Global report finds that shareholder activist activity globally is showing signs of bouncing back from the pandemic

5 minute read  12.04.2022 Kate Hilder, Siobhan Doherty

Key takeaways from Insightia's latest statistical analysis of the level and focus of shareholder activist activity globally over the Q1 2022 period.

Key takeouts

  • Insightia found that the level of activist activity globally in the Q1 2022 period increased as compared with the same period last year
  • The level of activity in the US far outpaced all other jurisdictions in Q1 2022, followed by the Republic of Korea and Australia.
  • The number of environmental and social activist demands has increased (as compared with the same period last year)
  • Most 'environmental' demands relate to climate change and greenhouse gas (GHG) emissions, and according to the report, 100% of environmental demands on Australian companies during Q1 2022 fell into this category

Overview 

Insightia has released its latest statistical analysis of global trends in shareholder activism for Q1 2022.  The report includes insights into activist 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 the Q1 2022 period. 

Global trends

Levels of activity are up on last year

Insightia found that:
  • the level of activist activity globally has increased compared with the same period last year, with the number of companies publicly subjected to activist demands increasing from 237 in Q1 2021 to 348 in Q1 2022. 
  • For context, this is still down on pre-pandemic levels of activist activity (387 companies targeted in 2019) 

Australia third in the world?

Looking at the level of activist activity by country, US-based companies faced the highest level of activist demands over the first quarter of 2022 with 209 companies targeted, followed the Republic of Korea (33 companies targeted) and Australia (18 companies targeted).  

Most targeted sectors globally

  • Globally, the most targeted sectors were: industrials (56 companies) followed by consumer cyclical (44) and financial services (41).  In contrast, funds (8) and communication services 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 and microcap companies were overall, the least likely to be targeted.

'Governance' demands still the most common, uptick in E&S demands

  • The most common activist demands overall were governance related (179).  The next most common category of activist demand was the appointment of personnel (101).
  • The number of activist 'environmental' demands increased to 61 (vs 38 in Q1 2021), the number of 'social' demands was also up on last year (59 in Q1 2022 vs 48 in Q1 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 has increased from 198 companies targeted in Q1 2021 to 209 for the same period in 2022.  For context, this was down on pre-pandemic levels of activity.  In the 2017-2019 period over 220 US companies were targeted in Q1 period.  The Q1 2022 total is also well down on the 308 companies targeted in Q1 2016 (which according to the report, is the high water mark for activist activity over the 2016-2021 period).

Activist demands were consistent with global trends

  • The most common form of activist demands levelled at US-based companies in Q1 2022 were governance related.   Of these governance-related demands, the majority (146) called for a shift in company policy. 
  • Q1 2022 saw an uptick in the number of companies facing 'environmental' demands: 19 companies in Q1 2021 vs 32 companies in Q1 2022.  Of the 34 environmental demands levelled at US-based companies in Q1 2022 the majority (24) relate to climate change and greenhouse gas (GHG) emissions.

    Q1 2022 also saw a smaller increase in the number of companies being targeted with a wide range of 'social' demands: 34 companies in Q1 2021 vs 35 companies in Q1 2022.  Of the 66 'social' demands levelled at companies during the period, the most common were diversity related (21) or related to companies' 'political activity' (17). 

[Note: Separate analysis of shareholder demands from As You Sow (full report here, summary in Governance News 30/03/2022 at p10) also identifies climate change and GHG emissions reduction and to some extent diversity as key concerns]

Most targeted sectors 

  • In the US, the most targeted sectors were: 1) industrials; 2) consumer cyclical, 2) industrials; and 3) healthcare (and separately) technology.  The least targeted sector was communication services.

Board seats

  •  Activists secured 39 board seats in Q1 2022, well down 60 in Q1 2021.   
  • Of the 39 secured by activists, 38 were secured through settlements (as opposed to contested votes at meetings).

Australia

As flagged, according to Insightia's report, Australia ranked third behind the US and the Republic of Korea as the jurisdiction with the highest level of activist activity for Q1 2022, with 18 Australia-based companies targeted (up from 14 companies in both Q1 2021, and Q1 2020).

Activist demands

  • The most common form of activist demands levelled at Australia-based companies in Q1 2022 were governance-related.
  • E&S related demands:
    • According to Insightia's analysis, 100% of the five 'environmental' demands levelled by activists at Australia-based companies related to climate change and GHG emissions
    • According to Insightia there were two 'social' demands for Q1 2022, both relating to 'conflict'
    • Of the five governance related demands levelled at Australia-based companies during Q1 2022: four called for a change in company policy and one called for a change in board composition.  

Board seats

Activists secured 4 board seats in Q1 2021 (down from 6 in Q1 2021) all of which were secured through settlements.  

Most commonly targeted sectors 

  • The most commonly targeted sectors were: basic materials and energy.  
  • Interestingly, the smallest (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 Q1 2022]

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