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 韩国GV 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, 韩国GV 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.

韩国GV 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.

With the 2025 North American proxy season now officially closed, emerging trends in executive compensation are offering valuable insights and shaping important considerations for boards going forward. Here, we explore some of these issues and ways boards and management teams can start to incorporate these into planning for next year’s shareholder meeting.

Say-on-pay support stays steady

A review of voting results for say-on-pay (SOP) proposals at Russell 3000 and S&P 500 companies reveals outcomes consistent with prior years. As of June, average support for the Russell 3000 was 90.6 percent and 23 companies (1.2 percent of total) have failed SOP so far this year. For the S&P 500, average support was 89.5 percent with five companies (1.2 percent of total) failing to secure majority support.

In general, SOP proposals receive overwhelming support from shareholders, with a relatively small number of companies failing the non-binding advisory vote. In fact, average support levels tend to fluctuate around 90 percent. While investors continue to show broad support for executive pay programmes, boards should be cautious not to become complacent about their pay programme. Issuers also understand that SOP support below 80 percent generally requires some level of response from the board. Further, staying attuned to the specific practices that tend to trigger investor pushback is essential to head off any surprises.

For example, of the 23 companies that failed to receive majority support, seven had underlying pay-for-performance concerns that were compounded by special awards, poor design practices, questionable rigour of performance goals, or insufficient shareholder engagement and related disclosure. This indicates that failed votes are rarely driven by a single factor. More often, they result from a cumulative set of shortcomings.

Large, one-time grants, often used for retention purposes or to bring on new hires, tend to draw criticism when lacking clear performance alignment. Proxy advisers and investors are expected to remain highly attentive to substantial one-time grants, closely examining both the justification behind them and the structural elements of their design.

Shareholders continue to prefer equity awards linked to performance goals (although we are starting to see some investors question some elements of performance-based pay). Proxy advisers, in policy guidance leading up to the 2025 season, hinted at taking a more holistic view of equity awards, balancing performance and time vesting elements.

Board and management should regularly evaluate compensation programmes against shifting investor expectations, supported by ongoing engagement efforts. They should also provide robust disclosure around one-time or discretionary pay decisions, detailing the rationale, alternatives considered, and alignment with shareholder interests.

DEI metrics disappearing from incentive plans

When ESG metrics started making their way into executive compensation plans, diversity, equity and inclusion (DEI) measures quickly became among the most commonly used. According to data from Farient Advisors, at the peak in 2023, 57 percent of S&P 500 companies incorporated DEI metrics into executive compensation. However, this fell to only 22 percent in 2025, demonstrating how political, legal and shareholder pressures have accelerated the removal of these metrics from executive compensation plans.

Some issuers are reframing their DEI programmes and disclosures to emphasise inclusion and employee engagement more broadly while downplaying diversity. Board and management should consider replacing quantitative metrics, like representation targets, with more qualitative measures.

Perks under pressure

Perquisites account for only a small portion of total executive compensation but are on the rise and experiencing renewed interest from regulators and investors. Two perks in particular – airplane use and security services – are experiencing significant increases. Based on recent analysis by Glass Lewis, chief executive air travel costs at S&P 500 companies saw a median increase of nearly 46 percent between 2019 and 2023. Median personal security costs surged 119 percent over the same period. Such sharp increases in chief executive perks not only raise cost concerns but draw scrutiny from regulators and shareholders alike.

While excessive perks, as a sole issue, rarely lead investors to oppose SOP, they can be an indicator of weak pay for performance design, and prompt investors to delve deeper into a company’s pay programme. At the same time, regulators are seeking more disclosure around these expenses. Disagreement over the classification of these benefits is often at the root of Securities and Exchange Commission (SEC) challenges. For instance, the SEC considers executive security expenses a personal benefit, making them a disclosable perquisite, while many companies classify them as business expenses.

Boards and management should benchmark their perks payments: outliers draw scrutiny, so reviewing how you compare to peers regularly is important. Also important is reviewing your internal classification framework to ensure it reflects SEC guidance.

