The Activist Investing Annual Review
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2021 THE ACTIVIST INVESTING ANNUAL REVIEW THE EIGHTH ANNUAL REVIEW OF TRENDS IN SHAREHOLDER ACTIVISM Activist Campaign Activist Adviser SCHULTE ROTH & ZABEL of the Year of the Year THE DEAL AWARDS U.S. THE DEAL AWARDS EUROPE FOREWORD Marc Weingarten, Ele Klein, and Brandon Gold. The enduring coronavirus pandemic and political and Shaw, signaling that corporate environmental responsibility social upheaval during the course of the 2020 presidential will no longer be taken lightly by institutional investors and campaigns and election have brought about a seismic shift in heavyweight market players. activism and market focus in 2021 that we expect to continue throughout the year. We believe that, as activists have This sentiment was also expressed in TCI Fund POWERHOUSE stepped back and refocused their efforts, a “new normal” has Management’s “say on climate” campaign, where it submitted emerged that will guide the tenure of activism for years to proposals to major institutions such as Moody’s Corp, Union PRACTITIONERS come. Pacific Railroad, Charter Communications, and Alphabet, to adopt procedures through which shareholders can cast “… Schulte Roth & Zabel, widely regarded “Schulte is one of the top U.S. law firms THERE WILL BE BLOOD advisory votes on annually disclosed plans to manage as the dominant global law firm for that represents activists in the insurgencies.” greenhouse gas emissions. shareholder activism and activist investing – THE DEAL The market crash of March 2020 deflated asset prices for … advises some of the most active and a brief period, in turn revealing which companies, boards, Given the support these campaigns have generated, and influential activist investors in the space.” “Schulte Roth & Zabel … [has] come to and management teams were underperforming. Given that with a new presidential administration that is expected to – FORBES dominate the activism market.” the crisis has stretched for longer than many expected, increase incentives for companies to adopt green initiatives – REUTERS investors will expect competent companies to have adapted and business plans, we only expect continued large-cap ESG “It is better than any other firm in the U.S. their business models to a touchless, socially distanced, and inroads to be made in 2021 and further into the future. for corporate governance work, it is really mostly virtual marketplace. We expect that those companies unparalleled.” “Dissident investors are increasingly looking to deploy deep capital reserves outside that have failed to reduce costs, and manage liquidity and THE SPAC PACK – CHAMBERS USA their bread-and-butter U.S. market, driving capital allocation to address a new business environment — Schulte Roth & Zabel to bring its renowned especially compared to peers that may have fared better — Special purpose acquisition companies (SPACs) surged in 2020 “Schulte Roth & Zabel LLP is ‘truly one of shareholder activism practice to the U.K.” the top firms for shareholder activism; the will make for especially ripe targets for activists. and we see no signs of investors losing interest in them this best in the breed if litigation support is – LAW360 year. Several high-profile private companies, such as DraftKings required.’” Moreover, those companies that are perceived to be lavishing and Nikola, have completed business combinations with – THE LEGAL 500 US “SRZ’s clients in the U.S. include several of their executives with bonuses or options grants untethered SPACs and high-profile investment firms, such as Bill Ackman’s the highest-profile activist managers …” to market performance will almost assuredly face the ire Pershing Square (for the second time) and Jeff Smith’s “… Schulte Roth & Zabel partners … have – FINANCIAL TIMES of shareholders who demand meaningful value-creating Starboard Value, have sponsored SPACs of their own. established themselves as go-to lawyers incentives for executives. for activist investors.” “Has the judgment, calm demeanor and Though SPAC investments do not necessarily have the same – THE AMERICAN LAWYER sophistication to help clients work through ENVIRONMENTAL ACTIVISM IN tenor as the drawn-out, bloody activist fistfights of previous meaningful situations … very, very talented.” SHARP FOCUS campaign seasons, they can still provide for a high-profile “With offices in New York, Washington – CHAMBERS USA vehicle for activists to play active roles in major investments, D.C. and London, Schulte Roth & Zabel is For years, market analysts and commentators have predicted in turn, representing a new path to driving value for those a leading law firm serving the alternative the rise of ESG activism. Though activists have focused on activist funds that might have simply launched