Wachtell Memo: Shareholder Activism: Ten Trends for 2026

Shareholder activism is at record levels and is no longer limited to the “proxy season.” Dozens of U.S. activist situations are underway for 2026 annual meetings, well before the windows for nominations open at most targeted companies. Activists are preparing for the fall conference circuit at which they will debut many of their 2026 campaigns, already working behind the scenes at companies by contacting their management, directors, investors, employees, sell-side analysts, and other key constituencies. Here are ten trends to expect for the year ahead.

(1) Less Visibility into Shareholder Views

Companies may find it increasingly challenging to understand the true perspectives of their shareholders. Although companies are prioritizing year-round engagement, not all investors are receptive to engagement absent a specific issue, and recent C&DI guidance about potential loss of Schedule 13G eligibility for institutional investors has led to more guarded conversations with such investors. As we have recently written, the “Big Three” asset managers—BlackRock, Vanguard and State Street—are shifting their approach to stewardship and splitting their proxy voting teams into separate groups with their own voting decision-makers and policies. The proliferation of “voting choice” options at major asset managers, such as Vanguard, also stands to further fracture the shareholder base, decreasing visibility into what portion of a company’s stock will be voted according to what policies. The operation of proxy advisory firms like ISS and Glass Lewis, and the way in which they will continue to provide recommendations in the U.S., remains the subject of much legal and political scrutiny. These dynamics make it increasingly challenging for companies to anticipate the likely outcome of a contested situation. Although the tools to analyze proxy voting patterns are more sophisticated than ever, companies going to a vote will face even more than the usual level of uncertainty in the lead up to the annual meeting.

(2) Engaged Retail

Companies are increasingly finding avenues to communicate with their retail shareholder base to garner support. Some are looking into the idea of implementing auto-voting programs for retail investors, believing that retail investors are generally inclined to support boards and management teams. Companies will continue to be creative and active in engaging their retail base, especially for corporate decisions that require a higher quorum to achieve (such as M&A or reincorporation proposals). Such efforts are already being met with some resistance from activists and their law firms, and may in the future be scrutinized by investors, proxy advisory firms, and other constituencies with an interest in how shareholder elections are administered. Retail shareholders should not be treated as a monolith, and depending on the specifics of the situation, some of these efforts may not have the intended consequences. We also have seen retail investors undertake activist tactics at companies in the form of organized social media campaigns.

(3) M&A-Focused Activism

M&A remains a persistent theme of activism. The returns from operational improvements are generally less attractive to activists than the prospect of an immediate transaction premium. Over the last few years, however, a challenging regulatory and macroeconomic environment limited activists’ ability to credibly push for full-company sales or strategic carve-outs. With the significant M&A rebound in 2025, we expect activists to increase their focus on event-driven M&A outcomes. While pushing for full-company sales will remain a key objective for many activist campaigns, we also expect to continue to see activists arguing for break-ups that purportedly shed underperforming divisions or capitalize on trading multiple arbitrage for different businesses. Companies seeking to take more time before undertaking transformative M&A may consider agreeing to the formation of a strategic review committee, with one or more activist-nominated directors on such committee. While these committees may make sense in particular situations, the decision whether to sell or break up the company should be a full-board decision, and any committee charter should maintain the full board’s ultimate decision-making responsibility.

(4) Emboldened Occasional Activists

Nascent or occasional activists have caught on to the reality that a long or successful track record is not necessary to garner the support of ISS and Glass Lewis, or even of large institutional holders, if they make a credible business case for change and recruit reasonably qualified director nominees. The proliferation of lesser-known activists has already led the more established activists to concentrate their efforts in larger cap companies, a trend we expect to continue. Relatively smaller companies will be left to contend with less-tested players that are seeking publicity and validation to further their fundraising efforts. The level of access and engagement to offer an unfamiliar investor with a relatively small investment position will remain a key judgment for companies and boards heading into 2026. This judgment requires the balancing of safeguarding board and management time with the increasing shareholder sentiment that companies should be regularly engaging with shareholders and open to their ideas.

(5) Speedy, Informal Settlements

The vast majority of activist campaigns are resolved by a negotiated settlement. Settlements will continue to be a favored path to resolution for many companies that wish to avoid the cost and distraction of a full, protracted proxy fight, especially against the backdrop of broader macroeconomic and political uncertainty. We expect to continue to see settlements announced without prior public agitation by, or even rumors of, an activist in the company’s stock, as activists and companies value the benefits of private engagement. These settlements may take the form of a simple press release, announcing various business and governance changes and a supportive quote from an activist. Full-fledged cooperation agreements will continue to make sense in certain circumstances, including when a standstill is appropriate, but companies and activists alike are increasingly more willing to be flexible about the form of resolution.

(6) Normalization of Serving as a Dissident Nominee

The speed of settlements has also been facilitated by an increase in the quality of individuals willing to serve as dissident nominees, which can include sitting directors and former public company CEOs and CFOs (including those of the target itself). Many of these individuals are sourced through the same search firms used by companies in their own director refreshment process and some may have no prior relationships with the nominating activist. Within this larger trend, however, we are seeing situations in which a potential dissident nominee has informed the activist that the nominee is willing to participate in a consensual settlement, but not in a publicly fought election contest. In these situations, the activist has extra incentive to reach a negotiated settlement.

