Shareholder Activists Take Full Control — And Want More
The first six months of 2018 showed shareholder activists at the height of their powers.
At Lazard's Shareholder Advisory practice, we meticulously study each activist situation at companies worth more than $500 million, and found some striking findings for the first half of 2018:
1) The first six months of 2018 brought more campaigns against more companies than ever before....
— 144 campaigns against 136 companies by 103 activists is a record level of activity, dominated by Elliott launching 17 campaigns in 3 continents for a 13% market share.
2 While companies have largely given up the fight...
— The first half of 2018 brought an 80% increase in board seats won by activists, almost all — 85% — via settlements, reflecting company’s lack of appetite for proxy fights.
3) And activists have gotten even more aggressive, demanding and winning complete control of company boards without paying a control premium...
— Activists pursued “long-slate” nominations – seeking to replace at least 50% of the Board – in one third of all Board representation campaigns in 1H 2018
4) And setting sights on new terrain: All of Europe...
— Telecom Italia represents a watershed moment in European activism, indicating that the increased dollars flowing into Europe are bringing with them American style proxy fights for control of the board room
Read the full Lazard report here:
https://www.lazard.com/perspective/lazards-review-of-shareholder-activism-q2-2018/
What comes next? We welcome your questions and conversation.
Visionary Executive | Building High-Impact Teams to Propel Business Success and Innovation
6 年It's becoming more of a problem by the day and it completely upsets the strategies and objectives of companies as well as their ability to perform and deliver on said items. It's also demoralizing to many great CEO's who have lost their jobs as a result of these activists. Shareholders should be investing in companies and leaders they believe in and let them do their jobs. Derailing them and their boards serve no one in the long run. It completely destroys company culture and stability and will make it harder for employees who have the desire and talent to step up into those roles in the future.
Board of Directors at The Resorts Companies, Inc.
6 年Interesting !!
Creator of the Art as a Derivative concept. Uniquely, I make art about the people and structures shaping financial markets.
6 年This Lazard report makes very interesting reading. What with a lot of companies masking their real situation via purchasing their own shares, activists have a new red flag. Of course, there are circumstances where activists make a positive difference to company governance; they can identify structural weaknesses and non-realised opportunities. It doesn't have to lead to a boardroom cull; the activist gains a place or two on the board and overdue changes are made. In other scenarios the activist threat can be a disincentive to investing for the long-term and much needed R&D, feeding on the quest for higher dividends to roil investor sentiment. It seemed clear to me that activism – Scaramucci famously called activists the rock and rollers of the hedge fund industry – was going to be an increasingly dynamic sector back in 2015 when I was creating my Art as a Derivative III – The Hedge Fund Industry series of verbatim-text paintings. I had scheduled two artworks on HF strategies, but the imperative was there; I just had to make a separate painting dedicated to activism. For more on this: https://www.larrymcginity.com/HedgeFunds#
President, TriOrient Investments. Co-Chair, Private Equity Committee at AmCham Taiwan.
6 年Thanks, Dennis for the report on shareholder activism and for the link.
Energy & Infrastructure Finance at Investec
6 年Activism in Europe, especially by hedge funds, has generally seen more opposition in the past, regarded as more short-term oriented. Do you think that the perception is changing? Further, do you think that the (Continental) European corporate governance models will continue to be an obstacle?