Rules of investor disengagement

Mid-proxy season, the SEC updated its guidance on Schedule 13G and 13D filings for investors owning more than 5 percent of a company’s share capital, tightening the criteria for beneficial ownership reporting and clarifying when investors must file a long-form Schedule 13D versus a short-form 13G. While the SEC indicates these adjustments were intended to enhance transparency, they have also had a chilling effect on investor engagements, discouraging some institutional investors from actively participating in governance discussions.

The result? Reduced visibility into institutional voting behaviour and rationales. For companies that received low SOP support, gaining a clear understanding of which aspects of their pay programmes are triggering concern may be more challenging this year. It remains to be seen if investors will feel less confined during the off-season engagement cycle, when discussions are not necessarily tied to specific items up for vote. However, in the meantime, getting the feedback you need may require an altered approach.

Board and management should keep discussions topic-specific as opposed to company-specific. Investors may be more willing to discuss their broad views on topics and what they consider best practice. In addition, the new guidance pertains to 5 percent holders, so consider expanding outreach to holders below this threshold for more candid conversations.

Next steps for 2025 and beyond

For those companies that are concerned about their executive compensation plan, the key is to reach out to their shareholders to pressure test their current plan. Starting the dialogue now with a comprehensive shareholder engagement outreach programme enables companies to course-correct for 2025 and lay the groundwork for a more defensible plan in 2026.

Shareholder activism remained high throughout the first half of 2025, as market volatility and uncertainty created a challenging environment for companies during the proxy season. Both prominent and smaller investment funds were highly active, with targeted companies entering into settlement agreements more swiftly than ever before. Looking ahead to 2026, boards must remain especially vigilant, recognising that even well-intentioned decisions may come under activist scrutiny.

FW: Looking back over the past year, what key trends have shaped shareholder activism?

 Riches: Market volatility and uncertainty has created a challenging environment for companies in the 2025 proxy season. Settlements with activists have been on the rise over the past few years since the introduction of the universal proxy card but the current market dynamics have created an extra incentive for boards to find an agreement with dissidents rather than face even more uncertainty by engaging in a proxy contest. There has also been a significant reduction in the number of shareholder proposals companies have faced, in part due to the changes to the Securities and Exchange Commission’s (SEC’s) ‘no-action’ rules which rescinded previous guidance, increasing the burden on companies which were looking to deny proposals. Environmental, social and governance (ESG)- focused proposals have faced greater scrutiny, a trend which was also reflected in voting results as shareholder support for environment and social proposals in 2025 have declined.

Tucker: Shareholder activism does not exist outside of the broader market, so the element having the biggest impact was volatility. Market disruption across the first half of 2025 had a significant impact on many activist engagements, often benefitting corporates. The changes afoot in global capital markets were seen as creating real uncertainty, and this put a near complete pause on activist attacks calling for significant corporate change – very similar to what we saw in the first half of 2020. As we look ahead to 2026, we will see activists and investors recalibrate and re-engage in our new reality quickly. Boards should not expect a free pass next year.

Tetelbaum: Q1 2025 was the busiest first quarter for shareholder activism since 2022, with activists continuing to target many of the largest companies across a range of sectors. Although there were a few high-profile activism battles that resulted in full proxycontests, the vast majority of activism matters in Q1 were resolved through settlement, including settlements mere weeks from when the activist surfaced at the company. Onenotable trend from the prior year is that activists privately submitted nomination notices at companies, often naming individuals from the activist’s fund as director nominees – raising questions about whether a full campaign was truly intended or if the move was primarily a strategic negotiation tool.Companies facing these situations nevertheless were compelled to devote valuable time, energy and resources to prepare proxy statements and explore settlement options with the activists. The short time periodbetween nomination windows and when proxy statements must be filed puts tremendous pressure on companies to dual track ‘fighting’ and ‘resolving’, especially in situations where companies are ambushed by activists a mere few months before an annual meeting.

Glover: Activism levels were very high during 2024 and have remained high during the first half of 2025. Activism hasbecome a global phenomenon, and the total number of funds has continued to grow. Many of the big name funds have been very active, launching multiple campaigns. Smaller funds have also been active. Companies targeted by activists are enteringinto settlement agreements more quickly than was the case in the past, and the number of campaigns that result in proxy contests has diminished. Theincreased willingness to settle may be attributable in part to the universal proxy card, which makes it easier for activists to target individual directors. It may also be attributable to the fact that institutional investors are more receptive to activist proposals than was the case in the past. There are an increasing number of situations in which multiple activist funds challenge the same company. Thisphenomenon may be a product of growth in the number of funds and competition for targets. It may also reflect the activists’ recognition that when they join forces the pressure on the target increases. In some multiple activist situations, however, the activists do not take the same position. The end result is more complexity for the target.

