2024 saw the most activist campaigns since 2018, with an increasing focus on operational and strategic initiatives in addition to traditional M&A-related theses. Increased Focus on Operational and Strategic Objectives Strategic and operational focused campaigns rose in 2024 to 22% of activist campaigns (25% in the United States). M&A focused campaigns (including calls for a divestiture or to break up a proposed deal as well as for the sale of a company) dipped in the first half of 2024, likely caused by high interest rates, geopolitical uncertainty, and a tougher regulatory environment, but bounced back in the second half, with full year numbers at 43%, in line with prior year averages.17 We expect the looser monetary policy and regulatory environment of Trump’s first term to return during his second term, providing a more M&A-friendly backdrop and inspiring more M&A focused campaigns, though geopolitical 17 Barclays 2024 Review of Shareholder Activism; Barclays H1 2024 Review of Shareholder Activism. 18 See MoFo’s client alert, “Occasional Activists: Shaping Corporate Governance in 2024,” Aug. 19, 2024. 19 West Palm Beach Firefighters’ Pension Fund v. Moelis & Co. (Del. Ch. Feb. 23, 2024). See also MoFo’s client alert, “Maintaining the Balance of Power in Venture-Backed Startups: The Impact of Delaware’s Moelis Decision on Drafting Shareholder Rights Provisions,” Mar. 4, 2024. 20 DGCL Sec. 122(18). and other policy uncertainties remain. Retail Investors and Social Media Taking a More Active Role Retail investors and social media have played increasing roles in activism over the last several years, joining “occasional” activists (such as institutional investors and individuals not dedicated to activist strategies) in an increasingly diverse activism landscape.18 Retail investing has grown significantly due to fintech firms like Robinhood lowering barriers to entry, and both companies and activists are increasingly seeking retail investor participation in governance matters. Social media and other public relations methods have become important tools for both companies and activists to garner retail investor support. For example, in Disney’s defeat of activist Nelson Peltz, both Disney and Peltz spent aggressively on tactics to solicit retail investor votes. Moelis, DGCL Amendments and Activist Settlements The Delaware Chancery Court in February struck down several pre-approval and board composition provisions in a governance agreement with a controlling stockholder, finding the provisions to be unlawful restraints on the board’s statutory discretion.19 The court noted (but did not rule on) the potential applicability of its reasoning to activist settlements. Delaware responded by amending the DGCL in August to expressly authorize stockholder agreements granting stockholders certain governance and consent rights that are not contrary to the company’s charter and that would not be contrary to Delaware law if included in the company’s charter.20 The amendments are new and subject to interpretation but are expected to mitigate some effects of the Moelis decision that many considered inconsistent with prevailing market practice. Minimal Effects of the Universal Proxy Card 2024 saw the second proxy season under the SEC’s universal proxy rules, but the full impact of these rules remains unclear. Indeed, contrary to predictions that the universal proxy card would make it easier for activists to attain board seats, activists only secured 119 board seats in 2024, down from 134 in 4. Shareholder Activism Outpaced Prior Year Averages 10 Morrison Foerster
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