Jason Frankl and Brian G. Kushner are Senior Managing Directors at FTI Consulting. This post is based on their FTI Consulting memorandum. Related research from the Program on Corporate Governance includes The Long-Term Effects of Hedge Fund Activism (discussed on the Forum here) by Lucian A. Bebchuk, Alon Brav, and Wei Jiang; Dancing with Activists (discussed on the Forum here) by Lucian A. Bebchuk, Alon Brav, Wei Jiang, and Thomas Keusch; and Who Bleeds When the Wolves Bite? A Flesh-and-Blood Perspective on Hedge Fund Activism and Our Strange Corporate Governance System (discussed on the Forum here) by Frankl and Kushner Leo E. Strine, Jr.
Introduction
R-E-S-P-E-C-T … One year down in UPC!
UPC, also known as Universal Proxy Card, has surely garnered “respect” from both issuers and activists alike. FTI Consulting’s Activism and M&A Solutions team touches on this, as well as how a culture change in Japan is igniting a surge of activism, in our September 2023 Activism Vulnerability Report. This iteration presents our 2Q23 Activism Vulnerability Screener results, as well as our commentary on notable trends in the world of shareholder activism.
During the first half of 2023, financial institutions faced their most challenging period in more than a decade, even calling into question the viability of the regional banking model. At the same time, activist campaigns targeting financial institutions increased by more than 60% year-over-year during the first half of the year. By the end of 2Q23, fundamental concerns for the sector waned with the Regional Banks and Savings Banks industries appearing substantially less vulnerable in our rankings. By contrast, Utilities’ vulnerability increased dramatically, moving from number 14 last quarter (out of 36 industries) to the industry most vulnerable to activism. Additionally, industries in the Healthcare Services sector, including the Life Sciences, Pharmaceuticals and Health Services industries, all increased in vulnerability during 2Q23.