Q1 2024 Review of Shareholder Activism

Posted by Jim Rossman, Chris Ludwig, and Quinn Pitcher, Barclays, on
Monday, April 22, 2024
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Jim Rossman is Global Head of Shareholder Advisory, Chris Ludwig is Managing Director, and Quinn Pitcher is Vice President- M&A and Shareholder Advisory at Barclays. This post is based on a Barclays memorandum by Mr. Rossman, Mr. Ludwig, Mr. Pitcher, and Michael Sun-Huang.

Observations on the Global Activism Environment in Q1 2024

1 U.S. and APAC Campaign Activity Remains Steady as Europe Sees Slow-Down
  • There have been 63 campaigns launched through Q1, down 19% versus the 78 launched YTD in 2023
  • Activity in the U.S. and APAC has remained steady, with 29 and 20 campaigns YTD vs. 30 and 17 in 2023, respectively
    • European activity is down 52% (11 campaigns YTD vs. 23 in 2023) as top global activists such as Elliott, TCI, and ValueAct focused on existing campaigns or other markets
  • More dispersed activity among activists, with the top 10 busiest activists accounting for 33% of campaigns YTD vs. 46% in 2023
      • 29% of campaigns this year have been launched by first-timers, well above the multi-year average of 16%
      • Nevertheless, familiar names such as Elliott, Icahn, Land & Buildings, Oasis and Starboard have been most active YTD
2 Activists Continue to Effect Board Change; Universal Proxy Impacting Board Wins
  • There have been 39 Board seats won YTD, below last year’s pace of 51 won
  • U.S. time-to-settlement has fallen 29% vs. 2022 (86 days vs. 61 days) in 2024 as campaigns settle more quickly in the
    universal proxy card (UPC) era
  • Activists are also taking a more surgical approach in their U.S. Board seat campaigns, demanding 30% fewer seats but
    winning nearly 80% of seats demanded, up from two-thirds historically
  • Notwithstanding the impact of the UPC on activist settlements, the results of SOC / Starbucks and Trian / Disney
    demonstrate that proactive corporate defense strategies can still stymie activists
3 Activists Focus on Board Change While M&A Takes a Backseat
  • Board change has been the most common demand, appearing in 49% of campaigns YTD
  • M&A demands have appeared in 29% of campaigns YTD, well below last year’s rate of 9%
    • Likely explanations include a relatively greater focus on Board change in the U.S. as nomination windows have opened, as well as a primary focus on capital return in APAC (45% of campaigns vs. 16% ex-APAC)
  • Pushing for a whole company sale has been the most popular M&A demand YTD, suggesting activists are pushing to proactively catalyze processes in anticipation of interest rate cuts
4 New Legal Developments Disrupt the Activist Landscape
  • The Miller and Moelis Delaware court cases have disrupted long-held practices around stockholder and settlement agreements
    • Activists including Elliott and Third Point have adjusted language in recent settlement agreements, subjecting the Board’s recommendation to shareholders of a settlement-related Director nominee to the “good faith exercise” of the Board’s fiduciary duty
    • Section 122(18) of the General Corporation Law of the State of Delaware is expected to be enacted to resolve uncertainty caused by the Moelis decision, enabling shareholder agreements
  • Companies and shareholders continue to litigate advanced notice deadline changes adopted in response to the UPC
  • The SEC’s long-awaited 13D/G rule amendments and climate change disclosure rules respectively went into effect and were adopted

Sources: Bloomberg, FactSet, Diligent Market Intelligence, 13D Monitor, press reports and publicly available data and sources. Market data as of 3/31/2024.
Note: All data is for campaigns conducted globally by activists at companies with market capitalizations greater than $500 million at time of campaign announcement; select campaigns with market capitalizations less than $500 million due to depressed valuation at the time of campaign announcement (company was larger than $500mm in prior twelve months).

Global Campaign Activity

Campaigns launched have lagged the pace of 2022/23, driven by a decline in European activity as U.S. and APAC activity has remained in line with past years

Source: Bloomberg, FactSet, Diligent Market Intelligence, 13D Monitor, press reports and publicly available data and sources. Market data as of 3/31/2024.
Note: All data is for campaigns conducted globally by activists at companies with market capitalizations greater than $500 million at time of campaign announcement; select campaigns with market capitalizations less than $500 million due to depressed valuation at the time of campaign announcement (company was larger than $500mm in prior twelve months).

Global Activist Universe

A broader array of activists have targeted companies thus far this year, with nearly a third of campaigns coming from first-timers

Source: Bloomberg, FactSet, Diligent Market Intelligence, 13D Monitor, press reports and publicly available data and sources. Market data as of 3/31/2024.
Note: All data is for campaigns conducted globally by activists at companies with market capitalizations greater than $500 million at time of campaign announcement; select campaigns with market capitalizations less than $500 million due to depressed valuation at the time of campaign announcement (company was larger than $500mm in prior twelve months).

  1. “Other” includes hedge funds, private equity funds, venture capital, individuals, family offices, long-only institutions, corporates and other miscellaneous activists.
  2. Leading activist hedge funds include: Cevian, Elliott Management, Icahn Associates, JANA Partners, Land & Buildings, Sachem Head, Starboard Value, TCI, Third Point, Trian Partners and ValueAct.

Activist Targets by Company Size

Source: Bloomberg, FactSet, Diligent Market Intelligence, 13D Monitor, press reports and publicly available data and sources. Market data as of 3/31/2024.
Note: All data is for campaigns conducted globally by activists at companies with market capitalizations greater than $500 million at time of campaign announcement; select campaigns with market capitalizations less than $500 million due to depressed valuation at the time of campaign announcement (company was larger than $500mm in prior twelve months).

Notable Q1 Campaign Developments & Launches

Notable Launches

Notable Updates

Source: Bloomberg, FactSet, Diligent Market Intelligence, 13D Monitor, press reports and publicly available data and sources.

  1. Market Cap as of campaign announcement date, or as of initial date of disclosure. In the case of multiple activists, represents market cap as of earliest campaign announcement date or initial disclosure.

U.S. Campaign Activity

Source: Bloomberg, FactSet, Diligent Market Intelligence, 13D Monitor, press reports and publicly available data and sources. Market data as of 3/31/2024.
Note: All data is for campaigns conducted globally by activists at companies with market capitalizations greater than $500 million at time of campaign announcement; select campaigns with market capitalizations less than $500 million due to depressed valuation at the time of campaign announcement (company was larger than $500mm in prior twelve months).

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