Shareholder Activism Increased by 9% in the First Half of 2024, According to Diligent

July 30, 2024 at 07:00 AM EDT

Proxy contests in 2024 ranked among the most high-profile and expensive, as activists look to large-cap companies for value creation opportunities.

Four hundred and forty-nine U.S. companies were subject to activist demands in H1 2024, a 9% increase compared to the 412 in H1 2023 and 11.4% increase compared to the 403 in H1 2022. According to the new Diligent Market Intelligence: Proxy Season Review 2024 report produced in association with Olshan Frome Wolosky and Campaign Management, more than half of U.S. companies subject to demands were valued at more than $10 billion, as activists seek value creation opportunities at large, well-known companies.

“The landscape of shareholder activism and corporate governance is becoming increasingly complex and dynamic,” said Richard Peterson, VP of Data Strategy and Services at Diligent. “With high-profile shareholder activist campaigns coming under enhanced public scrutiny, it is increasingly more important for companies to have a robust and data-driven corporate governance and shareholder engagement strategy in place, in the event an activist comes knocking.”

The universal proxy card also continues to give rise to more settlements between activists and companies, as investors' newfound freedom to pick and choose between management and dissident slates provides an easier path to board representation.

Three themes emerge from the report’s key findings that both boards and investors should have on their radar, including:

Activists seek to unlock value at large-cap companies:

Two-hundred and thirty-two (51.7%) of U.S. companies subject to demands this year were valued at more than $10 billion, compared to 178 (49.7%) in H1 2021, 205 (50.9%) in H1 2022 and 215 (52.2%) in H1 2023.
Such high-profile campaigns are incurring hefty costs. In the first half of 2024, proxy contests cost companies an average of $4.4 million and activists $1.7 million, compared to $3.1 million and $660,000 in 2020, respectively.
Conversely, European activism almost halved in the first half of 2024, with 96 demands made compared to 176 and 177 in the first half of 2022 and 2023, respectively. This comes as the U.K. market loses attractiveness as a value-creation target, thanks to rising interest rates and a scarcity of mergers and acquisitions.

Universal proxy prompts rise in settlements:

As of June 30, 2024, activists have secured 101 board seats at U.S. companies, compared to 100 in the same period a year prior. 86.1% of seats secured in H1 2024 were secured via settlement, up from 80.5% in H1 2022 and 86% in H1 2023.
Four settlements have been secured at U.S. companies involving the formation of a special committee, up from one in the same period a year prior.

ESG engagements hit record highs:

The first half of 2024 saw a record 349 environmental and social (E&S) shareholder proposals subject to a vote at U.S. companies, up from 319 in the first half of 2023 and the highest level in more than a decade.
Proposals seeking enhanced emissions reduction targets won the favor of investors, with six (10.3%) climate proposals securing above 40% support.
Litigation is becoming increasingly common in high-profile ESG campaigns. In the U.S., lawsuits against proposal proponents are raising concerns regarding shareholder rights, while in Europe investors are filing suits pushing companies to make good on their sustainability commitments.

To download the full report click here.

Register here to attend our webinar, 2024 Proxy Season Review: Shareholder Activism Trends and Strategies for Corporate Defense, examining key takeaways from the report.

About the report

Data from Diligent Market Intelligence’s Activism and Voting modules run from January 1, 2024, to June 30, 2024. Further data is available on request, although bespoke analysis may take 48 hours. For more information, please email dmi.press@diligent.com

About Diligent Market Intelligence

Diligent Market Intelligence (DMI) is a market-leading provider of shareholder activism, investor voting, and corporate governance data. Through its web application and data feeds, clients can access the most complete solution for listed company intelligence on the market, with broader and deeper insights than ever before.

About Diligent

Diligent is the leading GRC SaaS company, empowering more than 1 million users and 700,000 board members and leaders to make better decisions, faster. The Diligent One Platform helps organizations connect their entire GRC practice — including governance, risk, compliance, audit and ESG — to bring clarity to complex risk, stay ahead of regulatory changes and deliver impactful insights, in one consolidated view. Learn more at diligent.com.

Follow Diligent on LinkedIn, X (Twitter) and Facebook.