Staying a step ahead in the bold new era of shareholder activism

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Chuka Umunna: Hello and welcome to JP Morgan's Making Sense. I'm Chuka Umunna, Global Head of Corporate Governance and Sustainable Solutions here in London and it's a real pleasure to be your host today. Today we are going to be exploring trends in shareholder activism. Our shareholder engagement and M&A capital markets team helps boards and management teams anticipate activist approaches, assess vulnerabilities and prepare clear responses grounded in shareholder value and I'm delighted to be joined by two subject matter experts and leaders in the business from both sides of the Atlantic.  

Darren Novak is a Managing Director and Global Co-Head of the team based in London and has nearly three decades of experience advising clients on the topic. Lyndon Park is a Managing Director in the team in New York and started his career working in corporate governance, proxy voting and stewardship at the leading global investor BlackRock, before later coming here to JP Morgan. Welcome to you both.

Darren Novak: Thank you, it's great to be here.

Lyndon Park:  Hi Chuka, happy to be here.

Chuka Umunna: So why don't we kick off with a kind of sky view look at what's happening globally, Darren. How would you describe the current global market activity and volume overall?

Darren Novak: Well, as you've mentioned, I've been doing this for a long time now and I can honestly say, both based on the public numbers and what we're seeing privately, I've never seen it so busy. The number of campaigns, both public and private, are extensive and it's global. It truly is a phenomenon at present. And of course, we see the activists that are now incredibly experienced, incredibly entrenched with the overall institutional community, looking at opportunities, not only in the US, but again, on a global basis, but we're seeing a lot of first-time activists. People are using the tools of activism to try and create, quote unquote, alpha. And some of these first-time activists are more successful, some of them are less successful, often more difficult for companies to deal with because these activists are first-time activists. time. They aren't used to some of the skills and techniques that more experienced activists use. But it's not just these first-time activists in terms of just being hedge funds.

It's also institutional investors. Institutional investors in some cases are starting to use those tools of activism to try and apply pressure on boards, on management teams to take bolder action, to take quicker action. And so it's very much a changed landscape than certainly what we saw 10 years ago, but even five years ago, even two years ago when we were looking at APAC in Japan and Korea in particular, which I'm sure we'll get into in a moment. So the landscape is truly one that the activists have been taking advantage of. And certainly in these periods of overall market volatility, that really plays to the approach that activists take, being opportunistic.

Fundamentally the activists are looking for great companies that are experiencing some sort of  valuation challenge relative to global peers, not domestic peers, global peers, and where they see that there is a clear catalyst. Clear catalyst very often being M&A, sell the company, break up the company. Activists are clever in terms of that. They may not say that at first to companies. They may not say that at first to other shareholders, but often that is very much the fundamental basis for these campaigns. But also, of course, shareholder returns, capital allocation, share buybacks in particular, and the activists typically have that undercurrent of share buyback to address the undervaluation that they perceive as an activist, and the share buyback being a clear catalyst to trying to correct that valuation challenge.

So it is very much a global phenomenon. Of course, we still see the most in the U.S., but we are seeing a significant amount in Europe. Europe is a different market. The activists are certainly less public in Europe than they are in the U.S., and APAC is becoming just an incredibly active market. In fact, in terms of total number of campaigns for a country, Japan has the most after the U.S., and the activists are comfortable there being public. They are comfortable running proxy contests.

Chuka Umunna: So the volatility, the uncertainty, the changed global environment, is that what's precipitating the behaviors that you just mentioned?

Darren Novak: Absolutely. During COVID, there was a myth that somehow the activists just stepped back, and that just isn't the reality. In fact, when you speak to an activist, they will say during that time that they had never been busier. It's not as though that they were launching campaigns at that particular time, but they were doing the homework on great companies that are experiencing material under valuation where the activists saw over the next 24, 36 months there would have been some sort of regression to the mean. And then we started to see those campaigns once COVID had subsided.

