Activist campaigns increased markedly in the US and Asia last year but fell back in Europe.
The findings come in a review of the year by Insightia, an activism information provider.
The US saw 882 campaigns in 2022 compared with 667 the previous year. Asia rose to 218 from 160, driven mostly by Japan and Korea. But, in Europe, activism reduced from 235 campaigns in 2021 to 200 a year later.
The whole made for what Insightia described as only a “modest return” of activity levels.
US figures have been driven by the falling values of tech and media companies, and also the introduction of the “universal proxy rule”—a rule change allowing investors more influence over the makeup of boards.
The report says: “Activists staged a modest return in 2022, weathering tough market conditions and continued skepticism from companies and institutional investors that positions them to take full advantage in 2023.”
Despite prominent activist campaigns at Unilever and Vodafone, European campaigns have shrunk in number, though are far from collapsing.
Past performance is no guarantee
However, the future may be different. Insightia’s report says Europe, having moved past the energy crisis caused by Russia’s invasion of Ukraine, “could be an attractive market for activists and private equity”.
The report also notes that US activists appear more willing to apply “aggressive” campaign approaches in Europe, as demonstrated by Third Point and Trian.
Directors may be under more pressure in the coming year. Insightia notes last year saw 126 failures to re-elect directors, up on the 111 in 2021 and only 83 in 2020; 2023 may be different again.
“Expect to see more director revolts in 2023,” says Insightia, “with both investors and proxy advisers strengthening their ESG policies ahead of the coming season.”
That said, the introduction of ESG into activism, after the success of Engine No. 1 with ExxonMobil in 2021, did not materialise in great success.
Shareholder proposals based on ESG factors appeared to win less support as investors decided they were becoming overly prescriptive. “Amid fears of a recession and rising interest rates, ESG activist campaigns that failed to make a compelling link between a company’s ESG credentials and a company’s financial performance were largely doomed to fail,” the report says.