CLS Blue Sky Blog

Cleary Gottlieb on Navigating a World Where Almost Everyone Is an Activist

In many ways, 2021 was a high-water mark for corporate activism. The levels of traditional shareholder activism rebounded from the lows reached during the early days of the COVID-19 pandemic. M&A activism increased substantially as shareholder activists sought to capitalize on the M&A boom. Large-cap activism returned as activists targeted Fortune 500 CEOs with increasing frequency. The year also saw the emergence of a new brand of ESG-themed shareholder activism in the wake of the Engine No. 1 activist campaign supported by CalPERS at ExxonMobil and the copycat ESG tactics deployed by other shareholder activists.

At the same time, ESG shareholder proposals passed in record numbers as institutional investors sought to burnish their ESG credentials and attract an ever-growing pool of ESG capital. Under the Biden administration, the SEC joined the fray and facilitated activism by taking a step back from its role in policing which shareholder proposals make it onto the annual meeting agenda and moving to repeal Trump-era reforms designed to limit the influence of ISS and Glass Lewis. The ranks of climate change and DE&I activists expanded significantly, and their campaigns became more potent as efforts to accelerate change through corporate accountability gained traction amidst positive publicity and favorable political winds. Employee activism also proliferated as high-profile unionization drives accelerated and workforce-wide walkouts to register disapproval of corporate cultures continued to spread.

As we enter 2022, public companies face a world in which it seems that just about everyone is an activist. In navigating this new environment, boards and management teams would be well advised to take heed of some of the key lessons of 2021:

This post comes to us from Cleary Gottlieb Steen & Hamilton LLP. It is based on the firm’s memorandum, “Navigating a World Where Almost Everyone Is an Activist,” dated January 11, 2022, and available here.

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