in 2019. 83 As we expected (contrary to some market speculation), activists also appeared to be adversely affected by the pandemic and opted to be more cautious in response to the state of significant uncertainty. Moreover, the pandemic’s impact was accentuated by hitting North America hardest right in the heart of the 2020 proxy season. While a struggling issuer may appear to be an easy target for an activist, a thoughtful activist will often be unwilling to seek a turnaround strategy when the very survival of whole sectors of the economy is at stake. Quite apart from the macroeconomic considerations that dampened activism, the restrictions on large indoor gatherings meant that annual shareholders’ meetings had to move to an online, virtual setting. For technical and other reasons, it is almost impossible to conduct a contested virtual meeting without agreement between the issuer and the activist (see Chapter 5, Let’s Take This Online: Virtual Shareholders’ Meetings in 2020 and Beyond for a discussion of virtual meetings, including COVID-19’s impact on contested and contentious situations). Even when the technical challenges can be overcome, a virtual setting does not lend itself to the same attention and press coverage that a traditional in-person contested meeting typically attracts. This lack of exposure might also have limited the appeal of launching a proxy campaign, given that the success of an activist’s campaign largely depends on its ability to garner the support of an issuer’s other major shareholders. As a result, contested meetings were scarce in the first half of 2020. When assessing the number of Canadian-listed issuers subject to activist demands generally (which includes formal proxy contests), we note that the first half of 2020 yielded the lowest H1 total of the previous eight years, as shown in Table 4-1 below.
FIGURE 4-1: N umber of Canadian Issuers Subject to Activist Demands (2013 H1–2020 H1)
70
58
60
47
50
46
42
40
36
36
33
30
24
20
10
0
2019 H1 2018 H1 2017 H1 2016 H1 2015 H1 2014 H1 2020 H1 2013 H1
Source: Activist Insight
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Governance Insights 2020
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