SEC’s Shareholder Activism Role After The ’26 Proxy Season

In remarks on July 9, U.S. Securities and Exchange Commission Chairman Paul Atkins argued that the staff’s decision not to issue substantive responses to most exclusions of Securities Exchange Act Rule 14a-8 proposals served as a “proof of concept” for the SEC’s role in shareholder proposals.[1] In his view, giving market participants more responsibility for applying the proxy rules and resolving disputes about them did not result in chaos, but instead led to more productive engagement between companies and their shareholders.

The SEC has since gone even further, releasing proposed rules on Sept. 16 to entirely rescind Rule 14a-8.

These developments are expected to have little impact on traditional hedge fund activism, which has historically avoided shareholder proposals in favor of director election contests. Nonetheless, Atkins’ July 9 claim that refraining from “calling balls and strikes” on shareholder proposals allows the market to self correct provides a useful backdrop for reviewing shareholder activism in the most recent proxy season.

Proxy contests have long proceeded under a framework in which the SEC has a limited role focused on establishing disclosure rules, while companies and activists distribute their own materials to make their competing cases for shareholders to decide whether change is warranted. While few activism campaigns proceed to formal proxy solicitations, the federal proxy framework shapes the parties’ leverage and conduct long before any proxy filings are made.

This season’s combination of elevated campaign activity, limited formal escalation and measured voting outcomes under the universal proxy card rules illustrates how that framework functions in practice and why a targeted SEC role remains important.

Elevated Campaign Activity and Limited Formal Escalation

Despite macroeconomic and geopolitical uncertainty from hostilities with Iran, shareholder activism remained at elevated levels during the first half of 2026. Activists announced 155 campaigns at U.S. headquartered operating companies with a market cap of at least $250 million during this period, with volume up 37% year over year and more than 50% higher than the first half of 2024.

Mergers and acquisitions were a consistent theme in these campaigns against the backdrop of a robust dealmaking market and friendlier U.S. antitrust authorities, with 32.5% of these campaigns involving an M&A thesis, the highest level in the last three years.[2]

Formal campaign outcomes, however, did not increase along with campaign volume. During the first half of 2026, 34 campaigns at U.S. headquartered operating companies with a market cap of at least $250 million ended in a public settlement, and an additional six went to a vote, both the lowest figures in the last three years.[3]

Activists struggled at the ballot box and only secured a single seat at a vote during the first half of 2026, and every “withhold the vote” campaign during this period failed. Instead, we are seeing more campaigns end in informal understandings or unannounced withdrawals after companies deliver on their business strategies or proactively make changes that address the activists’ concerns and reduce the likelihood of succeeding in a public escalation.

The resulting pattern is one of high campaign activity but limited escalation into the proxy rules arena. Yet, the continued prevalence of formal settlements or informal resolutions does not mean that contested solicitations, the proxy rules that regulate them, or the SEC that promulgates and interprets those rules have become irrelevant.

All activist engagements occur in the shadow of how a vote might play out, and an activist without a credible path to electoral success has little leverage to push for changes.

Shareholders Continue to Select Least Possible Change on the Universal Proxy Card

Four years after the universal proxy card rules became applicable to contested director elections, they remain the SEC’s most consequential recent activism related rule change. By requiring each side’s proxy card to include all duly nominated director candidates, they allow shareholders to vote for any combination of management and dissident nominees.

It has become clear that shareholders tend to use universal proxy cards to vote for the least necessary change, and no change in most circumstances. As our study of the rules’ first three years found last September, management continued to retain all seats in a majority of contests, activists struggled to elect a majority of their slate or seize control, and activist electoral success was principally limited to electing a single nominee.[4]

Despite the potential fracturing of the voting ecosystem from investor choice programs and multiple proxy adviser recommendations, that voting pattern continued during this proxy season. Between Sept. 1, 2025, and July 31, 2026, eight campaigns seeking board representation at Russell 3000 companies proceeded to a vote. Management elected all of its nominees at six of those contests (75%).

While the sample size is small, this was the most incumbent favorable season since the rules took effect. In two of those contests, management swept the election despite both Institutional Shareholder Services and Glass Lewis recommending that shareholders support a majority of the dissident slate, affirming that advice from the proxy advisers is not outcome determinative.

