Shareholder activism: reflections on the current and future landscape

Campaigns keep evolving, with more high stakes ahead 11 min read

Last year was another big one for shareholder activists globally, with investor sentiment in 2024 taking its cues from disruption across the broader economic and geopolitical landscape. Closer to home, activity was more stable in Australia—as it typically is, owing to our smaller footprint, more stringent company laws and stable markets—but campaigns continue to evolve, with activists refining their strategies to both capitalise on financial opportunities and seek redress for governance concerns.

We expect high stakes for the rest of the year as the Trump administration's policies upend commercial and regulatory settings and potentially tip the scales in favour of activists. While shareholder activism is now a standard part of the investment landscape in the US, the practice is reverberating around Australia and the rest of the world.

In this Insight, we bring together the key takeaways from 2024 and provide our thoughts on what we see ahead.

A snapshot of the numbers

Activist activity has well and truly bounced back from the subdued levels brought about by the pandemic.

Over 1000 companies were targeted by activist campaigns worldwide for the second consecutive year.¹ The US continues to be the epicentre of activity, with nearly 600 US-listed companies facing activist demands, marking a 7% increase from 2023 and 16% from 2022. There was a strong showing from non-traditional and first-time activists—a record-breaking 160 different investors launched campaigns in the US in 2024, which included 45 first-time activists, also a record.

Activity in Asia was similarly strong (particularly in Japan and South Korea), though Europe trended down, owing to ongoing disruption brought about by the conflict in Ukraine and generally subdued economic activity. There, the United Kingdom hosts the lion's share of activity, with 42% of campaigns targeting British companies.

Australia saw a modest rise in activity year on year, with 56 companies targeted, up nominally from the 54 campaigns recorded in 2023. While the volume of campaigns remained steady, the effectiveness of Australian activists improved—activists were assessed as having achieved their objectives in 25% of resolved campaigns, up from 16% in 2023.

Despite this, Australian activists struggled to secure board representation in target companies, with only seven board seats gained in 2024, down significantly from 26 in 2023. This divergence suggests that although activism remains a powerful force for corporate engagement, the dominant institutional investors and influential proxy advisors remain selective and largely hesitant in delivering changes at the board level.

All up, campaign volumes continue to be strong, though success is trickier to measure. Whether the public demands of activists are met is one tangible way of assessing effectiveness, but the overall impact of a campaign can often manifest in less direct ways. For example, the opportunity cost of management in responding to a campaign, the inherent value derived from the ensuing publicity and any derivative or other trading in the target securities—and, of course, the concessions that play out behind closed doors—often contribute to the effectiveness of shareholder activism.

Stories from the front line

These are some of the headline-grabbing campaigns that played out in the last year or so that have set the tone for activist causes.

Activist themes

We see two broad themes that motivate activists at the moment. For the reasons set out in the next section, we think the global economic and geopolitical settings provide an opportunity to shape activist behaviours.

First, there is the more traditional activist strategy where professional investors identify companies that they perceive could optimise their performance or enhance their governance structures, and then seek to exert influence to encourage the company to focus on increasing shareholder returns. They do this by pushing for one or a combination of:

• a realignment in strategy—eg when Tanarra Capital applied pressure on Lendlease, leading to a radical shift in its business strategy by forcing the company to exit its international property development ventures and refocus on Australian operations;
• a different approach to M&A activity—such as Bell Rock's public campaign against Whitehaven in 2023, where the hedge fund contacted shareholders with letters advocating against the company's acquisition of metallurgical assets from BHP, which it also did via a website. Bell Rock's public tactics sat alongside its undisclosed 13.041% long position in Whitehaven, prompting intervention from the Takeovers Panel; and
• leadership change—as was achieved by Elliott in the Starbucks and Southwest Airlines campaigns discussed above.

Second, there is the rising influence of public sentiment and political undercurrents playing out in the theatre of public markets, and the volatility that comes with it. Activist campaigns are increasingly becoming a proxy for broader societal dissatisfaction.

In Australia, this dual-track activism—balancing financial imperatives with political and social influences—reinforces the heightened investor expectations for action and accountability for these issues at the board level.

For instance, shareholder dissent on pay has markedly increased in Australia recently, seeing over 40 strikes among ASX 300 companies in 2023 and 2024, compared with 22–26 strikes recorded between 2018 and 2022.² Among those receiving a strike was the Australian Securities Exchange itself, with 26.15% of votes against the adoption of the remuneration report. Commentators assessed that the vote was an expression of shareholder dissatisfaction with the $250 million write-down and anticipated cost of a further $300 million to replace the CHESS technology system. Although 13 companies in the ASX 300 received a second strike in 2024, not a single board spill proposal came close to succeeding, with none receiving more than 20% of votes in favour.³ This demonstrates that while strikes are increasing, this is not being accompanied by momentum to trigger broader change to leadership structures—it would appear that shareholders are looking to use their vote to send a shot across the bow as an appropriate warning, rather than achieve a fundamental governance reset.

