Activists ‘Get the Party Started’ Early for 2024 Proxy SeasonCarl Icahn is preparing for a second board battle at gene-sequencing company Illumina after shareholders elected his candidate, Andrew Teno, to the company’s board and ousted the chairman, John Thompson, in May. Icahn then successfully pushed out former CEO Frances DeSouza in June. 02 January 2024
Lindsay Frost of Agenda, a news service from the Financial Times for the U.S. corporate boardroom space, recently penned an article on activism.
In the article, Lindsay Frost writes that board members would be wise to keep an eye on the second round of the Illumina and Icahn campaign as well as Nelson Peltz’s round two with Disney. Both campaigns have claimed the company’s current board composition isn’t up to the task.
In order to prepare for activists knocking at the door, boards need to stay on top of the refreshment process and continue a laser focus on composition going into the new year, sources said to the Agenda. About half (47%) of 360 board directors surveyed by Spencer Stuart last year indicated that they changed their board’s composition as a top activism preparedness action.
“Universal proxy cards … make it more likely than in the past that an activist could nominate someone perceived as a far better candidate than an incumbent director, and then persuade shareholders to elect its nominee on that basis alone,” wrote Kurt Moeller, managing director in the activism and M&A solutions practice at FTI Consulting, in an email to the Agenda. “A thorough evaluation may lead a company to refresh its board, with a focus on specific skill sets and experience where the company found its board deficient,” he added. “This process allows the company to improve the quality of its board while reducing its vulnerability to shareholder activists.”
Some 63% of directors in the Spencer Stuart survey said shareholder engagement is also a top activism preparedness action. This is especially important as traditional asset managers increasingly take on activist tactics on certain issues, said Andrew Brady, Director in the shareholder activism team at SquareWell Partners. “You need a decent read of the shareholder base to gain support,” Brady added to the Agenda.
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Activist investors are expected to launch more and bolder campaigns for change among European companies in the year ahead, advisers told Reuters, after a record number in 2023.
AQTION, a subsidiary of SquareWell Partners, published its inaugural study – ‘Stewardship in AQTION’ – which details how the world’s largest 65 asset managers and owners steward their portfolio companies and how they incorporate extra-financial considerations into their investment decision-making processes.
Large asset managers no longer hesitate to support activist campaigns, which still remain mainly led by hedge funds