A thought-provoking read, Teneo’s “A Proxy Odyssey: What Will 2030 U.S. Proxy Season Look Like?” forecasts the future of proxy voting and shareholder engagement, assessing the likely implications and unintended consequences of recent and anticipated developments—including investors’ use of AI for proxy voting recommendations and the SEC’s withdrawal from the Rule 14a-8 no-action process.
Predictions include:
Most Large Institutional Investors Will Utilize AI instead of Proxy Advisors—With JPMorgan and Wells Fargo already announcing plans to use AI in lieu of proxy advisors for voting recommendations, institutional investor adoption of AI for proxy research and analysis is likely to accelerate. That trend, combined with the SEC’s recent policy shift on Rule 14a-8 no-action letters and its indication of further reduced involvement, will increase uncertainty around voting outcomes and heighten the importance of understanding investors’ policies and priorities.
Smaller Institutional Investors Will Continue to Rely on Proxy Advisors—Smaller investors are unlikely to have the incentives or resources to develop proprietary AI platforms and will continue to depend on proxy advisors. As a result, benchmark policies may increasingly reflect the perspectives of labor and government pension funds and European institutional investors that often diverge from management recommendations, reinforcing the importance of continued engagement in proxy advisor policy development and engagement.
Social Media Campaigns, Proxy Access and Other Activist Tactics Will Replace Shareholder Proposals—As regulatory changes continue to impede shareholder proposals—already evident this proxy season—investors may increasingly turn to vote-no campaigns, proxy access, floor proposals, social media, and litigation to advance their positions. Companies should continue engaging constructively with reasonable proponents and regularly reviewing shareholder rights provisions in their governance documents and practices.
Some Institutional Shareholders May Abstain from Proxy Voting Entirely—Regulatory developments promoting voting optionality could make it more difficult to meet quorum or supermajority requirements and amplify the influence of shares voted against management. This possibility underscores the importance of carefully evaluating reforms that may reduce institutional voting participation.
Robust Shareholder Engagement Will No Longer Be Optional—These trends will make direct engagement essential. In light of the SEC’s 2025 13D-G guidance, companies may need new approaches, including deeper knowledge of investor policies and priorities, strong relationships with stewardship teams, attention to pass-through voting dynamics, outreach to smaller investors, earlier engagement requests given resource constraints, and retail investor strategies.