Global report finds shareholder activist activity is yet to bounce back to pre-pandemic levels

5 minute read 19.07.2022 Kate Hider, Siobhan Doherty

Insightia has released its latest statistical analysis of global trends in shareholder activist activity for H1 2022. Our key takeaways are below.

Key takeouts

The global report found that the overall level of activist activity for H1 2022 was 5% up on the same period last year, though still well down on pre-pandemic levels
Activist activity continues to be highest (by far) in the US, followed by Japan. Australia ranks fifth overall in terms of activist activity
Globally, the number of companies publicly subjected to activist ESG demands increased substantially in H1 2022. In the US, the number of companies publicly subjected to specifically 'environmental' demands increased 76% on H1 2021
In Australia, fewer companies were publicly subjected to activist demands in H1 2022 compared with the same period last year. The number of Australian companies targeted with specifically environmental demands reached 'record' levels

Overview

Below is a short overview of some of the key findings from the Insightia report: Shareholder Activism in H1 2022.

Global trends

The overall level of activist activity is 5% up on last year

According to the report, 678 companies globally were publicly subjected to activist demands in H1 2022 (up from 646 in H1 2021). For context, this is well down on the level of activity over the same period in any year over the 2015-2020 period.

Most active regions

Levels of activity continue to be highest in the US where 390 companies were targeted in H1 2021.
The next most active regions were: Japan (71 companies targeted); the Republic of Korea (38 companies targeted), Canada (33 companies targeted), the UK (28 companies targeted) and Australia (25 companies targeted).
Activity was lowest in Finland, Malta, Turkey, India, Nigeria, Slovenia, Hungary, Italy, Luxembourg, Norway, Belgium, Brazil and the Russian Federation (all had only 2 companies targeted during the H1 2022 period).
Overall, the number of Europe based companies publicly subjected to activist demands decreased 23% in H1 2022 (compared to H1 2021)

Sectors most targeted

Globally, more companies in the industrials sector were targeted than any other (16% of the total number of companies publicly subjected to activist demands were companies in this sector).
The next most targeted sectors were: technology (14%), consumer cyclical (14%) and financial services (13%).

Most targeted companies by size

Large cap companies were the most targeted (accounting for 39% of the total number of companies publicly subjected to activist demands).

More companies faced ESG demands

According to the report, during H1 2022, the number of companies publicly subjected to activist ESG demands increased substantially:

114 companies were publicly subjected to 'environmental' demands (up from just 63 in H1 2021, and 51 in H1 2020).
129 companies were publicly subjected to 'social' demands (up from 93 in H1 2021)
310 companies were publicly subjected to 'governance' demands (up from 299 in 2021)

There was also a spike in the number of companies facing remuneration related demands, with 94 companies publicly targeted in H1 2022 (vs just 68 in H1 2021).

The number of companies publicly subjected to activist M&A demands also increased from 28 in H1 2021 to 41 in H1 2022

US-specific findings

More US-based companies were publicly subjected to activist demands in H1 2022 than in the same period last year – according to the report 390 companies were publicly subjected to activist demands in H1 2022 vs 363 in H1 2021. For context, this is still down on the level of activity for any year in the 2016-2020 period.
The technology and industrials sector were the most targeted.

More companies faced ESG-related demands

According to the report, 380 US-based companies were publicly targeted by ESG-related demands in H1 2022 (up from 318 in H1 2021). Notably, the number of US companies publicly subjected to specifically 'environmental' demands increased 76% on H1 2021.
Demand type:
- In the 'environmental' category, GHG emissions reduction/climate-related demands were the most common.
- In the 'social' category, diversity/equality and 'political activities' related demands were the most common
- In the 'governance' category, calls to amend company policy were by far the most common form of demand.

Australia-specific findings

Fewer Australia-based companies were publicly subjected to activist demands in H1 2022 compared with the same period last year - 25 Australia based companies in H1 2022 vs 28 in H1 2021. For context, this is substantially down on 2019 levels (40 companies were targeted during H1 2019).
Consistent with previous years, the basic materials sector continues to be the most targeted sector (accounting for 36% of the total number of companies targeted during the period)
In H1 2022, the most common demand type were demands to appoint or remove personnel (61% of demands).
The report highlights an uptick in the number of Australian companies publicly subjected to activist ESG-related demands and more particularly in environmental demands:
- More companies faced specifically environmental demands in H1 2022 than in the same period last year (5 in H1 2022 vs 3 in H1 2021). For context, this is the highest level for the H1 period over the 2019-2022 period.
- Consistent with previous years 100% of demands in the 'environmental' category were classified as GHG emissions reduction or climate related.
Activists have so far secured 9 board seats (down from 18 in H1 2021). 78% of these (7 of 9) were secured through settlements rather than meetings.

[Source: Insightia report: Shareholder Activism in H1 2022]