Environmental, social and governance (ESG). M&A. Short attacks. Every year, executive suites and boards are warned of the shareholder threats likely to dominate the next 12 months, and 2026 is no exception.

As another proxy season looms, ‘vote-no’ campaigns are the danger of the moment and have the potential to scupper corporate plans from New York to Tokyo.

Sometimes known as ‘withhold’ campaigns, vote-no campaigns are an alluringly simple way for disgruntled shareholders to make their presence felt. Asking investors to vote against the election of one or more directors – but without offering up alternatives – is a strategy far cheaper and faster than old-school proxy fights.

As so often, these strengths are reflected in the numbers, with Diligent Market Reporting finding there were 33 vote-no campaigns in the year to June 2025, up 10 from 2024.

The vote-no threat

Beyond the headline numbers, ‘withhold’ activism is rising across corporate boardrooms. That is clear enough among US firms just in the last few months. Notably, fast-food firm Jack in the Box’s board chair faced a campaign from an institutional investor.

Nor is the US unique here. In Japan, the chief executive at manufacturing firm Taiyo was challenged by a vote-no campaign, while ESG activists in London pulled the same trick with BP.

How, then, to explain these varied fights? The answer ultimately involves contrasting vote-no campaigns to traditional proxy fights. The latter, after all, imply a hostile takeover of a company, or at least an attempt to force a particular policy on unwilling executives.

Such fully fledged battles are unsurprisingly expensive, with activists spending an average of $1.8m during the 2025 season. They are time-consuming too, often encompassing a barrage of solicitation efforts, from private meetings to public letters, and to media rounds. Incidentally, Accenture has found proxy fights typically last a full year.

Compared to all that, vote-no campaigns are appealingly straightforward. As the name suggests, they are basically negative in outlook – not aiming to impose policies or board members, just expelling stalwarts or perceived underperformers from their posts. That immediately cuts costs, with activists not needing to identify and promote their own nominees, even as savings are obvious elsewhere too.

Consider here the time and cost of repeated press releases. Withhold campaigns can be instigated with a single public letter, explaining why a shareholder plans to vote against a particular director. Cheap in its minimalism, this approach also is not considered solicitation under Securities and Exchange Commission rules. Only by expressing an opinion, it does not campaign for alternatives, making it cost-effective from a regulatory perspective too.

All the while, the speed of vote-no campaigns can make them a boon for activists – and a threat for executives and boards. Putting aside the limited need to produce campaign materials, they can also be started even after advance-notice deadlines for proxy votes have passed.

And if that again hints at the basic flexibility of vote-no activism, so too do the intended outcomes. To be sure, many withhold campaigns are aimed at dislodging specific nominees for perceived mistakes. If shareholders are even contemplating voting against a board nominee, something has already gone seriously wrong.

At the same time, withhold campaigns are often less about particular personalities, and more simply a way of expressing shareholder discontent. In May 2025, for instance, an institutional investor with a 7 percent share in WEX launched a vote-no campaign against several company directors – less an indictment of them, and more because the payment services giant had refused to split its business segments and open up board seats.

And if that again speaks to the pleasing adaptability of vote-no activism – for activist investors anyway – so too does the fact that even defeat can spark change. That is arguably true at Harley-Davidson. The motorcycle firm’s directors may have won re-election to the board, yet its chief executive still retired soon after. Activists piled on similar pressure at WEX, with shareholder support for board nominees slumping by 30 points and the insurgents planning to propose their own candidates at the next AGM.

A serious challenge

All told, then, there are plenty of reasons for executives and board members to worry about vote-no activism.

More fundamentally, complacency over vote-no campaigns is deeply damaging for what it says about a firm’s investor engagement stance. If angry shareholders have reached the point where they are actively campaigning against incumbent board members – either to genuinely depose them or merely make some general point about a firm’s failings – executives have failed already.

That is especially true when savvy leaders have countless tools to keep shareholders onside: stock surveillance platforms that help them spot aggressive investors before they strike are the first line of defence. In addition, companies that conduct year-round shareholder engagement and audits of their governance framework stand a much better chance of heading off such campaigns.

“Combined with the reputational damage caused by vote-no campaigns – and the ease and low cost with which investors can now launch them – serious executives can no longer afford to ignore withhold activism.”

Particularly vulnerable companies should use their proxy solicitor, investor relations and legal team to develop an activist preparedness audit to identify ownership concentrations, voting vulnerabilities, governance gaps and messaging weaknesses early – so they can proactively engage shareholders, reinforce support and head off potential ‘vote-no’ campaigns before they gain traction.

Combined with the reputational damage caused by vote-no campaigns – and the ease and low cost with which investors can now launch them – serious executives can no longer afford to ignore withhold activism.

In this evolving landscape, the most forward-thinking boards treat proxy season not as an annual event but as a year-round discipline. Partnering with an experienced proxy solicitor early can be transformative.

Beyond execution during contests, a skilled firm brings deep expertise in vote modelling, shareholder intelligence and targeted outreach strategies that maximise support for management’s nominees and initiatives. By stress-testing vulnerabilities and crafting precise messaging well in advance, companies can bolster voting outcomes, strengthen board credibility and turn potential threats into opportunities for deeper investor alignment.

In the end, the boards that thrive are those that engage relentlessly – and leverage professional proxy expertise to ensure their message lands effectively when it matters most.

Artificial intelligence is beginning to reshape how institutional investors approach stewardship, particularly in the high-stakes areas of executive compensation and board elections. As asset managers look for ways to evaluate more ballot items with greater speed and precision, AI is emerging as a powerful tool for analyzing pay practices, governance structures, and voting patterns at scale. That shift has important implications for boards of public companies, especially as institutional shareholders apply increasing scrutiny to compensation committees and director oversight.

