Shareholder activism continues to grow, both in the U.S. and abroad, but while growth in the U.K. remained somewhat stagnant with last year, there’s no denying that it remains a strong force there. Growth in activism in the rest of the world has actually outpaced activism growth in the U.K. so far this year, but the U.K. remains the hotbed for activist activity in Europe.
Activism growth in the U.S. down slightly
Schulte Roth & Zabel released a report entitled “Shareholder Activism in the U.K.,” which was cosponsored by Activist Insight. They found that activism is still going strong in the U.S. and is on the rise in the rest of the world (excluding Europe). It should be noted that the data for this year runs through the end of this year, so there is still time for the U.S. and the U.K. to top last year’s number of activist campaigns.
In the U.K., activism is down just slightly from last year but has been declining steadily since 2012. There’s still time for the country to tie or surpass last year’s number of companies being targeted, however, and it’s close enough that growth for this year is a possibility.
Here’s a look at how individual nations in Europe stack up to each other in terms of shareholder activism. The U.K. is clearly fertile ground for activists right now.
U.S. activist involvement in Europe on the decline
It seems that activist campaigns against U.S.-based companies may be slightly more successful than those against European firms.
It appears as if activist investors based in the U.S. may be seeing fewer opportunities in Europe or are simply focusing more on companies located on their home soil. However, European activists are still finding plenty of opportunities in their area.
U.S. versus European activism
Interestingly, there appears to be a diversion in the focus of activist campaigns in the U.S. versus activism in Europe. European activism cases are more likely to have activism as their primary focus than U.S. activism cases are.
Activists are also starting to shift their sector focus. While the Financial sector was the main focus three years ago, now Services is on top, although Financials are starting to gain ground.
Shareholder activism focuses on capital
Capital allocation has been a hot topic for activism in recent years, with even the likes of Apple gaining the focus of high-profile activist investor Carl Icahn in the past for its cash stockpile. The same is true in the U.K., as the report indicates that activist investors usually pick the companies with the biggest signs of discontent among shareholders. Of course the reason for this is obvious, as activists need support from other shareholders to get their proposals pasted.
According to the report, 53% of activists had less than 90% for at least one of their resolutions at a past annual general meeting. Of those resolutions, 37.5% of them dealt with capital increases, either with or without preemptive rights, while 25% were related to remuneration. The report indicates that 25% of the proposals were related to a two-week notice of an extraordinary general meeting, while 12.5% were filed in connection with director elections.
Some shareholders have a track record of supporting activists
Schulte Roth & Zabel found a trend among institutional shareholders with some often voting along with the dissident or activist. Here’s a look at the numbers for European investors who voted in at least 10 global proxy contests:
Here are details on some of the biggest proxy contests in Europe:
All graphs/ charts in this article are courtesy Activist Insight and Schulte Roth & Zabel.
See full slides below.