As the 2023 proxy season begins, companies should prepare their strategies for board elections, including governance roadshows and the potential for activism and proxy battles, which are now a little more likely with the introduction of the universal ballot. Company leadership and boards of directors should fill their toolbox with resources for any challenges that may arise, and equip themselves to have open and honest communication with shareholders. The best strategy to remain insulated from an activist campaign is to be proactive — understand your weaknesses, and communicate the root causes as well as any steps you’re taking to remediate.

One big change coming this proxy season is the universal ballot, or universal proxy cards. The SEC has finalized the adoption of universal ballots by management and shareholders soliciting proxy votes in director elections. Prior to this change, voting shareholders were unable to vote for a combination of director nominees from competing slates through a proxy card, as they would be able to in person. 

Under the new rule, ballots must include all director nominees presented by management and shareholders for election, allowing shareholders the same voting power on the proxy card as they would have through an in-person vote. The rule also alters the notice and filing requirements for all parties and the presentation requirements for the ballots, and is effective for all shareholder meetings involving contested director elections after Aug. 30, 2022.

It’s necessary to be open to shareholder suggestions at any time, but particularly during proxy season, as shareholder alignment and input are priorities for strong governance, the underpinning of the annual proxy cycle. Gaining shareholder confidence and trust requires practicing consistent and transparent communication throughout the year. 

In order to effectively engage shareholders, management teams need to be accessible and proactive in communicating the company’s strategy as well as KPIs — regularly attending conferences, opening lines of communication with shareholders and analysts, and providing timely updates on key strategic initiatives as well as full disclosure with formal updates shared through public digital channels. A strong, proactive investor relations team can help build these relationships for you. As a means of strengthening these practices and obtaining shareholder feedback in advance of formal voting season, IR teams could consider governance roadshows. 

Building the relationship between a company and its shareholders takes time and requires that management teams establish credibility. It’s important for issuers to build relationships so you can rely on regular feedback, and create alliances with investors who understand your story and strategy if and when you need support. 

Activist investor campaigns have become more prominent in recent years. In 2022, there were 1,026 campaigns launched, up from 851 in 2021. Regular interaction with shareholders is a crucial element of managing campaigns so you can understand the objectives of your shareholder base. Often, these campaigns can threaten the long-term success of a business model, as activists might be more motivated by short-term gains than long-term value creation. 

A strong relationship with investors might not be enough to avoid activist campaigns, so companies should be prepared for them. This entails proactively considering all of the sentiment available and viewpoints of various investors along with their motivations. 

Understand your weaknesses, which might include how your results compare to peers and industry benchmarks, how your capital allocation policies and balance sheet structures resonate with investors, total shareholder return over an extended period relative to peers and relevant indexes, and even your IR efforts — transparency, accessibility and credibility. With this baseline understanding, you’ll want to communicate your awareness of these shortfalls (or perceived shortfalls), why they may be misconstrued and any steps you’re taking to improve. 

It’s crucial to also consider your board and any perceived weaknesses in governance structure. For example, how frequently do you refresh your board? Do you have an appropriate level of diversity? Are the necessary skill sets represented? Understand the vulnerabilities of your company and board so you can firm up your action plan before an activist investor tries to act for you. 

Investors often have good suggestions, born from experience with varying industries and observing your company at a higher level. But activist campaigns take massive amounts of valuable time away from management teams that should be focused on running their business and creating a company culture that generates success.

Overall, the goal of a public company is to do what’s best for their shareholders. As long as you stay true to your company’s mission and values, effectively communicate your strategies with shareholders and prepare for any possible bumps in the road, your relationship should benefit both parties.

If you are interested in learning more about our investor relations offerings as a means to enhance the relationship with stakeholders, please reach out to Executive Vice President Heather Crowell at