2021 U.S. Shareholder Activism Review

December 20, 2021

As the U.S. economy continues to adjust to the ongoing COVID-19 pandemic, shareholder activism campaigns against U.S. public companies have generally returned to pre-pandemic levels — activism activity through August increased 28% this year from 2020 and is comparable to 2019 levels. The most high-profile campaign this year, Engine No. 1’s successful proxy contest at ExxonMobil, introduced what is likely a new wave of shareholder activism campaigns focused on ESG (environmental, social and governance) theses. The extent to which Engine No. 1’s success can be replicated by other activists or in other industries is still to be determined, but ESG-focused activism is expected to gain further traction as a by-product of increasing public institutional investor emphasis on ESG issues.

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S&C's 2021 U.S. Shareholder Activism Review: Key Topics

Our 2021 Shareholder Activism Review analyzes trends in shareholder activism from the past year. Key themes include:

Public activism levels increased during the 2021 proxy season compared to the 2020 proxy season, with the number of U.S. activism campaigns up approximately 28% through August
Engine No. 1’s high-profile campaign against ExxonMobil cements ESG (environmental, social and governance) as a primary activism campaign objective, but the extent to which Engine No. 1’s success may be replicated by other activists or in other industries remains to be seen
Activism campaigns during the 2021 proxy season concluded in settlement agreements more frequently and more quickly compared to prior years, with 32% of settlement agreements through August being reached within one month of the activist publicly initiating its campaign
Recent regulatory developments, including those focused on antitrust oversight, shareholder voting practices and disclosure, will likely have a meaningful impact on future activism campaigns

S&C’s Corporate Governance Practice

Sullivan & Cromwell offers clients practical approaches for navigating the increasingly complex corporate governance landscape. In every area of corporate governance—from risk oversight and strategic decision-making frameworks to ESG matters, disclosure issues, shareholder proposals and shareholder activism—our Corporate Governance practice offers market-leading expertise honed from decades of experience.

Meet Our Lawyers:

Melissa Sawyer is the co-head of the Firm's Corporate Governance & Activism Practice and a partner in the Firm's Mergers & Acquisitions Group. Her experience advising companies spans the full range of governance topics, including board structure, board evaluations, director tenure and diversity, ESG, directors’ fiduciary duties, disclosure, investor engagement, shareholder proposals, crisis management, responding to activists and short-sellers, succession planning, and insider trading and other compliance matters. In 2020, Melissa was named “Dealmaker of the Year” by The American Lawyer.

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Marc Treviño is the co-head of S&C's Corporate Governance & Activism Practice, the managing partner of its Executive Compensation Group, and a founding member of its Financial Institutions Group. Marc is a recognized leader in structuring and counseling senior executives and boards in significant matters involving reputation, overlapping regulatory regimes, fiduciary conflicts and multiple jurisdictions, with a particular emphasis on matters involving financial institutions.

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Lauren Boehmke is a partner in S&C’s Corporate Governance & Activism Practice and Mergers & Acquisitions Group. She advises clients on a broad range of corporate governance, activism, takeover defense, and other public company advisory matters, as well public and private M&A and other transactional matters. Lauren has assisted with representing clients across the industry spectrum, including in the consumer & retail, sports & entertainment, healthcare, technology and financial industries.

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