Shareholder Engagement in Flux: Recent Developments and Practical Implications
Evolving regulatory and market dynamics are reshaping the shareholder engagement landscape with an impact on the 2026 proxy season and beyond. The Securities and Exchange Commission’s (“SEC”) recent announcement regarding Rule 14a-8 shareholder proposals combined with increased scrutiny of proxy advisors, the increase of vote no/withhold campaigns, the implementation of retail voting programs, and updated guidance on historically routine shareholder engagement practices, present new considerations for issuers and investors alike. This article, featured on the Harvard Law School Forum on Corporate Governance, examines the implications of these changes and offers insight into navigating shareholder engagement in the current environment.
How Shareholder Activism Fared in 2025
In many ways, 2025 was a turbulent yet transformative year, and the area of shareholder activism was no exception. As we reflect on the events of the past year, we highlight key takeaways to help companies prepare for a 2026 that is shaping up to be even more lively.
California Supreme Court Holds Right to Jury Trial Does Not Bar Enforcement of a Delaware Forum Selection Clause
On July 21, 2025, the California Supreme Court issued a decision in EpicentRX v. Superior Court, reversing a decision by the California Fourth District Court of Appeal that declined to enforce a forum selection clause in a corporation’s certificate of incorporation and bylaws designating the Delaware Court of Chancery as the mandatory forum. As we reported at the time, the Court of Appeal concluded that because the Delaware Court of Chancery, as a court of equity, does not conduct jury trials, the forum selection clause in favor of the Delaware forum ran afoul of California’s “sacred” right to a jury trial and thus was unenforceable. In reversing, the California Supreme Court rejected this reasoning in its entirety, holding that “A forum selection clause is not unenforceable simply because it requires the parties to litigate in a jurisdiction that does not afford civil litigants the same right to trial by jury as litigants in California courts enjoy.” (more…)
How Three Years of the Universal Proxy Card Rules Have Changed Proxy Contests
On September 1, 2022, the SEC universal proxy card (UPC) rules took effect, allowing shareholders to freely “mix and match” from among management and dissident nominees in contested director elections. Before the rules’ adoption, their impact on shareholder activism was hotly debated, including in a comment letter to the SEC from our practice. Since they went into effect, judgments (even by us) have too often been anecdotal or based on limited data.
2025 Proxy Season: Temporary Disruption Amid Structural Shifts in Shareholder Activism
Fewer Campaigns, but Much to Observe from the 2025 Proxy Season
While the number of overall shareholder activism campaigns cooled in the 2025 proxy season compared to years past, the season has been marked by its fair share of fireworks and headlines, as well as unique events and disruptions. The season has also provided many lessons for companies as we look ahead to the 2026 proxy season.
Another “Super Year” for Activism
2024 was called a “super year” for political elections, with 72 countries and half the world’s population going to the polls. Incumbent political parties across the globe lost these elections at a dizzying rate as voters punished those seen as responsible for inflation and other economic woes. It was also a booming year for shareholder activism, but incumbent directors fared much better than their political counterparts at the ballot box as activists failed to persuade investors of their case for change in proxy contests that went to a vote. With many expecting 2025 to be another “super year” for activism, here is a look at what we observed in 2024. (more…)
Chambers 2024 Global Practice Guide for Shareholders’ Rights and Shareholder Activism
The 2024 Chambers Global Practice Guide for “Shareholders’ Rights & Shareholder Activism”, with contributions from Kai Liekefett, Derek Zaba, Ram Sachs, and Evan Grosch, is now available. The guide provides an overview of corporate governance and shareholder activism based on the latest legal developments and market trends.
Sunshine Breaking Through the Clouds: Delaware Supreme Court Sheds Light on Standard of Review for Challenges to Advance Notice Bylaws
On Thursday, the Delaware Supreme Court issued a long-awaited decision regarding the validity and enforceability of certain provisions in a company’s advance notice bylaws. The Kellner v. AIM Immunotech Inc. decision clarifies how the Delaware courts will evaluate claims challenging an advance notice bylaw. Critically, it confirms that different standards attach when a plaintiff challenges (i) the language of a company’s bylaw (a so-called facial or validity challenge) in the abstract, absent a proxy contest versus (ii) a board’s decision to adopt, amend, or enforce an advance notice bylaw during a proxy contest (a so-called as applied challenge). This decision provides helpful guidance to practitioners and will hopefully limit the wave of facial challenge litigation that followed the Kellner trial court ruling.
Voting Commitments Matter and Will Be Enforced: Delaware Supreme Court Affirms Chancery Decision Holding Activist Stockholders to Their Bargain
When companies settle proxy contests with activist stockholders, the activists generally give up stockholder-level influence in exchange for board-level influence. In a typical agreement in this setting, activists gain board seats in exchange for a commitment to vote their shares with the board’s recommendation on proposals put to stockholders. Activists also agree to standstill periods in which they refrain from taking actions opposed to the board, and from increasing their holdings above a specified cap.