Scrivano: Activists have maintained a focus on total shareholder return (TSR) and operational performance, with TSR and performance weakness still being the major activist campaign attractant. Furthermore, the spotlight continues to be on operational improvements, such as cost cutting and operating expense reduction. Corporate governance weaknesses have also drawn activist attention. Recently, tariffs and market volatility have disrupted M&A, which has in some cases increased activist activity at particular companies, while decreasing it at others. This past year has also seen a significant number of break up or divestiture campaigns by activists, including at some fairly large companies, such as CVS, Honeywell, Becton Dickinson, Kenvue, Warner Bros. Discovery and others. Unsurprisingly, the universal proxy card continues to facilitate split votes between activist nominees and company nominees. In addition, activist funds have resumed nominating their own employees to boards.

FW: Which issues are currently driving activist campaigns, and how do shareholder-friendly legal frameworks influencetheir likelihood of success?

Tucker: There is a focus on calls for companies to look at where business lines could be separated. In the past few years, there has been a real increase in the number and size of spin-off transactions. Most of all, we see the market consistently rewarding companies that pursue these transactions. This dynamic really challenges aboard to articulate the benefits of the combined company and the risks of separation, both areas where concrete data is often hard to find. These arguments tend to focus on long-term stability, whichrequires a significant level of trust between investors and boards. Activists are adept at claiming any resistance to a separation is simply entrenchment.

Tetelbaum: Activists continue to prioritise short-term agendas that can come at the expense of long-term value creation, relying on a tired formula of targeting ‘underperforming’ companies. Activists often use cherry-picked metrics, challenging long-tenured directors, irrespective of the institutional knowledge and industry expertise they may bring, and push for event-driven outcomes such as breaking up or selling the company, even if at inopportune times. Even the smallest hedge funds are legally permitted and practically able to buy into a company and run a control proxy fight without meaningful financial commitment or any long-term orientation. The disruption caused by many activist campaigns risks undermining the board’s deliberative processes, continuity and cohesion that are essential for sustained corporate performance and long-term value creation.

Glover: Over the past year, more and more activist campaigns have focused on operational and strategic issues. For example,activists have been making arguments that a company should employ more effective cost controls, devote more resources on high margin businesses, or otherwise adjust business strategies. In many cases they have also argued that the chief executive and other members of the management team should be replaced. These kinds of campaigns often take time to gain momentum, but if theysucceed they can generate significant returns for the investor. The number of campaigns focused on M&A issues has declined somewhat, which may be in part because the M&A markets have been relatively cold. The SEC’s decision to adopt the universal proxy card rule two years ago has probably helped activists by increasing pressure to settle. Delaware courts’ insistence that bylaw regulations governing access to the shareholder meeting ballot should not be unduly restrictive has also helped activists.

Scrivano: TSR or performance weakness continues to be the driving force in activist campaigns. It tends to be challenging to defend directors or a board that has overseen TSR or performance weakness for a durationally significant period of time. Operational improvements and cost overruns also invite scrutiny. In parallel, portfolio review, especially in cases where a company division could be sold or spun off, and companies integrating M&A, are targets for activists. Single classboards open up the potential for a control slate. Over the last 20 years, the staggered board has become rarer at Fortune 500companies, with many having pre-emptively de-staggered their boards. Many of these companies took solace in the fact that they were large enough that they did not need tofear a takeover offer; however, they did not see the threat on the horizon of activist attacks that do not seek to acquire the company but rather to obtain control at the board of directors level.

In recent years, there has been a notable rise in activist campaigns explicitly targeting chief executives and chairs of the board.

