One email from an activist fund can now cost a CEO their job. With record campaigns this year, the speed and scale of shareholder influence have never been higher. The question is whether this new wave builds stronger companies or burns them out faster.

2025 is shaping up to be a turning point for activist investors. 61 campaigns were launched in the third quarter alone, bringing the total year to date campaigns to 191, putting the year on pace to beat prior records. Activists won more board seats and settlements this year and CEO turnover is up, as companies either meet demands or scramble to head off proxy fights. This raises a central question of whether this trend is beneficial for real, long-term value creation and what this means for corporate governance. While the sheer volume of campaigns might initially suggest a healthy and engaged shareholder base driving accountability and forcing change, a deeper analysis shows just how complex this landscape is. There is a thin line between constructive engagement and potentially disruptive short termism and this line always remains hotly contested. I argue that ultimately, this surge of investor activism presents a problematic trend for sustainable corporate growth and a significant structural shift in corporate governance. 

Several forces have fueled this acceleration. Persistent economic uncertainty in the form of rising interest rates, inflation pressure, and geopolitical volatility has exposed undervalued or poorly managed firms, tempting activists who believe they can “unlock” trapped value. The Universal Proxy Card (UPC), introduced in 2022, has also reshaped the playing field by lowering barriers for challenging boards. With fewer logistical and financial obstacles, even smaller investors can nominate their own candidates, leading to a flood of contests across industries. There’s also a growing backlash against ESG-driven policies, as some investors push companies to abandon what they see as distractions from financial performance. The combination of easier access, political polarization, and volatile markets has made corporate governance an open battlefield. A useful comparison is the activism surge seen after the 2008 financial crisis, when undervalued firms became prime targets for restructuring. But unlike that era, this new wave is powered by procedural efficiency rather than pure market dislocation. Campaigns today are faster, cheaper, and more frequent, thanks to the UPC and digital shareholder engagement. This efficiency has improved accountability, but it has also made activism more opportunistic.

Activist strategies have also evolved significantly. There is a notable trend towards earlier settlements, with activists preferring to secure board representation through negotiation rather than protracted proxy contests. This shows how activists are relying more on pragmatic approaches aimed at achieving quicker results. Additionally, a broader pool of participants are now active. Empowered by the UPC, more investors are willing to engage in activism on a more ad-hoc basis, introducing new dynamics to the activist playbook and putting companies under more pressure. In response, companies are adapting their governance and preparedness strategies. Many firms are prioritizing proactive shareholder engagement, with boards attempting to establish stronger relationships with their investors long before any activists appear. This is being done through more frequent and thorough communication about long-term strategies and performance. Companies are also working towards having a more diverse board, including people from various backgrounds, skills, and experiences to demonstrate their responsiveness to the evolving governance expectations. Furthermore, companies are becoming more engaged with legal and financial advisors to develop robust activist defense strategies and improve their overall governance frameworks to withstand potential challenges.  

This pattern has measurable consequences. A 2024 Harvard study found that firms targeted by activists outperformed peers by 15 percent in the first year but underperformed by 8 percent by year three. The data suggests that activists can deliver short-term boosts, often through cost cuts or asset sales, but struggle to sustain performance once the initial market excitement fades. In other words, activism frequently front-loads value rather than creating it.

Companies most vulnerable to these campaigns tend to share common traits such as undervaluation, management turnover, and underutilized assets. Energy, technology, and consumer staples are among the most active sectors. Historically, mid-sized firms bore the brunt of activism, but the UPC has shifted that balance. Large firms such as Disney and Salesforce, once seen as too complex to target, have faced significant pressure this year, proving that scale is no longer protection. Still, not all activism leads to short-term thinking. Elliott Management’s 2020 campaign at AT&T is one of the exceptions. By pushing for divestitures and improved capital discipline, Elliott helped the company shed over $50 billion in non-core assets and refocus on its communications business. The case shows that activism aligned with strategic restructuring can create enduring value. But those outcomes are increasingly rare in today’s faster, more fragmented environment.

Looking to the future, the current surge of investor activism represents a significant structural shift in corporate governance rather than just being a cyclical peak. The easier proxy access, evolving activist strategies, and a sustained focus on shareholder value is embedding activism more deeply into the corporate landscape. This suggests that the pressure on boards and management to demonstrate accountability, agility, and a clear path to value creation will remain constant, shaping corporate decision-making significantly for the years to come. While the intensity may fluctuate depending on market conditions, the fundamental mechanisms and expectations driving activism will stay. 

To address this, regulators and boards could set structural guardrails. Requiring activists to hold positions for at least 12 months before launching campaigns would discourage speculative engagements and encourage genuine, long-term stewardship. Extended voting rights for long-term shareholders could also balance influence toward those invested in sustained success. The reality is that activism will remain a central force in modern capitalism, but the challenge is in how it’s channeled. The surge in 2025 has proven that activism can drive accountability but also expose a fragile dependency on speed and optics. If boards, investors, and regulators cannot recalibrate, corporate governance in the coming years may grow louder and faster, but not necessarily smarter.