Shareholders and special interest groups have also used the proxy forum to express dissatisfaction regarding climate action, reflecting broader societal concerns around environmental sustainability and climate change. Last year, Market Forces led an activist campaign against Woodside Energy, advocating for an overhaul to its climate transition action plan and encouraging other shareholders to push for further board renewal at the 2025 AGM. At the AGM in April 2024, 58.4% of proxies cast were against the transition strategy, following three hours of questions. Earlier this month, another activist shareholder group, the Australasian Centre for Corporate Responsibility, advised investors to vote against the re-election of all three directors standing at the 2025 AGM and continues to integrate climate concerns into its analysis of shareholder returns.

There is a similar experience in the UK, where Shell shareholders are still asked to vote on resolutions brought by activists to align the company's medium-term emissions reduction targets with the 2015 Paris Climate Agreement and to factor 'Scope 3' emissions from fuels burnt by consumers into such calculations. Although the resolution received just 18.6% support from shareholders in 2024 (down 1.4% from 2023), the sustained pressure and media exposure may have contributed to the environmental, social and governance (ESG) proposals instead advanced by Shell's board.

For a more detailed analysis of the specific tactics that activists deploy pursuing these issues and how companies can prepare, see our earlier Insight.

Our expectations for the road ahead

Economic and geopolitical disruption to fuel activity

The global economy is currently experiencing disruption. The focal point is, of course, the US, where the combination of (promised) tax cuts and deregulation will free up capital for investors to pursue short-term opportunities. As the Australian Prudential Regulation Authority Chair, John Lonsdale, remarked in his recent address at the Australian Financial Review Banking Summit, 'what happens in the world’s biggest economy has implications for the world, and therefore for Australia'. We thus expect the positive conditions for activists will spill across borders, and perhaps the momentum will too—the Australian Securities and Investments Commission recently outlined its first steps towards easing compliance obligations for directors.

The hoped-for spike in M&A activity creates the opportunity for shareholder activism, so we anticipate elevated volumes of activity in the near term. At the same time, the imposition of tariffs and other protectionist policies—and the market volatility and trade war they may set off—will create winners and losers, with companies that struggle in the turbulence becoming targets for activists.

A reckoning on ESG and DEI initiatives

There has been mounting pushback on ESG and, more recently, DEI policies of corporations, with activists querying their necessity and appropriateness. Critics, who may not be shareholders, will be even more emboldened by the priorities and tone of the Trump administration.

We expect that activists will continue to seek out opportunities to make high-profile examples of some companies. However, while proponents of these initiatives have attracted significant attention, we haven't yet seen this noise translate into strong shareholder support for campaigns, as the recent experience with Apple demonstrates.

The anti-anti-ESG and DEI cause

While some activists are seeking to challenge ESG and DEI initiatives as a corporate priority, we anticipate others that may already be frustrated with perceived slow progress on sustainability, diversity and broader governance issues will look to double down and push for companies to stay the course.

This sentiment will be particularly emboldened if governments consider rolling back regulations or shifting priorities. If it is perceived that lawmakers and regulators aren't creating the framework to manage these issues, then we expect activists to take matters into their own hands by using shareholder meetings as forums or otherwise turning to the courts.

Scrutiny of board composition and director accountability

We are seeing investors pay closer attention to the fitness for office of individual board members, by using their vote to signal dissatisfaction and impose accountability for governance missteps when directors stand for election or re-election. This can be in relation to a company that has experienced an issue, or could follow individual directors to unrelated companies.

Expect to see closer scrutiny of board composition and more protest votes against director elections. Even if candidates still easily obtain the ordinary majority needed to carry the resolution, this is a far cry from the near 100% backing candidates would typically receive, and, particularly for larger companies, shows at least some institutional investors (whose holding may have previously been seen as more passive) are sending a message.

Leveraging technology and AI in activist strategies

Artificial intelligence (AI) has transformed a number of different fields, and has a role to play in the shareholder activism space as well, by making campaigns data driven and, as a consequence, more cost effective.

AI can be deployed by activists to monitor and analyse tremendous amounts of data associated with corporate disclosures and financial performance, and to recognise the vulnerabilities and patterns in would-be candidates for a campaign. As these tools grow in sophistication, we expect to see activists be able to penetrate the market more deeply, and move with greater efficiency and precision in identifying opportunities.

Activism has never been a simple strategy. We anticipate a continued evolution of the activist playbook in light of the above.