AI Gives Institutions the Ability to Conduct Proxy Analysis at Scale

One of the clearest effects of AI is the ability to scale proxy analysis far beyond what stewardship teams could historically do through manual review alone. AI tools can rapidly ingest proxy statements, compensation tables, peer pay data, governance disclosures, and prior voting outcomes, allowing investors to identify perceived outliers across large portfolios much faster than before. For issuers, that means compensation proposals and director slates are more likely to be screened against consistent criteria, with less room for weak disclosure, unclear rationale, or misalignment between pay and performance to escape attention.

AI is also likely to increase consistency in stewardship decision-making. Large institutional investors often manage voting across thousands of companies and multiple internal teams, and AI can help standardize how voting policies are applied from one issuer to the next. That can reduce uneven treatment, but it also raises the stakes for boards because issues that once may have been viewed as company-specific judgment calls can now be flagged more systematically, particularly where there are recurring concerns around compensation design, director responsiveness, or governance quality.

Deeper Scrutiny of Pay for Performance Alignment & Director Accountability

Another implication is deeper scrutiny of pay-for-performance alignment. Proxy advisers and institutional investors already assess whether executive compensation reflects long-term shareholder outcomes, and AI will likely make that assessment more sophisticated by connecting financial results, total shareholder return, incentive plan structure, disclosure quality, and prior voting history in a more integrated way.

The same logic extends to board elections. AI can help stewardship teams identify patterns involving director over boarding, committee accountability, poor responsiveness to shareholder concerns, or governance structures that appear out of step with investor expectations. In practice, that means voting decisions on directors may become more data-informed and more closely tied to a board’s handling of compensation, disclosure, and shareholder engagement over time.

Advance Preparation is Critical

This environment makes advance preparation more important, not less. Where AI-driven review is surfacing potential red flags earlier, boards and executives should work with their proxy solicitor well before the proxy is filed to conduct vote projections, pressure-test compensation proposals, identify likely institutional shareholder concerns, and refine disclosure around the committee’s rationale. Proxy solicitors can help management and directors map investor priorities, organize outreach, and assess whether the company’s pay narrative will withstand review by institutions that are now using Ai as a key input in their decision-making.

For companies, the takeaway is clear: as investor stewardship becomes more technology-enabled, successful outcomes will depend not only on the substance of compensation and governance decisions, but also on how effectively boards prepare, explain, and defend them to the institutional shareholders who ultimately decide the vote.

Financier Worldwide discusses hostile M&A and shareholder activism with Etelvina Martinez, Michael Vogele, Reid Pearson and George Rubis at º«¹úGV Advisors, and Sean Donahue at Paul Hastings LLP.

FW: How do you see shareholder activists balancing traditional value‑creation demands – such as M&A, capital allocation and governance reforms – with emerging themes like operational efficiency in the current market environment?

Donahue: Shareholder activists have recently been balancing traditional value‑creation levers with operational themes by becoming more targeted and thesis‑driven. With M&A markets still uneven and financing conditions tighter, activists continue to emphasise capital allocation discipline, board accountability and strategic portfolio moves – but they now pair these demands with sharper operational critiques. Campaigns in 2025 showed activists using operational efficiency as evidence of management credibility: benchmarking margins, scrutinising cost structures and tying governance reforms to execution risk. At the same time, evolving regulatory expectations and increasingly polarised shareholder proposals have pushed investors back toward fundamentals. Companies that articulate a coherent strategy linking capital deployment, governance and measurable operational progress tend to blunt activist narratives early, while those that drift invite focused, high‑conviction campaigns.

Universal proxy mechanisms in the 2025 season continued to reshape leverage in proxy contests, but the balance of power has become more nuanced.

— Sean Donahue

FW: How are activists adapting their tactics – such as campaign messaging, coalition building or use of media channels – to increase pressure on target companies?

Martinez: Activists are increasingly more sophisticated and targeted in how they apply pressure to companies. In recent years, messaging has expanded beyond purely financial and stock price performance, to encompass themes including governance practices, executive compensation, sustainability commitments and other themes that resonate with a wider range of stakeholders. This broader framing helps activists build credibility with audiences beyond just investors. Media strategies have also evolved. It has become more common to see these blend traditional financial press with other channels like social media or campaign-specific websites. Coalition building has always been a cornerstone of activism, but is becoming more critical in the current environment where proxy adviser influence may be eroding and institutional voting grows more fragmented.

Activists have been known to borrow shares before the record date to temporarily increase their voting block.

— George Rubis

FW: How have universal proxy mechanisms and evolving voting dynamics shifted the balance of power in proxy contests and settlement negotiations?

Donahue: Universal proxy mechanisms in the 2025 season continued to reshape leverage in proxy contests, but the balance of power has become more nuanced. Activism volumes remain high, with US campaigns up roughly 11 percent year over year and boards settling faster and earlier as universal proxy modelling improves. While activists still benefit from the ability to target individual directors, 2025 dynamics showed that universal proxy has not unleashed a wave of full contests; instead, it has encouraged partial refreshes, withhold campaigns and data-driven negotiations. At the same time, large passive investors – particularly the ‘big three’, BlackRock, Vanguard and State Street Global Advisors – retain significant influence over director elections, reinforcing the premium on director level credibility, transparent governance processes and defensible advance notice bylaws. Well-prepared issuers now counterbalance activist leverage through targeted engagement and clearer articulation of board skills and strategy.

Changes are becoming clear as investors rely more on artificial intelligence to assist with voting decisions.

