Canada Sees “Appoint Personnel” Demands Double Amid Surge of Activity by U.S. Activists, According to Diligent
New data reveals Canada is fast becoming an activist hotbed, as opportunistic activists seek value creation opportunities
New York, NY, September 12,2023 – Attractive valuations and activist-friendly regulations have made Canada a hot draw for activists this year, with the number of appoint personnel and oppose M&A demands made increasing by 100% and 150%, respectively, compared to the first half of 2022.This is according to the new Shareholder Activism in Canada report from Diligent Market Intelligence.
According to the report, 39 Canada-listed companies were publicly subjected to activist demands, the highest number in the same period since 2019. The number of appoint personnel demands has doubled, while oppose M&A demands have nearly tripled in number.
Despite above average corporate governance, Canadian issuers face pressure to strengthen their environmental, social and governance (ESG) efforts. Institutional investors renewed calls on fossil fuel financers to enhance their climate-related reporting, in the hopes that ESG policy changes will trickle down to portfolio companies. Nearly 56% of environmental and social shareholder proposals subject to a vote in the first half of 2023 were filed in the financial services sector.
“Undervalued companies and shareholder-friendly regulations are establishing Canada as a market rich with opportunities for investors looking to unlock value,”said Josh Black, editor-in-chief of Diligent Market Intelligence. “Boards and management teams need to remain focused on addressing issues concerning profitability and corporate strategy.”
Three themes emerge from the report’s key findings that boards should have on their radar. These include:
Attractive valuations attract surge of U.S. activists:
- In the first half of 2023, 39 Canada-listed companies were publicly subjected to activist demands, up from 37 in the first half of 2022 and the highest number in the same period since 2019.
- The number of appoint personnel and oppose M&A demands made increased by 100% and 150%, respectively, compared to the first half of 2022.
- 26 (34.7%) of 75 demands made werelaunchedby U.S.-based investors, up from 12 (14.1%) of 85 throughout 2021.
Financiers face enhanced ESG scrutiny:
- The number of climate change shareholder proposals subject to a vote at Canada-listed companies more than tripled to 21 in the first half of 2023, up from six throughout 2022. Proposals of this kind won 19% average support, up from 17% a year prior.
- 19 (55.9%) of environmental and social proposals subject to a votewere filed at financial services companies, compared to 12 (38.7%) throughout 2022.
- Only 12.4% of Canadian companies report on Scope 3 emissions, compared to 17.6% of the 3,000-largest U.S. public companies.
Canada outperforms peers on board governance:
- Canadian boards feature an average 30.9% female representation, compared to 27% in the U.S. and only slightly behind Europe’s 33%. Canada also leads on board independence, with 80.1% of directors being independent, compared to 78.9% and 54.2% in the U.S. and Europe, respectively.
- Director re/election proposals secured 95.6% average support in the first six months of 2023, compared to 93.8% in the U.S. in the same period.
To download the full report click here.
About the report
Data from Diligent Market Intelligence’s Activism, Activist Shorts, Voting, ESG, and Governance modules, as well as Diligent’sCompensation and Governance Intel (CGI)and Manzamasolutions, run from January 1 to December 31, 2022. 2023 data are as of June 30, 2023. Further data isavailable on request, although bespoke analysis may take 48 hours. For more information, please email firstname.lastname@example.org
About Diligent Market Intelligence
Diligent Market Intelligence (DMI)is a market-leading provider of shareholder activism, investor voting, and corporate governance data. Through its web application and data feeds, clients can access the most complete solution for listed company intelligence on the market, with broader and deeper insights than ever before.
Diligent is a leading GRCSaaS company that gives organizations the tools and solutions they need to bring clarity to complex risk, elevate impactful insights and get ahead of a world that is constantly changing. With solutions across governance, risk, compliance, audit and ESG, Diligent empowers more than 1 million users and 700,000 board members and leaders to make better decisions, faster. No matter the challenge. Learn more at diligent.com.