Report finds the level of shareholder activity globally remains much lower than pre-pandemic levels

6 minute read 14.07.2021 Kate Hilder, Mark Standen, Siobhan Doherty

Insightia has released its latest statistical analysis of global trends in shareholder activist activity for H1 2021. Our key takeaways are below.

Key takeouts

The global report found that the overall levels of activist activity for H1 2021 was 13% down on last year
Activist activity continues to be highest (by far) in the US, followed by Japan. Australia ranks fifth in terms of activist activity levels
The number of Australia-based companies publicly subjected to activist demands in H1 2021 is unchanged on H1 2020 levels, and still well down on pre-pandemic levels

Below is a short overview of some of the interesting findings in the report.

Globally, 518 companies have been publicly subjected to activist demands. According to the report, this is 13% down on H1 2020 and the lowest level of activity over the same period in any year over the 2015-2021 period.
The number of activist short campaigns stood at 67 in H1 2021, This is 20 fewer campaigns than the same period last year, and the lowest level for the same period in recent years.

Levels of activity continue to be highest in the US where 302 companies were targeted in H1 2021.
The next most active regions were: Japan (43 companies targeted); Germany (31 companies targeted); Canada and the UK (both with 22 companies targeted); and Australia (21 companies targeted, consistent with H1 2021).
Activity was lowest in Malaysia, Austria and Hong Kong (all had only 2 companies targeted during the period).

Globally, companies in the technology, consumer cyclical and industrials sector were the most targeted, each accounting for 14% of the total number of companies publicly subjected to activist demands. Financial services (13%), health care (11%) and basic materials (9%) were the next most targeted sectors.

Large cap companies were the most targeted (accounting for 34% of the total number of companies publicly subjected to activist demands).

Pay revolts increased:

459 companies faced pay revolts (ie 20% or more votes against) in H1 2021. According to the report, this is highest proportion in recent years.
Pay revolts were most common in the following sectors: 1) financial services (16%); 2) consumer cyclical and healthcare (both 15%); 3) technology (13%); 4) industrials (12%); and 5) real estate (7%).

Support for directors (generally) decreased:

Overall, the average level of support for directors decreased (slightly) across all sectors with the exception of the consumer defensive sector where the level of support remained unchanged at 96.8% (on average)
According to the report, the average level of support for directors of companies in the healthcare sector has fallen to a 'record low' of 93.7%, down from a high of 95% in 2018.
The drop in the level of support for directors was greatest in the commercial services sector (drop in support from 96.6% to 95.8%) and the real estate and utilities sectors (support for directors in both sectors dropped 0.4% on H1 2020 levels).

Support for shareholder E&S proposals has increased

Interestingly, the report found that the number of 'environmental and social' shareholder proposals is only slightly higher than in H1 2020: 218 proposals in H1 2020 up from 215 in H1 2020. However, the average level of support for these proposals has risen from 24% in H1 2020 to 30% in H1 2021.
The volume of shareholder proposals in the 'board of directors' category has more than halved from 1837 proposals in H1 2020 to 959 proposals in H1 2021. The average level of support for these proposals has also decreased from 83% in H1 2020 to 75% in H1 2021.

The number of Australia-based companies publicly subjected to activist demands in H1 2021 remained stable at 21 (unchanged from H1 2020). For context, this is substantially down on 2019 levels (39 companies targeted during H1 2019).
The basic materials sector was by far the most targeted (accounting for 48% of the overall total number of companies targeted during the period)
Board-related demands were the most common accounting for 63% of demands overall.
Activists have so far secured 17 board seats (up from just eight in H1 2020). Over 50% of these (9 of 17 seats) were secured through settlements.