“This proxy season is shaping up to be the busiest on record,” said Shaun Mathew, a partner at law firm Kirkland & Ellis LLP who advises companies on how to prepare for and respond to activists.“Companies are concerned it will draw in first-time activists who think they can take advantage of the new system to threaten proxy contests to create leverage to advance their agendas,” he said.
Even before the proxy change, a surge in newcomer activists had been building, with many taking their cue from then-little-known hedge fund Engine No. 1 LLC, which prevailed in a proxy battle against Exxon Mobil Corp. in 2021. The first-time activist won three board seats after arguing the oil giant was a climate laggard, while owning just a tiny fraction of its stock.
Since then, a raft of other rookie activists have launched campaigns at companies including Hasbro Inc. and Wall Street Journal parent News Corp. (In some cases, these first-timers have been started by people who used to work at big-name shops like Elliott Management Corp.) Strive Asset Management, founded earlier this year, sent letters in September to the boards of Apple Inc. and Walt Disney Co., urging them not to let a focus on ESG get in the way of corporate decision-making. Strive also publicly called on Chevron Inc. to pump more fossil fuels over the next decade and slow spending on its energy-transition plan.Through September this year, about 25% of activist campaigns launched globally at companies with market capitalizations over $500 million have been spearheaded by first timers, up from 17% in all of 2021, according to data compiled by Lazard’s Capital Markets Advisory group.
Overall, there were 171 campaigns launched as of Sept. 30, up 39% from the same period in 2021, as activists seek out cheaper entry points to place their bets.Companies Brace for Onslaught of New Activists After Change in Proxy-Voting Rules – WSJ