It’s usually bad news for employees when an activist investor targets a company. That could change

February 17, 2023, 12:35 PM UTC
Portrait of young woman with white helmet looking up
Investors are raising flags about DEI, employee rights, and safety.
Getty Images

It’s not your imagination—activist investing is creeping upward toward pre-pandemic levels.

That’s the topline takeaway from this year’s Shareholder Activism Annual Review by Insightia, a research firm. (Insightia is owned by Diligent, which sponsors this newsletter.) The report found that activist investors targeted 967 companies globally in 2022, up from 913 in 2021.

Josh Black, Insightia’s editor-in-chief, says the sell-off in the markets, the arrival of the universal proxy card, and new regulatory requirements have created fertile ground for even more proxy fights this year. Activists will push companies to focus on margins, not growth, and capital allocation and other standard concerns will face investor scrutiny.

Surprisingly, investor interest in the worker experience also surfaces in the review, pointing to a potential trend.

Let’s be clear, activist campaigns are typically tied to cost-cutting and mass layoffs, and that’s unlikely to change. But the report cites examples from 2022 when traditional activists sought to hold companies accountable for failing to protect workers from sexual harassment (part of Legion Partners’ challenge to Guess directors) and for keeping employees safe on the job (one of several concerns Elliott Management brought to Canada’s Suncor Energy.) In Europe, an expert told Insightia he expects the cost of living and worker pay rates, especially compared to CEO compensation, to become flashpoints in 2023.

Shareholder resolutions about racial equity also continue to see strong support from investors, says Black, noting that Larry Fink’s 2022 annual letter to CEOs highlighted the changing relationship between companies and employees. “Workers demanding more from their employers is an essential feature of effective capitalism,” the BlackRock chief wrote.

Meanwhile, cause-based activists are expected to make waves this year, too. Those who see abortion rights as a business and employee retention matter have already put boards on warning. And, in an early win for one coalition of investors, Apple’s board just agreed to an audit of its response to unionization efforts.

“The employee piece is a broad umbrella for issues related to the attractiveness of working for a specific company, in specific locations, and workers’ rights, safety, equity, and diversity,” says Black. “Companies don’t necessarily know which issue they’re going to have to engage on in a given proxy season—it may be several, it may be none—but it’s well worth keeping a global perspective on what’s happening in the marketplace.”

Lila MacLellan

A Word of Advice

“[W]hen U.S. Navy SEAL teams switch from the pure command-and-control mode of missions to after-action reviews—at which everyone is expected to share criticisms, suggestions, and kudos equally—all present take off their stripes and other signs of rank to signal a temporary flattening of the hierarchy.”

Harvard Business Review explores how the best leaders shift between command-and-control and power-sharing leadership models

On the Agenda

👓 Read: Some 64% of board members think employees have too much leverage in the workplace, according to Diligent Institute’s What Directors Think survey. It also found that only 20% of board members feel underpaid for their work, despite spending more hours in meetings. 

📹 Watch: “I did have someone who told his team not to embrace the 100-day plan because I would be gone in 90 days because it was just a PR stunt,” Cynthia Marshall, CEO of the Dallas Mavericks, explains in this insightful interview with Fortune. “That person is no longer with the Mavs.” 

📖 Bookmark: The average age for new S&P 500 CEOs dropped from 56 to 54 in 2022, according to a new report from Spencer Stuart. COOs and presidents remained most likely to land CEO jobs, though the data showed a spike in CFO-to-CEO promotions.


Paula Johnson, president of Wellesley College, was appointed to the Johnson & Johnson board of directors. Bath & Body Works added Lucy Brady, president of grocery and snacks at Conagra Brands, to its board. Brent Saunders will assume the chair role at Bausch & Lomb when he becomes CEO next month. Invesco tapped Beth Johnson and Todd Gibbons for its board; Gibbons is the former CEO of BNY Mellon, and Johnson is the chief experience officer and head of ESG at Citizens Financial Group. Robert Henrikson will retire from the Invesco board in May. Lisa Edwards, executive chair of the Diligent Institute and former senior executive at Salesforce, was appointed to the LogicMonitor board. Nella Domenici, most recently CFO at Dataminr, was appointed as an independent director at Cognizant. 

In Brief

- In a sign of the times, UC Berkeley’s Haas School of Business launched a course on leadership in a unionized workplace. 

- Good news if you subscribe to Alan Greenspan’s underwear sales index theory: Men are replacing their threadbare briefs.

- Homebuilder Taylor Morrison launched its board fellowship program, a first-of-its-kind initiative to offer paid board experience and on-the-job training to executives from underrepresented backgrounds. The company's board fellows will not have voting rights.

- Workers may find their demands for flexible schedules fall on unsympathetic ears. According to Slack’s latest Future Forum report, 75% of executives say they have few or no constraints on their schedules, compared to 41% of non-executives.

- When Glaxo, maker of Zantac, forged ahead with that product’s global rollout 40 years ago, it ignored warnings that the drug’s active ingredient could form a carcinogen. Its board chose not to ask inconvenient questions, Bloomberg reports.  

Editor’s Pick 

Once upon a time, a retail CEO could play the role of “a merchant prince,” a branding guru who decided which products to sell and operated above the fray, writes Fortune’s Phil Wahba in his latest feature. 

While the industry’s chief executive responsibilities have changed dramatically over the past two decades, the leadership pipeline has not kept up, which explains why the sector has been lousy with interim CEOs of late. Today, four of the eight Fortune 500 companies without permanent CEOs are retailers, Wahba explains.

Here’s a snippet from his piece: 

“On a November call with Wall Street analysts, and after the announcement of Gass’s departure, Kohl’s chair Pete Boneparth read a laundry list of qualifications the company’s search committee wanted in its next CEO, including expertise in brand-building, e-commerce, store operations, supply chain, data security, and the ability to ‘build great teams,’ to name a few. He also noted that the committee couldn’t say how long it would take ‘until a permanent successor is named.’

Over at Gap, interim chief Bobby Martin said last summer that the board would ‘take the time to get this right.’ It’s been six months and counting.”

Read the rest here, and have a great weekend.

This is the web version of The Modern Board, a newsletter focusing on mastering the new rules of corporate leadership. Sign up to get it delivered free to your inbox.

Read More

CEO DailyCFO DailyBroadsheetData SheetTerm Sheet