Corporate Governance

Shearman & Sterling LLP 20 | Recent Shareholder Activism Trends Source: Proxy Insight E&S Proposals, Russell 3000, 2020 YTD is as of June 30, 2020. FOCUS ON ESG The increased focus on ESG from institutional investors, proxy advisors and other corporate constituents continued through 2019. Not only were institutional investors like BlackRock, Vanguard and State Street more publicly vocal about the importance they are placing on ESG-related matters, but they also signaled an increased willingness to encourage and support ESG-driven activist campaigns. While environmental and social matters have lagged somewhat behind governance as a focus of activist campaigns, support for environmental and social shareholder proposals has climbed steadily. For Russell 3000 companies, for example, each year, including 2020, has brought new all- time-high support for Environmental and Social (E&S) proposals, indicating that activists are not only more willing to pressure corporate boards on ESG matters, but they are also able to garner more support than ever from other shareholders on their ESG-related campaigns. The number of shareholder resolutions proposed in the first half of 2020 is significantly lower compared to the same period in prior years, but interestingly, as of June 30, 2020, the number of E&S-related shareholder resolutions remained on par for the same period in 2019. In the short-term, ESG-related activism will likely see the same decline as other activist campaigns have experienced since the onset of the COVID-19 pandemic. ISS/Glass Lewis, who have been among the strongest advocates for ESG matters, acknowledged that these issues may be subject to "shifting timeframes and priorities," given the immediate concerns created by the crisis. While the COVID-19 pandemic may have had a chilling effect on the initiation of new activist campaigns, it may ultimately heighten the focus on ESG. As the temporary slowdown in activist campaigns ends, investors and the other corporate constituents may # Proposals Support % ISS For % GL For % 163 188 190 143 143 128 2015 2016 2017 2018 2019 2020 67.3% 67.2% 29.7% 34.9% 36.8% 44.1% 53.8% 61.9% 20.7% 22.5% 23.3% 27.5% 29.4% 31.2% 69.1% 78.3% 78.3% 87.9% ESG will continue to be a major focus for investors

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