The difference now is that the activists are not waiting for the market to be quieter. They're actually pursuing the campaigns and they're looking, again, not necessarily for those companies right in the direct crosshairs of the geopolitical aspects or AI, but they are definitely looking at those companies that may not be so materially impacted, but are impacted in terms of the market value and are pushing at those and often making the argument that the pieces should be valued greater than the whole, or that the private market values the company more highly than the public market does. And so it's very much a topic that companies globally now really need to be in front of and be proactive about, not just simply reactive.

Chuka Umunna: And Lyndon, just over in New York, what do you see stateside? To what extent is what we are seeing in the U.S. market aligned with the global picture? And to what extent are we seeing something different take hold over there?

Lyndon Park:  Yeah, Chuka I just want to double click on what Darren mentioned in terms of global volume, we're seeing record numbers of companies that are in the U.S. market, and we're seeing record numbers of companies. A lot of it, obviously, is being driven by the U.S. market, which is the most dominant space when it comes to activism activity. In first quarter alone, we saw over 90 campaigns. That's almost 20% increase year over year. In 2025, year total, we saw over 250 campaigns, which was a historical high, right? And something that Darren mentioned, which is very important, after the pandemic years, both in the U.S. the shift to universal proxy card, and we'll get to that in a minute. And quote, unquote, animal spirits, I don't like that kind of cliche phrase, but that spirit returning to the M&A markets is really driving this breakout. And combined with macro uncertainties today, M&A environment is driving a lot of activity, especially in certain sectors like tech and industrials. We are also seeing some disruption from AI that's impacting even adjacent industries like insurance and such.

Chuka Umunna: You mentioned the universal proxy card. I think one of the distinctive features in the U.S. is just the evolving regulatory landscape and the moves of the SEC. But do you want to just talk us through the impact of the introduction of the universal proxy card?

Lyndon Park:  Yeah, sure. It's a novel mechanism in the U.S., but not so in some of the global markets. Before, whereas a company had a white card, And an activist had a blue card. And for the shareholders, they had a binary choice to select between one slate versus the other. Now investors can mix and match directors, right? So for example, if you look at the fact that over 90% of activist board seats, those seats that they won came through private settlements, this is really the impact of the universal proxy card because now the shareholders can be sharpshooters and really pick and mix one or two directors from the dissident slate without disrupting the whole board. And companies are now more likely to settle and offer a seat versus go through the public campaign, which is obviously very costly. It can bring some embarrassment and noise, unnecessary noise to the marketplace concerning the company. And if you also look at the impact on the ISS and Glass-Lewis recommendations, they don't also have to endorse the entire campaign to recommend, who they view as strong directors, right? Now they're targeting in their recommendations, quote unquote, weak link directors with, let's say, long tenures or directors without the requisite skill sets so that dissident nominees that they see on the activist slate looks more attractive. So what we're seeing out of universal proxy card is this wholesale movement toward companies settling more, activists gaining more seats, but very few contests actually going to the proxy vote.

Chuka Umunna: So Darren, I mean, in a way, choppy waters, almost quite stormy stateside. Would it be right to see the waters being calmer in Europe? And have you seen any impact from all this change in activity on the US side in Europe?

Darren Novak: That's a very good question. And Europe, in terms of the activism market and the activist tactics, really is distinct from the US. So fundamentally, the activists are looking for exactly the same thing. But how they go about it is different. The level of engagement in particular between institutional shareholders and corporates has not been impacted by the regulatory challenges that are now present in the US. And so the battles are very much behind the scenes, trying to win the hearts and minds of shareholders, whether that's the activists in our case, advising corporates, ensuring that the corporates are crafting messages that, in fact, resonate with shareholders, that they're, in fact, taking action that resonates with shareholders. And they get that feedback in a very direct way. And the institutional investors, distinct from even five, 10 years ago, are not worried about losing access to senior management and the board. They actually are seeing greater engagement with senior management and the board.

