by David Katz, Elina Tetelbaum, and Loren Braswell
From left to proper: David Katz, Elina Tetelbaum, and Loren Braswell (pictures courtesy of Wachtell, Lipton, Rosen & Katz)
Shareholder activism is at document ranges and is not restricted to the “proxy season.” Dozens of U.S. activist conditions are underway for 2026 annual conferences, nicely earlier than the home windows for nominations open at most focused corporations. Activists are making ready for the autumn convention circuit at which they may debut lots of their 2026 campaigns, already working behind the scenes at corporations by contacting their administration, administrators, buyers, staff, sell-side analysts, and different key constituencies. Listed below are ten developments to count on for the yr forward.
Corporations could discover it more and more difficult to know the true views of their shareholders. Though corporations are prioritizing year-round engagement, not all buyers are receptive to engagement absent a particular difficulty, and up to date C&DI steering about potential lack of Schedule 13G eligibility for institutional buyers has led to extra guarded conversations with such buyers. As now we have lately written, the “Large Three” asset managers—BlackRock, Vanguard and State Road—are shifting their method to stewardship and splitting their proxy voting groups into separate teams with their very own voting decision-makers and insurance policies. The proliferation of “voting selection” choices at main asset managers, resembling Vanguard, additionally stands to additional fracture the shareholder base, lowering visibility into what portion of an organization’s inventory will likely be voted in accordance with what insurance policies. The operation of proxy advisory companies like ISS and Glass Lewis, and the best way wherein they may proceed to offer suggestions within the U.S., stays the topic of a lot authorized and political scrutiny. These dynamics make it more and more difficult for corporations to anticipate the doubtless final result of a contested state of affairs. Though the instruments to research proxy voting patterns are extra refined than ever, corporations going to a vote will face much more than the same old degree of uncertainty within the lead as much as the annual assembly.
Corporations are more and more discovering avenues to speak with their retail shareholder base to garner help. Some are wanting into the thought of implementing auto-voting packages for retail buyers, believing that retail buyers are typically inclined to help boards and administration groups. Corporations will proceed to be inventive and energetic in partaking their retail base, particularly for company selections that require a better quorum to realize (resembling M&A or reincorporation proposals). Such efforts are already being met with some resistance from activists and their legislation companies, and will sooner or later be scrutinized by buyers, proxy advisory companies, and different constituencies with an curiosity in how shareholder elections are administered. Retail shareholders shouldn’t be handled as a monolith, and relying on the specifics of the state of affairs, a few of these efforts could not have the supposed penalties. We even have seen retail buyers undertake activist ways at corporations within the type of organized social media campaigns.
M&A stays a persistent theme of activism. The returns from operational enhancements are typically much less engaging to activists than the prospect of a direct transaction premium. Over the previous couple of years, nonetheless, a difficult regulatory and macroeconomic surroundings restricted activists’ means to credibly push for full-company gross sales or strategic carve-outs. With the numerous M&A rebound in 2025, we count on activists to extend their concentrate on event-driven M&A outcomes. Whereas pushing for full-company gross sales will stay a key goal for a lot of activist campaigns, we additionally count on to proceed to see activists arguing for break-ups that purportedly shed underperforming divisions or capitalize on buying and selling a number of arbitrage for various companies. Corporations searching for to take extra time earlier than enterprise transformative M&A could take into account agreeing to the formation of a strategic evaluation committee, with a number of activist-nominated administrators on such committee. Whereas these committees could make sense specifically conditions, the choice whether or not to promote or break up the corporate needs to be a full-board resolution, and any committee constitution ought to preserve the total board’s final decision-making accountability.
Nascent or occasional activists have caught on to the truth {that a} lengthy or profitable observe document shouldn’t be essential to garner the help of ISS and Glass Lewis, and even of huge institutional holders, in the event that they make a reputable enterprise case for change and recruit moderately certified director nominees. The proliferation of lesser-known activists has already led the extra established activists to pay attention their efforts in bigger cap corporations, a development we count on to proceed. Comparatively smaller corporations will likely be left to take care of less-tested gamers which might be searching for publicity and validation to additional their fundraising efforts. The extent of entry and engagement to supply an unfamiliar investor with a comparatively small funding place will stay a key judgment for corporations and boards heading into 2026. This judgment requires the balancing of safeguarding board and administration time with the growing shareholder sentiment that corporations needs to be usually partaking with shareholders and open to their concepts.
