(Photo by Patrick Herrera/iStock)

One trend in corporate governance this year appears to be: If you can’t beat activist investors, settle with them.

Several détentes with activist shareholders and companies this year illustrate the trend to more frequently engage with and come to an agreement with investors, according to blog a post written by Richard Sandler, a partner at Davis Polk & Wardwell, and co-head of the firm’s global corporate governance group, on the Harvard Law Forum on Corporate Governance and Financial Regulation.

“The trend toward settling with activist shareholders has continued and perhaps accelerated,” Sandler wrote. “This trend reflects not just a desire on both sides to save time and money, but also the power of information: now that we are several years along in the activist boom, companies and activists have a greater ability to predict the outcome of a potential contest and to assess their leverage accordingly.”

Sandler cited these examples from corporate governance news this Spring:

  • Carl Icahn agreed to withdraw his proposal for eBay to divest PayPal in exchange for a single independent director suggested by Icahn.

  • Apple agreed to stronger language in its nominating committee charter with respect to board diversity.

  • Disney obtained withdrawal of a proxy access proposal asking the company to allow shareholders to nominate directors in exchange for amending its corporate governance guidelines to include a carefully hedged statement that in the future the chairman would “in the normal course” be independent unless the board determines otherwise.
  • Exxon will make available information on climate change issues.

Sandler also noted that this proxy season, “different forms of activism start to converge,” with different players like hedge funds using approaches from the traditional shareholder activist playbook, such as Rule 14a-8, which lays out how shareholders can get their proposals on proxy statements. Sandler also noted that speculation is rife that institutional investors and hedge funds are sharing governance ideas behind the scenes.