— Reid Pearson

FW: How has the current movement by a number of major institutional investors to more AI-driven voting policies and methods impacted contested solicitations?

Pierson: Changes are becoming clear as investors rely more on artificial intelligence (AI) to assist with voting decisions. Certainly, the influence of proxy advisory firms Institutional Shareholder Services and Glass Lewis will continue to wane. Investors will focus more on their own internal models to evaluate key drivers in a proxy contest, such as financial performance, governance and board, and activist proposals. Not only will AI-driven voting policies drive specific voting outcomes at the institutional level, but we will see different voting among specific funds at the same institution, particularly at actively managed funds. This will make projecting vote outcomes more difficult during a contested solicitation. Both activists and companies will need to evolve the way they engage with shareholders. Historically, both parties have relied on a similar message, usually conveyed in a lengthy deck as well as filings. With the influence of AI, the message from the activist and company will need to be very tailored to not only the investor but the underlying fund manager. It is critical that companies and activists have a clear understanding of the shareholder base, particularly in a high stakes contested solicitation.

FW: Could you explain how stock loan and shorting impact activism?

Rubis: Shares on loan and shorted stock can have a meaningful impact on shareholder activism, mainly because they affect voting power and who controls the vote at the record date. The borrower of the shares receives the voting rights. As a result, the original owner of the shares – the lender – loses the ability to vote. Activists have been known to borrow shares before the record date to temporarily increase their voting block. The slight difference between shares on loan and stock that is shorted is that the latter has been sold into the market and now the new buyer of the stock holds the voting rights.

Repeated weak director votes may indicate governance concerns or gaps in risk oversight.

— Michael Vogele

FW: What indicators or early warning signs should boards monitor to assess their vulnerability to unsolicited bids or activist driven strategic demands? What preparedness programmes are available so that a board can proactively stay ahead of, or be better prepared for, a possible activist event?

Vogele: Boards should closely monitor shareholder voting outcomes. Particularly when recurring over multiple years, support well below 85 percent for director elections or advisory votes on executive compensation signals meaningful shareholder dissent. Repeated weak director votes may indicate governance concerns or gaps in risk oversight, while persistently low support on compensation proposals often reflects a perceived disconnect between pay and performance and potential misalignment with long-term strategy. An underperforming three- or five-year total shareholder return relative to peers can further heighten these vulnerabilities and attract activist attention. Proactive engagement is critical. Boards should use their proxy solicitor to help them reach out to the stewardship teams of major institutional investors to understand concerns and address them early – whether related to pay design, director qualifications or risk management. Institutional investors typically favour constructive dialogue and demonstrable improvement over adversarial campaigns. Companies can use proxy solicitors to design a year-round shareholder engagement strategy that utilises Form N-PX filings to analyse vote returns. In addition, boards can utilise solicitors and legal teams to conduct an activist preparedness audit, which should include a governance benchmarking analysis to helps spot weaknesses in a company’s governance framework.

Coalition building has always been a cornerstone of activism, but is becoming more critical in the current environment.

— Etelvina Martinez

FW: In your experience, what distinguishes successful defensive strategies from those that ultimately strengthen an activist’s case during a contested situation?

Donahue: Successful defensive strategies over the past few years share a consistent pattern: they confront the activist’s thesis directly with credible, data-driven analysis and demonstrate that the board is acting decisively. In 2025, for example, uncertainty, tariff-related developments and select Securities and Exchange Commission proposals drove some activist investors to reassess engagement practices, increasing scrutiny on whether boards were genuinely responsive. Companies relying on procedural manoeuvres or generic messaging often reinforced activists’ claims. Meanwhile, activism levels remained near long-term averages but grew more chaotic in tone, making disciplined sequencing and clear operational milestones even more important. The defences that failed appeared reactive or insular, while the ones that succeeded articulated a forward path more compelling than the activist’s alternative.

FW: Looking ahead, what structural or market conditions do you expect will most influence the next wave of M&A-related activism, including hostile or contested approaches?

Pierson: The next wave of M&A-related activism – especially hostile or contested approaches – will be driven by stronger equity markets, changing regulations, distressed opportunities and more advanced activist tactics. Activists will lean harder into M&A situations, as they are emboldened by improved dealmaking conditions, a universal proxy card and heightened sponsor appetite. Rising equity markets have historically inspired activists by increasing their assets under management. The universal proxy card has lowered the costs associated with contested situations, making them more viable. Activists are increasingly aligning with private equity sponsors to gain added leverage in their campaigns, and companies facing operational underperformance will continue to be prime targets of activism. In addition, activists are now employing more sophisticated digital strategies, such as multimedia campaigns, causing faster public escalation without the cost or delay associated with private engagement. These factors will collectively contribute to a surge in sponsor-led activity and create conditions in which activists will feel increasingly empowered to push for sales, breakups and contested transactions.

Efficiency. Transparency. Speed. Shareholders expect more than ever from corporate communications, even as studies suggest that 80 percent of a firm’s valuation is linked to investor relations (IR) activities. And as so often in our febrile digital world, it is tempting to see the solution contained in just two letters: AI. Certainly, the numbers here are once again compelling, with over four out of five insiders believing AI can make IR both faster and more streamlined.

To an extent, this overwhelming enthusiasm makes sense. Quite aside from the clear potential of AI across the broader culture, machine learning systems can parse and analyse vast amounts of data more or less immediately. Yet if that has manifest advantages for IR professionals, especially when dealing with thousands of shareholders at once, caution is still required. In the end, corporate communications are meant not for robots but people — with AI there to amplify, not replace, the value of flesh-and-blood IR teams.

