Stakeholders More Accepting of Shareholder Activism According to a Report by Schulte Roth & Zabel, Activist Insight and FTI Consulting

Leading law firm Schulte Roth & Zabel (SRZ) today announced key findings from its 2016 Shareholder Activism Insight report, published in association with Activist Insight and FTI Consulting. The report, which surveyed the views of 37 of the leading activists in the marketplace, shows that acceptance and support for shareholder activism continues to increase across all constituencies. Notably, 92% of those surveyed believe institutional investors are more accepting of activists than in previous years, with activists also experiencing increased receptivity from retail investors, boards of directors, management teams and the media.

Other key findings from the report include:

• 84% of respondents see some or a lot of opportunity for activism in the United Kingdom, compared to 74% for the rest of Europe, and 19% of activists see no opportunity in Asia.
• 66% of activists feel companies should enter into an active dialogue with investors as an effective defensive tactic.
• The median length of time respondents hold their activist investments is three years and they target a median alpha-adjusted annual return of 20% on activist investments.

Click here for a PDF of the report.

SRZ partners Marc Weingarten and Eleazer Klein serve as co-heads of the firm's global Shareholder Activism Group, which also includes London-based corporate and funds partner Jim McNally and New York-based litigation partner Michael E. Swartz. Contributing to the Shareholder Activism Insight report, Mr. Weingarten noted, "More directors with an owner's perspective are still needed in many boardrooms, to respond to the increasing acceptance of shareholder activism."

The report discusses the difficulty activist investors face in reaching resolutions with management teams. Commenting on the rise of settlements, Mr. Klein said, "Settlements continue to be the trend, but the tides may be changing." The report is based on a survey sample consisting of economic activist funds, with combined assets under man­agement of $153 billion, that have engaged over 420 companies in activist campaigns since 2010 including some of the largest and most high-profile situations.

The surveys were sent out immediately after the Brexit vote. In commenting on those survey results, Josh Black, editor-in-chief of Activist Insight, said, "It appears activists have every intention of being as busy next year as they have in recent times, while the U.K.'s decision to leave the European Union appears to have made both markets, if anything, more attractive to activists."

The report also addresses the growing sophistication of campaigns. Steven Balet, managing director at FTI Consulting, commented, "Companies that have already been targeted with activism and which may even have activist nominees on their boards, will not necessarily be immune to either a refreshed approach for control by the original activist or from being targeted by an entirely different activist fund."

"We are pleased to present the Shareholder Activism Insight report as it uncovers the issues that are top of mind for investors in today's market," commented Alan S. Waldenberg, chair of SRZ's Executive Committee. SRZ is recognized for its renowned shareholder activism practice. Notable matters include the representation of: Altimeter Capital Management in its successful shareholder activist campaign at United Continental Holdings, the parent company of United Airlines; Elliott Management in connection with its agreement with PulteGroup, one of America's largest homebuilding companies; and JANA Partners in entering into a cooperation agreement with Team Health Holdings, a leading physician services organization. To visit SRZ's Shareholder Activism Resource Center, click here.