Q1 2022 Review of Shareholder Activism - LAZARD'S CAPITAL MARKETS ADVISORY GROUP - Lazard.com
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L A Z A R D ' S C A P I TA L M A R K E T S A D V I S O R Y G R O U P
Q1 2022 Review of Shareholder Activism
Lazard has prepared the information herein based upon publicly available
information and for general informational purposes only. The information is not
intended to be, and should not be construed as, financial, legal or other advice,
and Lazard shall have no duties or obligations to you in respect of the information.Q1 2022 REVIEW OF SHAREHOLDER ACTIVISM
Observations on the Global Activism Environment in Q1 2022
1 73 new campaigns launched globally in Q1 marks the busiest quarter on record and, when combined with Q4, the busiest six-month period for
activism since 2018
Record Pace for
The U.S. continues to account for the largest share of global activity, representing 60% of new campaigns and 55% of capital deployed
Global Activism,
Q1 activity in APAC accelerated, accounting for 16% of new campaigns vs. 2021’s recent low of 11%
Led by U.S.
While Icahn and Starboard were both prolific in Q1 (launching four and three new campaigns, respectively), “first timers” and smaller-cap focused
funds accounted for a higher proportion of activity than in prior years
Robust Activity in Europe registered 15 new campaigns in Q1, representing a 50% jump in activity compared to Q1 2021
Europe Despite Pull- French companies were disproportionately targeted in Q1, representing ~27% of European targets—nearly 3x the country’s historical share
Back Since Onset of Activity has declined following the onset of the Ukraine crisis, particularly from non-European activists; agitation may have pivoted to behind-the-
Ukraine Crisis scenes pressure rather than public campaigns
2 30% of all activist campaigns in Q1 2022 featured an M&A-related thesis, starting the year down slightly vs. the same period last year
Scuttle/sweeten campaigns—the most common M&A attacks in recent periods—were down materially, in line with reduced deal volume in Q1
relative to prior quarters
Fewer M&A-Related
With scuttle/sweeten activism less prevalent, demanding an outright sale became the most frequent M&A attack vector, with notable examples
Campaigns, but Still
including Everbridge/Ancora and Cano Health/Third Point
Common
The potential for more interplay between PE and activism is drawing attention, with activists partnering with PE to submit bids (Elliott with Vista
Equity to buy Citrix and with Brookfield to take Nielsen private), traditional PE engaging in activist behavior (Hellman & Friedman’s plans to engage
at Splunk) and activists pursuing their own PE strategies (Starboard Value-backed Acacia Research bidding for each of Comtech and Kohl’s)
3 38 Board seats were won by activists in Q1 2022 and Board change was an objective in ~40% of all new campaigns initiated
Only one Board seat has been secured by an activist via proxy fight in 2022 thus far (by Voss Capital at Griffon), with the remainder of seats
With Proxy Season secured via settlement
Looming, Many Starboard’s high-profile proxy fight for four Board seats at Huntsman came to a head in late March, with all ten of the Company’s nominees
Seats “In Play” prevailing at the AGM
85 seats remain “in play” heading into Q2, including notable potential contests at Kohl’s (10 seats), Southwest Gas (10 seats), U.S. Foods (5 seats1)
and Hasbro (5 seats)
4 The SEC’s November adoption of a universal proxy rule is poised to lower barriers to entry for nominations from both traditional activists and other
Regulatory constituencies (e.g., climate and labor activists, current/former employees)
Changes Poised to Although the rule does not officially take effect until August 2022, activists have already requested universal proxy usage in recent campaigns –
Impact Activist notably, Huntsman, SpartanNash and LivePerson
Behavior The SEC’s proposed 13D and 13G rule amendments—which recently concluded the public comment period—would benefit issuers by bolstering the
“early warning” function of these ownership disclosure rules
5 Between the SEC's long-anticipated climate change disclosure rule and the increasing number of E&S proposals submitted at U.S. AGMs, ESG
Public Company scrutiny on public companies continues to mount
ESG Pressure Grows Proposed increased disclosure around long-term emissions goals will, if approved, increase transparency on corporate climate strategies
Increased transparency will potentially lead to further ESG proposal action from shareholders, which is already at heightened levels
Source: FactSet, press reports and public filings as of 3/31/2022.
Note: All data is for campaigns conducted globally by activists at companies with market capitalizations greater than $500 million at time of campaign announcement; select campaigns 1
with market capitalizations less than $500 million at time of announcement included during the COVID-19 pandemic-induced market downturn; companies spun off as part of
campaign process counted separately. Stakes and capital deployed may not reflect positions held through derivatives.
1 Sachem Head reduced its slate to five nominees, from seven, on 4/11/2022.1 Global Activism Activity
Q1 2022 REVIEW OF SHAREHOLDER ACTIVISM
Global Campaign Activity and Capital Deployed
($ in billions)
Annual Campaign Activity Quarterly Campaign Activity
# of Companies Targeted # of Campaigns Initiated Q1 activity increased 33% Y-o-Y # of Campaigns Initiated Q1 continued momentum from late 2021; when coupled, Q4 and
and ended at a multi-year high Q1 represent the busiest 6-month period since 2018
249
73
209
184 59
173 58
227 57 54 52 55 50
Mean: 47 46 41
Mean: 186 187
171 39
158 73 29
26
68 59 68
53 52
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2018 2019 2020 2021 Q1 2022 2019 2019 2019 2019 2020 2020 2020 2020 2021 2021 2021 2021 2022
Capital Deployment in New Campaigns Q1 2022 Capital Deployed by Sector
Aggregate Value of New Activist Positions1 Q1 2022 capital deployed already Aggregate Value of New Activist Positions1 Industrials and Consumer companies
represents ~40% of the total for all of 2021 31% accounted for a significantly greater share of
$67.2
27% capital deployed than multi-year average levels
4.50
13.5
3.50 $4.9 19%
8.7 2.50 $4.2
$42.3 $41.9
$40.0 9%
6.1 1.50 $3.0
19.0 9.5 13.5 4% 4% 3%
11.6 $1.5 2% $0.3 1%
4.7 0.50 $0.7 $0.7 0%
$0.5
8.5
Technology
Institutions
Media
Energy & Infra.
