We no longer support this browser. Using a supported browser will provide a better experience.

Please update your browser.

Close browser message

As a global leader, we deliver strategic advice and solutions, including capital raising, risk management, and trade finance services to corporations, institutions and governments.

Learn more about our solutions:

  

Serving the world's largest corporate clients and institutional investors, we support the entire investment cycle with market-leading research, analytics, execution and investor services.

Learn more about our solutions:

  

We are a leader in investment management, dedicating to creating a strategic advantage for institutions by connecting clients with J.P. Morgan investment professionals globally.

Learn more about our solutions:

    

Our financial advisors create solutions addressing strategic investment approaches, professional portfolio management and a broad range of wealth management services.

Learn more about our solutions:

    

Leverages cutting-edge technologies and innovative tools to bring clients industry-leading analysis and investment advice.

Learn more:

    

The latest news and announcements.

Learn more:

    

For company information and brand assets for editorial use.

Learn more:

    

The latest news and announcements.

Learn more:

    

In a fast-moving and increasingly complex global economy, our success depends on how faithfully we adhere to our core principles: delivering exceptional client service; acting with integrity and responsibility; and supporting the growth of our employees.

Learn more:

    

J.P. Morgan is a global leader in financial services, offering solutions to the world's most important corporations, governments and institutions in more than 100 countries. As announced in early 2018, JPMorgan Chase will deploy $1.75 billion in philanthropic capital around the world by 2023. We also lead volunteer service activities for employees in local communities by utilizing our many resources, including those that stem from access to capital, economies of scale, global reach and expertise.

Learn more:

    

With over 50,000 technologists across 21 Global Technology Centers, globally, we design, build and deploy technology that enable solutions that are transforming the financial services industry and beyond.

Learn more:

    

Technology Banner

For general inquiries regarding JPMorgan Chase & Co. or other lines of business, please call +1 212 270 6000.

Learn more:

      

For general inquiries regarding JPMorgan Chase & Co. or other lines of business, please call +1 212 270 6000.

Learn more:

      

2021 Proxy Season

Our executives from the global Shareholder Engagement team reflect on activism trends across the U.S. and Europe.

Key Activism Trends in the U.S. and Europe

Learn about the U.S. Proxy Season takeaways including sector trends, short slates, environmental proposals, say-on-pay voting and more.

Video Play Button
Video Play Button

Learn about the U.S. Proxy Season takeaways including sector trends, short slates, environmental proposals,
say-on-pay voting and more.

[rock music]

Alfredo: So the 2021 proxy season stacked up by having twice, roughly twice the number of campaigns of the 2020 season. And that is explained by the fact that 2020 was somewhat affected by the pandemic, and that makes sense because there’s a renormalization of markets.

David: It’s very important to note that activists have shown that they’re willing to attack any sector whatsoever with a campaign. Of all sectors though, it is information technology and the consumer discretionary sectors that have received the most campaigns over the years. In fact, 70 to 80 percent of the time, they put up what’s called a short slate, which is a minority of the board of directors if they were to win. They do that because it’s a lot easier to gain support from other institutional investors who may just say, “Well, what’s the harm in adding one or two board members?” We again saw that 50 percent of the proxy contests were settled, where the dissident took board seats and the company was willing to grant the dissident those board seats to avoid actually going to a shareholder vote. Companies realized that they have to balance: is it worth fighting versus the quality of the board members that are in front of them?

Alfredo: We have seen a significant increase of compensation in governance-related campaigns broadly across the sector. And that was followed also by an increased number of operational-type campaigns, then an increase in M&A-related campaigns, which is somewhat of a function of activists enjoying or really targeting situations where they can achieve a significant return within a short timeframe.

David: The proposals regarding the environment actually were more frequent and they developed a much larger support vote. So you were seeing about 33 percent of proposals regarding the environment actually pass this year, which was up significantly from previous years. 2021 also saw the first proxy fight where the primary issue was climate change. We saw Engine No. 1 nominate candidates to the Exxon Mobile board and they were able to win three seats on the board. As we go into 2022, I think that the environmental themes that we saw and the social themes are becoming a bigger trend. The Say on Pay vote is interesting because it’s an early indication of shareholder unrest, and the trend that we saw in 2021 should trouble some companies. And in 2021, you saw more proposals fail than in any other year, with upwards of 35 to 40 percent of the proposals failing at the largest companies in America.

