It’s not your imagination—activist investing is creeping upward toward pre-pandemic levels.
That’s the topline takeaway from this year’s Shareholder Activism Annual Review by Insightia, a research firm. (Insightia is owned by Diligent, which sponsors this newsletter.) The report found that activist investors targeted 967 companies globally in 2022, up from 913 in 2021.
Josh Black, Insightia’s editor-in-chief, says the sell-off in the markets, the arrival of the universal proxy card, and new regulatory requirements have created fertile ground for even more proxy fights this year. Activists will push companies to focus on margins, not growth, and capital allocation and other standard concerns will face investor scrutiny.
Surprisingly, investor interest in the worker experience also surfaces in the review, pointing to a potential trend.
Let’s be clear, activist campaigns are typically tied to cost-cutting and mass layoffs, and that’s unlikely to change. But the report cites examples from 2022 when traditional activists sought to hold companies accountable for failing to protect workers from sexual harassment (part of Legion Partners’ challenge to Guess directors) and for keeping employees safe on the job (one of several concerns Elliott Management brought to Canada’s Suncor Energy.) In Europe, an expert told Insightia he expects the cost of living and worker pay rates, especially compared to CEO compensation, to become flashpoints in 2023.
Shareholder resolutions about racial equity also continue to see strong support from investors, says Black, noting that Larry Fink’s 2022 annual letter to CEOs highlighted the changing relationship between companies and employees. "Workers demanding more from their employers is an essential feature of effective capitalism," the BlackRock chief wrote.
Meanwhile, cause-based activists are expected to make waves this year, too. Those who see abortion rights as a business and employee retention matter have already put boards on warning. And, in an early win for one coalition of investors, Apple’s board just agreed to an audit of its response to unionization efforts.
“The employee piece is a broad umbrella for issues related to the attractiveness of working for a specific company, in specific locations, and workers’ rights, safety, equity, and diversity,” says Black. “Companies don't necessarily know which issue they're going to have to engage on in a given proxy season—it may be several, it may be none—but it's well worth keeping a global perspective on what's happening in the marketplace.”
Lila MacLellan
lila.maclellan@fortune.com
@lilamaclellan
