Overview
Insightia has released its statistical analysis of the level of shareholder activist activity globally in 2022 and the focus of activist demands over the year.The report includes insights into global trends as well as trends in the US, Canada, Europe, Asia and Australia.
Below is a short overview of the some of the overall trends identified in the report, as well insights into the level and focus of activist activity in the US and Australia over 2022.
Global trends
Levels of activity are up on last year
Insightia found that the overall level of activist activity globally increased 6% on 2021.
For context, this is still down on pre-pandemic levels of activist activity: 1062 companies were publicly subjected to activist demands in 2019 vs 967 companies in 2022.
Australia third in the world
Looking at the level of activist activity by country, US-based companies faced the highest level of activist demands in 2022 with 511 companies targeted, followed the Japan (107 companies targeted) and Australia (61 companies targeted).
Most targeted sectors globally
Globally, the most targeted sectors were: industrials (143 companies) followed closely by consumer cyclical (142 companies) and technology (125 companies).In contrast, funds (17 companies) and communication services (29 companies) were the least targeted sectors.
Large cap companies (>$108) were the most likely to be targeted by activists.At the other end of the spectrum, nano cap (<$50) and microcap companies ($50 - $250) were overall, the least likely to be targeted.
'Governance' demands still the most common, uptick in E&S demands
Consistent with previous years, Insightia found that the most common category of activist demands overall was 'governance' (417 demands fell into this category).For context, this category includes (among other forms of demand): requests to amend company policy, board independence, requests for disclosure of board information and requests to separate the Chair and CEO role.
The next most common category of activist demand is identified in the report as the appointment of personnel (311).
According to the report, the number of activist 'environmental' demands increased to 135 (up from 84 in 2021) while the number of 'social' demands was also up on last year (148 in 2022 vs 118 in 2021).
US trends
According to Insightia's analysis, the focus of activist activity at US companies is more or less consistent with the global trends identified above.
Activity is up on last year
The number of US-based companies subjected to activist demands increased from 462 companies targeted in 2021 to 511 in 2022.
For context, this was down on pre-pandemic levels of activity.The 2017-2019 period saw over 550 companies targeted in each 12 month period.The 2022 total is also well down on the 659 companies targeted in 2016 (which according to the report, is the high water mark for activist activity over the 2016-2022 period).
Activist demands were consistent with global trends
The most common form of activist demand levelled at US-based companies in 2022 were governance related.Of these governance-related demands, the majority called for a shift in company policy.More companies also faced demands to disclose information (29 in 2021 vs 51 in 2022).
According to the report, there was an uptick in the number of companies facing 'environmental' demands: 73 companies in 2022 vs 42 companies in 2021.Drilling down, the majority related to climate change and greenhouse gas (GHG) emissions.
2022 also saw companies being targeted with a wide range of 'social demands'.86 companies in 2021 vs 109 companies in 2022.The most common category of 'social' demand was 'diversity and equality', closely followed by 'political activity'.
Most targeted sectors
In the US, the most targeted sectors were: 1) consumer cyclical, 2) technology, and 3) industrials.The least targeted sector was communication services.
Board seats
Activists secured 171 board seats in 2022, up from 132 in 2021.Of these seats, 91 were secured through settlements.
Australia
As flagged, according to Insightia's report, Australia ranked third behind the US and Japan as the jurisdiction with the highest level of activist activity for 2022, with 61 Australia-based companies targeted during the period (down from 69 in 2021).
Activist demands
The most common form of activist demands levelled at Australia-based companies in 2022 concerned the appointment or removal of personnel.Insightia highlights that the number of companies subjected to demands to remove personnel increased 89% on 2021 (34 companies subjected to this category of demand in 2022 vs 18 in 2021).
ESG-related demands:
- Insightia found that more Australian companies were publicly subjected to activist 'environmental' demands in 2022:14 in 2022 vs 16 companies in 2021.The vast majority of these demands concerned climate change and GHG emissions.
- According to Insightia, the number of Australian companies subjected to 'social' demands increased to 4 in 2022 (up from just two in 2021).These demands concerned 'political activities' and 'conflict'.
- 16 companies faced 'governance' related demands (down from 21 in 2021).The majority of these concerned requests to change company policy.
Board seats
Activists secured 33 board seats in 2022 (down from 38 in 2021) 18 of which were secured through settlements (up from 15 secured through settlements in 2021).
Most commonly targeted sectors
The most commonly targeted sector was basic materials (44% of companies targeted in 2022 fell into this category).
Interestingly, the smallest companies (nano cap companies) were the most likely to be subjected to activist demands (as flagged above, the report found that globally large cap companies (>$108) were the most likely to be targeted while nano cap and microcap companies were overall, the least likely to be targeted).
[Source: Full text report from Insightia: Shareholder Activism 2022]
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