Shareholder activists are more active than you think

The high-profile coverage of pressure placed on Canadian companies by activist investors is not the whole story.

While headlines talk of the investor power exerted on firms such as Hudson’s Bay Co. and Valeant Pharmaceutical, a new report says that only about a third of activist actions in Canada become public.

The report from Kingsdale Advisors says that activism is hot in Canada and while there have been fewer public fights, there has been an uptick in the successful actions by investors.

In 2017 so far, activists have won some or all of their objectives in 70% of the fights; a big jump compared to 55% in 2015 and just 33% in 2016.

Kingsdale’s 2017 Proxy Season Review also reveals that tightening of the reins on executive compensation has also been a key factor of corporate governance in the past year.

"The bar for governance standards only continues to rise. Proxy advisors, Institutional Shareholder Services (ISS) and Glass Lewis are tightening their policies and investors, even those that are considered passive, are becoming increasingly focused on management and board accountability,” said Wes Hall, Executive Chairman and Founder of Kingsdale Advisors.

Shareholders are expected to push for more representation on corporate boards. This trend for proxy access proposals is expected to spread to most if not all Canadian pension funds.

Investors are also keen to understand corporates’ environmental, social and governance (ESG) profiles and are increasing their scrutiny in the growing belief that long-term sustainability can equal long-term results.

The full report is available from Kingsdale Advisors.