Amplification not automation

Perhaps the clearest limitation of ‘tech-first communications’ is contained in the term itself. Technology, whatever its strengths, is ultimately just a collection of ones and zeroes, lacking the subtlety of an actual human being. Despite this obvious truth, and the fact that AI has only been around for a couple of years, IR teams have already been punished for ignoring it.

This is true even at the world’s biggest companies. At the 2023 launch of its Bing AI tool, for instance, a Microsoft marketing executive asked the system to summarise Gap’s IR site – only to be given answers filled with errors.

And even if teams avoid such awkward embarrassments, the truth is that ‘off the shelf’ AI platforms are designed by developers who do not always grasp the nuances of IR. Any IR professional worth their salt knows that tone, timing and context are key to keeping shareholders happy, with surveys highlighting personalised relationship building as fundamental to the role.

In other words, if left alone AI will never truly succeed, especially when over a third of chief financial officers report that IR communications are becoming more frequent and urgent, increasing the room for mistakes.

The solution is to craft AI platforms alongside IR professionals, appreciating their needs without removing their agency. In practice, this means seeing AI as a workforce multiplier, particularly when it comes to computational tasks that do not necessarily require the personal touch.

There are plenty of case studies here, not least when enterprise AI can perform literally trillions of sums a second. One example might involve using AI to flag abnormal stock movements, allowing executives to spot short attacks early. Elsewhere, AI could be deployed to analyse historical trading patterns, predicting what institutional investors will do next.

Even a cursory look at the figures shows how useful such number-crunching can be, with AI set to save white-collar workers 12 hours a week by 2029 — even as proxy fights at Exxon and Disney were partly won by lightning-fast campaigns.

Yet the broader point is that AI is only the first stage of the IR process. Once the algorithm has provided the data, it is up to the human team to act, whether by sending a chief executive letter or drafting a conciliatory press release.

The same is true even when AI takes on a more intimate role. Imagine, for instance, that a corporate is planning an investor day. AI is invaluable for finessing scripts – tightening tone and pacing, and so on – but a living, breathing executive must finally step up and give the speech.

In a similar vein, AI can help with other documents, drafting Q&As or earning reports. Yet they must still be finessed by hand, with shareholder sentiment and ongoing activist campaigns just two important factors to consider. This same rule applies even when AI is conscripted to more offbeat tasks. Yes, IR officers are exploiting AI to brief results in multiple languages or instantly generate podcasts. But that means little if the grammar is off or the voices inaudible.

To put it differently, then, AI is about more than mere speed, and rather represents an opportunity for corporates to work smarter, enhancing results even as they cut workloads. As so often, industry polling is revealing here, with AI especially popular among smaller media teams – those frantically juggling IR with more generic communication tasks.

From theory to practice: real‑world use cases

Across the IR landscape, teams are increasingly using AI‑enabled tools to track sentiment on platforms such as StockTwits and other social channels. This helps issuers understand how retail investors are reacting to press releases, earnings calls and investor days in near real time. These early indicators allow IR leaders to address concerns or misconceptions before they solidify and influence institutional conversations, transforming what was once a lagging signal into a proactive, early‑warning capability.

AI is also being adopted to streamline content development and review. Many IR teams now use AI to assist in reviewing earnings scripts and investor communications for clarity, tone and potential risk areas, compressing work that might previously have taken days or weeks into a matter of hours. Importantly, the goal is not to replace human judgment or generate copy autonomously, but to free experienced IR professionals to focus on messaging strategy, targeting and high‑value stakeholder engagement.

On the analytics side, advanced platforms are beginning to aggregate years of proxy, governance and market data to offer companies a real‑time view of shareholder activity, motivations and likely voting behaviour. As AI‑driven modelling features mature, issuers, advisers and financial institutions can run vote projections ahead of proxy contests or contentious meetings, allowing them to refine proposals and engagement plans based on predicted outcomes rather than assumptions.

Guardrails: governance, trust and ‘responsible AI’

As AI becomes more embedded in capital markets, both regulators and investors are sharpening their focus on how it is used.

On the governance side, a growing share of S&P 500 companies now disclose explicit board-level oversight of AI, with one recent review finding that such disclosures increased by more than 80 percent in a single year. Many boards are moving AI from a purely operational topic to a core risk and strategy issue.

Investors are sending similar signals. An EY survey of institutional investors in 2024 found that around one in five cited ‘responsible AI’ as a concern in their engagements with companies, and subsequent research indicates that proportion has since risen as awareness of AI risks has grown. At the same time, activist investors are pressing large technology and consumer companies, including Apple and Amazon, with shareholder proposals demanding greater transparency around AI, data collection and model usage.

For IR teams, that means two things. First, they need to be ready to explain how their company uses AI – in products, operations and decision making – in a way that is concrete, balanced and credible. Second, they must hold themselves to the same standard in their own use of AI: being clear about human oversight, data sources, accuracy checks and how they protect material non-public information.

This pressure is only likely to intensify. One recent industry forecast suggests that the AI enabled investor presentation software market could grow roughly fourfold by 2033, as both corporates and investors adopt more sophisticated tools for modelling scenarios, simulating votes and tailoring messaging. Activist funds are already experimenting with AI driven voting simulations and predictive analytics to stress test campaigns and anticipate management responses.

Against that backdrop, complacency carries both reputational and operational costs. The IR functions that will thrive are those that adopt AI early – but thoughtfully – and build a culture where human expertise is amplified, not sidelined.

