Corporate Governance

Shearman & Sterling LLP 18 | Recent Shareholder Activism Trends ACTIVIST RANKS Grow Before COVID-19 Notwithstanding fewer activist campaigns in 2019 compared to 2018, the number of activist funds continued its upward trend with a historic high of 141, of whom 60 were first time activists. Still Grow After COVID-19 Source: FactSet. # of activists # of first timers 102 109 112 122 141 2015 2016 2017 2018 2019 30 0 60 90 120 150 0 70 30 50 39 32 46 48 60 # of activists # of first timers As of the end of the second quarter of 2020 Recent campaigns by private equity firm KKR at Dave & Busters and a consortium of Elliott, MFS, Capital Group and Fidelity at CenterPoint also show the broadening of the activist investor landscape and willingness of long-term institutional investors to engage on activist campaigns. 68% of the campaigns in Europe were initiated by occasional activists or institutional and other investors, compared with 52% of the campaigns over the same period in 2019 10 20 30 40 50 33% 38% 36% 44% 45% 2015 2016 2017 2018 2019 M&A-FOCUSED ACTIVISM Up Before COVID-19 Companies are increasingly learning the lessons of prior activist campaigns and addressing vulnerabilities that activists have historically targeted, particularly relating to governance. As such, activist investors are gradually shifting their focus to M&A (e.g., agitating for a sale, opposing announced deals), with nearly half of all campaigns in 2019 involving an M&A thesis. % of M&A Related Campaigns Launched Globally Source: FactSet. Down After COVID-19 With M&A-focused campaigns steadily comprising an increasing proportion of shareholder activist campaigns and reaching an all time high of 45% of all shareholder activist campaigns in 2019, decreased M&A activity in the first half of 2020 undoubtedly put downward pressure on the number of activist campaigns. As long as M&A activity continues to be depressed, shareholder activism will likely be similarly affected.

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