Shareholder activism

Short description: Shareholder using equity to pressure management

Shareholder activism is a form of activism in which shareholders use equity stakes in a corporation to put pressure on its management.[1] A fairly small stake (less than 10% of outstanding shares) may be enough to launch a successful campaign. In comparison, a full takeover bid is a much more costly and difficult undertaking. The goals of shareholder activism range from financial (increase of shareholder value through changes in corporate policy, cost cutting, etc.) to non-financial (disinvestment from particular countries, etc.).[2] Shareholder activists can address self-dealing by corporate insiders, although large stockholders can also engage in self-dealing to themselves at the expense of smaller minority shareholders.[3]: 241

Shareholder activism can take any of several forms: proxy battles, publicity campaigns, shareholder resolutions, litigation, and negotiations with management. Daniel Loeb, head of Third Point Management, is notable for his use of sharply written letters directed towards the CEOs of his target companies.

Activism may help to address the principal-agent problem where the agents (management) do not adequately respond to the wishes of the principals (investors) of publicly traded companies. In the 2010s, investments in the activist asset class grew, with activists receiving coverage by the media[4] and positive attention from investors.[5] Activists have typically engaged in adversarial campaigns, but have also in some cases been able to acquire board seats with a formal proxy context.[6]

Shareholder activists are influencing mergers and acquisitions. A 2015 survey of corporate development leaders found that 60% of respondents saw shareholder activism affecting transaction activity in their industry.[7] Increasingly, non-financial forms of shareholder activism are affecting companies in a range of sectors. Shareholders, often with a comparatively small stake in a company, are seeking to influence the company's environmental and social performance.[8] Other forms of activist campaigns include influencing divestitures, with results from Fortune 500 companies, between 2007 and 2015, suggesting these are often more successful in terms of increasing shareholder value than management led divestitures.[9][10]

## Contents

* 1 History
* 2 Notable investors and funds
* 2.1 Outreach strategies
* 2.2 Funding
* 3 Offensive versus defensive
* 4 Laws
* 4.1 Proxy access
* 4.2 Voting
* 5 Performance
* 6 Research and statistics
* 7 Retail involvement
* 8 Political and labor involvement
* 8.1 Socially responsible investing
* 9 See also
* 10 References
* 11 Further reading

## History

Corporations in 18th-century Europe were relatively uncommon, but in the United States they were more prevalent, starting with 300 in the 1790s and expanding by around 26,000 between 1790 and the 1860s, resulting in about 15 times the corporations in Great Britain by 1830.[3] These early corporations contained provisions for corporate governance, including restricted charters, bylaws, prudent-mean voting rules,[11] dividend payments, and press coverage.[3]

Between 1900 to 1950, about 1.22 "offensive" activist initiatives occurred per year, with more occurring in the 1940s and 1950s.[3] Notable investors included Cyrus S. Eaton, Phoenix Securities Corporation, Benjamin Graham, J. Paul Getty, and Malcolm Chace.[3] Activism was likely limited by the lack of ownership dispersion, meaning that many corporations had large shareholders with sizable blocks (10 to 20% of total shares) who already exerted significant control over the corporation.[3]

During the 1980s activism referred to as corporate raiding emerged, before this reducing after corporations formed strategies to mitigate this. As such tactics declined, there was a rise in institutional investors, with institutional investor activism led by policy changes in locations such as the UK and continental Europe, with factors such as conflicts of interests constraining activism. By the 21st century, hedge funds and private equity funds became well placed to engage in shareholder activism.[12] By the 2010s shareholder activism which predominantly occurred in places such as the US and Europe began to expand into Asia and quickly surpassed the amount of activism occurring in Europe.[13]