Alfredo: As we think of the role of proxy advisors in the context of proxy fights, there has been a shift where many investors are viewing the input from ISS and Glass Lewis (the two main proxy advisors) as an input into their decision process on how to vote on a number of items. ISS has recommended in favor of dissident candidates two-thirds of the time, whereas Glass Lewis has done that one-third of the time, and that is somewhat consistent with past practices.

David: Preparing for an activist campaign is like the old adage, “an ounce of prevention is worth a pound of cure.” Making sure that you have reviewed your strategy and know how well you’re communicating with your shareholders and being in touch with that is a very important element to being aware whether you are vulnerable and knowing how quickly you can act. Assembling a team of advisors that you know and trust and are ready to move into action quickly is a key part of being prepared.

Find out what's driving the shareholder activism landscape in Europe from midcap targets to value stories and ESG themes.

Video Play Button
Video Play Button

Find out what's driving the shareholder activism landscape in Europe from midcap targets to value stories and ESG themes.

[rock music]

Darren Novak: In Europe, activism is substantially done behind the scenes. They're trying to apply pressure to affect change, affect change more quickly and more broadly than they would otherwise. Other main themes in Europe that we wind up seeing is certainly about breaking up companies. For any company that exhibits a discount in terms of its market value to its sum of the parts value of 20% or more, the activists start to get interested in that type of story.

ESG is a fundamental theme that many activists are using because they resonate so deeply with so many shareholders, not only in Europe, but globally. It's actually a catalyst to unlock value. Say-on-climate provides important opportunity for activists, it provides them with a hook. So if they're looking at a company where they can see that that company can be broken up into its constituent parts and create a Brand Co versus Green Co, and there are issues in terms of climate change and there are votes in terms of climate change, that can provide them with that particular hook that they can in fact propel that thesis.

So gender diversity, diversity in terms of experience, diversity in terms of international perspective. Those are all fundamentally important in terms of what activists are looking for because that, in fact, translates and resonates with all the leading institutional shareholders. European clients really need to get ahead of the activist risk now. And what clients need to do is they need to be looking for the key themes of the activists are looking for: industry consolidation, potential takeover risk. Ultimately, always thinking about what that activist thesis is going to be.

Preparing for Future Shareholder Activism Efforts

“It's like the old adage: An ounce of prevention is worth a pound of cure. Make sure that you have reviewed your strategy. Communicate with your shareholders. Assemble a team of advisors that you know and trust. Be ready to move into action quickly.”
David Freedman
Global Head of Shareholder Engagement
and M&A Capital Markets
“European clients really need to get ahead of the activist risk now. Clients should be looking for the key themes activists are looking for. Industry consolidation. Potential takeover risk. Ultimately, always thinking about what that activist thesis is going to be.”
Darren Novak
Head of Shareholder Engagement and
M&A Capital Markets for EMEA

2021 Proxy Season by the Numbers

“The 2021 proxy season stacked up by having roughly twice the number of campaigns than in the 2020 season. That is explained by the fact that 2020 was impacted by the pandemic, and 2021 became a renormalization of things."

Alfredo Porretti
Head of Shareholder Engagement
and M&A Capital Markets for North America

Sources: FactSet, ISS, Activist Insight
Proxy season covers annual meetings held by June 30 each respective year since July 1 the year before; “Proxy fights” defined as contests where a shareholder sought board seats, so output excludes contests in which board seats were not sought; Sample set includes proxy fights at U.S. companies with market cap >$500mm at the time of campaign announcement; Includes hostile situations in which activist also demanded board seats

Related Insights

2021 Global M&A Outlook
Anu Aiyengar and Dirk Albersmeier, global co-heads of M&A, discuss the key trends shaping the M&A market in 2021.
Learn More
Center for Carbon Transition
J.P. Morgan’s center of excellence that provides clients the data and firmwide expertise needed to navigate the challenges of transitioning to a low-carbon future.
Learn More
49th Annual Technology, Media & Communications Conference
Insights from J.P. Morgan’s key investor event for the technology, media and communications industries.
Learn More
Back to top button Back to top

This material (including market commentary, market data, observations or the like) has been prepared by personnel in the Mergers & Acquisitions Group of JPMorgan Chase & Co. It has not been reviewed, endorsed or otherwise approved by, and is not a work product of, any research department of JPMorgan Chase & Co. and/or its affiliates (“J.P. Morgan”). Any views or opinions expressed herein are solely those of the individual authors and may differ from the views and opinions expressed by other departments or divisions of J.P. Morgan. This material is for the general information of our clients only and is a “solicitation” only as that term is used within CFTC Rule 1.71 and 23.605 promulgated under the U.S. Commodity Exchange Act.

