It ain’t easy being green (especially for Boston Celtics fans). According to research from proxy advisor ISS, ESG activism declined this proxy season, slowing momentum for the once-growing corner of investing that has lately been highly politicized on the national level. Pensions & Investments’ Hazel Bradford covered the research report and pointed out that “of [the] environmental and social shareholder proposals voted on at annual meetings held by May 24, only one environmental proposal, on methane emission disclosure, and three social proposals on diversity and human/labor rights, received majority support,” which is down from the same time period last year “when five environmentally focused shareholder proposals and seven addressing social issues received majority support.”

The trend was made apparent this week when high-profile, climate-focused shareholder proposals were torpedoed by investors at Exxon and Chevron. Shareholders rejected proposals "urging the companies to cut greenhouse-gas emissions derived from fuel consumption, put out new reports on climate benchmarks and disclose certain oil-spill risks, among other initiatives,” as noted by the Wall Street Journal’s Collin Eaton and Jenny Strasburg. While there isn’t an official explanation for the climate activists’ defeats, it’s not hard to speculate that soaring profits at oil majors from the price spikes following Russia’s invasion of Ukraine and the hyper-politicization of ESG that has institutional investors like BlackRock and Vanguard in the cross-hairs of legislators might have something to do with it.

Communications company Twilio might be facing waning immunity when it comes to defending off activist investors. This week, The Information’s Maria Heeter reported that tech-focused activist investor Legion Partners has been engaging with Twilio over the past few months on numerous topics (cost optimization, balance sheet and corporate governance, to name a few). Legion made their $40 million stake public in mid-May, conveniently coming just as the Twilio’s dual-class share structure ends, dissolving founder and CEO Jeff Lawson’s supervoting power. In the near-term, the company is spared from any nominations to its Board as their annual meeting approaches this month, but the change in share class structure could have consequences next proxy season. 

Have a great weekend,

GPP team   

Pensions & Investments: ESG Activism Down This Proxy Season, ISS Says

Jun Frank, managing director at ISS Corporate Solutions, says support for ESG issues is down across all categories except for proposals blending E&S issues, as reported by Hazel Bradford. Frank estimates that this trend could continue and wouldn’t be surprised if ESG proposals decline back to 2019 levels. Read More

The Wall Street Journal: ESG Blowback: Exxon, Chevron Investors Reject Climate Measures

Shareholders at Exxon Mobil and Chevron voted against a slate of sustainability proposals requiring the oil companies to modify their climate disclosure policies, dealing a major blow to climate-focused stakeholder activism, write Collin Eaton and Jenny Strasburg. Read More

The Information: Twilio, Set to Lose Supervoting Protection Next Month, Has Been Meeting with Activist

Maria Heeter reports that as Twilio founder and CEO Jeff Lawson’s supervoting privileges are due to expire in the coming weeks, activist investor Legion Partners has reportedly amassed a stake in the communications company and is pushing for potential divestitures or board changes. Read More

ACTIVISM

DealBook: Reassessing the Board Fight That Was Meant to Transform Exxon

Since Engine No. 1’s huge victory at Exxon, climate activists have struggled to succeed in their campaigns against big oil. The DealBook team discusses how activists are rethinking their strategy, as they try to convince shareholders to consider long-term climate effects amid booming oil revenue. Read More

CNBC: Energy Activist Investor Campaigns Have Leveled Off, Says Axios’ Michael Flaherty  

Axios's Michael Flaherty joined "Squawk Box" to discuss the shareholder activism landscape, commenting that while energy activism campaigns have "probably peaked", energy-related proposals are still present on shareholder ballots. Read More

Semafor: Carl Ichan’s End Game  

Liz Hoffman dissects the precipitous decline of Icahn Enterprises’ share price including how through a cycle of paying dividends and selling stock, the holding company’s valuation has been inflated akin to a “self-licking ice cream cone.” Read More

Harvard Law School Forum on Corporate Governance: Shareholder Activism: What Investors Seek, Which Companies Are Targeted, and How Stocks Perform 

Research findings from Goldman Sachs’ David Kostin and Jenny Ma suggest that in the long term, the share prices of companies targeted by activist campaigns actually underperform in comparison to their sector averages. Read More

Beyond the Boardroom: What Makes "Hostile" M&A? 

In the latest episode of Insightia's "Beyond the Boardroom" podcast, Woolery & Co's Mathew Saur examines the impact that rising interest rates and general market volatility can have on the M&A landscape. Listen Here

The Hollywood Reporter: Writers Guild Targets Executive Pay in Letters to Netflix, Comcast Shareholders 

Alex Weprin reports that as part of its ongoing striking efforts, the Writers Guild of America has moved beyond the picket to “corporate shareholder activism” and has sent letters urging shareholders at top media and entertainment companies to vote against their "Say on Pay" proposals. Read More

FROM OUR DESK TO YOURS

Following the world sheltering-in-place during the COVID-19 pandemic and the U.S. federal government issuing rounds of stimulus checks, the rise of the retail investor began to take shape, so too did a new phenomenon: the meme stock. CNBC’s newest documentary chronicles the rise of Chewy founder and self-made billionaire Ryan Cohen from high school computer whiz to “meme-stock king.” The documentary, Making of the Meme King, dives into Cohen’s new brand of activist investing, as his efforts catalyzed the Game Stop stock craze in January of 2021. 

Last week, GPP had the pleasure of welcoming a cohort of young gators from the University of Florida’s communications and journalism program to our offices for an informational session. They were full of thoughtful (and tough!) questions, and we are already looking forward to hosting them again next year.

PEOPLE MOVES

• Peter Orszag has been named CEO of Lazard, succeeding Ken Jacobs. Read More

• Christine O’Brien has resigned from her role as head of investment stewardship at Elliott Management. Read More

• Dina Powell McCormick is leaving Goldman Sachs for a position at BDT & MSD Partners, a boutique merchant bank founded by two other former Goldman standouts. Read More

• Ed Garden, Co-Founder of Nelson Peltz’s Trian Fund Management, is stepping down but will remain involved as a senior adviser. Read More

• June 6, 2023: The Deal Economy 2023: Predictions and Perspectives – New York, NY

• June 6: The Economic Club of NY, a Discussion with Marc Rowan and Andrew Ross Sorkin – New York, NY

• June 6-8, 2023: NIRI Annual Conference – Chicago, IL

• June 6 – 8: Bloomberg Invest – New York, NY

• June 13 – 14: Harvard Corporate Governance Roundtable, Cambridge, MA