Taken together, the message for IR leaders is clear. AI is no longer a distant buzzword; it is rapidly becoming a practical advantage – and, increasingly, a baseline expectation – in investor communications. But technology alone is not the differentiator. The real edge belongs to teams that blend human intelligence with digital amplification: using AI to see more, sooner, while still relying on experience, judgment and relationships to decide what to do next.

In an era when investors scrutinize every line of a proxy statement and every dollar of dilution, public companies are increasingly turning to vote projections to navigate the choppy waters of proxy season. These probabilistic forecasts, built on data, governance insight and disciplined scenario analysis, while remarkably accurate are not promises of outcomes but powerful decision-support tools. They help boards, counsel and corporate secretaries chart a course that aligns management’s strategic objectives with what shareholders are likely to approve.

Purpose: to provide a shareholder vote sensitivity analysis of potential outcomes of ballot items, including shareholder proposals, approval of equity compensation plans and increases in capital among other proposals.

What a vote projection does: A vote projection is a structured analysis that combines a company’s specific shareholder base, historical voting patterns, proxy advisor firm guidelines and influence and proposal specifics. Typically a company will want to run a few projection scenarios, as many proposals will be reviewed on a case-by-case basis by the proxy advisory firms and shareholders.

Ultimately, a vote projection will tell you whether a proposal is likely to pass a shareholder vote. In addition, a strong projection will give you a close sense of what the vote outcome is likely to be.

When are vote projections used: A vote projection can be used on any ballot item that is put before shareholders but in º«¹úGV Advisor’s experience, the three most common ballot items are equity compensation plans, proposals submitted by shareholders and increases in authorized capital.

Equity Plan Proposals

Equity plan proposals (whether asking for new shares or an entirely new plan) are one of the most important ballot items put before shareholders. Performing a vote projection is an important step in the planning process. A projection analysis will inform you of the influence of ISS and how critical their support will be on the proposal… spoiler…rarely is ISS outcome determinative. Just as importantly, a projection will allow you to zero in on the number of shares your specific shareholder base is likely to support.

Benefits for Equity Plan Proposals:

Vote projections serve as an early-warning system to identify potential opposition before the actual vote. They allow time to address potential shareholder policy concerns and modify the proposal and disclosure, which reduces the risk of the proposal failing a shareholder vote.

They provide the foundation for targeted engagement and proposal optimization by pinpointing specific institutional investors likely to vote against. This in turn provides data to adjust the equity plan terms as disclosure to maximize shareholder support. In some cases, vote projections can indicate to management that they can seek more shares than originally proposed.

Proposals Submitted by Shareholders

Proposals submitted by shareholders are often nuisances for management but should not be taken lightly. Typically, companies want to see what the base line support would be to determine if the proposal will pass or fail and the likely vote outcome. This will help determine the appropriate proxy solicitation strategy.

Benefits for Proposals Submitted by Shareholders:

Based on the expected level of shareholder support it helps gauge whether aggressive opposition, neutral stance or acceptance is appropriate and prevents underestimating support for proposals that may pass.

Vote projections can also help with the overall proxy statement strategy and positioning of the proposal. It provides data to help craft more persuasive “Vote AGAINST” rationale based on shareholder sentiment and voting support levels, and identifies specific concerns to address in opposition statements. It can also help determine if voluntary adoption of proposal elements could defuse support.

Capital Raises

Increases in capital ballot items seek to increase authorized shares or cover private placements over 20 percent of the outstanding shares. Vote projections in this area can mean life or death for a capital-starved company, particularly small and mid-cap companies.

Benefits for Capital Raise Proposals:

For capital raises, certainty that the proposal will be approved by shareholders is the single most important benefit. Companies can reduce execution risk and enable better timing decisions by gauging shareholder support in advance. In addition, data gleaned from the research can help in identifying acceptable dilution thresholds, which help with structuring terms (warrants, conversion ratios, discounts) that maximize approval odds.

For exchange-listed companies requiring shareholder approval (e.g., >20 percent dilution under NYSE/Nasdaq rules) it helps determine if private placement or registered offering is a more viable option.

For capital-starved companies, a vote projection can help avoid failed offerings that damage market credibility. It can also help minimize legal and advisory costs from drawn-out campaigns and proxy solicitation cost associated with failed votes requiring re-solicitation.

In summary, vote projections are a valuable tool for gauging the success of any type of ballot item. They provide boards and management with actionable data on the likelihood of success, proxy solicitation strategy, and also demonstrate due diligence to board members and support informed decision-making. Companies looking to achieve certainty going into a shareholder meeting should reach out to a proxy solicitor with a demonstrable track record of delivering accurate vote projections.

Retail investors are increasingly shaping corporate governance and M&A transactions, driven by the availability of accessible financial platforms and a growing willingness to exercise their shareholder voting rights. Unlike institutional investors, who have historically dominated shareholder votes, retail investors represent a dynamic and expanding bloc that companies must engage strategically. This report examines the rise of retail investor influence, key drivers of their participation, and actionable strategies for corporations to leverage this trend in critical M&A votes.

The Growing Influence of Retail Investors

Retail investors are becoming a pivotal force in US markets. According to Goldman Sachs, it is estimated that 38% of all US stocks are held directly by retail shareholders. Additionally, they anticipate U.S. retail investors will purchase $450 billion in shares in 2025, underscoring their significant economic impact. Younger investors, particularly Millennials, are driving this trend.

This group, however, participates in corporate elections at a far lesser rate than their institutional counterparts. Our analysis of hundreds of shareholder meetings in 2025 found that barely 30% of retail shareholders vote in shareholder meetings, without solicitation. That number easily doubles when retail engagement strategies are deployed.