Healthcare
Telecom
Industrials
Real Estate
Consumer
Retail
11.1 $15.8 -0.50
Financial
13.0
9.1
Power,
26.0
11.6 14.7 10.8
2018-21 21% 12% 22% 6% 7% 5% 11% 10% 4% 4%
2018 2019 2020 2021 2022
Avg.2
Q1 Q2 Q3 Q4
Source: FactSet, press reports and public filings as of 3/31/2022.
Note: All data is for campaigns conducted globally by activists at companies with market capitalizations greater than $500 million at time of campaign announcement; select
campaigns with market capitalizations less than $500 million at time of announcement included during the COVID-19 pandemic-induced market downturn; companies spun off 2
as part of campaign process counted separately. Stakes and capital deployed may not reflect positions held through derivatives.
1 Calculated as of campaign announcement date, or as of initial date of disclosure. Does not include campaigns in which the size of the activist stake is not publicly disclosed.
2 4-year average based on aggregate value of activist positions.1 Global Activism Activity
Q1 2022 REVIEW OF SHAREHOLDER ACTIVISM
Global Activist Activity in Q1 2022
($ in billions)
The number of activists waging campaigns in Q1—many of them “first timers”—is already over half of the number in 2021 as a whole
Investors Launching Activist Campaigns by # of Activists Q1 2022 Activist Activity by Campaigns Launched
147 # of “First Timers” Ancora and Icahn each launched 4 campaigns in Q1 alone,
128 the same number of campaigns each launched in all of 2021
122
4 4
104 3
88
88 62 2 2 2 2 2
2 2
41
43 40 34
21
Advisors 2
Starboard
Capital
Engine
Capital
Sarrissa
Elliott Mgmt.
Third Point
Associates
Impactive
Oasis Capital
Amber
Capital
Ancora
Capital
Value
Icahn
2019 2020 2021 Q1 2022
% “First Time”
Activists 29% 31% 28% 34%
Investors Launching Activist Campaigns by % of Campaigns Q1 2022 Capital Deployed ($bn)3
19% $2.3 Single campaigns by unconventional activists Temasek,
23% 23% 28% Hellman & Friedman and Flossbach Von Storch each
$1.8 involved >$1bn positions at mega-cap issuers
$1.5
$1.3
56% $1.0
60% 56% $0.9
55% $0.8
$0.6
$0.4 $0.4
21% 25%
17% 17%
Fundsmith
Starboard
LetterOne
Sarissa
Third Point
Hellman &
Temasek
Von Storch
Inclusive
Associates
Capital
Flossbach
Friedman
Capital
Value
Icahn
2019 2020 2021 Q1 2022
% by “First Timers” % by Other Activists % by Major Activists1
Source: FactSet, press reports and public filings as of 3/31/2022.
Note: All data is for campaigns conducted globally by activists at companies with market capitalizations greater than $500 million at time of campaign announcement; select
campaigns with market capitalizations less than $500 million at time of announcement included during the COVID-19 pandemic-induced market downturn; companies spun off
as part of campaign process counted separately. Stakes and capital deployed may not reflect positions held through derivatives.
3
1 Includes Cevian, Elliott, Glenview, Icahn Associates, JANA Partners, Land & Buildings, Pershing Square, Starboard Value, Third Point, Trian and ValueAct.
2 Includes campaigns launched by Ancora Advisors and Pacific Point Capital at CH Robinson as well as Ancora Advisors and Macellum Advisors at SpartanNash.