RESTRICTED DISTRIBUTION: This material is distributed by the relevant J.P. Morgan entities that possess the necessary licenses to distribute the material in the respective countries. This material is proprietary and confidential to J.P. Morgan and is for your personal use only. Any distribution, copy, reprints and/or forward to others without permission from, or attribution to, J.P. Morgan is strictly prohibited.

This material is intended merely to highlight market developments and is not intended to be comprehensive and does not constitute investment, legal or tax advice, nor does it constitute an offer or solicitation for the purchase or sale of any financial instrument or a recommendation for any investment product or strategy.

Information contained in this material has been obtained from sources believed to be reliable but no representation or warranty is made by J.P. Morgan as to the quality, completeness, accuracy, fitness for a particular purpose or non-infringement of such information. Sources of third party referred to herein retain all rights with respect to such data, and use of such data by J.P. Morgan herein shall not be deemed to grant a license to any third party. In no event shall J.P. Morgan be liable (whether in contract, tort, equity or otherwise) for any use by any party of, for any decision made or action taken by any party in reliance upon, or for any inaccuracies or errors in, or omissions from, the information contained herein and such information may not be relied upon by you in evaluating the merits of participating in any transaction. All information contained herein is as of the date referenced and is subject to change without notice. All market statistics are based on announced transactions. Numbers in various tables may not sum due to rounding.

J.P. Morgan may have positions (long or short), effect transactions, or make markets in securities or financial instruments mentioned herein (or options with respect thereto), or provide advice or loans to, or participate in the underwriting or restructuring of the obligations of, issuers mentioned herein. All transactions presented herein are for illustration purposes only. J.P. Morgan does not make representations or warranties as to the legal, tax, credit, or accounting treatment of any such transactions, or any other effects similar transactions may have on you or your affiliates. You should consult with your own advisors as to such matters.

The use of any third-party trademarks or brand names is for informational purposes only and does not imply an endorsement by JPMorgan Chase & Co. or that such trademark owner has authorized JPMorgan Chase & Co. to promote its products or services.

J.P. Morgan is the marketing name for the investment banking activities of JPMorgan Chase Bank, N.A., J.P. Morgan Securities LLC (member, NYSE), J.P. Morgan Securities plc (authorized by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority), J.P. Morgan AG (authorized by the German Federal Financial Supervisory Authority (BaFin) and regulated by BaFin and the German Central Bank (Deutsche Bundesbank), J.P. Morgan Securities Australia Limited (ABN 61 003 245 234/AFS Licence No: 238066 and regulated by Australian Securities and Investments Commission) and their investment banking affiliates. J.P. Morgan Securities plc is exempt from the licensing provisions of the Financial and Intermediary Services Act, 2002 (South Africa).

For Brazil: Ombudsman J.P. Morgan: 0800-7700847 / ouvidoria.jp.morgan@jpmorgan.com

For Australia: This material is issued and distributed by J.P. Morgan Securities Australia Limited (ABN 61 003 245 234/ AFS Licence No: 238066) (regulated by ASIC) for the benefit of “wholesale clients” only. This material does not take into account the specific investment objectives, financial situation or particular needs of the recipient. The recipient of this material must not distribute it to any third party or outside Australia without the prior written consent of J.P. Morgan Securities Australia Limited.

For information on any J.P.Morgan German legal entity see: https://www.jpmorgan.com/country/US/en/disclosures/legal-entity-information#germany

For information on any other J.P.Morgan legal entity see: https://www.jpmorgan.com/country/GB/EN/disclosures/investment-bank-legal-entity-disclosures

© 2021 JPMorgan Chase & Co. All rights reserved.