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    INVESTMENT BANKING | INNOVATION EDGE

    2024 activism boosted by new campaigners and US activity

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    Contributor: Jim Rossman
    11 Nov 2024

    Despite a steeper-than-average slowdown in Q3, 2024 activity continues to exceed that of recent years, driven by an uptick in first-time activists and accelerated activity in Japan and the US. Our Investment Banking Shareholder Advisory team’s Q3 Review of Shareholder Activism also uncovers a shift in activist demands and updates on board seat wins.

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    2024 activism bolstered by first-time campaigners and Japan activity

    To receive a copy of the full report, H1 2024 Review of Shareholder Activism, please email: ShareholderAdvisoryGlobal@barclays.com

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    1. Activism gathers pace as more activists join the fray

    Across the world, 184 campaigns have run in 2024 through Q3, 26% above the four-year average, but just short of the record for the same period in 2018.

    New activists continue to join the fray as first-timers launched 22% of campaigns, eclipsing major activists for the first time. The top ten most active activists accounted for just 30% of campaigns through Q3, compared to 46% in 2023. 

    Activity in the United States, up 22%, and APAC, boosted by Japan in particular, up 100%, is driving this campaign surge. Although mega-cap European companies continue to be targeted well above the global rate, Europe overall remains quieter, with campaigns down 29% year-over-year, but in line with the long-term average. 

    Record pace for shareholder activism
    Record pace for shareholder activism

    2. Activists switch focus to strategy and operations 

    Through Q3, 23% of activist campaigns were geared towards strategy and operations-related demands, notably higher than the 18% three-year average. Although all regions have seen an uptick, it was especially noticeable in the US, as the subject of 26% of campaigns amid a recovering M&A market. 

    Nevertheless, M&A demands remain prevalent in 41% of campaigns, in line with the 43% three-year average. Amid the M&A market recovery, the nature of M&A demands has shifted, with more activists pushing their targets towards a sale – 21% of campaigns vs 17% last year. 

    Record pace for shareholder activism

    3. US CEOs turnover at activist targets almost doubles 

    Increased CEO turnover in the US is a potential byproduct of the increase in strategy and operations-focused campaigns. In the past two years, ~20% of CEOs of US activist targets resigned within a year, compared to the ~12% average annual turnover in the S&P 500.

    Mega-cap companies felt the brunt of this. Through Q3, they comprised 38% of often high-profile CEO resignations. 

    More CEOs are leaving their roles faster too, with the average time for a CEO resignation following an activist campaign dropping 35% since 2022.

    Record pace for shareholder activism

    4. Activist board seat wins are on a downward trend

    Through Q3, activists have won 84 board seats, down from 113 for the same period in 2023. 

    This drop-off in wins has led to questions about the prediction that the Universal Proxy Card would improve activist odds in US proxy fights. US activists have been defeated in six proxy fights this year, securing seats in only three proxy fights, in which only six of 16 seats sought were won.

    Major activists1 have not been affected by the same dynamics in 2024. These activists, who often can better extract settlements, have accounted for a greater share of US board seats won, 44% compared to 27% in 2023.

    Record pace for shareholder activism

    What's next?

    If rate cuts lead to a pick-up in sponsor activity, M&A demands may follow, while the strong focus on strategy and operations demands could lead to boards becoming more aggressive on refreshing management and director self-evaluations.

    Finally, close attention will be paid to whether activists begin to adjust their proxy fight tactics and slates given recent struggles.

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