Drivers of Retail Investor Engagement

The surge in retail investor ownership is largely attributable to digital innovation. Online commission-free trading platforms, such as Robinhood, have democratized access to financial markets, with Robinhood reporting 25.2 million accounts at the end of 2024 compared with 5.1 million at the end of 2019. Social media platforms, including Reddit, Stock Twits, Yahoo, and emerging social investing platforms like Traderverse.io, have further amplified ownership and engagement by fostering discussions on investing and voting strategies for retail-heavy stocks.

Strategic Engagement with Retail Investors

Engaging retail investors requires a shift from traditional approaches. While institutional investors participate in 92% of shareholder meetings, only 30% of retail investors are currently active, presenting both a challenge and an opportunity. Long gone are the days when proxy solicitors could just pick up the phone and ask shareholders to vote.

We estimate that 50% of all small-cap M&A transactions succeed because active solicitation of the retail shareholders pushed the vote over the needed threshold. Companies must adopt proactive, transparent, and digital-first strategies to mobilize this group effectively.

Looking Ahead

Retail investor influence is poised to grow further, and as institutional activism continues to rise, retail investors offer a strategic counterbalance for executives navigating governance challenges.

To capitalize on this opportunity, companies should partner with shareholder advisory firms to identify retail investors and tailor engagement strategies.  By investing in these relationships early, corporations can build a loyal retail shareholder base to support long-term success.

Conclusion

The rise of retail investors marks a transformative shift in corporate governance and M&A transactions. By leveraging digital tools, transparent communication, and targeted outreach, companies can harness this growing bloc to influence M&A votes and other pivotal decisions. Proactive engagement, informed by data and expert guidance, will be critical for executives seeking to navigate this evolving landscape effectively.

New plan shares have new guidelines, and keeping the old, unawarded shares that may not get granted, just hampers dilution calculations unnecessarily.

Michael Vogele

FW: What are three key actions a company can take during the planning phase to maximise shareholder support for an equity compensation plan proposal?

Freyman: First, understand your shareholder base. You will need to make a map of what the influences are that determine how your shareholders will vote – factors such as dilution, burn rate, proxy advisers and so on. Second, build your plan within those limits. This may be choosing a new share number that matches the maximum dilution allowed by your shareholder’s specific guidelines, or that a proxy adviser will likely support. Lastly, reach out to your shareholders. Establishing a relationship with your top holders before you need their vote will give you a strong platform to talk again during the proxy process.

FW: What are the primary factors institutional investors and proxy advisers consider when evaluating an equity plan proposal?

Cioffi: Dilution, burn rate and plan features are primary factors. While dilution and burn rate are the most important factors, it is important to remember that plans that allow for repricing or contain ‘evergreen’ provisions and other problematic ‘features’ are likely to face significant blowback from institutional investors and proxy advisers.

FW: What are three common missteps companies should avoid during the planning phase of an equity compensation plan proposal?

Vogele: We find one of the most common missteps that typically older equity plan, established more than seven years ago, is where the company proposes to amend the existing plan rather than create a new plan. Frequently, legal provisions and best-market practices change over the years, and having a newly designed plan document is normally easier than finding and fixing the mistakes from the past. In a similar way, should a company be updating its plan documents, one common misstep is not removing evergreen provisions or single trigger conditions for change in controls, something many investors see as red-line issues. Another common misstep that occurs when implementing a new equity plan is not cancelling unawarded shares from the previous authorisation. New plan shares have new guidelines, and keeping the old, unawarded shares that may not get granted, just hampers dilution calculations unnecessarily.

Make sure your proxy statement tells your story as to why you are asking shareholders to approve shares for your equity plan.

Reid Perason

FW: What strategies can a company deploy to address potential investor concerns or mitigate risks associated with an equity plan proposal?

Martinez: In instances where a company anticipates opposition from one or both proxy advisers, it is imperative to reach out to shareholders directly to underscore the importance of their vote in securing approval for the equity plan. These conversations should be informed by a clear understanding of each investor’s policies, whether they prioritise dilution thresholds, plan cost, historical burn rate or a combination of these and other factors. It is equally important to assess how closely each shareholder aligns with proxy adviser recommendations versus relying on their own internal guidelines. Some may follow Institutional Shareholder Services (ISS) or Glass Lewis closely, while others apply proprietary criteria. Because each investor evaluates equity proposals through a distinct lens, outreach should be tailored to address their specific concerns and decision drivers. While technical metrics such as burn rate or dilution are important, they are not the sole factors shareholders consider. Overall, messaging for shareholders should emphasise the strategic role the equity plan plays in attracting, incentivising and retaining key talent, and how equity grants are aligned with the company’s long-term business objectives. The argument that the equity plan is a tool to drive performance can be especially persuasive when the plan benefits a broad employee base, not just the named executive officers. Finally, emphasise how the board actively stewards the plan by highlighting any shareholder-friendly features it may contain, such as minimum vesting requirements or double trigger change-in-control provisions, and takes a disciplined approach to dilution. These elements demonstrate a commitment to responsible governance and alignment with shareholder interests.

Certainly, having ISS support your plan is helpful, but it is not essential to secure shareholder approval of your plan proposal.

Etelvina Martinez

FW: How critical is obtaining Institutional Shareholder Services support for the success of an equity compensation plan proposal?