While companies should scrutinize the qualifications and entanglements between activists and their nominees, if a company intends to settle, there are benefits to doing so before a fight becomes too acrimonious and relationships with prospective directors are harmed. Companies should also take steps to make sure they are not learning in the news that their officers or directors have joined an activist slate, no matter how unrelated the situation is to their home company. One approach would be to revise director governance guidelines to require notice to the company, not just before a director or officer joining another board, but before a director or officer agreeing to be nominated as a candidate for another board.

(7) Private Placeholder Nominations

While many activist campaigns start publicly and play out entirely in the public eye, some activists have found tactical value in privately submitting nomination notices. These “placeholder” nominations provide activists optionality to continue to pressure a company, even without the expense of mounting a full proxy fight. Receipt of nominations, even privately, puts companies in limbo for the upcoming annual meeting. Companies must dual-track and prepare a proxy statement for a contested election, while also potentially needing to pivot quickly to a settlement scenario. These placeholder nominations, often naming individuals from the activist’s fund or other repeat nominees of the activist, add to the time, expense and distraction the company is already facing in addressing activist engagement. Although companies tend to wait until the filing of preliminary proxy materials to disclose any private nomination notice, there are benefits to earlier disclosure in certain circumstances, and disclosure decisions should be evaluated by the target and its advisors based on their specific facts.

(8) More “Withhold” Campaigns

Activists are reviving the “withhold” campaign, which can result in unseating a director even without nominating a competing slate. Withhold campaigns are an attractive approach for activist investors because they offer a cheaper alternative to running a full proxy contest. Activists believe in “addition by subtraction” (i.e., that board dynamics can change even without new voices in the boardroom). Withhold campaigns are particularly appealing in a volatile market environment, since an activist can find an attractive entry point into a stock and still pressure the board after the passing of a nomination deadline. Although a board can always choose to reject the resignation of a director who does not get the requisite votes under a majority voting standard, such an approach may run the risk of shareholder ire and have consequences in any future contested election.

(9) Rethinking Quarterly Reporting

President Trump has recently expressed a desire to switch from a quarterly reporting regime for U.S. public companies to a semiannual one. Securities and Exchange Commission (SEC) Chairman Paul Atkins has stated that the SEC will be proposing a rule change to that effect, suggesting that it will be left to companies to decide whether they switch to semiannual or stay with quarterly reporting. If the SEC proceeds with the rule change, although implementation may not take effect in 2026, activists will need to reconceive how they invest in and run their playbook at target companies. We can expect activists and their supporters to put pressure on companies to commit to voluntary quarterly reporting. Companies should consider affirmatively engaging with shareholders to understand their reporting expectations in a semiannual regime, while conveying the benefits of moving away from a quarterly reporting cycle and the short-termism it can promote.

(10) Harnessing AI

As of yet, AI has not fundamentally altered the activism landscape. Increasingly, however, AI will be harnessed by activists to source targets and identify shareholders sympathetic to the activists’ perspectives. Screening tools already exist to process publicly disclosed data and identify company vulnerabilities. AI will increase the sophistication with which activists are able to analyze companies on a relative basis and make arguments for change. If AI is able to generate fight letters and fight decks on behalf of activists, and make it even cheaper to pursue campaigns, companies will find it even more challenging, as they consider how to ethically utilize AI to aid them in defending against activist attacks. Ultimately, it will continue to be the credibility of management and the board, borne out of real world interactions and shareholder engagement, that will influence key voting decisions.

Given the complex shareholder activism landscape, effective preparation and monitoring are crucial. Many activist approaches are successfully diffused or discouraged before they evolve into an attack or campaign, and quality advanced planning and preparation remain the critical ingredients. The following are key steps that companies should take to ensure they stay ahead:

● Implement Stock Surveillance and Website Monitoring: Stock surveillance programs allow companies to keep an eye on stock accumulation and unusual trading patterns, often providing an early warning system for activist activity. Activists often start by taking relatively small positions and/or using derivatives to build their stakes, which makes early detection all the more complex. Similarly, website monitoring programs allow companies to see in real time who is visiting their websites and social media profiles, and what content they are viewing.

● Review Shareholder Engagement Strategy: An effective shareholder engagement strategy is crucial to building relationships with key investors, tracking investor sentiment, and staying ahead of potentially problematic issues. Companies should be intentional about establishing credibility and rapport with their investors well before an activism campaign arises.

● Conduct a Vulnerability Analysis: Regularly conducting an internal vulnerability analysis enables companies to identify vulnerabilities that can be utilized against them in a potential activism attack. Companies can then make strategic changes or prepare rebuttals to potential activist theses. Additionally, the extent to which a company and board has already appropriately considered an activist thesis is becoming a key area of investor focus in a proxy fight. Vulnerability analyses can be a useful tool in anticipating and evaluating business ideas before an activist raises them, arming the board with a stronger record.

● Identify the Working Group: A working group should be identified and ready to act in case of an activism situation. The team should consist of internal members, such as the CEO, CFO, General Counsel, and investor relations representatives, as well as external members, including the legal counsel, financial advisor, public relations firm, and proxy solicitor.

● Have a “Break the Glass” Plan in Place: In case of a sudden and unforeseen activist attack, companies should have a “break the glass” plan that outlines the strategic and procedural next steps in various scenarios. This ensures that companies are able to respond quickly and in a unified, coordinated manner.
Daniel A. Neff
Adam O. Emmerich
Steven A. Cohen
David A. Katz
Andrew J. Nussbaum
Joshua R. Cammaker
Mark Gordon
Igor Kirman
Gregory E. Ostling
Benjamin M. Roth
Jenna E. Levine
John L. Robinson
Elina Tetelbaum
Loren Braswell