3 Calculated as of campaign announcement date, or as of initial date of disclosure. Does not include campaigns in which the size of the activist stake is not publicly disclosed.1 Global Activism Activity
Q1 2022 REVIEW OF SHAREHOLDER ACTIVISM
Regional Trends in Global Activity
U.S. continued to lead activity in Q1 2022, representing 60% of all global campaigns and 55% of capital deployed; campaign activity
in APAC accelerated over the quarter, although capital deployed remained flat vs. 2021 as activists initiated modest positions
Regional Breakdown of Campaigns Initiated by Year Regional Breakdown of Capital Deployed by Year1
Regional breakdowns are normalizing towards longer term trends Europe’s share of campaigns declined in Q1 (in spite of new campaigns
with the U.S. representing a larger percentage of campaigns initiated increasing in absolute terms), but its share of capital deployed remained
constant due to multiple large stakes at mega-caps
1% 1% 2%1 Global Activism Activity
Q1 2022 REVIEW OF SHAREHOLDER ACTIVISM
U.S.: Campaign Activity and Capital Deployed
($ in billions)
U.S. Annual Campaign Activity U.S. Campaign Activity by Month (LTM)
# of Companies Targeted # of Campaigns Initiated Q1 number of campaigns just Q1’s robust activity driven largely by extremely active
under 50% of full year 2021 total March – the busiest single month since February 2015
200
141
124
140
21
120
124 95 14
100
13 13
107 83
Mean: 100 10
8
80
7 7
100
6 4
90 44 5 5 $3.7 $3.8
1
60
78 $2.0 $2.6 $2.5 $2.5 $2.3
$1.0 $0.4 $1.2 $1.2 $0.6
40
$0.2
42 41 20
34 25 36
0
2018 2019 2020 2021 Q1 2022
4.50 Campaigns Initiated Capital Deployed
U.S. Market Cap. Breakdown of New Campaigns, Q1 20221 4.00 Q1 2022 U.S. Capital Deployed by Sector1
3.50
$25bn 14% campaign targets, materially 1.50 $2.4
higher than the multi-year 11%
average of 18%2 1.00 $1.7
14% 40% 5%
0.50 $0.9 3%
1%1 Global Activism Activity
Q1 2022 REVIEW OF SHAREHOLDER ACTIVISM
U.S.: Notable Q1 Public Campaign Launches and Developments
($ in billions)
Notable Campaign Launches Notable Campaign Developments
Launch Company / Launch Company /
Date Market Cap1 Activist Highlights Date Market Cap1 Activist Highlights
In February, proxy advisors Glass Lewis and
In February, Humana entered into a ISS recommended against Zendesk’s proposed
cooperation agreement with Starboard, without $3.2bn acquisition of Momentive; Momentive
a prior public campaign; Humana agreed to shareholder Legion Partners also opposed the
2/22 add two independent Directors to its Board, 11/21 transaction
$53.3 with one appointed in early March and the $12.3 A few days later, JANA nominated four
other to be mutually-agreed before the 2023 Directors to Zendesk’s Board
AGM Zendesk subsequently terminated the deal
after it failed to pass a shareholder vote
In February, The Wall Street Journal reported In March, Southwest Gas announced the
that Icahn privately threatened a proxy fight at separation of its infrastructure services
McDonald’s, citing concerns over mistreatment business, Centuri
2/22 of pigs by the Company’s pork suppliers 10/21
$194.3 $4.2 Later in March, Icahn increased his tender offer
Later in February, Icahn nominated two to $82.50, and continued advancing his proxy
candidates to the Board fight to replace the 10-member Board
In January, Starboard nominated a slate of four
In January, Blackwells sent a letter to the Directors for election at Huntsman’s 2022
Board of Peloton, calling for the removal of AGM, including its founder Jeff Smith
CEO John Foley and a sale of the Company In February, Huntsman indicated its alignment
1/22 In February, John Foley stepped down as CEO 9/21 with the objectives Starboard laid out and
$9.0 and assumed the position of Executive Chair; $6.2 argued Starboard failed to recognize its recent
Blackwells opposed the transition, stating Foley strong performance
should be removed from the Company entirely In March, shareholders voted to elect all ten
management nominees
In March, Elliott and Brookfield jointly advanced
In January, Starboard urged the Company to a ~$15bn takeover offer for Nielsen, which the
terminate the rights plan it had adopted in Company subsequently rejected
December 2021 after JANA disclosed a 6.6% Later in the month, Elliott and Brookfield
1/22 stake 4/20 $5.3 agreed to acquire Nielsen for ~$16bn
$3.2 In March, Bloomberg reported that Elliott had ($28/share)
taken a large stake in the Company and Post 3/31 Update – WindAcre filed a 13D,
submitted a bid to acquire the Company stating that it would “take steps to attempt to
block the [t]ransaction”
Source: FactSet, press reports and public filings as of 3/31/2022. 6
1 Calculated as of campaign announcement date, or as of initial date of disclosure. In the case of multiple activists, represents market cap as of earliest campaign
announcement date or initial disclosure.1 Global Activism Activity
Q1 2022 REVIEW OF SHAREHOLDER ACTIVISM
Europe: Campaign Activity and Geographic Breakdown
($ in billions)
Annual Campaign Activity Campaign Activity by Geography
Country # of Activist Campaigns
# of Companies Targeted # of Campaigns Initiated
33% 35% 37%
8% 12% 27%
3% 5% 13%
57 57
12% 13% 15%
50 0% 0% 7%
48 55
54
0% 0% 7%
44
42 4% 9%
6% 8%
5% 7%
2% 5%
15
1% 2%
2% 5%
16 9 20 9 13
1% 4%
2018 2019 2020 2021 Q1 2022
% of Campaigns Q1 2022 % of Campaigns 2019-21 % of Campaigns 2016-18
New campaign activity in Europe returned to normalized levels
French companies were disproportionately targeted in Q1 2022,
representing 27% of all European campaigns (almost three times
Busy Q1 continues the momentum of 16 new campaigns in Q4,
historical levels)
implying a record-setting last six months of activity
Source: FactSet, press reports and public filings as of 3/31/2022. 7
Note: All data is for campaigns conducted globally by activists at companies with market capitalizations greater than $500 million at time of campaign announcement; select
campaigns with market capitalizations less than $500 million at time of announcement included during the COVID-19 pandemic-induced market downturn; companies spun off
as part of campaign process counted separately.1 Global Activism Activity
Q1 2022 REVIEW OF SHAREHOLDER ACTIVISM
Slowdown of Activity Pronounced in Europe vs. U.S. Amid Ukraine Crisis
Campaigns Launches and Developments in Europe and the U.S. on a Monthly Basis, Q1 2022
(38%) Drop of
Activity
Europe 11 16
10
7 5 3
Jan-22 Feb-22 Mar-22
50% Growth of
Activity
18
U.S. 13
8
21
10 13
Jan-22 Feb-22 Mar-22
New campaigns launched Notable development at existing campaigns
The Ukraine crisis has led to significant market destabilization and monopolization of the news cycle, potentially affecting the pace of activism as there was a
steeper decline in the number of new campaign launches in Europe vs. the U.S.1
In March 2022, overall activity decreased by ~38% in Europe while it increased by ~50% in the U.S. compared to the previous month
While the number of new campaigns between February and March 2022 increased in the U.S. by 62%, activity in Europe dropped precipitously following the Ukraine
crisis outbreak with a 40% reduction of new campaigns
Source: Activist Insight, Activist Monitor, FactSet, Public information.
