Recent research has found that Australia ranks on par with South Korea in second spot as a target for increased shareholder activism in the Asia-Pacific region.
Global shareholder engagement firm Georgeson found that Australia and South Korea both account for 25% of all activist campaigns, coming in behind Japan which accounts for 34%.
The findings were published in the Global Activism 2024 report, which notes that the APAC region has “become a hotbed of shareholder activism, spurred by regulatory reforms and competition for foreign institutional capital”.
Georgeson Global COO Domenic Brancati says shareholder activism has evolved significantly over the past year, reshaping corporate strategies, governance and stakeholder engagement.
Australia in particular has seen a notable decline in traditional shareholder proposals at annual general meetings but an increase in investors resisting key management-sponsored proposals, according to Georgeson.
The biggest sticking points for shareholders centre on director pay and appointments.
If 25% or more shareholders vote against a company’s annual remuneration report, the company receives a strike.
According to Georgeson, there has been a significant increase in strikes against executive pay among S&P/ASX300 companies in the past couple of years.
In 2024, 40 strikes were registered against companies while 2023 saw 41 strikes lodged. In comparison, 2022 and 2021 witnessed 21 and 26 strikes, respectively.
If two consecutive strikes are recorded, shareholders can then move to put forward a motion to “spill” the board, which if successful requires the incumbent directors to stand for re-election.
According to the Global Activism 2024 report, companies with lower market caps witnessed a higher level of shareholder activism across the majority of Asia-Pacific jurisdictions, with activity against larger companies remaining largely muted.
Over 40% had a market capitalisation of less than $50 million, 27% fell into the ‘micro-cap’ category with a market capitalisation of between $50 and $250 million, while 5% were small cap companies with market capitalisations of $250 million to $2 billion.
In Australia, over 30% of companies targeted were in the basic materials sector. According to Georgeson, energy companies in particular were a main target.
Brancati says there has also been a rise in collaborative activism, with institutional investors, hedge funds and retail investors forming alliances to amplify their influence.
“These coalitions have ‘raised the stakes’ for corporate boards, requiring them to provide more robust engagement and proactive responses,” he says.
According to Georgeson’s Global Institutional Investor Survey 2024, 85% of institutional investors said they would engage with an activist.
The major priorities for institutional investors for 2025 were executive pay, shareholder rights, climate transition and human capital management.
Environmental, social and governance (ESG) is an increasing focus for investors, especially institutional investors, with activists targeting companies they believe are falling behind in this area.
“ESG activists are intensifying campaigns that target companies perceived as lagging in their ESG
commitments and are pushing businesses to integrate these considerations into their core operations,” Brancati notes.
“Activists play a pivotal role in holding companies accountable and driving value, especially as shareholders challenge boardrooms about their environmental, social and governance (ESG) initiatives.”
Write to Angela East at Mining.com.au
Images: iStock & Unsplash
