Shifts in policies, proposals define 2025 proxy season
A review of the 2025 proxy season, with highlights and commentary from Freshfields US LLP
“This year has been very, very different,” said Freshfields Partner Pamela Marcogliese, reflecting on the recently concluded proxy season.
On a June 26 webcast featuring Marcogliese and Freshfields Partner Elizabeth Bieber, KPMG BLC Senior Advisor Stephen L. Brown identified four key themes that emerged:
- A narrowing of focus by investors
- A more muted investor voice
- Greater influence from the federal government and certain state governments on corporate governance
- Hedge fund shareholder activism is here to stay
The number of environmental and social proposals—and related shareholder support—continued to decline, observed Marcogliese. “Some of the larger institutional investors revised their voting policies and perspectives on some of the most significant environmental, social, and governance (ESG) issues. … Proxy advisory firms made changes to their voting recommendation guidelines.”
Watch the webcast replay and read Freshfields’ full analysis below.
“This is all against the backdrop of changes at the US Securities and Exchange Commission in terms of the approach to shareholder proposals and the ability to include/exclude them from the proxy statement,” said Marcogliese. Traditional governance proposals, such as adopting a simple majority voting threshold or declassifying the board, however, continued to receive strong support in certain instances.
In aggregate, only 7% of shareholder proposals received majority support through June 16, 2025, according to Deal Point Data cited by Freshfields. Moreover, the issuance of Staff Legal Bulletin 14M expanded the circumstances under which the SEC will grant companies no-action relief for the omission of shareholder proposals from their proxies; 194 proposals received no-action relief this year, compared to 145 in 2024, according to Freshfields’ analysis of ISS data.
Proposals seeking reincorporation to Nevada (or Texas) from Delaware for controlled companies or those with concentrated shareholders approaching control saw success this season. Seven out of eight submitted proposals among this group of companies passed. “Controlled companies will continue to consider this and possibly put it to a vote next year or even at special meetings,” said Marcogliese.
For shareholder activism, Freshfields’ Bieber had been expecting a very active year. The uncertainty introduced in April related to US tariffs pushed some of that activism underground “while companies figured out what the tariffs meant for them in their business,” said Bieber. As some semblance of stability returns—or companies and investors simply push ahead—Bieber said activists are revisiting their approaches, including whether to nominate themselves or independent directors for board seats.
“We’ve seen more creativity in what counts as satisfying an activist to drop a proxy contest,” from increasing buybacks to agreeing to name directors in the future, said Bieber, adding that companies are increasingly dealing with multiple activists (swarms), though the firms are not always coordinated. “Just because a company raised buybacks … doesn’t mean it will satisfy everyone,” she said. “Sometimes activists have very different views about corporate strategy.”
Bieber, Marcogliese, and Brown also discussed regulatory and legal developments expected to impact the current “proxy off-season.” Top of mind are the implications related to a new compliance and disclosure interpretation (C&DI) related to Regulation 13D-G, which sets guidelines for investors holding more than 5% of a company’s outstanding equity and their interest in effecting change or influencing control. Traditionally, large institutional investors holding greater than 5%, but pursuing a primarily passive or limited engagement strategy, would file on the less onerous short-form Schedule 13G as opposed to Schedule 13D.
Discussion topics that the SEC indicated may constitute influencing control include the following:
- Removal of a classified board
- Switch to a majority voting standard in uncontested director elections
- Removal of a poison pill
- Change executive compensation practices
- Undertake specific actions on social, environmental, or political policy
In addition, 13G eligibility may be lost if investors discuss their policy on a particular topic and how the issuer fails to meet the investor’s expectations.
“It’s really taken the rug out from companies. We had said for years: Know how your shareholders feel. Engage with your shareholders. Get a sense of what they think about what you are doing and your strategy,” said Marcogliese. The new guidance has investors pausing engagements or taking a different approach.
“If there’s a silver lining to everything that’s going on,” said Bieber, “it’s that with less external pressure on companies for a variety of reasons, it’s an opportune time [for companies] to really take a step back and focus on how they would like to define themselves.”
2025 Proxy season highlights
- Fewer proposals, less support. There has been a drastic reduction in the overall number of shareholder proposals, in part due to the SEC’s willingness to grant no-action relief after publication of SLB 14M, coupled with lower levels of shareholder support for environmental and social proposals.
- Zeroing in. Following a multi-year trend of shareholder proposals reflecting issues of societal importance, proponents are increasingly tailoring proposals to specific company practices and industry.
- Retreat to comfort and safety. As the regulatory and global environment becomes more uncertain for institutional investors and other shareholders, there has been a retreat to the relative safety of supporting traditional governance and compensation proposals.
- Investors go dark. After SEC guidance changed, investors dramatically changed their engagement practices, leaving companies without feedback on topics of interest and raising the specter of an uncertain engagement season this fall.
- New admin influence over proxy season. A new administration led to significant mid-season changes to the SEC, recommendations from proxy advisory firms, and policies and voting of institutional investors, although shareholder proposals generally were submitted before the administration change.
- The state of ESG. Despite limited support for proposals, anti-ESG considerations continue to be a significant topic for companies and their stakeholders and drive changes in the ecosystem.
- Activists in the boardroom? While largescale proxy contests were won and lost in 2025, activists also focused their efforts outside of boardroom representation, demonstrating a willingness to wage vote-no campaigns, settle without boardroom representation, or settle for unnamed future directors.
Source: Freshfields US LLP
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The views and opinions expressed herein are those of the speakers and do not necessarily represent the views and opinions of KPMG LLP.
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