The overwhelming majority of activist campaigns are resolved by a negotiated settlement. Settlements will proceed to be a popular path to decision for a lot of corporations that want to keep away from the fee and distraction of a full, protracted proxy combat, particularly towards the backdrop of broader macroeconomic and political uncertainty. We count on to proceed to see settlements introduced with out prior public agitation by, and even rumors of, an activist within the firm’s inventory, as activists and corporations worth the advantages of personal engagement. These settlements could take the type of a easy press launch, saying numerous enterprise and governance adjustments and a supportive quote from an activist. Full-fledged cooperation agreements will proceed to make sense in sure circumstances, together with when a standstill is acceptable, however corporations and activists alike are more and more extra keen to be versatile concerning the type of decision.
The pace of settlements has additionally been facilitated by a rise within the high quality of people keen to function dissident nominees, which may embrace sitting administrators and former public firm CEOs and CFOs (together with these of the goal itself). Many of those people are sourced by the identical search companies utilized by corporations in their very own director refreshment course of and a few could haven’t any prior relationships with the nominating activist. Inside this bigger development, nonetheless, we’re seeing conditions wherein a possible dissident nominee has knowledgeable the activist that the nominee is keen to take part in a consensual settlement, however not in a publicly fought election contest. In these conditions, the activist has further incentive to achieve a negotiated settlement.
Whereas corporations ought to scrutinize the {qualifications} and entanglements between activists and their nominees, if an organization intends to settle, there are advantages to doing so earlier than a combat turns into too acrimonious and relationships with potential administrators are harmed. Corporations must also take steps to verify they don’t seem to be studying within the information that their officers or administrators have joined an activist slate, irrespective of how unrelated the state of affairs is to their house firm. One method could be to revise director governance pointers to require discover to the corporate, not simply earlier than a director or officer becoming a member of one other board, however earlier than a director or officer agreeing to be nominated as a candidate for one more board.
Whereas many activist campaigns begin publicly and play out totally within the public eye, some activists have discovered tactical worth in privately submitting nomination notices. These “placeholder” nominations present activists optionality to proceed to stress an organization, even with out the expense of mounting a full proxy combat. Receipt of nominations, even privately, places corporations in limbo for the upcoming annual assembly. Corporations should dual-track and put together a proxy assertion for a contested election, whereas additionally probably needing to pivot shortly to a settlement situation. These placeholder nominations, usually naming people from the activist’s fund or different repeat nominees of the activist, add to the time, expense and distraction the corporate is already dealing with in addressing activist engagement. Though corporations have a tendency to attend till the submitting of preliminary proxy supplies to reveal any non-public nomination discover, there are advantages to earlier disclosure in sure circumstances, and disclosure selections needs to be evaluated by the goal and its advisors based mostly on their particular details.
Activists are reviving the “withhold” marketing campaign, which can lead to unseating a director even with out nominating a competing slate. Withhold campaigns are a sexy method for activist buyers as a result of they provide a less expensive various to working a full proxy contest. Activists consider in “addition by subtraction” (i.e., that board dynamics can change even with out new voices within the boardroom). Withhold campaigns are notably interesting in a risky market surroundings, since an activist can discover a sexy entry level right into a inventory and nonetheless stress the board after the passing of a nomination deadline. Though a board can all the time select to reject the resignation of a director who doesn’t get the requisite votes underneath a majority voting customary, such an method could run the danger of shareholder ire and have penalties in any future contested election.