Martinez: Having the support of ISS is not critical. Certainly, having ISS support your plan is helpful, but it is not essential to secure shareholder approval of your plan proposal. Roughly 99 percent of plan proposals pass despite ISS recommending against approximately 30 percent of proposals. Planning a successful vote outcome begins with an analysis of your shareholder base. Three factors to consider are, firstly, the makeup of your shareholder base, in terms of retail investors and institutional investors. Secondly, for your institutional base, how many are influenced by ISS and Glass Lewis, and how strictly these shareholders follow those firms. And thirdly, which investors follow their own internal guidelines and what are the equity plan guidelines of these investors. Once you understand your shareholder base model, undertake several vote projections with each investor, considering factors like burn rate, voting power dilution and plan duration, among other factors. If you identity any potential pressure points with these factors, consider engaging with your investors before the proxy is filed. Do this analysis before signing up with ISS’s consulting arm.

Establishing a relationship with your top holders before you need their vote will give you a strong platform to talk again during the proxy process.

Stephen Freyman

FW: What role does transparent communication and stakeholder engagement play in securing approval for an equity compensation plan?

Pearson: Make sure your proxy statement tells your story as to why you are asking shareholders to approve shares for your equity plan. For example, your burn rate may be considered high by some investors. Perhaps you have increased headcount to focus on a new business line and provided these new employees with equity grants – make sure the proxy explains this. Many investors look at thousands of proxies every year, so make your rationale for why they should support the plan proposal easy for them to find. Also make sure to explain how your equity plan proposal ties to your overall business strategy. At many investors, it will be a stewardship or governance team that makes the vote decision, and they may not be as familiar with the business strategy as the investment side. This will be important context for them. Shareholder engagement can also be an important step in maximising support for your plan. As you are in the planning phase and you identify some potential pressure points, such as high voting power dilution, for example, you may want to set up some time to engage with your holders before you file the proxy. The feedback can be important in your proxy disclosure. Of course, you will want to follow up with your holders after the proxy is filed.

FW: How can benchmarking against peer practices and market norms strengthen the credibility and competitiveness of an equity plan proposal?

Cioffi: An understanding of peer practices and market norms is crucial for most companies that have a significant institutional shareholder base for equity plan proposals. Dilution and burn rate outside of peer and market norms can be problematic for advisory firm recommendations and individual institutional investors’ guidelines. Many of ISS’s plan features have become widely accepted over the years since the ‘Scorecard’ has been implemented, however all are not widely accepted. The most common equity plan feature is prohibiting dividends on unvested awards, and by far the least common is limiting the discretion to accelerate vesting.

The most common equity plan feature is prohibiting dividends on unvested awards, and by far the least common is limiting the discretion to accelerate vesting.

Donald Cioffi

Global sustainability reporting has hit a great reset

Volatility may appear irrational, but there are steps investor relations professionals can take

Corporate executives often wake up to unsettling stock price swings with no clear catalyst, news, filings or obvious events. In today’s markets, volatile price movements frequently extend well beyond the fundamentals. Algorithmic trading, macro-overlay strategies and often drive disconnects, making market reactions appear irrational.

These dynamics have intensified in recent years. The rise of passive investing, the influence of retail traders, , and the emergence of ‘meme stocks’ have all contributed to a market structure that is more fragmented, faster moving and harder to interpret.

For directors and executives, understanding these market forces should be a key priority to help elevate their company’s governance, finance and investor relations functions. Volatility can affect a company’s access to the capital markets, create an opening for shareholder activism and shape investor sentiment far more than earnings alone.

This article explains the forces driving stock price volatility, outlines best practices for communicating strategically, and provides actionable steps to help leadership teams understand what is going on with their stock price.

What’s really driving volatility – market microstructure in action

Algorithmic and high-frequency trading (HFT) are automated platforms that execute trades based on momentum, trend-following, sentiment and statistical arbitrage rules. While these algorithmic and HFT participants often improve liquidity when markets are calm, they become more cautious in pricing risk assets with wider bid-ask spreads when volatility explodes. In turn, this often amplifies price moves through rapid feedback loops.

A prime example is the March 2020, the Covid-19 pandemic induced sell-off showed how liquidity evaporated when HFT participants pulled back, exacerbating volatility just as investors sought to raise cash in a critical time of uncertainty.

Boards must understand that much of today’s intraday trading is detached from fundamentals, driven instead by speed and statistical relationships. This complicates the task of explaining short-term share price movements to investors.

Macro overlay trading strategies: Global news, interest rate shifts, inflation data and geopolitical shocks often drive exaggerated stock price movements. Quantitative macro and factor models sift through massive datasets and tilt portfolios toward regions, sectors and themes like growth, value or momentum. When multiple models converge, sharp buy or sell orders can trigger unusual stock price swings far detached from company fundamentals.

Boards and CFOs should connect macro-driven volatility to the company’s treasury management policy, including capital allocation strategy and timing of debt or equity issuance.

ETF flows and index events: ETF rebalancing, inflows and outflows add another powerful driver for individual stock price movements. The sheer size of passive funds means that rebalancing often creates concentrated buying or selling trading flows.

An example was Tesla’s addition to the S&P 500 in 2020. From the November 16 announcement date through year-end 2020, Tesla’s stock price rose approximately 73 percent, primarily fueled by index-tracking funds that had to acquire its shares.

Executives should anticipate these events and prepare investor messaging accordingly. For companies facing upcoming index changes, explaining to the board and shareholders that such moves are technical, not fundamental, can help manage expectations.

What should companies do?

Reaffirm your company’s long-term vision and the fundamentals supporting your value proposition. Ensure alignment across investor decks, MD&A disclosures, earnings calls and shareholder outreach. Consistently highlight strategic priorities, execution progress and financial resilience. Market noise is inevitable, and credibility rests on demonstrating consistency and discipline.

