The 2025 proxy season revealed significant shifts in shareholder engagement and governance practices. For board members, understanding these developments is essential to effectively address evolving investor expectations, regulatory complexity, and the rise in off-cycle activism.
To further explore this topic, the Nasdaq Center for Board Excellence hosted a webinar, Post-Proxy Season Trends in Corporate Activism, featuring a panel of seasoned experts: Avinash Mehrotra, Co-Head of Americas M&A and Global Head of Activism & Raid Defense, Goldman Sachs; Marc Goldstein, Head of U.S. Research, Institutional Shareholder Services (ISS); Lori Keith, Board Member, e.l.f. Beauty, Portfolio Manager & Director of Research, Parnassus Investments; and Gabriella Halasz-Clarke, Head of Governance and Sustainability Solutions, Nasdaq. These experts explored consequential trends from the 2025 proxy season, sharing practical insights for boards navigating an increasingly activist-driven landscape.
Governance Returns to Center Stage
The 2025 season saw governance fundamentals reclaim the spotlight. Proposals to eliminate supermajority voting and declassify boards gained momentum, while social and environmental proposals saw waning support—unless directly tied to business strategy and material long-term value creation. This strategic link is essential, reflecting investor priorities around sustainable growth and resilience over short-term gains.
The surge in reincorporation proposals required shareholders to scrutinize state law provisions and the fine print of charters and bylaws, underscoring the importance of understanding fiduciary duties as defined across different states. Goldstein noted this trend has contributed to the renewed investor focus on governance fundamentals—and boards should evolve with intention.
“Boards need to play offense, not defense,” explained Keith. Boards are now embracing a forward-looking posture, grounded in materiality and supported by straightforward mechanisms like majority voting and the right to call special meetings. Looking ahead, Keith predicted a "back to basics" approach, focused on enhancing corporate governance structures. Emerging proposals on human rights, biodiversity, and AI oversight signal the need to integrate broader strategic and operational concerns.
Activism Is Now Year-Round
The traditional seasonality of activism is changing. “This was one of the most active seasons for campaigns,” noted Mehrotra, citing earlier launches, faster settlements, and intensified withhold efforts. Campaigns are increasingly led by new and occasional activists, often surfacing six to nine months before nomination windows.
Boards must proactively monitor vulnerabilities year-round to close governance gaps and address shareholder concerns around underperformance. Activists often target and exploit pressure points like capital return, business focus, and M&A activity. Mehrotra advised regular self-assessments against these top activist demands to determine if any adjustments to business strategy are warranted.
First-time activism from traditionally long-only investors has also emerged as a key theme. In the first half of 2025, one in three high impact campaigns involved a first-time activist (see chart below). Subtle shifts in investor behavior, such as ownership patterns, derivative activity, and tone can signal activist intent well before a public campaign.
High Impact Campaigns in 1H2025 Segmented by RBICS Economic Sector
Sources: FactSet, Nasdaq Equity Surveillance Analysis
Shareholder activism is not just a reaction to poor stock performance but an evolving investor strategy in response to global economic conditions, market volatility, and sector-specific opportunities. A poignant example is the shareholder rights agreement Carter’s adopted in September following a rapid accumulation of shares by RWWM, Inc., a firm founded in 2008 with no prior activist history. This recent development supports a finding from Nasdaq’s Shareholder Activism review for 1H 2025 that highlighted Consumer Cyclicals as a sector facing acute interest from first-time activist investors.
Direct, continuous engagement with investors to better understand their perspectives can help surface concerns before they escalate. “The most effective boards have already thought through scenarios and can clearly explain their path to shareholders,” noted Keith. Ultimately, board preparedness is no longer seasonal—to successfully forestall activist intentions, preparedness is a year-round discipline.
