A 2024 proxy season review: 3 themes for boards and investors
In the first half of 2024, a total of 449 U.S. companies faced activist demands, marking a 9% increase from the 412 companies in the same period in 2023, and an 11.4% rise from the 403 companies in 2022. The Diligent Market Intelligence: Proxy Season Review 2024 report, produced in collaboration with Olshan Frome Wolosky and Campaign Management, reveals that over half of these companies boasted valuations exceeding $10 billion, highlighting a trend where activists are increasingly targeting large, well-established firms for value creation opportunities.
Richard Peterson, Vice President of Data, AI and ESG Strategy at Diligent, comments on the evolving scenario: “The landscape of shareholder activism and corporate governance is becoming increasingly complex and dynamic. With high-profile shareholder activist campaigns now under enhanced public scrutiny, it is more crucial than ever for companies to develop a robust, data-driven corporate governance and shareholder engagement strategy to effectively respond to potential activist challenges.”
Additionally, the adoption of the universal proxy card (UPC) is facilitating more settlements between activists and companies. This tool grants investors the unprecedented flexibility to select from both management and dissident slates, simplifying the process of gaining board representation.
From the report, three critical themes have emerged that should be on every board's and investor's radar:
1. The rise of settlements facilitated by universal proxy
A significant development this season has been the impact of the UPC. The UPC has notably facilitated a higher rate of settlements between companies and activists, with a substantial number of board seats being secured through these agreements. This tool has proven essential in smoothing negotiations, allowing for more strategic alignments and less contentious battles.
2. Record highs in ESG engagements
Environmental, social and governance (ESG) issues have continued to be at the forefront of shareholder concerns, reaching record levels of engagement. The number of environmental and social proposals put to vote has never been higher, indicating a growing priority among shareholders. Additionally, litigation related to ESG campaigns has become more prevalent, highlighting the increasing seriousness with which these issues are being addressed.
3. Emerging focus on AI governance
A noteworthy addition to this year's proxy season is the focus on artificial intelligence (AI) governance. Several AI-related proposals were voted on, reflecting the growing importance of ethical considerations in AI development and deployment. This emerging focus is likely to gain more traction as AI becomes increasingly integral to business operations and societal norms.
Get deeper insights from our latest report
The 2024 proxy season has been characterized by dynamic changes and significant activism, with substantial impacts on corporate governance and shareholder value. As we look forward, these trends are expected to shape the landscape of corporate engagements and strategic decision-making.
For more insights on how the 2024 proxy season is shaping the corporate landscape, download the full Diligent Market Intelligence: Proxy Season Review 2024 report.
