, media) and result in greater media coverage of the campaign, which can itself be destabilizing to the company and its stakeholders. Further, ISS and Glass Lewis tend to give greater credence to activist theories and claims if they are held by multiple investors.

The blog notes that dealing with multiple activists can be particularly challenging, but offers recommendations on defensive actions that companies facing wolf packs should consider. These include proactively refreshing the board with high-quality candidates early in the campaign, alignment with a “friendly activist” who will support the company, adoption of policy changes called for by the activists, and adoption of a limited duration pill to deter rapid open market accumulations by members of the wolf pack.

John Jenkins