2020 Proxy Season
COVID-19 has brought about tremendous change around the world, with effects expected to linger for years to come. While we have already seen some changes to this year’s proxy season, a key takeaway is the continued permanence of shareholder activism as an investment and engagement strategy. Companies’ awareness and understanding of shareholder activism have matured over the years, and so has the appreciation for proper “clear day” preparation. Activism preparedness, now a priority for boards and management teams worldwide, is not a one-time task; rather, it’s an ongoing process that needs to be refined and updated as the set of investors willing to be active widens and the tactics used to target companies become more complex.
Key trends from this year’s landscape include: new partnerships and increased collaboration among investors and private equity; greater control on target boards; emergence of operational activism; continued ESG activism, with specific focus on race and gender diversity issues; government protectionism against activism in Europe, compared to intervention in Japan.
Taking steps to identify and address vulnerabilities, and to proactively engage with shareholders will help companies minimize the potential risks of becoming an activist target, and respond in case a threat emerges.