President Trump has lately expressed a need to change from a quarterly reporting regime for U.S. public corporations to a semiannual one. Securities and Change Fee (SEC) Chairman Paul Atkins has acknowledged that the SEC will likely be proposing a rule change to that impact, suggesting that it is going to be left to corporations to determine whether or not they swap to semiannual or stick with quarterly reporting. If the SEC proceeds with the rule change, though implementation could not take impact in 2026, activists might want to reconceive how they put money into and run their playbook at goal corporations. We are able to count on activists and their supporters to place stress on corporations to decide to voluntary quarterly reporting. Corporations ought to take into account affirmatively partaking with shareholders to know their reporting expectations in a semiannual regime, whereas conveying the advantages of transferring away from a quarterly reporting cycle and the short-termism it might probably promote.
As of but, AI has not essentially altered the activism panorama. More and more, nonetheless, AI will likely be harnessed by activists to supply targets and establish shareholders sympathetic to the activists’ views. Screening instruments exist already to course of publicly disclosed knowledge and establish firm vulnerabilities. AI will improve the sophistication with which activists are capable of analyze corporations on a relative foundation and make arguments for change. If AI is ready to generate combat letters and combat decks on behalf of activists, and make it even cheaper to pursue campaigns, corporations will discover it much more difficult, as they take into account how one can ethically make the most of AI to assist them in defending towards activist assaults. In the end, it should proceed to be the credibility of administration and the board, borne out of actual world interactions and shareholder engagement, that can affect key voting selections.
* * *
Given the advanced shareholder activism panorama, efficient preparation and monitoring are essential. Many activist approaches are efficiently subtle or discouraged earlier than they evolve into an assault or marketing campaign, and high quality superior planning and preparation stay the essential components. The next are key steps that corporations ought to take to make sure they keep forward:
- Implement Inventory Surveillance and Web site Monitoring: Inventory surveillance packages enable corporations to keep watch over inventory accumulation and weird buying and selling patterns, usually offering an early warning system for activist exercise. Activists usually begin by taking comparatively small positions and/or utilizing derivatives to construct their stakes, which makes early detection all of the extra advanced. Equally, web site monitoring packages enable corporations to see in actual time who’s visiting their web sites and social media profiles, and what content material they’re viewing.
- Evaluate Shareholder Engagement Technique: An efficient shareholder engagement technique is essential to constructing relationships with key buyers, monitoring investor sentiment, and staying forward of probably problematic points. Corporations needs to be intentional about establishing credibility and rapport with their buyers nicely earlier than an activism marketing campaign arises.
- Conduct a Vulnerability Evaluation: Usually conducting an inside vulnerability evaluation allows corporations to establish vulnerabilities that may be utilized towards them in a possible activism assault. Corporations can then make strategic adjustments or put together rebuttals to potential activist theses. Moreover, the extent to which an organization and board has already appropriately thought of an activist thesis is turning into a key space of investor focus in a proxy combat. Vulnerability analyses could be a great tool in anticipating and evaluating enterprise concepts earlier than an activist raises them, arming the board with a stronger document.
- Establish the Working Group: A working group needs to be recognized and able to act in case of an activism state of affairs. The crew ought to include inside members, such because the CEO, CFO, Basic Counsel, and investor relations representatives, in addition to exterior members, together with the authorized counsel, monetary advisor, public relations agency, and proxy solicitor.
- Have a “Break the Glass” Plan in Place: In case of a sudden and unexpected activist assault, corporations ought to have a “break the glass” plan that outlines the strategic and procedural subsequent steps in numerous situations. This ensures that corporations are capable of reply shortly and in a unified, coordinated method.
David Katz and Elina Tetelbaum are Companions and Loren Braswell is Counsel at Wachtell, Lipton, Rosen & Katz.
