New York: A Corporate/M&A: Shareholder Activism Overview
Shareholder activism has established itself as a highly effective counterbalance to the power of corporate boards – a means to hold directors not acting in the best interests of shareholders accountable, refresh boards with skilled new directors, and drive value for all shareholders. Investors ranging from investment funds approaching each situation with activism in mind, to typically passive investors fed up with years of underperformance at portfolio companies, fill this role at publicly traded companies around the world, with shareholder activism as an investment strategy emerging as a distinct asset class.
Types of Activist Engagements
Many activist engagements begin with private communications between the investor and members of the management team and board, seeking to resolve pressing concerns. If the company and investor fail to reach a resolution, or if the investor otherwise doubts its ability to get traction solely through private engagement, it may lead the investor to launch a public campaign. The investor may also submit nominations of director candidates for election at the next shareholder meeting, challenging incumbent directors for seats on the board. This formal process requires the investor to strictly comply with procedures in the company’s governing documents, including by delivering written notice of the nomination by a specified deadline. In these situations, having strong director nominees on the investor’s slate is key, and activists have proven their ability to attract highly qualified candidates to join their campaigns. Alternatively, an activist may pursue a withhold campaign where it opposes the election of certain company-nominated candidates but does not field its own slate, which provides shareholders with another mechanism to hold underperforming boards accountable.
While the prescription for what ails any particular company depends on the situation, activists commonly press for a range of corporate actions, including corporate governance enhancements, operational and/or strategic reviews and initiatives, and changes to capital allocation practices. In some situations, an activist will focus on opportunities for M&A, including the potential value for shareholders of a sale of certain assets or the company as a whole, or, when there is a deal on the table, campaign for improved terms or against shareholder approval of a transaction that the investor believes is not in the best interest of shareholders.
Types of Shareholder Activists
A wide range of investors utilize activism to drive shareholder value. These include funds focused on activism as an investment strategy that have repeatedly and successfully used activism to create value at their portfolio companies. We also see various non-traditional players, including former insiders with a significant investment in a company, strategic investors interested in potential transactions, and initially passive investors that switch to active engagement at a portfolio company after years of poor performance and intransigence from the board and management team. Notwithstanding the diverse personalities, styles and strategies of these different types of investors, activists share the same fundamental goal – to unlock shareholder value.
Developments and Trends in Shareholder Activism
As the leading law firm representing activist investors, Olshan Frome Wolosky LLP has firsthand insight into the current trends in this space, and a deep understanding of how these trends will impact the activism landscape. In 2025–2026, these trends include the following.
Strong activity in 2025 moving into 2026
The value of activist stakes globally totaled USD74 billion in 2025. Shareholder activism had a strong 2025, with a record 255 campaigns launched around the world – 55% in the USA, 16% in Europe and 25% in the Asia-Pacific region – making 2025 a record year. In the USA, that activity carried over into the new year, with the number of campaigns from Q4 2025 and Q1 2026 up 12% compared with the same period last year, while global campaign activity was down 11%.
There was a marked increase in M&A-related campaigns toward the end of 2025, reflecting an active M&A market. Other frequent campaign objectives included board change, strategic/operational improvements and capital allocation issues. In Q1 2026, activists appeared to shift away from M&A-focused campaigns, perhaps reflecting uncertainty in the market, with increased demands for strategic/operational improvements in particular.
Varied uses of activism in notable campaigns
Notable campaign developments in Q1 2026 demonstrate the different types of situations in which activism is used as a strategy and the wide range of investors engaging in activism. Norwegian Cruise Line appointed five new directors to reshape its board after reaching a pact with Elliott Management, which launched the most campaigns overall in 2025 and Q1 2026. Paramount used activist pressure to support its takeover bid at Warner Bros Discovery, with an assist from Ancora Holdings’ public pressure, resulting in Netflix’s withdrawal and a signed merger agreement with Paramount. After Lululemon’s CEO stepped down, Chip Wilson escalated his battle with the company over its strategic direction and governance, nominating a slate of director candidates and submitting a shareholder proposal requesting that the company’s staggered board be eliminated. HoldCo Asset Management continued its series of campaigns pushing for changes at US regional banks.
Ties to C-Suite turnover
It should be no surprise that the sort of sustained underperformance that drives activist engagement also drives turnover in the C-Suite. In the USA, 2025 saw increases in both the number of campaigns following a CEO departure, and CEO departures following a campaign. Installing directors who will hold CEOs and other members of the management team accountable for poor performance remains a typical objective for activist campaigns. Companies with a dissatisfied shareholder base that see themselves as a likely target for activism will also make proactive changes to management to stave off a potential campaign. However, as the boards of Norwegian Cruise Lines and Lululemon have seen, moving on from a CEO is often not enough on its own to satisfy shareholders that the company is on the right track. Shareholders tend to seek the installation of experienced new management teams, board refreshment with independent directors possessing appropriate skillsets, and public commitments that the board and management can be held to if performance does not improve.
Impactful regulatory developments in USA
Regulatory developments in the USA stand to meaningfully impact the ways in which shareholder activism plays out. In 2025, the Securities and Exchange Commission (SEC) issued new guidance on when a more-than-5% shareholder is required to file a Schedule 13D rather than a short-form Schedule 13G. This guidance contributed to changes to the company engagement and voting practices of institutional investors, including how they make voting recommendations to clients and their willingness to share thoughts on key corporate matters with companies and other shareholders, decreasing visibility into their views and likely voting recommendations/decisions in a proxy contest.
The SEC has been working on new rules that would allow companies to report earnings on a semi-annual rather than quarterly basis. If adopted, semi-annual reporting would significantly change the information flowing to investors, which will impact the ability of investors to monitor business performance and ultimately hold boards and management teams accountable. Additionally, as proxy advisory firms have faced pressure from multiple directions, certain institutional investors announced new voting practices to demonstrate their independence from proxy advisory firms, and proxy advisory firms are modifying their approaches to adapt. As the proxy voting landscape continues to evolve, companies and investors alike will need to re-evaluate how they engage with shareholders, both in the lead-up to and during a proxy contest.
More of the same company defense tactics
While company advisers like to tout the importance of year-round monitoring and proactive engagement with their investor base to “be your own activist”, we still see companies modifying their corporate governance structures in ways that create unnecessary and defensive procedural hurdles for shareholders to exercise their legal rights. Particularly, companies adopt onerous advance notice by-laws designed to increase the difficulty and cost associated with nominating director candidates, and increasingly require shareholder nominees to complete lengthy company-form questionnaires that must be requested in advance and submitted with the nomination. We regularly see companies attempt to invalidate shareholder nominations or disqualify dissident nominees on the basis of hyper-technical disclosure deficiencies that do not meaningfully add to the information investors need to evaluate the director nominees.