Note: All data is for campaigns conducted globally by activists at companies with market capitalizations greater than $500 million at time of campaign announcement; select
campaigns with market capitalizations less than $500 million at time of announcement included during the COVID-19 pandemic-induced market downturn; companies spun off
8
as part of campaign process counted separately. Notable updates catalogued based on Lazard analysis and may include M&A, Board or management change, changes to
capital allocation or business strategy, or related filings tied to an ongoing activist campaign.
1 The S&P 500 and Stoxx 600 returned +4.2% and (1.1%), respectively, between 2/20/2022 and 3/31/2022.1 Global Activism Activity
Q1 2022 REVIEW OF SHAREHOLDER ACTIVISM
Decline in Campaigns Led by Non-European Activists
In recent crises, the willingness of U.S. investors to launch new public campaigns declined sharply for many reasons (i.e., desire not to
appear “tone deaf”, limited media traction, unpredictable market); during these periods, public activism may be replaced by private agitation
which could later come to light
Quarterly Campaign Activity by Activist Geographic Origin
% Non-European Activists
(out of Total Campaigns)
42% 25% 56% 27%
Covid outbreak Ukraine crisis
12
1
15
15
8
4
1
10
5 4 5
7 4
6
9 7 9
8
6 6
5 5 5
4 4
2 2 1
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2019 2020 2021 2022
Activist Jurisdiction US Europe RoW
Historically, non-European activists have launched ~41% of campaigns targeting European companies
However, in Q1 2022, the proportion of campaigns led by non-European activists significantly decreased compared to historic levels, suggesting that non-
European activists are increasingly reluctant to commit capital in foreign geographies in the context of major crises (Covid, Ukraine), and would rather focus on
local targets
Source: FactSet, press reports and public filings as of 3/31/2022.
Note: All data is for campaigns conducted globally by activists at companies with market capitalizations greater than $500 million at time of campaign announcement; select 9
campaigns with market capitalizations less than $500 million at time of announcement included during the COVID-19 pandemic-induced market downturn; companies spun off
as part of campaign process counted separately.1 Global Activism Activity
Q1 2022 REVIEW OF SHAREHOLDER ACTIVISM
Increased Vocalism From Institutional Investors Turns Into Public Debate
Q1 2022 saw continued willingness from active managers to take public stances on key strategic matters, with shareholders speaking up on
both sides of the debate in certain instances
Vocalism Against the Company Vocalism in Support of the Company
Company Vocal Investor Activist Observations Company Vocal Investor Activist Observations
In March 2022, Temasek agitated for In March 2022, Union Investment
the departure of Bayer CEO Werner opposed Temesek’s call to oust
Baumann, dissatisfied with his Bayer’s CEO, contending the
performance Company had made visible progress
In January 2022, an international In February 2022, Lindsell Train
investor coalition including Candriam, expressed support to CEO Alan Jope,
Trinity Health and GMPF urged the stating it “would have been a lot more
Company to adopt ambitious targets to disappointed if [Unilever] had not
increase the proportion of healthy considered making the acquisition [of
foods in its sales GSK healthcare unit]”
In March 2022, RWE’s municipal
In February 2022, Abrdn and PSAM
Association of investors dismissed Enkraft Capital’s
indicated they would back Cevian’s Enkraft
Municipal RWE call for a rapid spin-off of the Lignite
campaign at Vodafone, which they Capital
Shareholders division, asserting it would threaten the
believed was “long overdue”
local economy and jobs
In February 2022, Deka Investment In December 2021, Royal London
expressed its concerns over dismissed Elliott’s push to break up
Thyssenkrupp’s steel unit performance SSE, stating the activist’s strategy
and future without state aid would cause “disruption”
In October 2021, Abrdn stated Third
In January 2022, Janus Henderson
Point’s call for Shell to split was “too
criticized the planned combination
complicated” and that “just because
between Zendesk and Momentive
Third Point says it makes compelling
Global, a deal already opposed by
financial logic doesn't mean it will
activist JANA Partners
happen”
Source: FactSet, press reports and public filings as of 3/31/2022. 101 Global Activism Activity
Q1 2022 REVIEW OF SHAREHOLDER ACTIVISM
Europe: Notable Q1 Public Campaign Launches and Developments
($ in billions)
Launch Company / Launch Company /
Date Market Cap1 Activist Highlights Date Market Cap1 Activist Highlights
In March, Temasek pressured Bayer to oust its
In February, Union Investment urged Siemens
CEO Werner Baumann, concerned by his
3/22 $65.6 2/22 $15.3 Energy to take full control of wind turbine
performance and the Company’s lack of
division Siemens Gamesa
succession planning
In March, Clearway Capital called on In January, Cevian urged Vodafone to
TotalEnergies to exit its Russian operations consolidate the mobile-telecom sector by
amid the Ukraine crisis or face a vote on the combining its towers business with Deutsche
issue at its next AGM Telekom
3/22 $130.5 1/22 $46.3
Shortly after, the Company ceased new In February, Coast Capital joined Cevian in its
investments in Russia and suspended trade in campaign to improve Vodafone's performance
Russian oil, but stopped short of withdrawing and expressed its concerns about regulators’
from the country “overreach” in the telecom sector
In January, an investor coalition urged
Unilever to increase the proportion of healthy
In February, Mirova called for governance foods in its sales
changes after the Company was the subject of A few days later, Fundsmith urged Unilever to