## Notable investors and funds

Notable activist investors include: Isaac Le Maire (1558–1624),[14] Carl Icahn,[15] Nelson Peltz (Trian Partners),[15] Bill Ackman (Pershing Square),[15] Daniel Loeb (Third Point Management),[15] Barry Rosenstein,[15] Larry Robbins (Glenview),[16]: 19 David Einhorn, Gregg Hymowitz (EnTrust Global),[17] Larry Fink (BlackRock),[18] Christer Gardell (Cevian Capital), and Ryan Cohen.[19]

During the 1980s, activist investors such as Carl Icahn and T. Boone Pickens gained international notoriety and were often perceived as "corporate raiders" for acquiring an equity stake in publicly owned companies and then forcing them to take action to improve value or rid themselves of activist investors by buying back the raider's investment at a premium, often at the expense of other shareholders.[20] More recently, activist investor Phillip Goldstein suggested that the role of the activist investor has moved from green mail to one of being a catalyst to unlock value in an underlying security, and says that the public perception of activist investors as "corporate raiders" has dissipated.[21]

Activist investment funds include: California Public Employees' Retirement System (CalPERS),[22] Icahn Management LP, Santa Monica Partners Opportunity Fund LP, State Board of Administration of Florida (SBA),[23][24][25][26] and Relational Investors, LLC.

In 2019 and beyond, notable activist investors included Starboard Value, Icahn Enterprises, Elliott Investment Management,[27] and Third Point.[16] In 2019, mutual funds such as Wellington Management Company began to show signs of activism.[28] A prominent campaign by hedge fund Engine No. 1 resulted in them winning three seats on Exxon's board in 2021, with the objective of influencing the company to reduce its reliance on fossil fuels.[29]

Examples of activist investors in Asia include Oasis Management[30], David Webb[31], and Yoshiaki Murakami.[32]

### Outreach strategies

Activist investors advertise their message out in various ways including postal mail, websites, and social media.[16]

### Funding

Activist investors are often hedge funds funded by accredited investors and institutions. In 2019, institutions were demanding more upfront explanation of the activist ideas before funding, and in some cases requiring that the funds be placed into special purpose vehicles specifically for the project.[33] Activist hedge funds, which are hedge funds that "take concentrated positions in the equity of public corporations and actively engage with corporate managers" can address the principal-agent problem and limit self-dealing by providing management with high-powered incentives to increase value.[34]: 104

## Offensive versus defensive

Shareholder activism can be categorized as "offensive" or "defensive"; in the latter case, an existing shareholder attempts to correct some deficiency, while offensive activists build a position with the intention to agitate for change.[3]: 256 Shareholders can also initiate a derivative suit to force action by the corporation. Shareholders can also engage in a securities class action but these are typically not associated with activism.

## Laws

In the United States, acquisition of over 5% of beneficial ownership in a company with the intention to influence leadership must be accompanied by a Schedule 13D filing; investors who do not intend to become activists may file a Schedule 13G instead.

### Proxy access

Historically, investors were required to mail separate ballots when trying to nominate someone of their own to the board, but beginning in 2015, proxy access rules began to spread driven by initiatives from major institutional investors, and as of 2018, 71% of S&P 500 companies had a proxy access rule.[35]

### Voting

Votes for the board may be "straight" or "cumulative". In straight voting (aka statutory voting), shareholders get one vote per share on all ballot questions (e.g., candidates for the board of directors or shareholder proposals). In cumulative voting, a shareholder receives a general vote for however many number of ballot questions there are. The votes can then be all cast for (or against) a single ballot question, which makes it easier for minority shareholders to elect candidates.[36] There has also been a movement toward "majority" voting, where a candidate must receive the majority of votes.[37] Most large corporations are incorporated in Delaware due to the well-developed Delaware General Corporation Law; in Delaware, cumulative voting is optional, but exceptions exist; for example, a California-based but Delaware-registered corporation may be "pseudo-foreign" under California law and therefore have to comply with California law.[37]

## Performance

Research has suggested that activist investment strategies may generate returns higher than those achieved through passive investing. A 2012 study by Activist Insight[38] found that the mean annual net return of more than 40 activist-focused hedge funds consistently outperformed the MSCI World Index in the years following the 2008 financial crisis.[39]