Engagement Builds Investor Trust
Changes in SEC regulations, particularly around 13D and 13G filings, have transformed shareholder engagement. The risk of being reclassified from passive to active has made many asset managers more cautious in company interactions. This shift is especially evident in sensitive situations, such as failed say-on-pay votes or activist pressure. Companies are rethinking how they engage with large shareholders and respond to emerging threats. A key takeaway from the 2025 season: proactive board engagement and strategic composition are essential.
Boards should maintain regular investor dialogue, with a focus on capital allocation and strategic alignment. “Go beyond board meetings,” advised Mehrotra. “Not every director needs to engage with investors regularly, but a subset should lead that dialogue.” Transparency and context around board decisions reduces vulnerability to activist narratives.
“Don’t just read from a script,” added Goldstein. Investors respond to authentic and candid communication, which builds trust—and trust is the currency boards rely on when challenges arise.
Finally, director engagement must be meaningful. As Goldstein noted, serving on too many boards may dilute effectiveness, especially as governance challenges grow more complex. This season highlighted the importance of depth over breadth.
AI, Investor Expectations, and Board Composition
AI is rapidly reshaping investor expectations and board responsibilities. Directors are under increased scrutiny, particularly in companies undergoing AI transformation, where fluency in emerging technologies is essential for effective oversight. As Mehrotra noted, technological expertise—especially in AI—is now a core component of board composition, and boards perceived as stale or misaligned with strategic direction are increasingly vulnerable to activism.
The rise of AI oversight proposals signals investor demand for governance that anticipates disruption and manages its ethical and strategic implications. Boards must embed AI literacy into strategic oversight—not as a standalone initiative, but as a lever for long-term value creation. Lean, focused boards are often better positioned to respond to disruption and drive strategic clarity.
To stay ahead, boards should continuously evaluate composition through skills matrix assessments and succession planning. “Don’t think about board refreshment only when an activist shows up or a vacancy arises,” said Keith. “The strongest boards treat director succession like CEO succession.” By looking two to three years ahead, mapping strategic direction, and identifying required skills, boards can build active pipelines—which in turn strengthen their position in activist negotiations.
A proactive stance not only mitigates risk but also positions AI as a strategic asset, aligning governance with investor expectations and equipping boards to guide their companies toward sustainable, AI-integrated futures.
Navigating Activist Demands
To stay ahead of potential interventions, boards should be able to anticipate activist demands and prepare strategic responses. Three common areas of activist focus include:
- Return of Capital
- Activist Demand: Activists may argue that a company is hoarding cash and that the excess should be returned to shareholders via increased dividends or share buyback programs.
- Board Strategy: Regularly review cash management strategies to ensure they align with short-term and long-term objectives. Clearly communicate capital allocation rationale to shareholders to preempt misconceptions or activist criticisms.
- Business Simplification
- Activist Demand: Activists may claim that a company with multiple lines of business lacks strategic focus and efficiency. They often push for restructuring or divestiture of non-core assets.
- Board Strategy: Thoroughly evaluate business units for strategic fit and performance. Consider divestiture where appropriate to streamline operations and unlock value.
- M&A Activity
- Activist Demand: Activists scrutinize M&A strategies—especially if execution falters.
- Board Strategy: Continuously assess market dynamics to identify opportunities and threats. Articulate to shareholders how M&A aligns with corporate strategy.
Embedding these topics into ongoing boardroom dialogue enables swift, strategic responses aligned with long-term vision.
A Call to Action
The 2025 proxy season marked a strategic recalibration. Governance and shareholder engagement are evolving rapidly, influenced by regulatory changes, investor expectations, and societal trends.
Moving forward, boards must remain proactive, aligned, and prepared to meet both traditional and emerging challenges. By focusing on robust governance fundamentals, continuous skill alignment, and authentic communication, boards can foster long-term value and resilience against activism.
To receive exclusive corporate governance insights for board members and leaders, join the Nasdaq Center for Board Excellence.
The views and opinions expressed herein are the views and opinions of the panelists and do not necessarily reflect those of Nasdaq, Inc.
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