2023 Activism Recap

2023 marks the first full year in which the universal proxy rules have been in effect. As most know by now, a key change brought about by the rules is the required use of the universal proxy card in a contested director election—which enables stockholders to vote for their preferred combination of directors, including by mixing and matching among the company and dissident nominees, regardless of which side solicited their vote. Many practitioners predicted that the implementation of the universal proxy rules would have a substantial impact, resulting in increased US activist activity, decreased spending by dissidents on proxy contests, and larger slates of director nominees, among other changes. However, year-end numbers show that such predictions generally missed the mark—by most metrics, there were few notable year-over-year changes. Despite this, there is one key development that emerged in 2023 that merits attention: companies rejected dissident director nomination notices for non-compliance with advance notice bylaws at record rates. This has caused an increasing number of dissidents to challenge such rejections in court. Below, we recap the 2023 numbers and provide key takeaways in light of court guidance on advance notice bylaw provisions and nomination notice rejections.