an investigation regarding malpractices related focus on strengthening operations instead of
to elderly care pursuing large acquisitions
2/22 $2.6 1/22 $127.6
Later in January, Trian built a stake in Unilever
Mirova asked Orpea to appoint an independent after the Company expressed interest in
Vice Chairman and called to split the roles of GSK’s consumer health unit
CEO and Chairman In February, Flossbach von Storch called on
Unilever to breakup its food, beauty, and
homecare operations
Source: FactSet, press reports and public filings as of 3/31/2022. 11
1 Calculated as of campaign announcement date, or as of initial date of disclosure. In the case of multiple activists, represents market cap as of earliest campaign
announcement date or initial disclosure.1 Global Activism Activity
Q1 2022 REVIEW OF SHAREHOLDER ACTIVISM
Rest of World: Notable Q1 Public Campaign Launches and Developments
($ in billions)
Launch Company / Launch Company /
Date Market Cap1 Activist Highlights Date Market Cap1 Activist Highlights
In February, RCF nominated three Directors to
the Board of IAMGOLD, criticizing the
In March, a group of investors led by MKT
Company’s underperformance and expressing
Tactical Fund wrote a letter to the Company’s
MKT Chairman, urging the Company to initiate a
disappointment with previous attempts to
3/22 Tactical 1/22 $1.5 engage with management
strategic review
$1.5 Fund Two weeks later, IAMGOLD reached a
MKT Tactical Fund also threatened litigation
settlement with RCF, appointing RCF’s three
and a potential proxy contest candidates to the Board and appointing one
as Chair
In January, Canadian National entered into a
In February, Snowcap urged AGL Energy to settlement agreement with TCI, appointing two
transition its business away from coal assets new independent Directors and replacing CEO
2/22 by 2030 and opposed the Company’s plan to 5/21 $1.5 Jean-Jacques Ruest
$3.6 demerge its power generation and retail This settlement followed TCI’s successful
electricity businesses campaign to thwart the Company’s proposed
acquisition of Kansas City Southern
In February, Quarz Capital opposed the In January, Artisan called on the Company to
Company’s merger with another Temasek- improve corporate governance practices and
backed REIT, Mapletree Commercial Trust threatened to launch a proxy fight
(MCT), claiming the proposal undervalued its Later in January, ValueAct urged the
high-quality portfolio 1/22 Company to separate its non-convenience
2/22 $2.9 $37.2
5/21 store retail operations
In February, MCT provided an option for the Post 3/31 Update – Seven & i announced it
Company’s shareholders to receive either would appoint additional independent, diverse
cash-only consideration for the merger, or a Directors; the Company also announced a
combination of both cash and MCT shares strategic review for its Sogo & Seibu unit
In January, 3D called for a special meeting to
accelerate a shareholder vote on the
In February, 3D Investment Partners
nominated two Directors to the Board of Company’s proposed three-way separation
Fujisoft, criticizing the Company’s low In February, Toshiba announced a two-way
12/20
profitability and poor growth strategy separation; 3D withdrew its prior proposal and
2/22 $1.5 6/20 $14.6
submitted a new proposal to solicit support for
In March, shareholders voted in favor of 6/20
Toshiba to pursue a sale
Fujisoft’s incumbent Board, despite ISS and In March, shareholders voted to reject the two-
Glass Lewis recommending 3D’s candidates way separation as well as 3D’s proposal to
initiate a sale process
Source: FactSet, press reports and public filings as of 3/31/2022. 12
1 Calculated as of campaign announcement date, or as of initial date of disclosure. In the case of multiple activists, represents market cap as of earliest campaign
announcement date or initial disclosure.2 M&A as the Primary Objective
Q1 2022 REVIEW OF SHAREHOLDER ACTIVISM
Slight Decline in M&A-Related Campaigns
Coincident with the recent pull-back in the M&A market, campaigns to scuttle/sweeten deals were less prevalent in Q1 2022 as compared to
typical annual levels, though transaction-related campaigns still accounted for ~30% of all campaign activity
Prevalence of M&A Campaign Objectives by Type Notable Examples of Campaigns Launched in Q1 2022
Non-M&A-Focused Agitate for Sale / Industry Consolidation
Launch
Break Up / Divestiture Scuttle / Sweeten Deal Date Target Activist(s) Objectives
Ancora urged Everbridge to sell itself
Sell the Company
3/22 and criticized leadership for its
inability to execute its strategy
Third Point urged Cano Health to
pursue a sale, claiming that the
3/22 Company had disappointed
53% investors since going public via
60% 57% SPAC in 2020
66%
70% Alta Fox urged Hasbro to spin off
Break Up/Divestiture
one of its gaming segments to
2/22
unlock up to $100/share in
incremental value
Flossbach von Storch called on
Unilever to separate its food
2/22
business from its beauty and
16% homecare operations
8% 12%
Scuttle or Sweeten Deal
Engine Capital and Breach Inlet
14% 2/22 stated opposition to Veritas’ offer to
17% 12% 12%
16% buy the Company for $21/share
10% 8% Snowcap opposed AGL’s plan to
split its power generation and retail
19% 2/22 electricity businesses, following the
15% 15%
10% 10% Company’s rejection of a takeover
offer from Brookfield
2018 2019 2020 2021 Q1 2022
Source: FactSet, press reports and public filings as of 3/31/2022. 13
Note: All data is for campaigns conducted globally by activists at companies with market capitalizations greater than $500 million at time of campaign announcement; select
campaigns with market capitalizations less than $500 million at time of announcement included during the COVID-19 pandemic-induced market downturn; companies spun off
