U.S. Shareholder Activism Review 2024 and a Look Toward 2025

As we know, activism can take many forms, but the goal always remains generally the same: to motivate management and boards to make changes in the way their companies are currently operating. The strategy that activists will use depends on their objectives and ultimate desired outcome. No one single factor drives an activist’s potential interest in a company. There are often a multitude of screening criteria that can pique the interest of an activist investor. An activist’s decision to target a company is ultimately determined by the activist’s assurance in a strong narrative of significant shareholder value creation.  Overall, activists are also attempting to drive a broad range of governance changes aimed at improving corporate accountability, transparency, and performance, with the goal to ultimately enhance shareholder value. In 2024 the U.S. saw a very robust shareholder activism environment; with a level of activity not previously seen. Here are a few key takeaways that we observed.

Board Refreshment and Focus on Skills and Experience

In 2024, we observed how activists have significantly influenced board composition through various tactics and campaigns. The universal proxy card rules, which went into effect in 2022, has made it easier for activists to focus on long-tenured directors. Activists have been successful in pushing for the replacement of long-tenured directors with new, independent (and presumably qualified) board members. Activists are now emphasizing the importance of board diversity and the need for directors with relevant skills and experience that are particularly germane to the specific enterprise.  From the activist’s point of view, this new regime has led to the appointment of directors who can better oversee the company’s strategy and operations.

Increased CEO Turnover

2024 saw a heightened focus on replacing underperforming CEOs and other top executives. Targeting CEOs can generate significant public attention, which can strengthen the activist’s message and put additional pressure on the company to make changes. ​This increased visibility can help activists gain support from other shareholders and stakeholders. Activists believe that new leadership can drive strategic and operational improvements, leading to better financial performance and shareholder value. ​ The trend of CEO departures following activist pressure indicates that boards are becoming more willing to replace underperforming CEOs to address these financial and operational issues. ​According to data from Diligent Market Intelligence (DMI), the number of CEOs who left U.S.-based companies following activist pressure almost tripled in 2024. Sixty seven of the 846 CEOs of U.S. companies who moved on last year did so within 12 months of a public demand by a dedicated activist fund, roughly 8%. In 2023, the number of CEOs leaving after an activist encounter was 24, or less than 3% of the 916 CEOs that moved on. [1] Overall, CEO changes driven by shareholder activism are likely to continue shaping corporate governance and management practices. ​ The willingness of boards to replace CEOs more readily may signal a shift in corporate governance practices. ​ This could lead to shorter tenures for CEOs and a greater emphasis on performance and accountability. It can potentially lead to more dynamic and responsive boards, improved company performance, and enhanced shareholder value.

Activists Secured Fewer Seats

According to ISS, the win rate for activists in 2024 was just 38 percent, which was the lowest since 2021. The win rates in 2022 and 2023 were both above 40 percent. [2] However, the win rate does only tell part of the story. Many activists have reached settlement agreements earlier with companies, and often without even public awareness of a potential campaign, resulting in the appointment of activist nominated directors to the board. These settlements often include commitments to add new board members with specific expertise or to refresh the board over time. In the past two proxy seasons, we have seen a significant trend towards faster settlements. The quick pace for settlement is due to the increased willingness of boards to settle and avoid the expense of a costly proxy fight, and this timing is very likely the most noticeable impact of the universal proxy rules. The elevated risk for individual directors in proxy fights has also made boards more inclined to continue to quickly reach a settlement. Activists are also asking for fewer board seats, which can ultimately facilitate quicker negotiations. According to DMI statistics, activists targeting U.S. boards have secured fewer seats, including through settlements, since the rollout of the universal proxy card with the figures decreasing from 176 in 2022, to 161 in 2023, and155 in 2024. [3] By the numbers in 2024 activists saw the highest win rate for at one seat since 2021, at 94; while at the same time, the highest level of no success. There were 76 instances in 2024 where the activist did not win a single seat. In the prior three-years, 2021-2023, that rate was steady in the mid-50 range of non-success.

Large Growth in the Number of First-Time Activist Investors

2024 also witnessed a significant expansion of the activist investor landscape, with a substantial influx of newcomers. First-time activists outpaced major activist in the number of campaigns launched. Major activists made up a smaller percentage of activism activity and set their sights on larger, mega-cap companies. Ultimately, this first-time activism surge reflects a broader trend of increased participation in shareholder activism which we anticipate will continue into 2025. This trend is reshaping corporate governance and driving changes in how companies are engaging with activists, and more broadly, their shareholder base broadly as well. It is also creating difficulties for companies as a tyro activist may not necessarily follow the tried-and-true playbook that a more established or experienced activist might. This uncertainty can present a unique set of challenges for the issuer company (and its assembly of outside advisors) facing a first-time activist; as the activist’s investment thesis, messaging and demands may fall outside of the norm and thusly, present a certain degree of difficult addressing.

Conclusion

2025 is shaping up to be a very active year for shareholder activism in the U.S. As of the date of this post there are already 108 public indications of activism in the U.S. market. M&A, CEO accountability, stock performance and the vigorous, ongoing ESG/DEI debates will continue to be likely key drivers of activity. Companies should prepare for increased scrutiny, including potential challenges to their strategic and operational decisions, the composition of their boards and senior leadership and engage proactively with their shareholders. While an activist can attempt to bring a fresh perspective to a company’s perceived shortcomings, quite often these self-same criticisms are most often reflected in comments offered by existing shareholders.

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[1] Diligent Market Intelligence Shareholder Activism Annual Review 2025

[2] ISS 2024 European and U.S. Activism Review

[3] Diligent Market Intelligence Shareholder Activism Annual Review 2025

1 Diligent Market Intelligence Shareholder Activism Annual Review 2025.(go back)

2 ISS 2024 European and U.S. Activism Review.(go back)

3 Diligent Market Intelligence Shareholder Activism Annual Review 2025. (go back)