Board Priorities in 2025: Shareholder activism
16 January 2025
Preparing for a rise in Shareholder activism
Shareholder activism has been growing globally in recent years and has become an increasingly prominent item on the boardroom agenda. Lazard's 2024 review of shareholder activism shows there has been a 29 per cent increase in the first half of 2024 globally compared to the historical five-year average, which is the busiest six months on record. There has been a particular spike in activity in APAC: in the first half of this year, there was a record number of 43 campaigns, nearly matching the full year 2023 levels.
Activism comes in different forms; whilst public campaigns are destabilising for the companies targeted, it should not be assumed that all activists present a threat or act in a self-serving manner. The increased engagement shown by investors is arguably the type of oversight that is being encouraged in governance regimes globally.
In Australia, we have seen a trend toward shareholders focusing on company specific issues, such as operational strategy, updates on previously disclosed strategic projects / transactions, directors’ time commitments, rather than macro-global issues, such as the adequacy of cyber measures and approach to AI and climate change. This focus has resulted in an increasing number of requests from shareholders for Board change as a means of demonstrating dissatisfaction with current performance or strategy. In the UK, M&A remains a frequent demand of campaigns, as does the call for Board changes which can result not only in the departure of directors but also an invitation to the activist to join the Board.
Regardless of campaign focus, shareholder activism has changed the corporate landscape globally and an increasingly diverse range of companies are now targeted. Boards which have successfully navigated activist situations in private have done so primarily by intense and constructive shareholder engagement over an extended period. Intensive preparation for AGMs, particularly in situations which have not de-escalated, is also a critical strategic response which enables a Board to demonstrate the good governance standards that can come under intense scrutiny, particularly where a campaign becomes public.
