Shareholder activism

Shareholder activism involves investors using their ownership stakes—sometimes as little as under 10% of a company’s shares—to push for changes in corporate management or policy. This approach is less costly and complex than launching a full takeover bid. Activists may pursue financial goals, such as boosting shareholder value through cost-cutting or policy shifts, or non-financial objectives, like pushing a company to divest from certain countries. While activism can expose self-dealing by corporate insiders, large shareholders themselves may engage in self-dealing at the expense of smaller investors. The practice can help resolve the principal-agent problem, where a company’s management (agents) fails to act in the best interests of its investors (principals). Tactics include proxy battles, publicity campaigns, shareholder resolutions, litigation, and direct negotiations with management. Daniel Loeb of Third Point Management is known for his pointed letters to CEOs. In the 2010s, the activist asset class grew, drawing media coverage and investor interest; some activists secured board seats through formal proxy contests. Activism also influences mergers and acquisitions. A 2015 survey found that 60% of corporate development leaders saw it affecting transaction activity in their industry. Non-financial campaigns, often launched by shareholders with small stakes, increasingly target companies’ environmental and social performance. Divestiture campaigns, particularly those involving Fortune 500 firms between 2007 and 2015, have often generated more shareholder value than management-led divestitures. According to Lazard’s H1 2026 Review, 184 new activist campaigns launched globally in the first half of 2026—the busiest six-month period on record. In the 18th century, corporations were rare in Europe but more common in the United States, where about 300 existed in the 1790s and roughly 26,000 were created by the 1860s—15 times the number in Great Britain by 1830. Early U.S. corporations had governance provisions such as restricted charters, bylaws, voting rules, dividend policies, and press oversight. Between 1900 and 1950, about 1.22 “offensive” activist initiatives occurred per year, with more in the 1940s and 1950s. Notable investors included Cyrus S. Eaton, Phoenix Securities Corporation, Benjamin Graham, J. Paul Getty, and Malcolm Chace.