On the Edge of Their (Director) Seats

For some directors, this year’s proxy season could turn out to be their last—whether they want it to be or not. 

After waging a record number of campaigns last year, activist investors have managed to win 51 board seats globally in the first quarter of 2025. That’s 34% more than last year at this time, and almost halfway to the 119 seats activist took in all of 2024. Forty-two more board seats will be contested this proxy season, which traditionally runs from April thru June, and based on the success rate of campaigns, directors are on the edge of their seats, says Bruce Goldfarb, president and CEO of proxy-solicitation firm Okapi Partners. “There is a heightened focus among investors on board performance,” he says.

Indeed, with markets in turmoil, a trade war looming, and questions about corporate strategy related to AI and other areas, board change now ranks above M&A as the top objective for activist campaigns. Board change has been the focus of more than half of all campaigns this year, well above the four-year average of 35%. 

Against that backdrop, experts say activists will likely weigh individual-director performance against a host of factors, such as age, tenure, experience, and skills. Some campaigns may target compensation as well. To be sure, overall increases for directors remain low, at about 4% last year. But directors at smaller firms (those with $50 million to $500 million in revenue) got a 10% raise last year. “If a director is in a precarious position, activists will look for anything to attack,” says David Larcker, Director of the Corporate Governance Research Initiative at Stanford Graduate School of Business. 

Irv Becker, vice chairman of executive pay and governance at Korn Ferry, says compensation usually becomes an issue for directors only if it is outsized or egregious relative to the firm’s size or peer group. Given the rapid pace of transformation, along with the need of many boards for specific skills and experience, firms may have to pay a premium to attract the right director, he notes. Certainly, the toll of the job has shot up, with many global issues, like tariffs, becoming hot-button board topics. “Most investors don’t appreciate how hard of a job being a director has become,” says Dennis Carey, vice chairman and co-leader of board services at Korn Ferry.

Okapi’s Goldfarb notes that investors pay close attention to what directors do with their equity. Holding shares—or, even better, buying shares with their own money—shows that they’re vested and confident in the company’s strategy and long-term performance. Selling is generally viewed as a sign of trouble or tough times ahead, unless personal circumstances, such as estate planning, are involved.  Since November’s election, data shows that directors selling shares are outpacing those buying them by a ratio of nearly 12 to 1. 

Over the past twenty years, that ratio is second oninsertly to that of the market’s post-COVID bull run in 2021. While Okapi’s Goldfarb thinks increased director compensation is justified, he does worry that the high level of insider sales could pose problems for directors facing challenges. “It could be a significant talking point for an activist,” he says. 

Learn more about Korn Ferry's Board and CEO Services capabilities.