Activist investing continued to draw attention in subsequent years. In 2013, it was reported as the top-performing hedge fund strategy, with activist funds earning average returns of 16.6%, compared to 9.5% for the hedge fund industry overall.[40]

## Research and statistics

Shareholder activism directed at both European and American companies has been surging.[41] A 1996 study found that larger firms with higher institutional holdings made firms more likely to be targeted by activist investors.[42] Researchers also try to understand what makes company a desirable target for an activist investor.[43] Since the late 2010s scholars and practitioners have started using machine learning methodologies to predict both targets and activists.[44]

As of 2018, an average of 272 activist campaigns were initiated each year in the United States, including 47 proxy contests.[16] The trend has also been global in scope; approximately 47% of companies targeted by activist investors during this period were located outside the United States,[45] with Europe and Asia seeing increases in the CAGR of such campaigns of over 40%, between 2016 and 2020, companies in Australia, Argentina, Brazil and Canada seeing increases of over 20%, compared to activist campaigns in the US increasing by 3%.[46]

In H1 2025, the business sectors that experienced the highest volume of shareholder activism campaigns globally were Industrials (22%), Technology (20%) and Healthcare (12%), with Industrials most targeted in APAC, Technology most targeted in the US and the Healthcare sector most targeted in Europe.[47]

## Retail involvement

Any shareholder, including non-institutional retail investors, may submit a shareholder proposal in the United States, and between 1934 and the mid-1980s these shareholders typically submitted proposals.[48] One estimate placed institutional owners at 68% of shares and retail at 32% of shares, but 98% of institutional owners vote and only 28% of retail owners vote.[48] Institutional shareholders, however, often vote automatically upon the advice of proxy advisory firms; allowing retail shareholders to vote based upon a guideline ("standing voting instructions") has been proposed to increase their involvement.[49]

Various websites have been created to facilitate retail involvement,[50] including Moxy Vote, Shareowners.org, United States Proxy Exchange and ProxyDemocracy.org, but over time these generally shut down.[48]

## Political and labor involvement

Labor unions, including through pension funds such as CalPERS coalitions such as the Strategic Organizing Center often engage in shareholder proposals.[51] The Shareholder Rights Group is a coalition of shareholder proposal advocates.[52]

### Socially responsible investing

Organizations such as the Interfaith Center on Corporate Responsibility (ICCR), As You Sow and Ceres use shareholder resolutions, and other means of pressure, to address issues such as sustainability and human rights.

For an analysis of the hundreds of annual shareholder resolutions, see Proxy Preview.[53]

## See also

* Board of directors
* Corporate governance
* Corporate raid
* Corporate social responsibility
* Passive investor
* Proxy statement
* Shareholder rebellion
* Socially responsible investing

