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Lazard's 2019 Annual Review of Shareholder Activism

Jan 15 2020

Lazard's annual review of shareholder activism compiles and analyzes data on key activism trends globally.

Key observations from 2019 report include: 

Activist activity returns to multi-year trend after record 2018

  • 187 companies targeted by activists, down 17% from 2018’s record but in line with multi-year average levels
  • Aggregate capital deployed by activists (~$42bn) reflected a similar dip relative to the ~$60bn+ level of 2017/2018
  • A record 147 investors launched new campaigns in 2019, including 43 “first timers” with no prior activism history

Activism against non-U.S. targets accounted for ~40% of 2019 activity, up from ~30% in 2015

  • Multi-year shift driven both by a decline in U.S. targets and an uptick in activity in Japan and Europe
  • For the first time, Japan was the most-targeted non-U.S. jurisdiction, with 19 campaigns and $4.5bn in capital deployed in 2019 (both local records)
  • Overall European activity decreased in 2019 (48 campaigns, down from a record 57 in 2018), driven primarily by 10 fewer campaigns in the U.K.
  • Expanded activity in continental Europe – particularly France, Germany and Switzerland – partially offset this decline

Record number of M&A-related campaigns

  • A record 99 campaigns with an M&A-related thesis (accounting for ~47% of all 2019 activity, up from ~35% in prior years) were launched in 2019
  • The $24.1bn of capital deployed in M&A-related campaigns in 2019 represented ~60% of total capital deployed
  • The technology sector alone saw $7.0bn put to use in M&A related campaigns

Activist influence on boards continues

  • 122 Board seats were won by activists in 2019, in line with the multi-year average
  • Consistent with recent trends, the majority of Board seats were secured via negotiated settlements (~85% of Board seats)
  • 20% of activist Board seats went to female directors, compared to a rate of 46% for all new S&P 500 director appointees
  • Activists nominated a record 20 “long slates” seeking to replace a majority of directors in 2019, securing seats in two-thirds (67%) of the situations that have been resolved

  • Actively managed funds saw ~$176bn in net outflows through Q3 2019, compared to ~$105bn in 2018 over the same period
  • ESG focus continues to grow: over the past two years, the AUM represented by signatories to the UN’s Principles for Responsible Investment increased ~26% to ~$86tn, and the number of assets in ESG-related ETFs increased ~300%
  • The Business Roundtable’s “Statement on the Purpose of the Corporation” emphasized the importance of companies incorporating the interests of all stakeholders, not just shareholders, into their decision-making processes
  • The SEC’s guidance on proxy advisors sought to increase accountability and oversight standards in their company evaluations

 

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