Corporate Governance

2020_Corporate Governance and Executive Compensation

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Shearman & Sterling LLP Recent Shareholder Activism Trends | 17 0 100 200 300 2016 2017 2018 2019 H1 2020 212 249 209 100 187 34 49 53 40 70 70 73 43 46 52 54 57 59 41 63 52 36 65 Recent Shareholder Activism Trends George A. Casey, Scott D. Petepiece and Lara Aryani Stalls After COVID-19 Activist engagement, which typically peaks during proxy season in the first half of each year, declined in the first half of 2020 with the onset of the COVID-19 pandemic. Because activist investors typically hold their shares for some period of time after launching a proxy contest, the share sell-offs and capital outflows that accompany market volatility can inhibit shareholder activism. With director nomination deadlines for many companies falling in the first quarter of the year and annual meetings falling in the second quarter, many activists that would have spent the first half of 2020 nominating directors and launching proxy contests opted not to nominate any directors or to seek settlements on nominations they had already made. While the desire to maintain liquidity during economic uncertainty may be the primary driver for decreased activism in the first half of 2020, some activist investors may also have been concerned that campaigns initiated during the peak of the COVID-19 pandemic would be seen as "tone deaf" and detracting from the target company's focus on priorities such as the health of their workforce and rebounding from the crisis. Insights Source: Lazard, Review of Shareholder Activism – H1 2020, July 14, 2020, https://www.lazard.com/perspective/lazards-quarterly-review-of- shareholder-activism-h1-2020/. Q4 Q3 Q2 Q1 Shareholder activism trends in 2019 remained largely consistent with prior years, perhaps underscoring the lasting role that shareholder activism will play in the foreseeable future. The advent of the COVID-19 pandemic ruptured existing patterns of market, investor and activist engagement that would have otherwise continued through the second quarter and second half of 2020. As of this writing, the market remains in flux as the world continues to grapple with controlling the COVID-19 pandemic and mitigating the damage it has caused. It remains to be seen how long the turmoil will last and, once it dissipates, whether business will resume where it left off, or if the COVID-19 pandemic will leave a lasting imprint on market activity, including shareholder activism, in the post-COVID-19 world. SHAREHOLDER ACTIVISM TRENDS Endures Before COVID-19 Shareholder activism has endured as a fixture of the corporate landscape. After reaching record highs in 2018, shareholder activism activity declined slightly in 2019 but remained consistent with multi-year historic averages.

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