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.
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Shareholder Activism
Key Practices for Board Organization and Oversight of ESG
Robust interest in ESG-related matters and growing demands from shareholders, regulators and various other stakeholders during 2021 have put management and boards of public companies firmly on notice that strong ESG policies, practices and commitments are key components to long-term organizational success, business resiliency and value creation.
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Diversity Issues Remain at Center Stage, and the Show Is Just Getting Started
Diversity, equity and inclusion (DE&I) has received unprecedented support in the past year, and trends show that it is here to stay at the forefront of focus areas for corporations and key stakeholders alike.
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2022 Shareholder Engagement Trends and Considerations: ESG and Investor Outreach
As ESG remains a mainstay of board and investor focus, effective shareholder engagement is as important as ever, and as complex as ever, for ensuring that companies have the external support necessary to advance their long-term strategy.
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The Materiality Debate and ESG Disclosure: Investors May Have the Last Word
In 2021, investors and regulators continued to focus on the scope and quality of public company disclosure of environmental, social and governance information.
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Selected Issues for Boards of Directors in 2022
Each year, we ask colleagues from around our firm to boil down the issues in their fields that boards of directors will be facing in the coming year. In the following pages, we present the results for 2022 – focused updates on 16 topics that will feature on board agendas throughout the year.
The concerns…
UK Introduces Mandatory Climate-Related Financial Reporting for Large Public and Private Companies
The UK Government has recently announced that it will introduce mandatory climate-related financial reporting for the first time.[1]
The new rules are likely to have particular implications for UK public companies listed outside the UK (particularly on the NYSE or NASDAQ) or on AIM, large UK subsidiaries of multinational corporate groups and large portfolio companies of financial sponsors that have a UK topco structure, where the new rules may require them to grapple with climate-related financial reporting for the first time.
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SEC Provides New Guidance on Shareholder Proposals – Likely To Limit Companies’ Ability To Exclude Environmental and Social Proposals
On November 3, 2021, the Division of Corporation Finance of the SEC (the “Staff”) issued Staff Legal Bulletin (“SLB”) No. 14L, which rescinds SLBs Nos. 14I, 14J and 14K, all of which provided guidance with respect to no-action letter requests that sought relief from the Staff to exclude shareholder proposals on the basis of Rule 14a-8(i)(7) and Rule 14a-8(i)(5). SLB No. 14L also provides guidance on (i) certain technical exclusions, (ii) the use of graphics and images in proposals and (iii) the use of email between proponents and companies.
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The Shareholder Rights and Activism Review, 6th Ed.
Cleary Gottlieb partner Michael Ulmer authored the “Germany” chapter in The Shareholder Rights and Activism Review, which was published by The Law Reviews.
The chapter discusses the legal framework and emerging trends of shareholder activism in Germany.
To read the chapter, click here.
UK Bids: Take-Private Boom Sees Negotiating Power Shift from Target Boards to Shareholders
As we have covered previously, one of the most noticeable trends that has emerged in the current boom in UK public M&A activity[1] is the heightened level of target shareholder opposition to bids. This is manifesting itself in a number of ways, including through increased and novel “bumpitrage”[2] campaigns as well as through institutional investors becoming more vocal in expressing their discontent at proposed bids. There appears to be a general feeling among a number of the largest UK institutional investors that private equity are acquiring UK public companies “too cheaply”.
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