Decorative Letter

Activism activity continued to be robust during the recently concluded 2019 proxy season, the 12-month period ending June 30. Almost 600 new campaigns were initiated globally in addition to the focus some activists gave campaigns announced in prior proxy seasons that had yet to be resolved. Global campaign volume stabilized this proxy season, fueled previously by rapid expansion of shareholder activism in the U.S., but in recent years by increased activity in Europe and Asia1. Despite the constantly evolving nature of the activism market, certain themes remain consistent from previous proxy seasons — the pivotal roles passive investors play in the ecosystem, the aggressive tactics that activists will use when targeting a company, the continued prevalence of settlements between activists and targets to resolve campaigns, and the threat of a proxy contest to achieve the activists’ goals.

The 2019 proxy season showcased the 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. Taking steps to identify and address vulnerabilities, and to proactively engage with shareholders by developing a robust communications plan tailored for each specific constituency, will help companies minimize the potential risks of becoming an activist target, and respond in case a threat emerges.

1Sources: SharkRepellent, Activist Insight and Activist Monitor as of June 30, 2019. 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. Global refers to U.S., Europe, Asia and Australia.

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