Big companies have been cutting deals with activist shareholders, putting away the boxing gloves in order to dodge negative publicity, Axios' Courtenay Brown writes.
Why it matters: While some activists continue to make noise, the broader silence — and behind-the-scenes dealmaking — is more representative of what's really going on.
The big picture: With investors of all sizes pressing their agendas on public corporations — from hedge funds seeking to block mergers to issue-oriented shareholders pursuing social and environmental agendas — top executives have started negotiating upfront, aiming to reduce the number of loud confrontations and proxy battles.
American-style activism has caught on abroad and is rising in countries like the U.K. and Japan. But in the U.S., where investors first started building up stakes in companies and picking high-profile fights, the number of public showdowns is way down this year, despite some splashy exceptions.
- Not since 2015 have so few U.S. companies faced demands from activists during spring's big proxy season, which runs through the end of June, according to research firm Activist Insight.
- Activism outside of the U.S., meanwhile, is spiking. The U.K. had its busiest first quarter in recent years while Japanese companies saw a record 30 campaigns last year, per CNBC.
Between the lines: In Q1, all of the corporate board seats gained by hedge funds were won via settlements, according to Lazard.
- "Companies are more willing to discuss, more willing to listen, and it de-escalates the situation," Jason Day, a partner at the law firm Perkins Coie who advises public companies on stockholder activism, tells Axios. "Or the company has a nice conversation, and it doesn't move to the public sphere."
More proposals are being withdrawn, a recent trend that's expected to continue this year, according to ISS, a proxy advisory firm. This typically happens when a company and a shareholder group reach a truce behind closed doors.
The other side: This trend by no means spells the end of big, public battles.
- Bill Ackman, who has a big stake in United Technologies, came out against the company's tie-up with Raytheon.
- Carl Icahn has sued Occidental Petroleum, after opposing its plan to purchase Anadarko.
- Dan Loeb, who also opposes the United Technologies/Raytheon deal, is pushing Sony to sell its semiconductor business.
There's been lots of activity on the ESG front, primarily among issue-oriented shareholders.
- HSBC Global Asset Management is a part of a group asking companies like ExxonMobil and Amazon for more transparency about the environmental impact of their operations.
- Glass Lewis, the proxy advisory firm, came out this year to recommend that shareholders vote against nominating committee chairs on boards without a single female director.