ELINA TETELBAUM
WACHTELL, LIPTON, ROSEN & KATZ

Riches: In February 2025, there was an expansion in SEC guidance regarding shareholder engagement, which put investors at risk of having to adhere to more stringent 13D filing requirements should they be deemed to engage in a way which could effect change or influence control at a company. This resulted in many stewardship teams adopting a listen-only approach in meetings with both activists and companies, creating further uncertainty around how they may vote. It is not just institutions that have come under scrutiny in 2025 as leading proxy advisory firms ISS and Glass Lewis, which issue voting recommendations for their institutional clients, have faced legal pressure from the state of Texas. Texas passed a law which restricted the proxy advisers’ ability to advise shareholders on ESG factors. ISS and Glass Lewis have responded by suing the state on the basis that the law violates their First Amendment right. It is notable that both ISS and Glass Lewis have been far more supportive of activist nominees in 2025 and activists have been more successful in winning board seats as a result.

FW: What strategies are activists using to assert influence and drive change? How have these tactics evolved in recent years?

Tetelbaum: Activists today employ a variety of strategies and tactics to influence boards in pursuit of short-term returns. For example, some activists rely heavily on media-driven campaigns, using headline-grabbing narratives to shape public perception and investor sentiment. Others pursue more behind the scenes engagement, working directly with boards on substantive strategic initiatives. Although there is a practiced activist playbook, each activist has a different style and set of objectives, driven by the personalities involved. In recent years, there has been a notable rise in activist campaigns explicitly targeting chief executives and chairs of the board. While any activist campaign that criticises a company’s strategy and operations can be viewed as an implicit attack on the company’s management, activists have been more often explicit in advocating for chief executive replacement. Correspondingly, there has also been an increased number of chief executive departures and resignations at companies targeted by activists in recent years, even after the chief executive prevails at the ballot box. This trend has magnified the importance of boards being fully aligned with management’s strategy, as anydaylight between a management team and its board may be amplified under the stress of an activism campaign.

Glover: The activists’ basic playbook has not changed for many years. They look for a target that represents a good opportunity because it is under leveraged, has lots of cash on the balance sheet, presents M&A opportunities, underperforms its peers or has strategic or operational problems. Activists also look for situations where they think they can persuade shareholders that the company has poor governance or a weak management team. When they find a suitable target, they will request meetings with the management team and the board at which they will describe their complaints, and perhaps also request the company to appoint new directors to help implement change. At the same time, they will seek support from other stockholders and may also seek topersuade other activist firms to join forces. If the target company does not agree to settle quickly, the activists ratchet up the pressure by going public and threatening a proxy contest. Activists have improved their game in a number of respects in recent years. In particular, they havebecome more sophisticated about proposing operational and strategic changes, and they make more fully developed arguments for why changes are appropriate. They may enlist support from formerboard members or executives. They select qualified director candidates and press harder for early settlement. In addition, a number of funds have gained traction by arguing that they will be friendly and supportive of management if management is willing to implement their proposed changes.

Riches: Activists have continued to target company chief executives, with the number of activism-related chief executivedepartures steadily increasing year on year since the pandemic. Given the subdued M&A environment of recent years, an increased focus on operations and corporate strategy has led to chief executives coming into activists’ crosshairs much more frequently, with activists applying pressure on boards to hold chief executives to account over any previous strategic missteps. ‘Vote no’ campaigns have also been used more frequently than ever before as activists look to prevent the election of the company’s directors. These campaigns give an activist more flexibility around the timing of a campaign, as they need not comply with nomination deadlines, as well as on the cost and scope of the solicitation. A ‘vote no’ campaign can serve as a litmus test for shareholder sentiment and help activists send a message to a company that change is required.

When investors believe that the management team is listening to them and responding proactively, they are much more likely to support management if and when an activist appears.

STEPHEN I. GLOVER
GIBSON, DUNN & CRUTCHER LLP

Scrivano: In a departure from the traditional activist tactic of a private approach combined with increasing pressure and then apublic disclosure, certain activist funds have resorted to issuing public letters to companies or filing schedule 13Ds disclosing a substantial stake in companies with little to no warning to those companies. Recent examples include Wolfspeed, Rapid7, Qorvoand others. In addition, certain activist funds, such as Elliott and Ancora, have been more willing to propose a control slate in a proxy contest, as occurred in Southwest and Norfolk Southern, respectively. A more stark example is Gildan Activewear’s entire board resigning in response to an activist campaign by Browning West. Swarming is another tactic that has continued  to occur, whereby multiple activists target the same company, often around the same time.

