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Activist investor activity is on the rise in 2024, with a surge in governance-focused shareholder proposals, according to EY. Vinson & Elkins partner and co-chair of shareholder activism practice Patrick Gadson joins Asking for a Trend to discuss activist campaigns and how Starbucks has recently navigated a push from Elliott Management.

"Over the last year or so, we've seen more companies deal with activism coming out of their annual meeting. So traditionally, activism was seen to be sort of a seasonal type of thing where a few months before the annual meeting of a company, there might be some fervor, and you'd see more publicity around maybe some leaks from an activist. And then leading into the annual meeting, that's when ultimately the decision would be made if there wasn't a previous settlement... Now, what we're seeing are far more companies outside of that traditional window, maybe even a week or two after their annual meetings, have activists surface in their stocks and make certain demands of management," Gadson explains.

In addition to a shift in the timing of activist investor campaigns, they're becoming more frequent and are happening to more highly recognized companies. "Activists know that if they do attach themselves to a powerful brand, a lot of the scaling of the PR that happens in campaigns goes a lot further at a lot lower cost for them," Gadson notes.

Starbucks (SBUX) is the latest company to come under pressure from activist investor campaigns, this time from Elliott Management. The beverage giant recently appointed a new CEO, and Gadson explains that whether or not Elliott was behind the move, Starbucks is focused on ensuring that shareholders believe it was solely the company's decision. "The company is still doing its best to try to present that as the sort of optimal framework of the change," he adds.

While there may be some changes implemented in response to activist investors, Gadson warns, "it doesn't mean that the company is in the clear."

For more expert insight and the latest market action, click here to watch this full episode of Asking for a Trend.

This post was written by Melanie Riehl