## References

1. ↑ Reasonable Investor(s), Boston University Law Review, available at: http://ssrn.com/abstract=2579510
2. ↑ "Activist Investor Definition". https://www.carriedin.com/activist-investor.
3. ↑ 3.0 3.1 3.2 3.3 3.4 3.5 3.6 Wright, Robert E.; Sylla, Richard (2011), Koppell, Jonathan G S, ed., "Corporate Governance and Stockholder/Stakeholder Activism in the United States, 1790–1860: New Data and Perspectives" (in en), Origins of Shareholder Advocacy (Palgrave Macmillan US): pp. 231–251, doi:10.1057/9780230116665_11, ISBN 978-1-349-29072-7
4. ↑ Grossman, Richard; Arcano, Stephen. "Navigating Today's Shareholder Activism Landscape". Transaction Advisors. ISSN 2329-9134. https://www.transactionadvisors.com/insights/navigating-today’s-shareholder-activism-landscape.
5. ↑ Golden, Peter; Richter, Philip; Schwenkel, Robert; Shine, David; Sorkin, John; Weinstein, Gail. "Shareholder Activism in M&A". Transaction Advisors. ISSN 2329-9134. https://www.transactionadvisors.com/insights/shareholder-activism-ma.
6. ↑ Gerber, Marc. "US Corporate Governance: Have We Crossed the Rubicon". Transaction Advisors. ISSN 2329-9134. https://www.transactionadvisors.com/insights/us-corporate-governance-have-we-crossed-rubicon.
7. ↑ Ruggeri, Chris; Kirschner, Ken; Blanchard, Tony. "Corporate Development Strategy: Thriving in your Business Ecosystem". Transaction Advisors. ISSN 2329-9134. https://www.transactionadvisors.com/insights/corporate-development-strategy.
8. ↑ Cundill, Gary (2017). "Non-financial shareholder activism: a process model for influencing corporate environmental and social performance.". International Journal of Management Reviews 20 (2): 606–626. doi:10.1111/ijmr.12157.
9. ↑ Ludwig, Christopher; Rossman, Jim; Pitcher, Quinn (2025-04-08). "Q1 2025 Review of Shareholder Activism" (in English). https://corpgov.law.harvard.edu/2025/04/08/q1-2025-review-of-shareholder-activism/.
10. ↑ Chen, Siwen; Feldman, Emelie. "Activist-Impelled Divestitures and Shareholder Value". https://faculty.wharton.upenn.edu/wp-content/uploads/2005/11/Activist-Impelled.pdf.
11. ↑ Dunlavy, Colleen A. (21 February 2007). "Social Conceptions of the Corporation: Insights from the History of Shareholder Voting Rights" (in en). Washington and Lee Law Review (Rochester, NY) 63: 1347.
12. ↑ Ringe, Wolf-Georg (March 2025). "ECGI Working Paper Series in Law - Adaptive Advocacy: The Reinvention of Shareholder Activism". https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5196390#.
13. ↑ Basnayake, Harsha (June 2017). "Shareholder Activism In Asia" (in en-GB). https://thehedgefundjournal.com/shareholder-activism-in-asia/.
14. ↑ Frentrop, Paul (2009). The First Known Shareholder Activist: The Colorful Life and Times of Isaac le Maire (1559–1624), in Frentrop/Jonker/Davis 2009, 11–26
15. ↑ 15.0 15.1 15.2 15.3 15.4 Carried Interest: "Activist Investors" . Retrieved 6 May 2015.
16. ↑ 16.0 16.1 16.2 16.3 "Review and Analysis of 2018 U.S. Shareholder Activism". Sullivan & Cromwell. https://www.sullcrom.com/files/upload/SC-Publication-SandC-MnA-2018-US-Shareholder-Activism-Analysis.pdf.
17. ↑ Chung, Juliet; Benoit, David (14 July 2017). "The Man Behind Activist Investors' Biggest Bets". WSJ. https://www.wsj.com/articles/the-man-behind-activist-investors-biggest-bets-1500037200.
18. ↑ "Larry Fink CEO - "You have to Force Behaviours, at Black Rock we are Forcing Behaviours"". 16 September 2023. https://www.youtube.com/watch?v=eTDdDgr-xYo.