Boards need to think about where support can erode slowly overtime and recognise that shareholder engagement is more akin to a relationship that needs to be nurtured than a transaction.

PAT TUCKER
FTI CONSULTING, INC

Tucker: One of the more notable trends we have observed over the past few years is the speed of settlements and the increase in private settlements, such as where a company and activist settle without any prior public disclosure of the activist’s position. At the same time, we are seeing an increase in activists forming strategic committees through settlement. These trends, taken together, really indicate activists’ significant ability to quickly change the direction of a company. Alongside this, we are seeing a generational change with new funds being started quickly. In our experience, the new funds are moving more aggressively as they need to prove a differentiated rate of return and a brand their limited partners would recognise.

FW: Have any recent activist campaigns stood out to you? What lessons can be drawn from their execution and outcomes, such as changes in board composition or corporate strategy?

Scrivano: Activists are continuing to push for change after board victories. At Norfolk Southern, Ancora’s board victory led to international investigations resulting in the termination of the chief executive and general counsel. A similar pattern emerged at Kenvue, where Starboard settled for three seats and then orchestrated the ousting of the chief executive several months later. Mantle Ridge also stands out – by targeting the chief executive of AirProducts, among other directors, in a proxy contest – the chief executive lost his board seat in the proxy contest and resigned shortly thereafter. Another notable development is that certain tier one activists that have previously not taken a contest to a vote are now doing just that, as seen with Elliott’s successful proxy battle at Phillips 66.

Tucker: There have been several campaigns in recent years that have put chief executives in focus. These stand out as a number of these engagementswent through a proxy fight where chief executives consistently remained in their jobs. That is a really important lesson that it is easier for activists to replace directors than to replace chief executives. It also affirms that in fights that focus on operational issues primarily, the investors remain sceptical that activistshave any special insight.

Riches: One of the most interesting activist situations took place at healthcare products distributor Henry Schein. The company initially faced pressure from Ananym Capital Management which had been gearing up for a proxy contest. However, before Ananym had a chance to nominate, Henry Schein announced a deal with private equity (PE) behemoth KKR, which became one of the company’s largest investors and took two seats on the board. An expanded share repurchase programme was also initiated and in the months since, the company’s president has stepped down and Henry Bergman, the company’s long-term chief executive, has announced his retirement. This situation is a perfect illustration of how PE can utilise activist strategies and highlights how activism and PE are converging.

Glover: Recent campaigns in which activists have successfully argued that a company is underperforming and that the chief executive should be removed have been interesting to watch. These campaigns demonstrate how much pressure activists can applyto boards of directors. It has also been interesting to watch the relatively few campaigns that have resulted in a live proxy contest, since contests generally go forward only when the target board strongly believes that it is on the right side of the debate with the activist. Finally, it has been interesting to see activists look for opportunities outside the US and launch campaigns in other markets.

Tetelbaum: No two activist situations are alike and many of the most interesting situations are resolved behind the scenes. For boards and management, it is often a key priority to minimise the distraction and potential disruption that public campaigns can cause for stakeholders. The most high- profile situations are ones with the most well-known activists at blue chip companies, especiallythose that get close to, or go the distance to, a vote. Proxy battles that go the distance usually do so because of the irreconcilable differences between the objectives of the board and the activist. Boards thatare well advised and maintain consistent engagement with shareholders are best positioned to go the distance and prevail in a vote.Success lies in maintaining year-round dialogue – not just during proxy season – while delivering a clear, consistent and uniformmessage and articulating a long term strategic vision aligned with shareholder interests.

Companies should be establishing relationships and communicating the company’s strategy and plans to these institutional investors, even if there is no activist threat on the horizon.

PAUL SCRIVANO
DAVIS POLK & WARDWELL

FW: How would you define institutional shareholder engagement, and why has it become a critical component of activist defence?

Tucker: Institutional shareholders are absolutely essential. In most public companies, the top 20 or so investors control more than 50 percent of the vote. That is ultimately a relatively small constituency that can dictate the outcome of a proxy fight. Far too often we see engagement with this group become perfunctory and stale. Management teams can easily get into a repetitive groove and miss any nuance in feedback that would indicate the mood is shifting. We think there is woeful underinvestment in credible research and data in this space. No elected officials stake their careers on anecdotal experience with voters, so why do boards?