as part of campaign process counted separately.3 Board Seats Won & Proxy Contests
Q1 2022 REVIEW OF SHAREHOLDER ACTIVISM
Global Board Seats Won
Board representation is top of mind heading into proxy season; 38 seats have been won by activists to date, with 37 secured via settlement
Board Seats Won Board Seats Won by Activists, Q1 2022
Board Seats Won1 # of Companies Targeted for Board Seats 7 Mantle Ridge won 7 of 11 Board seats initially
sought by way of a settlement with Dollar Tree
30 Board seats
(79% of the total) were
79
won at U.S. companies
66
3 3 3 3 3
159 55 52 2 2 2 2 2
122 132
29
89
Ancora Advisors 2
Mantle Ridge
D.E. Shaw
Icahn Associates
Management
Starboard Value
Inclusive Capital
TCI
Trian Partners
RC Ventures
ValueAct
38
Partners
RCF
65
39 43 42
2018 2019 2020 2021 Q1 2022
Settlements vs. Proxy Contests Global Campaign Objectives
Board Seats Won1 Board Seats Won through Settlements Lack of proxy The elevated percentage of Board-related
2018-21 Avg.3 Q1 2022
159 Board Seats Won through Proxy Fights contest wins in campaign objectives in Q1 coincides with
Q1 not surprising the upcoming proxy season
41% 40%
132 given seasonality
122 of AGMs
(most in Q2) 30% 31%
124 89
102 110 19%
17%
82 38 14% 14%
12%
10%
35 37 1 4% 5%
20 22 7
2018 2019 2020 2021 Q1 2022
Won Through M&A Board Change Strategy / Capital Return / Governance Management
Proxy Contest 22% 16% 17% 8% 3% Operations Allocation Change
as % of Total
Source: FactSet, press reports and public filings as of 3/31/2022.
Note: All data is for campaigns conducted globally by activists at companies with market capitalizations greater than $500 million at time of campaign announcement; select
campaigns with market capitalizations less than $500 million at time of announcement included during the COVID-19 pandemic-induced market downturn; companies spun off
as part of campaign process counted separately. Campaigns may feature multiple objectives; as such, percentages will not equal 100% if added up.
14
1 Represents Board seats won by activists in respective year, regardless of the year in which the campaign was initiated.
2 Includes seats jointly won by Ancora Advisors and Pacific Point Capital.
3 4-year average based on aggregate counts of campaign objectives.3 Board Seats Won & Proxy Contests
Q1 2022 REVIEW OF SHAREHOLDER ACTIVISM
Starboard’s Proxy Fight at Huntsman
In September 2021, Starboard Value launched a campaign against diversified chemicals company Huntsman; strong share price performance
and proactive portfolio and governance enhancements helped Huntsman ultimately prevail over the activist in a proxy contest
This marked the second consecutive Starboard proxy fight going to a final vote in which the Company prevailed
Campaign Timeline Voting Results
Proxy Advisor Recommendations
September 2021: Starboard filed a 13D, reporting an 8.4% stake in Huntsman and % Voted
FOR1,2 ISS Glass Lewis Elected?
announcing that it believed Huntsman’s shares were undervalued
Peter R. Huntsman 84% DO NOT VOTE FOR
October 2021: Starboard discussed Huntsman in its presentation at the 13D Monitor Active-
Mary C. Beckerle 48% DO NOT VOTE FOR
Passive Investor Summit, criticizing the Company’s track record of missed revenue growth
Sonia Dula 85% DO NOT VOTE FOR
and EBITDA margin targets
Cynthia L. Egan 49% DO NOT VOTE FOR
Management
December 2021: Huntsman launched a formal strategic review for its Textile Effects Division
Curtis E. Espeland 86% DO NOT VOTE FOR
and adopted a new multi-year executive compensation plan
Daniele Ferrari 49% DO NOT VOTE FOR
Early January 2022: Huntsman announced significant Board refreshment and governance
Jose Antonio Munoz Barcelo 49% DO NOT VOTE FOR
changes, including appointing three independent Directors and a new Lead Independent
Jeanne McGovern 85% DO NOT VOTE FOR
Director, as well as rotation of Committee composition and leadership roles
David B. Sewell 86% DO NOT VOTE FOR
Mid-January 2022: Starboard nominated a slate of four Directors, including its founder Jeff
Jan E. Tighe 85% DO NOT VOTE FOR
Smith, for election at Huntsman’s 2022 AGM
James L. Gallogly 37% FOR DO NOT VOTE
Dissident3
Late January 2022: Starboard filed its preliminary proxy statement, in which it claimed to Susan C. Schnabel 20% WITHHOLD DO NOT VOTE
have attempted to engage constructively with the Board and described the Company’s recent
Sandra Beach Lin 28% WITHHOLD DO NOT VOTE
Board refreshment efforts as “hasty”
Jeffrey Smith 37% FOR DO NOT VOTE
February 2022: Huntsman filed its preliminary proxy statement and asserted alignment with
Targeted by Starboard for Removal
Starboard on its objectives and strategic initiatives
Key Takeaways
Early March 2022: the parties exchanged several dueling presentations, with Huntsman
claiming Starboard’s arguments failed to account for recent performance and pointing to Strong performance and Board refreshment in the lead-up to the AGM
Starboard’s value-destructive involvement at GCP Applied Technologies may have ultimately swayed shareholder votes in the Company’s favor
Mid-March 2022: leading proxy advisors issued voting recommendations for shareholders Huntsman employed procedural and logistical tactics to curtail the
influence of dissidents, such as denying Starboard’s request for a
Glass Lewis issued its recommendation FOR all of Huntsman’s Director candidates
universal proxy and scheduling its AGM earlier than in prior years
ISS recommended FOR two of Starboard’s nominees, Jeff Smith and James L. Gallogly
Proxy advisors are influential, but not necessarily determinative of the
Egan-Jones recommended FOR all of Starboard’s nominees final vote outcome, as shareholders ultimately did not heed ISS’s
recommendations
Late March 2022: all of the Company’s nominees were elected to the Board
Source:
1
FactSet, press reports and public filings as of 3/31/2022.
