“The increase in settlements with activists by U.S. companies was the most significant trend in shareholder activism in 2016. Institutional investors have publicly voiced concern about companies settling so easily. It will be interesting to keep an eye on strategic developments at these companies in 2017 and beyond, as well as how these settlements affect management and employee turnover.”
Jay Frankl, Senior Managing Director
Country:
USA
Average % of insider ownership:
Activism
Threat Level
To learn more about this country, please click on the tabs below
The United States continues to be the epicenter of shareholder activism worldwide. While the total number of shareholder activism campaigns only decreased slightly over 2016, the number of proxy fights hit a five-year low in 2017. Activist funds and companies alike were reticent to allow a campaign to reach a proxy fight due to increasing cost. Additionally, funds achieved more success in settlements than in prior years, and received board seats before a proxy fight was necessary. It is yet to be seen if this trend will continue into 2018, as institutional funds have centered support for companies versus activists.
Shareholders must disclose beneficial ownership of more than five percent of a public company’s registered voting equity securities. Investors report holdings using a Schedule 13D filing within ten business days after their holdings exceeds five percent, unless they are eligible to report their holdings on a short-form Schedule 13G. 13G filings are reserved for investors acting in the ordinary course and without a control purpose or effect (i.e. passive investors).
Structural company defenses include poison pills, staggered boards, limited ability to call a special meeting, and denying replacement of directors without cause. Stringent advance notice by-laws and other warning systems for shareholder proposals can serve as a structural defense.
Some states have anti-takeover statutes that create hurdles for shareholders wishing to own over a certain percentage of stock.
Companies may have golden shares or classes of shares with increased voting rights which can deter activism; however, these companies may run afoul of new proposed index inclusion rules currently being discussed.
Top Campaigns by Type
1. Gain Board Representation
2. Adopt Majority Vote Standard
3. Remuneration
Campaigns By Year
Total
Campaigns
Notable Invested Activists
• Elliott Management
• Trian Partners
• Starboard Value
Recent Activism Campaigns
| Procter & Gamble | VS. |
Trian Fund Management |
| Automatic Data Processing Inc | VS. |
Pershing Square |
| Energen Corporation | VS. |
Corvex Management |
Total Active
Campaigns
Contact FTI Consulting
Capital Markets Research and Activist Engagement
Managing Director
+1 312 861 4721
Geoff.Serednesky@FTIConsulting.com
Head of Activism and M&A Solutions
Senior Managing Director
+1 (202) 312 9216
Jason.Frankl@fticonsulting.com