While operational activism has outstripped M&A-relatedcampaigns in the years a er the pandemic, companies should expect activists to increase their focus on transactions as market conditions improve.

ADAM RICHES
ALLIANCE ADVISORS

Riches: Institutional shareholder engagement is a programme designed to connect with a company’s largest institutional investors. The process begins by accurately identifying the beneficialowners behind custodial accounts and analysing their historical voting behaviours, as well as reviewing available voting rationalesand other relevant research. Following this analysis, targeted outreach is conducted by the board or senior management to these key institutional shareholders. These direct engagements provide valuable insights into investor perspectives, including concerns that may have led to opposing board nominees or executive compensation. The feedback obtained enables companies to proactively address potential gaps or weaknesses in their governance practices, potentially reducing their vulnerability to activist interventions.

Glover: A company that is the target of an activist campaign can reach out to its shareholder base in a variety of ways. It can issue press releases, make statements in social media and mail letters to stockholders in which it responds to the activist’s arguments and explains management’s plan for the company. If the activist launches a proxy contest, the target can also make its case in its proxy statement. These company materials can also be posted on a website. One on one meetings with significant stockholders are a critical part of the shareholder engagement process. These meetings are very important because they help the company identify which investors are its strongest supporters, which are on the fence, and which are likely to side with the activist. They also help the company determine whether the arguments it is making resonate with shareholders, whether it should make changes to those arguments, and whether it should consider settling with the activist or continue to fight.

Scrivano: Institutional shareholders remain critical to the outcome of any proxy contest. The big three passive investors, BlackRock, State Street and Vanguard, continue to play a decisive role in winning proxy contests. Many times, these investors tend to back incumbent directors, and are less likely to back an activist slate. Large institutional investors are also very important, and companies should be building and maintaining relationships with these key shareholders; after all, the activists are certainly hard at work trying to build these relationships. Ultimately, continued shareholder engagement with all institutional investors, whether large or small, is key. Companies should be establishing relationships and communicating the company’s strategy and plans to these institutional investors, even if there is no activist threat on the horizon.

FW: In what ways can shareholder engagement serve as an early-warning system to identify governance vulnerabilities before they attract activist attention?

Scrivano: Regular meetings with the company’s shareholders are the best way to build and maintain relationships. These meetings can also serve as an early warning to management and the board of shareholder unhappiness with management or performance or activist threats on the horizon. Additionally, stock watch programmes offered by proxy solicitation firms can serve as an early warning sign of activist interest by alerting companies to unusual reading patterns, such as unusual activity in the company’s stock – to the extent ascertainable – at prime brokers connected to the company’s stock. Vote analysis is a useful tool in assessing the company’s and the activist’s chances for victory in a proxy contest. Internally, companies should also monitor their investor relations inbox – complaints and negative feedback from shareholders sent to investor relations may indicate vulnerabilities.

Glover: Engagement with institutional and other significant investors before an activist campaign starts can provide an effective early warning system. If a company’s internal investor relations team meets regularly with investors, it can learn about the investors’ concerns and develop and explain management’s plan to address these concerns. If the company’s proposed solutions do not resonate with the investor base, management can consider adjustments that accommodate investor concerns. When investorsbelieve that the management team is listening to them and responding proactively, they are much more likely to support management if and when an activist appears.

Riches: Institutional shareholders prefer to invest in companies that demonstrate long term value creation, good governance and a low to moderate risk profile. As part of an investor’s due diligence, they typically initiate a governance risk assessment and when companies reach out through shareholder engagement, institutions convey their concerns to management. Should quarterly and annual results disappoint, then governance weaknesses become more prominent and a larger discussion point. Should these concerns not be addressed sufficiently and financial results continue to underperform peers, they become an entry point for potential shareholder activism. Shareholder engagement serves to alert companies to structural governance issues that institutions and activists may find unfavourable and allows for these issues to be addressed before an activist appears.