19. ↑ Trentmann, Nina; Maurer, Mark (24 February 2021). "GameStop CFO Was Forced Out as Activist Investor Pushes New Strategy". WSJ. https://www.wsj.com/articles/gamestop-cfo-was-forced-out-as-activist-investor-pushes-new-strategy-11614214793.
20. ↑ "The Co-Founder of Shareholder Activism Is Dead, but His Cause Is Thriving" (in en). 2019-09-13. https://www.ai-cio.com/news/shareholder-activist-oil-tycoon-t-boone-pickens-dies/.
21. ↑ "Phil Goldstein: The Bulldog's passion for value investing". 21 January 2011. http://www.opalesque.tv/youtube/Phil_Goldstein/1.
22. ↑ Forbes: "Calpers Votes Against Jamie Dimon, Again" "Calpers Votes Against Jamie Dimon, Again". https://www.forbes.com/sites/halahtouryalai/2013/05/20/calpers-votes-against-jamie-dimon-again/. . Retrieved 28 June 2013.
23. ↑ Eric, Finseth (2011). "Shareholder Activism by Public Pension. Funds and the Rights of Dissenting. Employees under the First Amendment". Harvard Journal of Law & Public Policy 34 (1): 289–366. http://www.harvard-jlpp.com/wp-content/uploads/2011/08/FinsethFinal.pdf. Retrieved 28 June 2013.
24. ↑ ProxyDemocracy.org: "FLORIDA SBA" "ProxyDemocracy | Florida SBA". http://www.proxydemocracy.org/data/funds/81. Retrieved 28 June 2013.
25. ↑ State Board of Administration: "SBA Corporate Governance Principles & Proxy Voting Guidelines" [1] Retrieved 28 June 2013.
26. ↑ Harvard Law School Forum on Corporate Governance and Financial Regulation: "Florida SBA Supports Proxy Access and Advisory Firm Transparency" "Florida SBA Supports Proxy Access and Advisory Firm Transparency". April 2011. http://blogs.law.harvard.edu/corpgov/2011/04/01/florida-sba-supports-proxy-access-and-advisory-firm-transparency/. Retrieved 28 June 2013.
27. ↑ "Elliott Management and the art of telling bosses they’re wrong". The Economist. ISSN 0013-0613. https://www.economist.com/business/2026/03/19/elliott-management-and-the-art-of-telling-bosses-theyre-wrong.
28. ↑ "Mutual funds start to put their mouth where their money is" (in en). Reuters. 15 March 2019. https://www.reuters.com/article/us-usa-companies-funds-analysis-idUSKCN1QW1C8.
29. ↑ Smyth, Jamie; White, Alexandra (2025-09-15). "SEC allows Exxon plan to limit shareholder activism". Financial Times. https://www.ft.com/content/215ca553-651e-42eb-8d8d-4960e539beef.
30. ↑ Barnes, Oliver (October 15, 2023). "Activist Oasis stands to net £40mn profit from Wagamama owner sale". https://www.ft.com/content/ec51f634-59dd-495f-81b1-e4ced30c2d26.
31. ↑ "Hong Kong activist investor David Webb dies at 60". The Standard. 2026-01-13. https://www.thestandard.com.hk/market/article/321504/Hong-Kong-activist-investor-David-Webb-dies-at-60.
32. ↑ Lewis, Jane (2025-10-26). "Yoshiaki Murakami: Japan’s original corporate raider" (in en). https://moneyweek.com/people/yoshiaki-murakami-japans-original-corporate-raider.
33. ↑ "Karmic reckoning? Investors in activist hedge funds agitate for change" (in en). Reuters. 30 July 2019. https://www.reuters.com/article/us-usa-hedgefunds-investors-focus-idUSKCN1UP17T.
34. ↑ Hirst, Scott; Bebchuk, Lucian; Cohen, Alma (1 July 2017). "The Agency Problems of Institutional Investors". Journal of Economic Perspectives 31 (3): 89. doi:10.1257/jep.31.3.89. https://scholarship.law.bu.edu/faculty_scholarship/340. Retrieved 5 November 2020.
35. ↑ Gregory, Holly J.; Grapsas, Rebecca; Holl, Claire; LLP, Sidley Austin; on (February 2019). "The Latest on Proxy Access" (in en-US). https://corpgov.law.harvard.edu/2019/02/01/the-latest-on-proxy-access/.
36. ↑ Coyle, John F. (25 January 2016). "Altering Rules, Cumulative Voting, and Venture Capital" (in en). Utah Law Review (Rochester, NY).
