This year’s proxy season is likely to provide a level of excitement that would rival any Hollywood script
In the current critically-acclaimed film One battle after another, circumstances compel the lead character, played by Leonardo DiCaprio, to revisit old conflicts and confront former adversaries. A similar narrative could prove to be one of the major themes in the shareholder activism world this year, as old battles flare up again and activists continue to push for improved corporate performance.
My view is largely based on the momentum generated by last year’s high volume of activist campaigns, coupled with the fact that a large percentage of those contests were resolved via negotiated settlements between the activists and the target companies’ boards of directors. The number of US activist campaigns in 2025 rose by an estimated 19 percent over the multi-year average, according to a recent Barclays report. However, a Harvard Law School Forum on Corporate Governance posting from The Conference Board estimates that more than 85 percent of the 2025 campaigns they tracked never got as far as a shareholder vote – with activists either withdrawing or securing concessions through settlements.
Truces may be temporary
A high proportion of last year’s so-called ‘friendly’ settlements have the potential to turn decidedly ‘unfriendly’ this year if the subject companies can’t hold up their end of the bargain – by failing to reverse a languishing share price, underperforming financially or falling short on other agreed-upon goals such as an M&A deal, spin-off or corporate governance reforms. Such companies could end up being the targets of follow-on proxy fights this year, either from their original activists or new opponents.
The reinvigorated M&A market may trigger an increased level of deal-related activism
Universal proxy card (UPC) deployment could also contribute to an uptick in ‘do-over’ activism this year. While activists have won numerous victories since the UPC was adopted in 2022, they rarely achieve the election of their full slates and are more likely to ‘split the ticket’ with managements and boards. Dissatisfaction with this partial outcome, coupled with limited performance results to-date, may cause some activists to try again in 2026.
M&A pressures might grow, but so could opposition
I also expect that the reinvigorated M&A market may trigger an increased level of deal-related activism in 2026. Thanks to the greater receptivity to M&A deals under the current administration, as well as capital market conditions that favored acquirers, 2025 was a banner year for M&A. Transaction volume in the US alone is expected to reach approximately $2.3 trn – up 49 percent from a year ago.
In a regulatory and market environment that is exceptionally conducive to merger transactions, it is reasonable to expect more activists to mount campaigns in 2026, calling for companies to be sold or broken up. Companies sold or in process of being sold in 2025, after activists identified them as targets, included Kellanova, Kenvue and Janus Henderson. Honeywell also announced a split of its businesses after meaningful dialogue with Elliott Management.
Conversely, we are likely to see a number of investors oppose M&A deals that, in their view, are not sufficiently value-enhancing or where they believe a price increase is justified. Most recently, hedge fund Broadwood Capital, the largest investor in STAAR Surgical, led the charge to block the company’s sale to Alcon.
Shareholder voting practices may change
Among the regulatory initiatives introduced by the current administration, an executive order was issued in December, instructing the SEC and other agencies to examine the influence of proxy advisory firms. Given that many institutional investors rely on firms such as ISS and Glass Lewis to research proxy proposals and provide guidance on how to vote, it will be interesting to see how the investment firms handle those tasks without help from the advisors.
JPMorgan Chase recently announced its plan to replace outside proxy research with in-house views, including proprietary AI-generated information. Perhaps other firms will follow suit. In 2025, very large asset managers appeared to alter the way they make voting decisions to be less reliant on proxy advisors and to also deal with potential conflicts that arise with other areas of the firm. This recalibration has often resulted in these shareholders voting for management in almost every case. We expect this trend to continue this year, especially as M&A in the asset management industry continues to form larger financial services conglomerates.
Furthermore, investment firms such as BlackRock, Vanguard and State Street are continuing to promote systems that allow their underlying shareholders to direct the voting decisions of their funds, which should lead to further changes in the way voting decisions are made.
It will be interesting to see how investment firms handle proxy voting without help from the advisors
The above outlook has several key implications for corporate boards, managements and their investor relations teams. It will be important not to ‘let your guard down,’ and continue to actively monitor your shareholder base for changes in the holdings of existing investors as well as new positions established by potentially hostile parties. It will also be essential to continue engaging with existing shareholders to make sure they are up to speed on the company’s long-term strategy and actions taken by leadership to enhance performance and valuation. In summary, the upcoming 2026 proxy season is likely to provide a level of excitement – due to the unraveling of negotiated settlements, pressures to engage in or repudiate M&A deals and unpredictable voting behavior – that can rival any Hollywood script.
