Already on the Rise, Shareholder Activism Set to Increase
In light of a proposed NYSE rule change that will give activist shareholders increased voting influence, Audit Analytics has just released a new briefing on trends in shareholder activism. Using the Audit Analytics Active Shareholder Database, which tracks SC 13D filings, researchers identified a significant increase in shareholder activism focusing on control of companies and concern over share price.
Findings in the briefing include:
- In 2006, only .43% of accelerated filers had activist shareholders express concern about share prices. In 2007 it was 2.3%, an increase of more than 5 times.
- Accelerated Filers with activist shareholders expressing disagreement with management actions or strategy significantly increased from only 18 issuers in 2006 to 84 in 2008.
- In 2008, 3.45% of Accelerated Filers had activist shareholders seeking to change or nominate members of the Board of Directors, up from 1.1% in 2006.
The NYSE is considering a change to rule 452, which allows brokers to vote shares for which they have not received instructions on all “routine business.” Brokers usually support management recommendations. The proposed change would reclassify uncontested director elections to be considered “non-routine.”
With 70-80% of U.S. public company shares managed by brokers, and many shareholders not voting, the new rule has the potential to be a major shift of power toward activists.
The full report is available here.
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