Activist investors help to oust record number of CEOs
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A record 27 CEOs resigned last year at companies targeted by activist investors, as shareholders revolted against leaders who weren't moving fast enough to boost market value.
Why it matters: Activists' success has boards moving quickly to remove underperforming CEOs, sometimes acting at the mere threat of a campaign.
The big picture: The 243 campaigns in 2024 mark the highest global total since 2018's record of 249, Barclays data show.
- U.S. activist campaigns rose 6% to 115, while Asia-Pacific's tally nearly doubled to 66 campaigns. European activity fell 26% to 48 campaigns.
By the numbers: The 27 resignations are a nearly threefold increase from 2020, according to Barclays, which publishes quarterly data on shareholder activism for companies valued at more than $500 million.
- Last year's significant departures include food processor Lamb Weston's CEO stepping down after pressure from Jana Partners; and Kohl's, under activist pressure for years, saw its CEO depart after a campaign from Vision One Management Partners.
The intrigue: It wasn't just when activist investors jumped in that boards shook up C-suites.
- Boards at Boeing, Nike, Intel, Stellantis and Hertz made changes at the top before an activist could publicly pounce.
- Several companies ousted their CEO while an activist was circling, and not represented on the board.
- "Activist Board representation is often a prerequisite for CEO change, but was not always the case in 2024," Barclays said in its activism note. "CEO change at CVS and Starbucks came without activist Board seats, suggesting the presence of an activist is enough for proactive Boards."
Zoom in: Elliott Management launched 14 campaigns, the most of any investor in 2024. The firm's major campaigns included investments in Honeywell, Softbank, Starbucks, and Texas Instruments.
- Starboard Value, Irenic Capital, the U.K.'s Gatemore Capital Management, and Asia's Oasis Management were also active last year.
What's next: The slow M&A market of the last few years forced activists to focus on operational changes at targeted companies rather than putting them up for sale. That tone is expected to shift.
- "M&A is going to be a big theme this year in activism," says Duncan Herrington, managing partner of advisory firm Jasper Street.
- The harder push by activists to seek more sales of companies will be a harder pill for a lot of companies to swallow, he says.
- "And I think more companies are going to push back. And that will likely lead to more aggressive, more public campaigns, and more potential fights."