The views, opinions and positions expressed inside all posts are these of the creator(s) alone and don’t symbolize these of the Program on Company Compliance and Enforcement (PCCE) or of the New York College Faculty of Regulation. PCCE makes no representations as to the accuracy, completeness and validity or any statements made on this website and won’t be liable any errors, omissions or representations. The copyright of this content material belongs to the creator(s) and any legal responsibility on the subject of infringement of mental property rights stays with the creator(s).
by David Katz, Elina Tetelbaum, and Loren Braswell
From left to proper: David Katz, Elina Tetelbaum, and Loren Braswell (pictures courtesy of Wachtell, Lipton, Rosen & Katz)
Shareholder activism is at document ranges and is not restricted to the “proxy season.” Dozens of U.S. activist conditions are underway for 2026 annual conferences, nicely earlier than the home windows for nominations open at most focused corporations. Activists are making ready for the autumn convention circuit at which they may debut lots of their 2026 campaigns, already working behind the scenes at corporations by contacting their administration, administrators, buyers, staff, sell-side analysts, and different key constituencies. Listed below are ten developments to count on for the yr forward.
Corporations could discover it more and more difficult to know the true views of their shareholders. Though corporations are prioritizing year-round engagement, not all buyers are receptive to engagement absent a particular difficulty, and up to date C&DI steering about potential lack of Schedule 13G eligibility for institutional buyers has led to extra guarded conversations with such buyers. As now we have lately written, the “Large Three” asset managers—BlackRock, Vanguard and State Road—are shifting their method to stewardship and splitting their proxy voting groups into separate teams with their very own voting decision-makers and insurance policies. The proliferation of “voting selection” choices at main asset managers, resembling Vanguard, additionally stands to additional fracture the shareholder base, lowering visibility into what portion of an organization’s inventory will likely be voted in accordance with what insurance policies. The operation of proxy advisory companies like ISS and Glass Lewis, and the best way wherein they may proceed to offer suggestions within the U.S., stays the topic of a lot authorized and political scrutiny. These dynamics make it more and more difficult for corporations to anticipate the doubtless final result of a contested state of affairs. Though the instruments to research proxy voting patterns are extra refined than ever, corporations going to a vote will face much more than the same old degree of uncertainty within the lead as much as the annual assembly.
Corporations are more and more discovering avenues to speak with their retail shareholder base to garner help. Some are wanting into the thought of implementing auto-voting packages for retail buyers, believing that retail buyers are typically inclined to help boards and administration groups. Corporations will proceed to be inventive and energetic in partaking their retail base, particularly for company selections that require a better quorum to realize (resembling M&A or reincorporation proposals). Such efforts are already being met with some resistance from activists and their legislation companies, and will sooner or later be scrutinized by buyers, proxy advisory companies, and different constituencies with an curiosity in how shareholder elections are administered. Retail shareholders shouldn’t be handled as a monolith, and relying on the specifics of the state of affairs, a few of these efforts could not have the supposed penalties. We even have seen retail buyers undertake activist ways at corporations within the type of organized social media campaigns.
M&A stays a persistent theme of activism. The returns from operational enhancements are typically much less engaging to activists than the prospect of a direct transaction premium. Over the previous couple of years, nonetheless, a difficult regulatory and macroeconomic surroundings restricted activists’ means to credibly push for full-company gross sales or strategic carve-outs. With the numerous M&A rebound in 2025, we count on activists to extend their concentrate on event-driven M&A outcomes. Whereas pushing for full-company gross sales will stay a key goal for a lot of activist campaigns, we additionally count on to proceed to see activists arguing for break-ups that purportedly shed underperforming divisions or capitalize on buying and selling a number of arbitrage for various companies. Corporations searching for to take extra time earlier than enterprise transformative M&A could take into account agreeing to the formation of a strategic evaluation committee, with a number of activist-nominated administrators on such committee. Whereas these committees could make sense specifically conditions, the choice whether or not to promote or break up the corporate needs to be a full-board resolution, and any committee constitution ought to preserve the total board’s final decision-making accountability.
Nascent or occasional activists have caught on to the truth {that a} lengthy or profitable observe document shouldn’t be essential to garner the help of ISS and Glass Lewis, and even of huge institutional holders, in the event that they make a reputable enterprise case for change and recruit moderately certified director nominees. The proliferation of lesser-known activists has already led the extra established activists to pay attention their efforts in bigger cap corporations, a development we count on to proceed. Comparatively smaller corporations will likely be left to take care of less-tested gamers which might be searching for publicity and validation to additional their fundraising efforts. The extent of entry and engagement to supply an unfamiliar investor with a comparatively small funding place will stay a key judgment for corporations and boards heading into 2026. This judgment requires the balancing of safeguarding board and administration time with the growing shareholder sentiment that corporations needs to be usually partaking with shareholders and open to their concepts.
