The first half of 2025 reshaped the proxy landscape. Rapid market shifts, new regulatory expectations including updated federal guidance on Schedules 13D and 13G and evolving activist strategies forced boards and investors to rethink how they operate. It has been the most disruptive proxy season in recent memory and its influence will continue well into the year.
Here are five essential insights from this year’s activity.
1. Engagement is changing quickly
Institutional investors faced new regulatory pressure and increased scrutiny in early 2025. Many reduced their direct outreach as they reassessed internal policies, especially after changes that narrowed the interpretation of passive investment status. Political developments also prompted some stewardship teams to rethink voting guidelines related to diversity, equity and inclusion.
This reduction in engagement creates uncertainty for companies. Without regular dialogue, issuers are left to infer shareholder intent from past voting behavior and policy statements. That guesswork adds friction and raises the risk of unexpected outcomes. To stay aligned boards now rely heavily on proactive planning, structured data tracking and continuous monitoring of shareholder activity.
2. Support for ESG proposals is slowing while governance stays strong
Tighter rules for excluding proposals contributed to a drop in overall volume this year. Support for environmental and social proposals continued to decline with average backing at only 11 percent. Votes for proposals opposing ESG priorities also reached their lowest point.
Governance proposals moved in the opposite direction. Thirty three passed with majority support in the first half of the year. Investors consistently signaled that board structure, accountability and transparency remain core priorities. For many shareholders governance continues to be the most reliable way to drive meaningful change which makes it an area where boards should expect sustained pressure.
3. Activists are more selective and increasingly successful
Although fewer activist campaigns launched in early 2025 the ones that did were far more effective. Activists won 112 board seats which is the highest number since 2022 even though formal demands for seats declined. More than 90 percent of those seats were secured through settlements which shows a growing preference for quiet and efficient outcomes.
The tactics have also shifted. Many activists now pursue focused campaigns that rely on vote no or withhold strategies instead of full proxy contests. These approaches are less expensive and faster to execute yet they still exert significant influence.
For boards this means the absence of a traditional proxy contest does not signal reduced pressure. Quiet campaigns can reshape board composition or corporate direction without the visibility associated with public fights. Early awareness and preparation are essential.
4. Agility is now a requirement
The 2025 proxy season demonstrated that old engagement playbooks no longer work. Shareholder behavior is shifting rapidly due to regulation, political influence and unstable markets. Companies that cannot adapt risk being caught unprepared.
Investors are adjusting their voting policies with limited communication. Activists are using a wider mix of tactics. Governance teams are expected to respond quickly even when the available information is incomplete.
Boards must operate with greater flexibility and anticipation. This includes understanding key stakeholders, recognizing early signs of risk and preparing response strategies for the period before and after the proxy vote.
5. Data driven engagement is becoming essential
With fewer direct conversations between shareholders and companies information gaps are widening. The risk of misreading investor expectations has grown. In this environment timely and accurate data is critical for effective governance.
Historical voting patterns, policy adjustments and investor behavior offer valuable signals when engagement is limited. However these insights only help when boards monitor them continuously throughout the year. Without consistent tracking companies are left to guess which issues matter most to their shareholders and often learn the truth too late.
