Shareholder Activism Update: Early Look at 2023 Trends

Reports and studies — Financial Advisory, Shareholder Advisory, Shareholder Activism

April 18, 2023


Lazard's Capital Markets Advisory team presents an early look at the shareholder activism trends that are emerging in 2023. These include a global expansion of the “swarming” phenomenon, in which multiple activists — often with competing agendas — pursue the same target concurrently or in short succession. The team also finds record activity in Europe and early market reactions to the universal proxy rule in the U.S.

Elevated Activity Persists, Fueled by Global “Swarming”

  • 69 new campaigns globally in Q1 2023 represented the second highest quarter of activity since 2019
  • 36% of Q1 2023 campaigns were initiated at companies that had been targeted by an activist already in recent periods—continuing the global “swarming” phenomenon—including new activists agitating at existing targets Salesforce, Disney, Bayer and Seven & i
  • 13% of targets in the quarter were subject to multiple new campaigns initiated within Q1 alone

Regional Mix shows Busiest Quarter on Record in Europe; Increase of Activity in APAC; Pull-Back in U.S.

  • New campaigns in Europe matched historical highs—21 new campaigns made Q1 2023 the busiest first quarter on record, and one of the busiest quarters in recent years, tying robust activity levels of Q3 2019 and Q4 2020
  • European campaigns accounted for 30% of all global activity and were heavily concentrated in two jurisdictions—the U.K. and Germany
  • Activism targeting APAC companies accounted for 19% of Q1 2023 campaigns, above the multi-year average of 14%
  • Unlike in prior quarters where activity was overwhelmingly concentrated in Japan, Q1 2023 saw a more even dispersion across Japanese (38% of APAC campaigns), South Korean (23%) and Australian (23%) targets
  • The U.S. saw a decline in campaign activity with only 29 new campaigns in Q1, down 34% Y-o-Y and 28% from Q4 2022, thereby breaking an eight-year seasonal trend of Q1 campaign counts meeting or exceeding the prior Q4

Mega-Caps Targeted More Than Ever

  • Global targets with market capitalizations >$50bn (mega-cap) represented 16% of unique companies targeted in Q1 2023, the highest share on record
  • The U.S. logged a third consecutive quarter of elevated levels of mega-cap focus at 20% of Q1 2023 activity following 20% of 2H 2022 activity
  • Europe likewise saw a spike in mega-cap targets which accounted for 22% of activity, rivaling Q1 2022 at 23% and beating the average for 2022 of 11%

Sustained M&A Activism Fueled by Global Break-Up Demands

  • M&A remained a dominant theme, occurring in 29 campaigns (42% of total) in Q1 2023 (vs. 30 campaigns / 46% in Q4 2022 and 23 campaigns / 32% in Q1 2022)
  • M&A-related demands were especially frequent in Europe – arising in 57% of all European campaigns (above historical average level of 44%), driven by a surge in calls for divestitures, which arose in two-thirds of European M&A attacks
  • Few activists called for industry consolidation or full company sales in Q1 (6 campaigns vs. a quarterly average of 9 in 2022), reflecting the current challenging environment for M&A

Early Look at Universal Proxy: Similar Appetite for Board Change, Yet Fewer Proxy Fights and Smaller Slates

  • Since the advent of the universal proxy rule in the U.S. (September 1, 2022 – March 31, 2023), relative to the same period Y-o-Y:
    • Activists have demonstrated the same apparent appetite for Board change at U.S. companies, seeking Board change in 39% of campaigns (vs. 40% in prior year), but launched significantly fewer proxy fights (14 vs. 26)
    • There has been a significant shift to smaller activist slates nominated at U.S. companies, with 50% of slates providing for 1 – 2 nominees vs. 31% of slates over the same period last year
    • Activists have secured 43 Board seats, 98% through settlements, vs. 37 Board seats, 98% through settlements, during the analogous prior year period

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