So it is fundamentally different in terms of that. But I think just a few other elements, perhaps, in terms of how the European market is developing in some respects. And we're seeing new tactics all the time. And the activists are far less publicly vocal, on the most part, in Europe than you see in the US. In part, it's because the activists are a little bit worried about potential press reaction in any particular country. And these battles are won and lost behind the scenes. Who has the most support at the end of the day? And so you see far fewer proxy contests. And that also means that the activists aren't really timing their campaigns in terms of AGM season here. They can run campaigns at any time of the year. Even though the activists do like to apply pressure pre-AGM season. But we are, in fact, seeing, despite what I've said, we are seeing activists being more and more comfortable to propose directors, to really threaten proxy contests, to threaten EGMs, to, in fact, file the materials privately, whether they ultimately pull the trigger or not is different. But there is a change, certainly. And that isn't just in the UK. It's also in continental Europe as well.

I think there are a few other tactics that might be worth noting as well. And this could be a global trend. And that is the willingness of activists to, in fact, potentially launch their own offers. In some ways, the economics could be attractive for the activists themselves. It means of obtaining more permanent capital. But also it's a way, especially when you're outside of the US, of applying a lot of pressure on boards. To potentially engage other third-party interests by potential acquirers, whether that be private equity, whether that be strategic acquirers.

And so we've seen in a few instances in Europe, we've seen it certainly in the US, and we've seen it in Japan. But it is an interesting trend that we might see more of, where it is not the standard reaction, and it's not the standard marketplace in many jurisdictions across Europe to just simply announce a strategic alternatives review, that can suggest something more negative than what you might think of it being in the US.

Chuka Umunna: And turning to Asia Pacific, APAC, you talked about Japan being a real hive of activity. Why is that?

Darren Novak: Well, I started covering Japan about 10 years ago now. And that's before the current wave of activism in Japan. And at that time when I was there, at the beginning, it was almost a theoretical discussion. Even though you could see all these companies were demonstrating financially material activist vulnerability they weren’t seeing activism and they were pointing to some of the poor activist campaigns that had been run in the decade prior to that.

But there were important regulatory changes that impacted governance that impacted stewardship. That have impacted the focus on price to book value. That have impacted how people are looking and expecting are we the greater focus on capital efficiency as part of that, a greater open-mindedness to share buybacks, and importantly, from a governance perspective and also a true defensive standpoint, a pressure on reducing the crossholdings between Japanese companies. That took out all these very, very friendly shareholders that were owning material and substantial blocks of companies that would make it very difficult for an activist. Those have very much lessened over time, so there's much greater opportunity for the activists.

We're also seeing increased international ownership at these significant Japanese companies, but also mid-cap companies, and the greater the international institutional ownership, often it's an easier opportunity for the activists. But the landscape has changed also with domestic Japanese institutional investors that are now getting used to the activists or seeing the activists on a regular basis can be more open-minded. Not necessarily does that open-mindedness translate into a vote for an activist at a contested AGM. We aren't seeing that so much.

Corporates are still winning the AGMs pretty solidly, but a lot of companies are feeling that pressure again behind the scenes. And we're also seeing an incredible symmetry between those companies that activists are targeting and that private equity is interested in. The way that it's working is that the activists are creating the opportunity, they're catalyzing the opportunity, and then private equity is coming in shortly thereafter to provide the solution in some ways to the activist challenge. That's a dynamic that we've seen in the U.S. for a long time. We're certainly seeing it in Europe now, and we have been seeing it for some time. But that is a very, very significant dynamic in Japan at present.

Chuka Umunna: And Lyndon, I know you've been working on a number of situations in Korea. I was just wondering whether you'd like to make some observations on what we see in the Korean market, the South Korean market.

Lyndon Park:  Yeah. I mean, it strikes me what they're saying, what we saw in the U.S., Europe, you're seeing in Japan and Korea. If you look at the U.S. market, a lot of the larger activists they were going after companies that had a conglomerate or complexity discount, some of the parts math kind of leading to some of the M&A-related thesis.

