Bob Marese is a Managing Director at MacKenzie Partners, a full-service proxy solicitation, stock monitoring and identification, investor relations and corporate governance consulting firm. Marese joined MacKenzie in 1994, and is currently responsible for oversight of European operations. He’s also responsible for the oversight of proxy and consent solicitations, proxy contests and corporate control events, and tender and exchange offers in both the United States and Europe.
Christopher P. Skroupa: What have been the top issues shareholder activists are talking to boards and management teams about this season?
Bob Marese: As always, most of the activism campaigns are initiated with the goal of securing board representation that the activist can leverage to drive change from within the company. But recently, we have seen many activists become more involved in M&A, often seeking to promote a strategic alternatives process or break up or drive up the price on existing deals. Just as there are no longer any “routine” annual meetings in this era of heightened shareholder engagement, shareholder opposition to deals, whether public or private, is becoming a constant feature of the M&A landscape.
Skroupa: How would you describe the key issues and resolutions?
Marese: On the corporate governance side, one type of resolution that we haven’t been seeing as much of are resolutions to adopt or amend proxy access bylaws. These resolutions had significant momentum in 2016, and as a result, we’ve gotten to appoint where approximately two-thirds of S&P 500 companies have adopted proxy access, generally following the same market-standard parameters. We haven’t seen the same initiative from corporate gadflies and other corporate governance activists on proxy access in 2018. Instead, we’ve been seeing more traditional shareholder proposals, such as proposals to allow for special meetings or lower the threshold required to call special meetings, or to separate the chair and CEO roles. We’re also seeing a wave of environmental and social proposals, which represents a continuation of a theme from last year. 2017 saw environmental issues take center stage, with a few climate change proposals passing nearly passing, and that trend shows no sign of slowing down in 2018.
Skroupa: Is this proxy season more contentious that last year?
Marese: Proxy contests are often highly charged, and the intensity of the rhetoric hasn’t changed substantially from prior years. We have, however, noticed a fairly significant uptick in activism activity across the board as judged by the number of campaigns. Based on the data we saw in the first quarter, 2018 could be a record-breaking year for shareholder activism.
Skroupa: What do you think is driving this activity?
Marese: Any number of factors could be driving the increased activity. After spending much of 2016 on the sidelines, 2017 saw many of the large activists return to the public eye with some high-profile campaigns, and it became clear that activists continue to have a lot of investable capital at their disposal. Recent stock market volatility has provided activists with more compelling entry points that may not have been available during the run-up in the markets during the early part of 2016. Likewise, a number of large US-based activists have begun testing the waters in Europe, which has opened the door for others to follow suit in search of opportunities in markets that tend to be less crowded.
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