PR campaigns investment management industry, and the good governance for decades, the latter parts of 2020 saw a to push for business combinations just a few years ago. firm is renowned for its shareholder activism dramatic introduction of environmental large-cap activism with practice.” – THE HEDGE FUND JOURNAL Engine No. 1’s campaign against Exxon Mobil Corporation, in * * * which Engine No. 1 called on Exxon to, among other things, invest in net-zero emissions energy sources and clean energy Though the number of activist campaigns decreased from infrastructure. Engine No. 1’s rallying cry was echoed by large 2019 with the onset of the pandemic, the likely decline in the institutional investors such as the California State Teachers’ pandemic, resurgence in the economy and a new Schulte Roth & Zabel LLP Retirement System (CalSTRS) and the Church Commissioners administration in Washington D.C. may provide for an New York | Washington DC | London for England, as well as by respected active players such as D.E. exciting new era of activist engagement. www.srz.com The contents of these materials may constitute attorney advertising under the regulations of various jurisdictions. 3 THE ACTIVIST INVESTING ANNUAL REVIEW 2021 | WWW.INSIGHTIA.COM | #AIAR2021 CONTENTS INTRODUCING INSIGHTIA The Activist Investing Annual Review 2021 In late 2020, Activist Insight merged with our sister company, Proxy Insight. The new company, Insightia, provides intelligent analytics on shareholder activism and 03 Schulte Roth & Zabel foreword Marc Weingarten, Ele Klein, and Brandon Gold, Schulte Roth & Zabel 06 2020: an overview Josh Black, Insightia engagement, corporate governance and directors, and proxy voting, which will 08 The new normal Jason Booth, Insightia 10 M&A, MIA? John Reetun, Insightia allow us to report on a fast-changing market and help our clients in an expanding 12 Staying in the fight Rebecca Sherratt, Insightia 14 On ESG, the time is up Cas Sydorowitz, Georgeson number of ways. Complementing our online information platforms, we look 16 The activist top ten The Insightia Editorial Team 22 You're going to need a bigger boat David Chase Lopes, D.F. King forward to keeping the market informed through Activist Insight Monthly, Proxy 24 Diversity matters Eleanor O'Donnell, Insightia 26 Back to fundamentals Marc Weingarten, Ele Klein, and Owen Schmidt, Schulte Roth & Zabel Monthly, and The Activist Insight Podcast. 28 Business abnormal Jim McNally and Gayle Klein, Schulte Roth & Zabel 29 Laissez-faire no more Sayer Devlin, Insightia 30 Animal spirits Jason Booth, Insightia 32 Road to recovery Iuri Struta, Insightia 34 Large-captivism John Reetun, Insightia 36 The best and the rest Sayer Devlin, Insightia 38 Ripping up the playbook Rodolfo Araujo, FTI Consulting 40 2021 targets Iuri Struta and Rob Cribb, Insightia 42 2020 track record Rob Cribb, Insightia 44 Crisis and opportunity Andrew Honnor, Greenbrook 46 Activist shorts in 2020 The Insightia Editorial Team 47 The activist short seller top five Eleanor O'Donnell, Insightia 50 Short selling in 2020 Iuri Struta, Insightia 52 ESG: savior or sham? Eleanor O'Donnell, Insightia THE TRUSTED HOME OF "We are grateful for the support of our clients and advertisers during a GOVERNANCE, ENGAGEMENT AND STEWARDSHIP challenging year for everyone. In particular, we thank Schulte Roth & Zabel, Georgeson, D.F. King, FTI Consulting, Spotlight Advisors, and Greenbrook for INFORMATION helping us produce this, our eighth Activist Investing Annual Review. We look forward to bringing you more coverage of these exciting topics in the year ahead. “ We at Insightia want to wish all of our readers and clients a safe and healthy year JOSH BLACK ahead. We look forward to seeing you soon." [email protected] All rights reserved. The entire contents of The Activist Investing Annual Review 2021 are DEFINITIONS: the Copyright of Insightia Ltd. No part of this publication may be reproduced without Primary focus: An investor which allocates most, if not all of its assets to activist strategies the express prior written approval of an authorized member of the staff of Insightia Partial focus: an investor which frequently employs activist investing as part of a more diversified strategy. Ltd, and, where permission for online publication is granted, must contain a hyperlink to the Occasional focus: an investor which employs an activist strategy on an infrequent basis. publication. Engagement focus: Typically large institutions and individuals that rally for change to promote good corporate governance. The information presented herein is for information purposes only and does not constitute Concerned shareholders: An individual or group of individuals who collectively form a group of shareholders to and should not be construed as a solicitation or other