The 2017 Proxy Season:
Globalization and a new normal for shareholder activism
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As the 2017 proxy season came to a hectic close, activist assets under management and campaign volume remained relatively flat compared to the 2016 proxy season, at $121 billion AUM1 and 606 campaigns,2 respectively. These numbers do not tell the whole story, however, as the year bore witness to the continued emergence of a longer-term trend of multi-demand, value-oriented agendas, as activists around the globe drive the strategy’s evolution.

Normalization of shareholder activism across global markets

Investors around the globe continue to use activist tactics to bring about change. As a result, shareholder activism has become an accepted strategy across global markets, even in regions once believed to be hostile or structurally difficult for campaigns.

After several years of growth, global activist campaign volume dipped by 6% in 2017, with nearly every region experiencing a modest decline in new campaigns, year-over-year. The U.S. market, in particular, seemed to settle into a ‘new normal’ of campaign volume, accounting for 54% of global volume, as the strategy gains footing in international markets.

327 (54%) 119 (20%) 86 (14%) 74 (12%) #/ % of global activism activity a Represents the following campaign types: board control and representation, enhance corporate governance, maximize shareholder value, remove director(s), remove officer(s) and vote/activism against a merger. Sources: FactSet SharkRepellent and Activist Insight, as of June 30, 2017 2017 global activist campaigns a

Smaller funds drove 2017 campaign activity

With larger funds on the sidelines in 2017, smaller funds were particularly active. These small companies focused their efforts on micro cap to mid cap companies where they could build significant positions and potentially gain more traction with management and boards. Accordingly, nearly two-thirds of all campaigns targeted companies with a less-than-$500mm market cap.3

Institutional investors have become activists

During the 2017 proxy season, institutional investors — mutual funds, investment advisers and pension funds — announced 44 campaigns, representing approximately 13% of total U.S. campaign volume.4 While these investors have historically voted on governance issues according to their respective proxy voting policies, more than half of their 2017 campaigns were instead aimed at “maximizing shareholder value,” a campaign type that is generally used by traditional shareholder activists to encompass a wide range of strategic and corporate actions.


campaigns aimed at maximizing shareholder value

Companies continue to settle rather than engage in a proxy contest

Continuing a trend from recent proxy seasons, only 19 of the 54 completed U.S. campaigns involving a proxy contest culminated in a vote, as many companies chose to settle with activists instead. Activists were at least partially successful in 47% of contests that went to a vote in 2017.5

annual meeting cycles 1.4 who, in exchange, agreed to an average standstill duration of Companies granted an average 1.7 seats to activists 35 settlements disclosed in the U.S.

Preparing for and responding to shareholder activism

Activist campaigns can be highly disruptive to target companies, particularly if the management team and board are unprepared. David Hunker, Head of Shareholder Activism Defense, discusses best practices for preparing for and responding to shareholder activism.

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1 Source: HFR Q1 Global Hedge Fund Industry Report, as of March 31, 2017.

2 Sources: SharkRepellent and Activist Insight, as of June 30, 2017. Represents the following campaign types: board control and representation, enhance corporate governance, maximize shareholder value, remove director(s), remove officer(s) and vote/activism against a merger.

3,4,5 Source: FactSet SharkRepellent, as of June 30, 2017. Represents the following campaign types: board control and representation, enhance corporate governance, maximize shareholder value, remove director(s), remove officer(s) and vote/activism against a merger.

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