Why activist investors are going to have a busy year

CARL ICAHN owns 1.4% of Illumina, a genomics giant with a market value of $34bn. Mr Icahn’s modest stake belies his ambition. As the elder statesman of activist investing, the 87-year-old aims to convert small shareholdings into considerable influence. Mr Icahn has nominated three directors to the board of Illumina, whose share price has fallen by 60% since its peak in 2021, in part owing to hubristic dealmaking. On May 25th, after The Economist was published, Mr Icahn’s colourful campaign against the firm’s bosses (16 letters, drawing on Shakespeare and Lincoln) will reach a climax at its annual general meeting. It is one of the hottest tickets in this year’s “proxy season”, when most American firms elect their boards of directors.

After a dismal year, when activist funds lost 16% of their value as stockmarkets slumped, many observers were expecting a spring offensive. Fund managers had a busy end to 2022, taking advantage of those sunken stockmarket valuations. New corporate-governance rules introduced last September make it easier for dissident investors to obtain board seats, by compelling firms to include all nominees on proxy ballots and allowing shareholders to mix and match those proposed by the company and by its detractors, rather than pick alternative slates. “Asked in December, I would have said this is going to be a proxy season for the ages,” says Kai Liekefett of Sidley Austin, a law firm.