2025 Proxy Season Review
August 11, 2025Activists Are Gearing Up for 2026: Volatility, Evolving Tactics and New Expectations for Shareholder Engagement
The 2025 proxy season was as volatile as any in recent memory. Activity was robust at the beginning of the year, slowed considerably after the April 2 tariff announcement, and was interrupted by surprise changes proposed by the SEC regarding investor engagement practices that prompted institutional investors to reassess their engagement strategies. According to FactSet, the number of campaigns launched by activist shareholders remained relatively consistent with the market’s 10-year average, but the tone and tenor of the campaigns was quite chaotic. Ultimately, the number of Board seats obtained by activists exceeded last year’s total, including an increase in Board seats activists won in proxy fights that went to a vote. Engagement dynamics are changing.
Looking ahead, we believe that conditions are in place for activists to be even more active in next year’s proxy season, starting with heightened offseason approaches and engagement in the second half of 2025. Investors and issuers are settling on how to manage the SEC’s new 13D/G guidelines. The M&A freeze is showing signs of thawing. Consequences from changing tariff policies are better understood and addressed in corporate strategic plans.
To effectively navigate this new era, management teams and Boards should prepare now so they are ready to mount an effective defense if targeted. This should include realistic assessment of vulnerabilities, creative approaches to offseason engagement, better use of the proxy and proactive use of owned channels and digital strategies so your message is delivered unfiltered. Managements must actively address vulnerabilities and any gaps in investor perception of strategy, operations or execution. It has never been more important to ensure investors and all stakeholders clearly understand strategy, metrics and long-term goals.
Rethinking Engagement Strategies Amid Evolving 13G/13D Guidelines
The SEC threw a curveball in the middle of proxy season by changing the guidance applying to institutional investors regarding the definition of a passive investor. Faced with the prospect of becoming a 13D filer, some investors paused all near-term engagement, while others gradually introduced new policies to be more conservative in their engagement. Vanguard, for example, recently separated its passive and active funds into two firms with separate stewardship teams.
As with many changes in proxy season mechanics over the years, we believe that investors and issuers will eventually find a new equilibrium to manage engagement while adhering to these guidelines. Enhancing the proxy can further improve the most effective tool for companies to communicate with investors. Reaching shareholders directly using controlled media activities, built-out IR websites as investor-focused news hubs, and targeted digital channels to proactively set the agenda and control the narrative will be advantageous strategies to get ahead of next year’s proxy season.
READ H/ADVISORS ABERNATHY INSIGHT: Rethinking Engagement Strategies Amid Evolving 13G/13D Guidelines
Activists Look Beyond Winning Board Seats to Drive Change
The number of “withhold” or “vote no” campaigns led by activists has increased by more than 40% since a year-ago, according to Diligent data, and two high-profile situations went all the way to a vote this proxy season (H Partners at Harley Davidson and Ancora at Forward Air). Historically these campaigns have been launched when an activist missed a nomination deadline or responded to an issue that emerged off-cycle, but this year’s activity may have been a result of strategic decisions to clamor for change while outsized market volatility made it difficult to mount a full proxy contest. The effects of a “vote no” campaign can be felt long after the final vote is counted. Boards often lose by winning and activists can win by losing these campaigns. It is common for Boards to undertake director refreshment following annual meeting season even after mounting a successful defense against a “vote no” or “withhold” campaign.
What can Boards do to be prepared for this type of activist approach? An essential activity every year is for Boards to ensure they are providing a comprehensive narrative and rationale for the skills, qualifications, experience and talents of every director. Make a compelling argument for why each director is right for this Board at this moment. This narrative should be consistent across the proxy, IR website and all investor-facing materials.
Investors Zeroing in On Pay Performance Disconnect
While shareholders continue to support executive compensation packages by significant margins, this year several high-profile exceptions brought “Say on Pay” back to the forefront of the conversation. Those that failed or received significant shareholder opposition, were primarily due to a disconnect between pay and company performance or insufficient disclosure. ISS updated its compensation assessment policies to sharpen its focus on this potential misalignment. While ISS’s voting recommendations were largely consistent compared to last season, we anticipate potentially greater scrutiny next year if companies fail to update their disclosures accordingly or if market volatility returns.
Now is the time for companies to review their CD&A disclosure and determine where enhancements would improve investor perception and understanding. Clearly articulate near-term and long-term metrics, how those metrics connect to the company’s strategy and provide a compelling rationale for how those metrics are designed. List the right peers in competitive benchmarking and explain why these companies are included or omitted. Add a summary narrative that ties all these pieces together. Simply assuming shareholders will understand the company’s rationale on compensation matters, without owning the narrative provided to them, is a risk not worth taking.
READ H/ADVISORS ABERNATHY INSIGHT: Roadmap to Improve Executive Compensation Disclosures
What We’re Watching: Boards Addressing AI
According to Nasdaq, fewer than 40% of directors are discussing AI in the boardroom, a surprisingly low total given that investors, regulators and stakeholders are increasingly demanding transparency about AI’s role in business operations and risk management. We believe that AI governance is emerging as a high-priority boardroom topic, on a par with the focus on cybersecurity discussions several years ago. Companies that fail to proactively frame their AI narrative risk having others define it for them, whether through activist investors questioning AI oversight, regulators demanding compliance explanations, or media highlighting governance gaps.
Contact our activism defense, investor relations and corporate governance advisory team to learn more about shareholder engagement and communications strategies this offseason.
Dan Scorpio
Managing Director, Head of M&A and Activism Practice
(646) 899 8118
Dan.Scorpio@h-advisors.global
Sheila Ennis
Managing Director, Head of Investor Relations Practice
(510) 604 8027
Sheila.Ennis@h-advisors.global
A trusted communications advisor, H/Advisors Abernathy specializes in advising CEOs, board directors and senior executives on efective stakeholder communications and engagement. Our experienced team helps companies prepare for, engage with and defend against activist shareholders, and advises boards and management teams on investor engagement, sustainability and governance-related issues and proxy advisory matters. For nearly 40 years, we have been entrusted by clients across sectors to help build, protect and enhance their reputations, boost value and seize new opportunities. H/Advisors Abernathy consistently ranks as a top M&A advisor by Mergermarket and top activism defense advisor by Bloomberg. The firm also has been named public relations firm of the year for M&A and activism defense by The Deal and PR Firm of the Year by Private Equity Wire.