Reflects votes FOR as a percentage of total shares outstanding.
15
2 Directors elected through a plurality vote; nominees with the most votes FOR were elected to the Board.
3 Only includes Dissident nominees to replace Company Directors.3 Board Seats Won & Proxy Contests
Q1 2022 REVIEW OF SHAREHOLDER ACTIVISM
Board Seats “In Play”: Calendar of Upcoming Contested AGMs
A number of high-profile campaigns for Board representation remain open, with 85 seats “in play” in the coming months
May 18*
JANA May 18
April 26 May 12 Sachem Head Capital May 26 June 17*
Slate Size: 4
Elliott Management Icahn Associates Slate Size: 51 Mithril Capital, et al. Lion Point/ETFS Capital
Slate Size: 2 Slate Size: 10 Slate Size: 3 Slate Size: 3
April May June
June 9
Macellum/Ancora
Slate Size: 3
April 27 June 24*
Land & Buildings Icahn Associates
Slate Size: 1 Slate Size: 2
June 14*
May 26* Sarissa
May 20* May 26
May 11 Slate Size: 2
Alta Fox Icahn Associates Starboard Value
Macellum Slate Size: 4
Slate Size: 5 Slate Size: 2
Slate Size: 10
Source: FactSet, press reports and public filings as of 3/31/2022.
Note: Board seats “in play” includes currently announced proxy contests at upcoming shareholder meetings as of 3/31/2022. Total does not include campaigns where an activist has 16
signaled an intention to nominate Directors but has not named the size of the slate.
* Denotes estimated date based on historical precedent.
1 Sachem Head reduced its slate to five nominees, from seven, on 4/11/2022.4 Voting Policy & Other Regulatory Change
Q1 2022 REVIEW OF SHAREHOLDER ACTIVISM
Key Development in Focus: Potential Impacts of Universal Proxy
Although the universal proxy does not go into effect until August 2022, certain activists have already requested its use in proxy contests
Overview Key Takeaways
In November 2021, the SEC adopted a rule requiring parties in a contested election to Lower barriers to entry for nominations from both
use a universal proxy card listing all available candidates, allowing investors to pick traditional activists as well as former founders/CEOs,
and choose which combination of candidates to vote for employees and upstart ESG-focused funds
The change contrasts the existing binary proxy voting regime, in which investors
Solicitation requirement (67% of voting power) is unlikely
must choose between company and dissenting shareholder proxy cards, which list
to be a deterrent given extreme concentration of most
only their respective nominees
shareholder bases
The SEC has called this an “important aspect of shareholder democracy,” putting
Individual Directors, rather than just the Company, may
investors voting in person and by proxy on “equal footing”
become more direct targets of a public activist campaign
The new rules require Director nominees’ consent to be named and introduce a
Unclear what the eventual impact on activist election
minimum solicitation requirement in which the activist must solicit the holders of
success, or the rate of settlements reached, will be
shares representing at least 67% of voting power
Upcoming Nomination Deadlines1 Pressure For Early Adoption
The concentration of AGMs in April – June means that ~2/3 of Russell 3000 issuers have
nomination deadlines in Q1; 20%+ of Russell 3000 issuers will be required to use the While the changes will not take effect until Aug. 31, 2022,
universal proxy for their 2022 AGMs in the event of a contested election activists may start demanding use of universal proxies in
32% advance of that date
Universal proxy rule
goes into effect Certain companies have successfully availed themselves
21%
of final opportunities to decline such requests in the 2022
13%
12%
proxy season, including:
4% 6%
2% 2% 2% 2% 2% 2%
Jan. Feb. Mar. Apri. May June July Aug. Sept. Oct. Nov. Dec.
Q1 Q2 Q3 Q4
Source: FactSet, Deal Point Data, SEC, press reports and public filings as of 3/31/2022. 17
Note: All dates for advanced notice deadlines based on estimates provided by FactSet and Deal Point Data. All data is for companies with market capitalizations greater than $500
million as of 3/1/2022.
