ANALYSIS: Why Activists’ Boardroom Blues Might Brighten in Q4

Activist campaigns with objectives that target board and management changes—a significant tool that investor activists wield to accomplish change at a company—didn’t succeed in the 2022 proxy season at the same rate as in 2020 and previous years. But that may not be the end of the story for the performance of activist efforts in 2022.

As pending objectives launched in 2022 get resolved, the ultimate success of activist efforts to make board and management changes may make up for activists’ bleak proxy season.

So far this year, there have been 72 successful board and management objectives—roughly 50 fewer than there were in 202 (125) and 2020 (121).

But despite the lower number of successful objectives in 2022 so far, the more compelling figure may be the number of board and management objectives launched this year that remain pending.

The number of successful objectives in 2022—and 2021, for that matter—are likely to grow, as there are still 162 pending objectives targeting board and management changes that have been launched in 2022 so far, and another 67 pending from 2021. (There are only 14 objectives from 2020 still outstanding.)

Here’s another key indicator that current investor activism performance is far from finalized for the year: the speed with which these board change objectives are finding success. Successful objectives targeting board representation, board control, board declassification, and management change are reaching success quicker in 2022 than in 2021 or 2020, according to Bloomberg data.

The longer durations in 2021 and 2020 show that objectives started in those years remained unresolved for a longer amount of time than many of those in 2022 so far.

As objectives targeting board and management changes reach resolution (and as more new objectives are launched) in Q4, we should keep an eye on board representation objectives to push 2022 toward 2021 and 2020 objectives’ success totals. Nearly 60% of resolved board representation objectives launched in 2022 were successful—and this is the most common type of pending objective.

By the time most of the pending objectives are resolved, 2022 is likely to closely mirror 2020 and 2021 in the number of board & management change objectives that end in success for activists.

Bloomberg Law subscribers can find related content on our ESG Practice page, as well as our Practical Guidance: Shareholders page. Investor activism data accessible on the Bloomberg Terminal at BI ACT <GO>.

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