By Third Economy, March 2025
The 2025 proxy season is unfolding in an increasingly polarized environment, shaped by shifting U.S. policies and intensifying scrutiny on environmental, social, and governance (ESG) issues. As shareholder activism surges to new highs, boards and executives must prepare to navigate a complex and often contradictory landscape of investor demands.
2024 set records for shareholder activism, and early indicators suggest 2025 will be no different. Activists are increasingly targeting companies on both sides of the ESG and DEI debate, forcing executives to balance competing pressures.
According to the Conference Board, an analysis of shareholder proposals filed at Russell 3000 companies underscores these trends:
These figures highlight the growing complexity of shareholder engagement, requiring companies to refine their governance strategies and investor communications proactively.
With heightened scrutiny and an increasingly active shareholder base, companies must take a proactive approach to governance, communication, and activism defense.
Companies should continuously evaluate potential risk areas and demonstrate a commitment to ongoing improvement. As Ted White, Managing Director at Legion Partners Asset Management, puts it, “We as shareholders ought to be a bit critical and skeptical when companies are only making changes when they're under pressure. Can you trust that the culture has actually changed?”
To stay ahead of activism, companies should:
Engagement shouldn’t start when an activist investor appears—it should be an ongoing process. Companies that build relationships with shareholders early can avoid expensive and distracting proxy fights.
Amanda Shpiner, Managing Director at Gasthalter & Co., emphasizes, “If an activist is at your doorstep, it's too late. Some of the best work happens behind the scenes.”
Best practices for proactive engagement include:
Overly aggressive defenses against activist investors can backfire, reinforcing perceptions of governance weaknesses. Companies should instead focus on constructive dialogue and strategic responses.
Marian Macindoe, Head of ESG Stewardship at Parnassus Investments, advises, “You're supposed to be partners and collaborating together to improve value for the company rather than just going in to destroy.”
The best activism defense is strong governance. Companies should:
The 2025 proxy season presents both challenges and opportunities for companies to reinforce their commitment to good governance while navigating an evolving shareholder landscape. By taking a proactive, transparent, and strategic approach, boards and executives can effectively manage activist pressures and maintain investor confidence.
If we can be helpful as you consider how these insights will affect your business, please don’t hesitate to reach out to our team.
Contact us:
Jacqueline Rhoades, Partner, Third Economy
Jacqueline.rhoades@thirdeconomy.com
Disclaimer: The information provided does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available are for general informational purposes only.
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