1 Reflects distribution of Russell 3000 issuers for which data was available.4 Voting Policy & Other Regulatory Change
Q1 2022 REVIEW OF SHAREHOLDER ACTIVISM
Key Development in Focus: Proposed 13D Amendments
The SEC’s recent proposed amendments to the 13D and 13G filing regime promote timely and enhanced disclosure, thereby having the
potential to reduce activists’ ability to capitalize on information asymmetry in the public markets
Overview
In February 2022, the SEC proposed new rule amendments that would update
Key Takeaways
the current Schedule 13D and 13G reporting regime, with changes impacting
constructs including:
Timing: reduces the deadline for investors that cross the 5% ownership Would provide issuers with enhanced “early
threshold to file a Schedule 13D from 10 days to 5 days warning” regarding potential stake-building
Applicability to Certain Derivatives: provides that a holder of cash-settled
swaps is deemed the “beneficial owner” of the underlying reference security if
derivative is held with the purpose or effect of changing or influencing control of Would limit the ability of investors to
the issuer surreptitiously build large positions
Would curtail the ability of activists to rely on cash-settled swaps to evade
13D filing obligations Would reduce asymmetry of information by
“Group” Formation: clarifies the circumstances in which investors have formed shedding light on “tipper-tippee” relationships
a “group” for 13D filing purposes
“Tipper-tippee” relationships (in which one investor shares non-public
May consequently encourage activists to
information with another investor who subsequently purchases securities
initiate smaller stakes to avoid triggering
based on that information) would qualify as “group” formation and would
disclosure requirements
trigger a 13D filing obligation if collective ownership exceeds 5%
Source: FactSet, press reports and public filings. 185 ESG Pressure On Public Companies
Q1 2022 REVIEW OF SHAREHOLDER ACTIVISM
Potential Impacts of SEC Proposed Rules on Climate Disclosure
Though likely subject to change and future legal challenge, the SEC’s proposed mandatory climate-related disclosures will create more
consistency in key metrics used and information disclosed by companies, allowing for better comparison across companies
Overview
Key Takeaways
In March 2022, the SEC proposed rules requiring registrants to include certain
climate-related disclosures in their public filings
Disclosure requirements align closely with
Qualifying companies1 would need to disclose: existing frameworks such as TCFD
Climate-related risks and possible material impacts on their financial Companies will need to consider carefully
statements, strategy, business model and outlook how to complement quantitative disclosure of
Governance around climate-related risk and risk management framework emissions with qualitative discussion of
climate risk and related transition strategies
Greenhouse gas emissions (including Scope 1 and Scope 2 emissions; Scope
3 emissions will also need to be disclosed if they are deemed to be material or The independent attestation requirement will
if targets have been set) likely result in incremental expenses for
Issuers will need to have independent attestation from an assurance service companies that do not already engage in
provider (though subject to a phase-in) assurance
Information around transition plans, scenario analysis and climate-related Proposed rules further increase the gulf
goals, if available between ESG-related disclosure
For climate-related goals, disclose the usage of renewable energy certificates requirements for public and private
(RECs) and carbon offsets in achieving those goals companies
Disclosures will be incorporated into registration statements and annual reports The final form of the SEC rule is subject to a
Large Accelerated Filers (companies with public float at or exceeding $700mm) minimum 60-day comment period and will
will need to comply with these parameters in FY23 disclosures (disclosed in likely face legal challenges, thus the final form
2024) of the rule will likely change
Source: SEC. 19
1 Qualifying companies refer to public companies registered with the SEC.5 ESG Pressure On Public Companies
Q1 2022 REVIEW OF SHAREHOLDER ACTIVISM
Increasing Number of E&S Proposals
Though how many E&S proposals go to a final vote is yet to be seen, the number of submitted E&S proposals for 2022 AGMs thus far nearly
matches 2021’s total, fueled in part by the continued growth in environmental-related proposals
E&S Proposals Submitted Over Time Observations
Pending Voted Withdrawn Omitted1 Other2
443 438 The number of E&S shareholder
10 1 proposals submitted in Q1 2022 nearly
5 360 36 350 27
42 328 73 95 matches 2021’s total
51 16
57
58
143 86 201
96 2021 and 2022 activity has been
299
171 elevated relative to the prior three years
132 161 159
2018 2019 2020 2021 Q1 2022 Environmental-related proposals
Environmental-Related Proposals comprise a growing percentage of E&S
proposals, with nearly 20% of proposals
89 in 2022 having an environmental theme
74
4 33
1 49 The 89 environmental-related
1 42 1
34 48 proposals submitted in Q1 2022
8
10 represent more than 2x the total
25 10 55
16
14 submitted in all of 2020
15 15 22
10
2018 2019 2020 2021 Q1 2022
Such proposals come amid ever-
Diversity-Related Proposals increasing expectations for companies
regarding the disclosure of their
130 emissions and “net zero” plans
6
16
77 Thus far in 2022, there have been fewer
8 59 75 15 diversity-related proposals, which may
9 37 30 1 4
1 suggest increased responsiveness from
23 6 57
11 4 14 33 companies after 2021’s wave of
13 15 22
proposals and withdrawals
2018 2019 2020 2021 Q1 2022
Source: ISS Governance.
Note: Includes E&S proposals at S&P 500 companies.
20
1 Proposal omitted following no-action process with the SEC.
2 Proposal not included in proxy statement or not presented at AGM for undisclosed reasons.Q1 2022 REVIEW OF SHAREHOLDER ACTIVISM
Lazard’s Capital Markets Advisory Group—Key Contacts
Managing Director and
Mary Ann Deignan (212) 632-6938 maryann.deignan@lazard.com
Co-Head of Capital Markets Advisory
Managing Director and
Jim Rossman (212) 632-6088 jim.rossman@lazard.com
Co-Head of Capital Markets Advisory
Managing Director and
Rich Thomas +33 1 44 13 03 83 richard.thomas@lazard.com
Head of European Shareholder Advisory
Christopher Couvelier Managing Director (212) 632-6177 christopher.couvelier@lazard.com
Kathryn Night Managing Director (212) 632-1385 kathryn.night@lazard.com
Antonin Deslandes Vice President +33 1 44 13 06 77 antonin.deslandes@lazard.com
Leah Friedman Vice President (212) 632-6685 leah.friedman@lazard.com
Quinn Pitcher Associate (212) 632-6715 quinn.pitcher@lazard.com
Laeticia Silva Analyst +33 1 44 13 08 03 laeticia.silva@lazard.com
Hela Baly Analyst + 33 1 44 13 04 17 hela.baly@lazard.com
Alexander Ataiifar Analyst (212) 632-1421 alexander.ataiifar@lazard.com
Colin Matheson Analyst (212) 632-1426 colin.matheson@lazard.com
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