We're seeing that in both Japan and Korea, but more meaningfully, if you look at Japan, 10 years ago or so under Abe, there was a governance reform through the Governance Code Amendment, and that really drove the ROE value-up program over there.

As Darren mentioned. In the first five years, you didn't really see much action. When I was formally in my role as an investor, I submitted a comment letter to that reform. But after five years, that market really blew up in terms of activism. In 2025, the Korean government introduced amendments to their commercial code, which almost mirrors Abe's reforms under the governance code reform. They announced a value-up. They announced a value-up initiative, making the companies disclose their ROE targets, returns, price-to-book disclosure. In effect, they're telling companies to disclose plans that almost can be a template for activists to pick apart or praise or attack. What is more meaningful is that this commercial code amendment introduced a new fiduciary rule. For the first time, directors in Korean companies, public company boards, they are now fiduciaries to shareholders. That may be a very old concept in the areas like U.S. or EMEA, but it's a new concept in Korea. Through that, and in addition to certain amendments like introducing cumulative voting mechanisms, it has made a lot easier, for activists to come into companies. We're seeing many domestic activists as well as international activists starting to enter the space. We foresee in about five years' time, just like Japan, Korean market becoming very, very volatile and active with activism everywhere.

Lyndon Park:  Yeah. Chuka, I have a question. We're talking about activism, which is, if you think about it, the tip of the iceberg, right? And when you're thinking about general engagement and governance landscape, there's a lot of activity. And I think that's a big part of what you're talking about. And I think that's a big part of what you're talking about. And I think that's a big part of what you're talking about. You talk a lot under the surface of the water, right? And as the global head of governance advisory at JP Morgan, what are you seeing in these days and how would you characterize the current engagement and governance landscape?

Chuka Umunna: Well, I'd probably say four things, actually. I think there's definitely been a snapback to a focus on governance by side investment stewardship teams. We went through a period, say, between 2019 through, say, 2022, where there was much more of a focus than we'd seen before. And that's the kind of focus that I'm looking for around environmental and social-related shareholder proposals. That has fallen back on both sides of the Atlantic, to be frank. And governance has returned to being the core focus we find amongst investment stewardship teams. Of course, it gets used opportunistically, some might say, by activists in activist situations. And that's why it's been fantastic to work with your team on these issues for clients.

The second thing there is definitely a degree of competition between jurisdictions from a governance perspective. So you obviously see that play out in the US between Texas and, say, Delaware. I think the jury's out on where that's going to land and whether Texas will ultimately win that battle. I think you probably need a couple more years to see how the land lies. But also, the competition around listing location, for example, is driving Europe to rethink its traditional attitudes around governance. And clearly around executive compensation, both quantum but also structure.

Some might say we're seeing increasing Americanization as there is this competition for talent. That said, in Europe, ultimately, you still do have the company law and regulatory architecture standing in the way of a huge degree of Americanization to some extent, not least because, say, for, example, in the continent here, we have the two-tier board structure with supervisory boards and management teams. And I'm not sure there's any great push to see that go away.

I suppose a third and fourth point, really, is I think we've seen, and in a way it's nice to finish where we started, how uncertainty, geopolitics, the evolution of how markets think about AI is affecting everything that we do. Board level competence. Bringing in people who have experience of dealing with both of those issues is an incredibly valuable thing in the current context. And so perhaps a few years ago when there was a focus on diversity of background, I think diversity of experience and in particular experience around some of the really pressing global issues that companies are having to deal with is meaning that who you've got sitting around the boardroom table. It's never been more important.

But look, we're out of time. We've covered a huge amount of ground. Always good to partner with Darren and Lyndon on these issues. And look, you know where we are. We have the best in the street giving advice to clients on these issues in a fast-changing world. Thank you very much for joining us.

Darren Novak: Thanks for having us. It's been a pleasure.

Lyndon Park:  Thank you.

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