Navigating U.S. Shareholder Activism in 2025: Actionable Strategies for Issuers

Shareholder activism in 2025 is more fragmented, politicized, and legally complex than ever before. The landscape has shifted dramatically due to regulatory change, evolving activist investor tactics, and the restructuring of stewardship teams among major asset managers.

Evolving views of shareholder rights in the public markets are leading to regulatory change. The SEC’s revised Compliance and Disclosure Interpretations (C&DIs) under Section 13D-G re-examines what it means to be a “passive investor.” The interpretive guidance increases the risk for certain institutions as loss of their status may result from perceived indications of exerting pressure or influencing control on an issuer. The reinstatement of broader exclusions for shareholder proposals under Staff Legal Bulletin 14M (SLB 14M) has led to a decline in proposals reaching a vote, particularly those focused on environmental and social issues.

Meanwhile, the rise of anti-ESG proposals - despite low support - has forced issuers to address their sustainability strategies more publicly. In traditional contests, the Universal Proxy Card regime continues to reshape proxy contests, as activism moves to a year-round phenomenon, with campaigns launching soon after annual meetings and the repeated targeting of companies. The “Big Three” asset managers (BlackRock, Vanguard, State Street) have fragmented their stewardship teams and voting policies, increasing complexity for issuers seeking effective engagement

Given these challenges, we believe there are 6 key ways issuers can recalibrate their investor engagement strategies to build credibility and defend against activism.

1. Proactive, Year-Round Engagement

• Treat investor engagement as a continuous process, not just a proxy season activity. Monitor activist sentiment and anticipate campaigns that may be launched outside traditional timelines.
• Schedule regular updates with key shareholders, especially after annual meetings, to reinforce your strategic narrative and governance priorities.

2. Build Credibility Through Transparency

• Use engagement to establish trust and explain strategic decisions before they become contested. Proactively address potential areas of concern, especially those highlighted by activist investors or in the media.
• Demonstrate responsiveness by following up on shareholder feedback and showing how it might inform board decisions.

3. Strengthen Shareholder Relationships

• Invest in building strong, long-term relationships with institutional investors. These relationships can be decisive in close election votes and proxy contests.
• Use every engagement opportunity to reinforce your company’s clarity of strategy, governance, and performance.

4. Understand Regulatory Shifts

• Stay informed about SEC guidance. Work with legal counsel to ensure your engagement activities do not inadvertently trigger regulatory risks.
• Prepare for increased reputational scrutiny linked to sustainability-related shareholder proposals.

5. Navigate Stewardship Fragmentation

• Map out the stewardship structures and voting policies of major asset managers. Tailor your engagement approach for each, recognizing that “one size fits all” no longer applies.
• Work to communicate directly with beneficial owners who may leverage pass-through voting options.

6. Prepare for Diverse Activist Tactics

• Be ready for non-traditional campaigns, including vote-no efforts, strategic settlements, and media-driven activism. Develop a rapid response plan for public challenges to your ESG strategy or governance.
• Monitor exempt solicitations and anti-ESG proposals, even if support is low, as they can influence public perception and regulatory scrutiny.

The evolving landscape of shareholder activism demands a strategic, proactive approach to investor engagement. By understanding regulatory changes, tailoring outreach to fragmented stewardship teams, and building credibility through transparency, issuers can turn engagement into a powerful defense tool. In 2025, credibility is more valuable than ever—make it your competitive advantage.