Shareholder Activism Flash Report: May 2020

Key observations from the report include:

Increased activity in Japan has driven an uptick in global activism

• May saw an increase in new campaigns compared to March and April; 16 campaigns and $3.3bn of capital deployed

        - May's campaign initiations were double April’s, while capital deployed in May was 159% higher than in March

        - However, May activity was still below the pre-COVID monthly average for the six-month period ended in February 2020 with respect to both campaigns initiated (~19) and                      capital deployed (~$4.6bn)

• Five campaigns in Japan continued the recent trend of heightened APAC activity

        - In 2020 YTD, 16 campaigns initiated in Japan, compared with an average of ~6 over the same period in 2017 – 2019

        - Three of the campaigns initiated in Japan in May had a capital return thesis, compared with only one capital return-oriented campaign initiated in the rest of the world in                         2020 YTD

Uncommon Activists in Europe

• In 2020 YTD, European activism saw broadened sources of agitation as vocalism diversifies across the activism landscape
• 80% of campaigns were initiated by occasional activists or institutional and other investors, compared with only 50% of campaigns over the same period in 2019

Activists are holding European management and boards accountable

• Board and/or management removal at European companies is becoming a more prominent demand by activists
• 50% of Q2 campaigns involved attacks against Boards or management teams
• COVID crisis has not deterred activists in situations where they believe management is jeopardizing the future of the company

The aperture of activism is widening

• Recent campaigns by private equity (e.g., KKR / Dave & Busters) show the continued blurring of formerly-defined investment lines

Board settlement activity is down

• May saw a downturn in settlements for Board seats, with only three campaigns settling for a total of six dissident Board seats relative to seven settlements for 11 Board seats in April

        - In 2020 YTD, 31 settlements have resulted in 60 Board seats versus 37 and 74 in the prior-year period, respectively

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