The overwhelming majority of activist campaigns are resolved by a negotiated settlement. Settlements will proceed to be a popular path to decision for a lot of corporations that want to keep away from the fee and distraction of a full, protracted proxy combat, particularly towards the backdrop of broader macroeconomic and political uncertainty. We count on to proceed to see settlements introduced with out prior public agitation by, and even rumors of, an activist within the firm’s inventory, as activists and corporations worth the advantages of personal engagement. These settlements could take the type of a easy press launch, saying numerous enterprise and governance adjustments and a supportive quote from an activist. Full-fledged cooperation agreements will proceed to make sense in sure circumstances, together with when a standstill is acceptable, however corporations and activists alike are more and more extra keen to be versatile concerning the type of decision.
The pace of settlements has additionally been facilitated by a rise within the high quality of people keen to function dissident nominees, which may embrace sitting administrators and former public firm CEOs and CFOs (together with these of the goal itself). Many of those people are sourced by the identical search companies utilized by corporations in their very own director refreshment course of and a few could haven’t any prior relationships with the nominating activist. Inside this bigger development, nonetheless, we’re seeing conditions wherein a possible dissident nominee has knowledgeable the activist that the nominee is keen to take part in a consensual settlement, however not in a publicly fought election contest. In these conditions, the activist has further incentive to achieve a negotiated settlement.
Whereas corporations ought to scrutinize the {qualifications} and entanglements between activists and their nominees, if an organization intends to settle, there are advantages to doing so earlier than a combat turns into too acrimonious and relationships with potential administrators are harmed. Corporations must also take steps to verify they don’t seem to be studying within the information that their officers or administrators have joined an activist slate, irrespective of how unrelated the state of affairs is to their house firm. One method could be to revise director governance pointers to require discover to the corporate, not simply earlier than a director or officer becoming a member of one other board, however earlier than a director or officer agreeing to be nominated as a candidate for one more board.
Whereas many activist campaigns begin publicly and play out totally within the public eye, some activists have discovered tactical worth in privately submitting nomination notices. These “placeholder” nominations present activists optionality to proceed to stress an organization, even with out the expense of mounting a full proxy combat. Receipt of nominations, even privately, places corporations in limbo for the upcoming annual assembly. Corporations should dual-track and put together a proxy assertion for a contested election, whereas additionally probably needing to pivot shortly to a settlement situation. These placeholder nominations, usually naming people from the activist’s fund or different repeat nominees of the activist, add to the time, expense and distraction the corporate is already dealing with in addressing activist engagement. Though corporations have a tendency to attend till the submitting of preliminary proxy supplies to reveal any non-public nomination discover, there are advantages to earlier disclosure in sure circumstances, and disclosure selections needs to be evaluated by the goal and its advisors based mostly on their particular details.
Activists are reviving the “withhold” marketing campaign, which can lead to unseating a director even with out nominating a competing slate. Withhold campaigns are a sexy method for activist buyers as a result of they provide a less expensive various to working a full proxy contest. Activists consider in “addition by subtraction” (i.e., that board dynamics can change even with out new voices within the boardroom). Withhold campaigns are notably interesting in a risky market surroundings, since an activist can discover a sexy entry level right into a inventory and nonetheless stress the board after the passing of a nomination deadline. Though a board can all the time select to reject the resignation of a director who doesn’t get the requisite votes underneath a majority voting customary, such an method could run the danger of shareholder ire and have penalties in any future contested election.