37. ↑ 37.0 37.1 "Majority Voting for Directors | Insights" (in en). https://www.jonesday.com/en/insights/2006/10/majority-voting-for-directors.
38. ↑ "Activist Insight – Shareholder Activism and Corporate Governance Information" (in en). http://www.activistinsight.com/.
39. ↑ "New Shareholder Activist Index Reveals Rewards of Activist Investing". http://www.activistinsight.com/press/Activist Insight Press Release - Activism Outperforms - Nov 2012.pdf.
40. ↑ Wood, John; Dysart, Theodore. "Assessing the Merits of an Activist Investor's Point of View". Transaction Advisors. ISSN 2329-9134. https://www.transactionadvisors.com/insights/assessing-merits-activist-investor’s-point-view.
41. ↑ "20 Places You Should be Sharing Your Content". 14 June 2018. https://www.searchenginejournal.com/places-to-share-your-content/234905/.
42. ↑ Smith, Michael P. (1996). "Shareholder Activism by Institutional Investors: Evidence from CalPERS". The Journal of Finance 51: 227–252. doi:10.1111/j.1540-6261.1996.tb05208.x.
43. ↑ Logsdon, Jeanne M.; Van Buren, Harry J. (2008). "Justice and Large Corporations". Business & Society 47 (4): 523–548. doi:10.1177/0007650308316524.
44. ↑ "Shareholder Activism: Wir sagen voraus wen es trifft!". Nordantech. https://www.nordantech.com/en/blog/data-science/activism-vorhersagen.
45. ↑ "The Activist Investing Annual Review 2019". Schulte Roth & Zabel. https://www.srz.com/resources/the-activist-investing-annual-review-2019.html.
46. ↑ Foldesy, Jody; Rice, Gregory; Weinstein, Simon (2021-04-26). "To Defeat an Activist Investor, Think Like One" (in en). https://www.bcg.com/publications/2021/strategies-for-managing-activist-investors.
47. ↑ "Review of Shareholder Activism - H1 2025" (in en). 29 July 2025. https://www.lazard.com/research-insights/review-of-shareholder-activism-h1-2025/.
48. ↑ 48.0 48.1 48.2 Miller, Robin (1 May 2016). "Shareholder Advocacy In Corporate Elections: Case Studies In Proxy Voting Websites For Retail Investors". International Development, Community and Environment. https://commons.clarku.edu/idce_masters_papers/52. Retrieved 19 March 2020.
49. ↑ Fisch, Jill E. (2017). "Standing Voting Instructions: Empowering the Excluded Retail Investor" (in en). Minnesota Law Review (Rochester, NY).
50. ↑ Levick, Richard (25 April 2011). "The Floodgates Are Open: Shareholder Activists Intensify Social Media Utilization" (in en). https://www.forbes.com/sites/richardlevick/2011/04/25/the-floodgates-are-open-shareholder-activists-intensify-social-media-utilization/.
51. ↑ Morgenson, Gretchen (24 March 2017). "Want Change? Shareholders Have a Tool for That" (in en-US). The New York Times. ISSN 0362-4331. https://www.nytimes.com/2017/03/24/business/proxy-climate-change-executive-pay.html.
52. ↑ "SEC rulemaking threatens to disrupt ESG investment ecosystem and undermine shareholder rights" (in en). 7 January 2020. https://www.responsible-investor.com/articles/sec-rulemaking-threatens-to-disrupt-esg-investment-ecosystem-and-undermine-shareholder-rights.
53. ↑ "Proxy Preview". As You Sow. https://www.proxypreview.org/.

## Further reading

* Icahn calls for Time Warner breakup, buyback / CNNMoney.com
* Third Point Management's letter to Star Gas CEO, Irik Sevin
* Qwest Withdraws from Bidding – Denver Business Journal / MCIpetition.com
* Academic Literature Summary (archived 27 December 2013)
* The Rise of Activist Investing and How to Respond
* A&M Activist Alert
* Predicting Shareholder Activist Targets, Nordantech.com

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