Tetelbaum: While stock watch firms can monitor activist activity through investor relations pages and occasionally anticipate activist threats, activists have grown increasingly adept at operating discreetly. Many build significant positions while remainingunder the radar, leveraging sophisticated strategies to avoid early detection. Despite their capabilities, activists rarely presentwholly novel strategic ideas. Boards that engage regularly with shareholders are better positioned to anticipate concerns and evaluate strategic alternatives on their own terms. Proactive engagement enables boards to develop deeper insight into shareholder priorities, mitigating the risk of being caught off guard. When faced with business suggestions, boards should respond deliberately, assessing each suggestion in good faith and equipped with adequate information and expert guidance. Incorporating insights from analyst reports can furtherenhance a board’s understanding  of its vulnerabilities and help refine its strategic direction. Ultimately, staying ahead of activism requires regular stakeholder engagement and a commitment to thoughtful governance.

Tucker: Too often boards view engagement with shareholders in a black and white framework: investors are either for us or against us. For a long time, that was effectively true. If an investor owned the shares, they were supportive; if they were not supportive, they sold their shares. Markets have changed in structure and investment style, making this dynamic no longer true. Boards need to think about where support can erode slowly over time and recognise that shareholder engagement is more akin to a relationship that needs to be nurtured than a transaction. One simple trick is for boards to evaluate annual general meetingvoting results and ask where shareholders expect them to respond and if more context is required.

FW: What emerging issues are likely to shape shareholder activism in 2025 and beyond? How should companiesprepare to respond?

Glover: The number of campaigns focused on operational issues will likely continue to grow. If the M&A markets become more active, campaigns that focus on M&A issues will make a resurgence. Companies are likely to continue to settle quickly, particularly when they are challenged by a well-known activist with a strong marketplace reputation or are targeted by multiple activists. Activists are less likely to focus on ESG issues than was the case in the past. A campaign that argues that a company should focus on ESG issues will not win strong support unless the activist can show a clear connection between those issues and economic returns.

Riches: While operational activism has outstripped M&A- related campaigns in the years after the pandemic, companies should expect activists to increase their focus on transactions as market conditions improve. Activists have already been focusing on break-up and spin-off demands to find higher valuations, and corporations need to ensure that they are communicating to both shareholders and the market in general why businesses across different industries should remain integrated. While it is been harder for activists to push for companies to sell within the current regulatory and macroeconomic environment, boards still need to demonstrate that they have not ignored ‘strategic alternatives’ and have a response ready should an activist look to apply pressure.

Tetelbaum: In today’s volatile environment – shaped by M&A uncertainty, tariffs, ongoing geopolitical conflicts, the rapid adoption of artificial intelligence and an evolving media landscape – boards are under heightened scrutiny. Any misstep in navigating a crisis risks being reframed by activists as a governance failure. In this context, boards must be especially vigilant, recognising that even well-intentioned decisions may be second-guessed in hindsight. The most effective preparation involves disciplined governance: using the board calendar and agenda strategically, anticipating risks and ensuring decisions are grounded in well-informed analyses. Byacting on a reasonable and informed basis, while maintaining records of the decision-making process, boards can improve theircredibility and resilience when faced with activist threats.

Tucker: We think there will be two major focus areas in shareholder activism going forward. The first will be a continued focus on operational improvement campaigns, where activiststarget relative performance, both in terms of revenue growth and profitability. This will be particularly noteworthy, as changes toglobal trade are creating tangible costs and strategic dilemmas for nearly every company. Activists will be quick to target companies that are perceived to be falling behind. We also think we will see a reinvigoration of activists focused on M&A-oriented themes, both continuing the separation theme and returning to a call for companies to be sold.

Scrivano: Looking ahead, shareholder activism will accelerate and continue to evolve. It will likely continue trending toward faster, more public and coordinated attacks. We are seeing certain activist campaigns begin with a public announcement of a position, with little to no advance warning to the company – that tactic may be used more frequently going forward. At the same time, the persistence of swarming continuesto pose challenges. Large stake building is also on the rise, giving activists an outsized presence in proxy fights. In response, companies should reassesswhether a poison pill – triggering at 10 percent – might be effective to prevent a rapidaccumulation of shares. If an activist rapidly accumulates in excess of 10 percent of a company’s shares and continues to buy, concerns of creeping control and the loss of a level playing field in a proxy contest begin to arise.