President Trump has lately expressed a need to change from a quarterly reporting regime for U.S. public corporations to a semiannual one. Securities and Change Fee (SEC) Chairman Paul Atkins has acknowledged that the SEC will likely be proposing a rule change to that impact, suggesting that it is going to be left to corporations to determine whether or not they swap to semiannual or stick with quarterly reporting. If the SEC proceeds with the rule change, though implementation could not take impact in 2026, activists might want to reconceive how they put money into and run their playbook at goal corporations. We are able to count on activists and their supporters to place stress on corporations to decide to voluntary quarterly reporting. Corporations ought to take into account affirmatively partaking with shareholders to know their reporting expectations in a semiannual regime, whereas conveying the advantages of transferring away from a quarterly reporting cycle and the short-termism it might probably promote.
As of but, AI has not essentially altered the activism panorama. More and more, nonetheless, AI will likely be harnessed by activists to supply targets and establish shareholders sympathetic to the activists’ views. Screening instruments exist already to course of publicly disclosed knowledge and establish firm vulnerabilities. AI will improve the sophistication with which activists are capable of analyze corporations on a relative foundation and make arguments for change. If AI is ready to generate combat letters and combat decks on behalf of activists, and make it even cheaper to pursue campaigns, corporations will discover it much more difficult, as they take into account how one can ethically make the most of AI to assist them in defending towards activist assaults. In the end, it should proceed to be the credibility of administration and the board, borne out of actual world interactions and shareholder engagement, that can affect key voting selections.
* * *
Given the advanced shareholder activism panorama, efficient preparation and monitoring are essential. Many activist approaches are efficiently subtle or discouraged earlier than they evolve into an assault or marketing campaign, and high quality superior planning and preparation stay the essential components. The next are key steps that corporations ought to take to make sure they keep forward:
- Implement Inventory Surveillance and Web site Monitoring: Inventory surveillance packages enable corporations to keep watch over inventory accumulation and weird buying and selling patterns, usually offering an early warning system for activist exercise. Activists usually begin by taking comparatively small positions and/or utilizing derivatives to construct their stakes, which makes early detection all of the extra advanced. Equally, web site monitoring packages enable corporations to see in actual time who’s visiting their web sites and social media profiles, and what content material they’re viewing.
- Evaluate Shareholder Engagement Technique: An efficient shareholder engagement technique is essential to constructing relationships with key buyers, monitoring investor sentiment, and staying forward of probably problematic points. Corporations needs to be intentional about establishing credibility and rapport with their buyers nicely earlier than an activism marketing campaign arises.
- Conduct a Vulnerability Evaluation: Usually conducting an inside vulnerability evaluation allows corporations to establish vulnerabilities that may be utilized towards them in a possible activism assault. Corporations can then make strategic adjustments or put together rebuttals to potential activist theses. Moreover, the extent to which an organization and board has already appropriately thought of an activist thesis is turning into a key space of investor focus in a proxy combat. Vulnerability analyses could be a great tool in anticipating and evaluating enterprise concepts earlier than an activist raises them, arming the board with a stronger document.
- Establish the Working Group: A working group needs to be recognized and able to act in case of an activism state of affairs. The crew ought to include inside members, such because the CEO, CFO, Basic Counsel, and investor relations representatives, in addition to exterior members, together with the authorized counsel, monetary advisor, public relations agency, and proxy solicitor.
- Have a “Break the Glass” Plan in Place: In case of a sudden and unexpected activist assault, corporations ought to have a “break the glass” plan that outlines the strategic and procedural subsequent steps in numerous situations. This ensures that corporations are capable of reply shortly and in a unified, coordinated method.
David Katz and Elina Tetelbaum are Companions and Loren Braswell is Counsel at Wachtell, Lipton, Rosen & Katz.
The views, opinions and positions expressed inside all posts are these of the creator(s) alone and don’t symbolize these of the Program on Company Compliance and Enforcement (PCCE) or of the New York College Faculty of Regulation. PCCE makes no representations as to the accuracy, completeness and validity or any statements made on this website and won’t be liable any errors, omissions or representations. The copyright of this content material belongs to the creator(s) and any legal responsibility on the subject of infringement of mental property rights stays with the creator(s).