Volatility presents opportunities to engage shareholders proactively, strengthen relationships with existing holders and prospects. Use turbulent periods to connect with long-term holders and high-quality prospects to reinforce trust. Tailor outreach based on shareholder profiles, distinguishing fundamental investors from high-turnover traders who generally do not align with long-term ownership.

The only way to be sure of what is happening to your stock is to use a market surveillance firm to monitor trading in the stock.  Market surveillance tracks real time activity, monitors order books, trading volume shifts and unusual liquidity patterns. Market surveillance also provides settlement and ownership analysis to identify high-frequency trading patterns, separate long-term holders from algorithmic churn along with short interest analysis and fails-to-deliver as indicators of market pressure. Companies should monitor securities lending dynamics, including stock loan and borrow rates, particularly ahead of shareholder votes, activist campaigns or other key events.

More importantly, real time stock surveillance monitors and alerts you to critical trading in your stock that detects early signs of activist involvement, ownership shifts and hard-to-identify activist tag-along investors.

Companies need to be careful of providers who merely repackage stale 13f data and call it stock surveillance.  By the time an activist shows up in an SEC filing your company has lost any benefit of early detection.  Monitoring of buyers and sellers of your client’s stock in real time takes you beyond standard 13f filers, to include pension funds, sovereign wealth funds, non-filing hedge funds and foreign investors

Market surveillance tools and accurate ownership analytics can equip executives and their advisors with actionable intelligence and a competitive edge in managing volatility that goes beyond the basic reporting of share price performance and trading volumes.

Conclusion

Directors and executives must recognize that short-term stock price action often reflects flows not fundamentals. All companies should have the tools in place to be able to spot the differences.

Executives cannot control algorithms or macro flows, or even an activist but they can control how they respond. Stay consistent and disciplined in messaging, be transparent and communicate openly with stakeholders, and more than anything else, focus on the long-term drivers of fundamental performance to create shareholder value versus daily stock price fluctuations.

Volatility is inevitable in modern market structures. Executives who embrace market literacy, monitor ownership changes and communicate consistently can withstand the turbulence, ultimately leveraging it to build credibility, reinforce investor trust and lower their company’s cost of capital.

A targeted strategy can help ensure your proxy vote passes without problems.

M&A Transactions are arguably the most consequential events companies can take on—for buyers, sellers and the C-Suites in the middle. From understanding shareholders to targeting the investors that truly matter, executives must be proactive in the run-up to these all-important corporate reforming proxy votes. This is particularly true when investor opposition and public scorn can stymie deals before they are consummated.

To ensure executives appreciate the risks and opportunities of M&A shareholder votes, º«¹úGV Advisors has developed a list of Do’s and Don’ts, explaining how partnering with industry experts can help a deal go smoothly.

The Don’ts

Don’t assume you have the vote or be passive. For a shareholder vote to succeed, executives must know their shareholder base. Even with a premium-priced transaction, deals can only succeed if companies develop a detailed picture of their shareholders.

Careful stock surveillance or Ownership Intelligence is therefore important, because it offers an early indication as to how a deal is being met by the marketplace and investors. Ownership Intelligence is market surveillance that identifies and tracks the true institutional shareholders holding share positions and hiding behind custodians in a company’s stock.

Don’t forget about the sell-side analysts—they can be a powerful ally in articulating the deal terms. Too often, companies overlook the role of sell-side analysts during an M&A transaction. But these individuals are regularly in front of your investors. If analysts misunderstand or misinterpret the transaction, that misunderstanding can trickle into the shareholder base, especially for institutional investors who lean on analyst notes for quick takes.

Spend time ensuring the sell-side understands the transaction rationale. If you’re not proactive in this area, you run the risk of leaving the narrative to be interpreted—or misinterpreted—by others. And once a negative view takes hold in the market, it’s hard to unwind.

Even with a premium-priced transaction, deals can only succeed if companies develop a detailed picture of their shareholders.

Don’t believe your shareholder base has remained static. Pay attention to share-holder base shifts—stock loan analysis is critical. Once a deal is announced, the makeup of the shareholder base will change radically and rapidly. Stock loan analysis identifies the top institutions lending out shares to short sellers and helps you assess how this impacts the voteable share positions.

º«¹úGV is this important? Because a large institution like Vanguard or BlackRock might report a significant record date stake in your company’s stock. However, since they both actively engage in securities lending, a portion of those shares could be out on loan and are not eligible to vote. This effectively reduces the voting power of that institution on its reported record date position.

Companies that fail to do this early in the transaction may find themselves wondering where certain institutional votes are at the last minute when fewer votes have appeared from record date positions. By this time, it might be too late to scramble to replace those lost votes.

The Dos

Do take a proactive approach—this is not a routine shareholder meeting. Just the threat of an activist investor seeking more is enough to know that companies must communicate with all investors, regardless of the premium involved. The statistics are stark: M&A demands appeared in over half of H2 2024 campaigns.

M&A votes demand an all-hands-on-deck approach; a company should have its regular proxy solicitor and IR firm on board. Don’t switch up your team. Now is not the time to be holding the hand of a new firm.

Do include retail shareholders in your strategy—they can make or break the vote. Retail shareholders specifically registered and NOBO shareholders can be the difference between a successful vote and failure. More times than not, companies facing tough votes have relied on the retail shareholders to push the vote over the needed threshold.

Retail engagement campaigns take time; that’s why it’s critical to plan upfront to include them in the overall strategy.

M&A shareholder votes should not fail, but they do, and if you’re a C-Suite executive or board member, you certainly don’t want it to happen to your deal. By adopting a targeted strategy—one dovetailing best-in-class ownership intelligence, end-to-end shareholder engagement with focused investor relations—companies can ensure M&A votes pass without problems.