Five Early Proxy Season Insights

By Dan Scorpio

As we approach the halfway point in the 2024 proxy season, it is shaping up to be a more active cycle than 2023, when many activists seemingly pressed “pause” on pursuing public campaigns to evaluate the full impact of new Universal Proxy Card (UPC) regulations.

Amid improving and more predictable economic conditions, a rebounding M&A market, and the prospect of rate cuts, activist shareholder activity continues to increase.

Remember, the vast majority of activist shareholder activity is conducted out of the public eye, either through a private approach or behind-the-scenes engagement. Thoughtful preparation ahead of any engagement with an activist can often determine how this dialogue evolves.

Here are five insights for corporate leaders from the first few months of this proxy season:

  • Say goodbye to the old playbook. Historically, companies have played defense while activists have played offense. We believe companies should reconsider this traditional approach and deploy a more confident and assertive strategy to help build support among shareholders. Every proxy fight is different, but this approach can be reflected in a more proactive media strategy, embrace of digital tools and utilization of visual-focused attention-grabbing materials reminiscent of a political campaign. Too often, companies make the mistake of assuming their shareholders understand their story and their strategy, without making the case directly to them.
  • M&A demands are still prevalent. A vocal push for (or against) M&A has been a core component of the activist playbook over the last several years, accounting for about 50% of activist campaigns. M&A demands were popular among activists even through 2023, when U.S. M&A activity fell by approximately 40%, but these demands evolved to calls for divestitures of non-core assets or breakups. Amid mixed messages in the M&A market so far this year – $725 billion of M&A was announced in Q1 2024, but a lower volume of deals, according to Dealogic – M&A accounted for about one-third of activist demands. If the M&A rebound solidifies, expect activists to follow suit and further increase their calls for companies to sell themselves.
  • Higher-quality nominees are contributing to activists’ success. Activists have moved far beyond the “friends and family” slate of nominees. Today’s activists are nominating experienced directors with successful track records and relevant expertise, which has been effective in the UPC era. Voting results bear this out. Of proxy contests that went to a vote in 2023, nearly 80% saw at least one dissident director elected, compared to the historical average of about one-in-three. Proxy advisor influence is as strong as ever, with ISS and Glass Lewis recommending dissident directors 44% and 53% of the time, respectively. Companies must present a detailed skills matrix for their Board and clearly tell the market why each director has the right skillset for their Board at this time.
  • The double-edged sword of NDAs. Signing a non-disclosure agreement (NDA) with an activist seems to be coming back in vogue with a handful of high-profile examples over the last year, often in multi-activist “swarms.” While these agreements can create near-term allies, beware of the after-effects of such a move, which may serve to alienate other shareholders. Companies should weigh these risks carefully.
  • In UPC era, fundamentals still matter. Much ink has been spilled, and continues to be spilled, about what UPC portends for corporate governance. The new rules appear to favor activists to a certain degree, a view we believe is supported by voting results from the last 18 months. What hasn’t changed? Companies must be well-run, with diverse and qualified Boards, and a clearly defined strategy for near-term results and long-term value creation that is well-understood by investors. In short, the fundamentals still matter, as does a robust investor engagement program.

A busy year for activist shareholders raises the stakes for companies to review their preparatory measures. Build your team of trusted advisors. Update your “break glass” plan to both anticipate potential scenarios and adapt to latest activist tactics and strategies. Review your investor communications program to identify areas for improvement so your Board can be positioned to go on offense, instead of just playing defense.


Our experienced team helps companies prepare for, engage with and defend against activist shareholders, and advises boards and management teams on ESG-related issues, investor engagement and proxy advisory matters.

Contact the Author

Dan Scorpio
Managing Director, Head of M&A and Activism