In 2023, a total of 982 companies worldwide were subjected to activist campaigns, marking a 4.6% increase compared to the previous year and the highest level since 2019, according to the Diligent Market Intelligence: Shareholder Activism Annual Review 2024 report.

The report suggests an increasing number of companies are identifying activism as a risk in their corporate disclosures. In fact, 23.4% of Russell 3000 companies disclosed shareholder activism as a risk in their 10-K reporting in 2023, up from 21.4% a year prior. The report suggests that financial resilience and the introduction of the universal proxy card are driving both traditional and non-traditional activists to launch campaigns aimed at remuneration and ESG oversight.

In 2023, 550 U.S. companies were publicly subjected to activist demands, a 7.8% rise compared to the previous year. In Asia, 220 companies faced demands, marking the third consecutive year of increasing campaigns in the region. Meanwhile, in Canada, 69 companies were subjected to demands, a 25.5% increase compared to 2022.

However, shareholder activism stagnated in Europe, with 123 European companies publicly subjected to campaigns in 2023, down from a high of 177 in 2021.

Investors enhanced their focus on remuneration in 2023, with 81 U.S. companies facing remuneration-related demands, a 37.3% increase compared to the 59 seen in 2022. The number of ESG demands publicly made by primary- and partial-focus activists increased in 2023 to 132 demands globally, up from 114 demands a year prior.

In the U.S., the newfound freedom offered when casting votes is bringing forth non-traditional activists, seeking board composition changes to remedy ESG shortcomings.

“Market conditions are playing a notable role in shaping activist demands and the companies which activists choose to target. Now more than ever, boards need to demonstrate that they are financially resilient and have strong governance practices in place to stay one step ahead," Editor-in-chief of Diligent Market Intelligence, Josh Black, said.

As the trend of shareholder activism continues to rise, companies globally are being urged to ensure their financial resilience and governance practices are robust enough to withstand the increasing scrutiny.