Market Led Does Not Mean Unregulated

It would be a mistake, however, to assume that the SEC can, should or will withdraw from all participation in proxy contests. Recent developments demonstrate that the staff continues to prioritize disclosures of material information to shareholders, particularly about matters that may cause divergent interests between an activist and other shareholders.

The SEC staff’s July 9 guidance on campaign specific special purpose vehicles illustrates the type of transparency focused intervention that can strengthen, rather than displace, decision making by market participants.[5]

Under the new corporation finance interpretations, when a vehicle is formed to raise capital to acquire securities of a specifically identified company and pursue an activism campaign, and investors are informed of that purpose and target in advance, those investors must be identified in any Schedule 13D it is required to file and, for those who invested over $500, named as participants for purposes of Schedule 14A.

These interpretations give shareholders greater visibility into who is financing the campaign and the interests behind it, precisely the kind of material transparency that should remain central to the agency’s participation in shareholder democracy.

The SEC has also taken steps toward addressing concerns raised by its February 2025 interpretation of Schedule 13D and Schedule 13G eligibility. Days before the first contested vote of the 2025 proxy season, the SEC announced changes to its interpretation of the rules concerning Schedule 13D and Schedule 13G filings.[6]

We believe this interpretation caused some companies to have less information about their prospects for success in the event of a proxy fight, potentially resulting in settlements that granted the activist more change than a majority of shareholders would have preferred. On Sept. 2, 2026, however, the SEC staff issued three new corporation finance interpretations clarifying that a Schedule 13G filer will not, without more, lose its eligibility merely by participating in issuer initiated discussions about voting decisions, discussing its views with a person engaged in a proxy solicitation or seeking clarification of an issuer’s disclosures.[7]

The SEC also has a critical role to play in enforcing the rules against false and misleading statements in violation of Rule 14a-9, one we hope that the current SEC staff will bolster its enforcement of in the coming proxy season.[8] In recent years, the SEC staff has issued fewer comment letters regarding inflammatory, false and misleading statements issued by activists, even when companies identify these statements to the staff.

In our view, the increase in occasional activists and the availability of artificial intelligence for them to mass produce solicitations with limited legal review has led to an increase in unhealthy, unproductive rhetoric from some activists. These sorts of statements cannot be effectively rebutted through SEC disclosures and ought to be addressed directly by the SEC staff.

As much as this most recent proxy season (both for shareholder proposals and traditional hedge fund activism) demonstrates that shareholder democracy can function without the SEC calling balls and strikes, we encourage the SEC staff to continue to bolster clear disclosure rules and enforce violations of Rule 14a-9 to provide for informed shareholder voting that benefits the entire market.

1Paul S. Atkins, Remarks at the Society for Corporate Governance Conference (July 9, 2026), https://www.sec.gov/newsroom/speeches-statements/atkins-remarks-society-corporate-governance-07-09-2026-remarks-society-corporate-governance-conference.(go back)

2Data from FactSet.(go back)

3Data from Deal Point Data.(go back)

4Eric S. Goodwin, Kai H.E. Liekefett & Derek Zaba, How Three Years of the Universal Proxy Card Rules Have Changed Proxy Contests, Sidley Update (Sept. 9, 2025), https://www.sidley.com/en/insights/newsupdates/2025/09/how-three-years-of-the-universal-proxy-card-rules-have-changed-proxy-contests.(go back)

5U.S. Securities and Exchange Commission, Corporation Finance Interpretations, July 9, 2026 Update, https://www.sec.gov/about/divisions-offices/division-corporation-finance/cfi-update-070926.(go back)

6U.S. Securities and Exchange Commission, Exchange Act Sections 13(d) and 13(g) and Regulation 13D-G Beneficial Ownership Reporting, Feb. 11, 2025, https://www.sec.gov/rules-regulations/staff-guidance/corporation-finance-interpretations/exchange-act-sections-13d-13g-regulation-13d-g-beneficial-ownership-reporting#103.12.(go back)

7U.S. Securities and Exchange Commission, Corporation Finance Interpretations Update, September 2, 2026, https://www.sec.gov/about/divisions-offices/division-corporation-finance/cfi-09022026.(go back)

8Kai H.E. Liekefett and Derek Zaba, Lying in Corporate Elections (Sept. 12, 2024), https://www.sidley.com/en/insights/newsupdates/2024/09/lying-in-corporate-elections.(go back)

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