Proxy Pressure

Tariffs. AI. Tariffs. Financial performance. Tariffs. Board change. Tariffs. Climate and sustainability. And, yes, tariffs. 

As firms head into the thick of proxy season, which runs from mid-April to mid-June, one huge, dark, cash-draining cloud hangs over leaders and directors. You guessed it—tariffs. But that’s far from the only cloud on the horizon. Investors are expected to press leaders on issues ranging from how they are allocating capital for AI, to how they are navigating a new political environment, to how they are managing costs. Also high on the list of priorities for investors, especially activists, is board change. In one recent survey, 40% of investors managing a collective $55 trillion in assets ranked board quality and effectiveness as a top priority this proxy season. “There’s a more tense feeling to this proxy season,” says David Larcker, director of the Corporate Governance Research Initiative at Stanford Graduate School of Business.

Tierney Remick, vice chairman and co-leader of Board and CEO Services at Korn Ferry, agrees. She says leaders, directors, and investors alike are all focused on stabilizing and preparing the business for the impact of tariffs—the trouble is that no one knows what that impact will be. “Everyone is nervous about how to manage through the uncertainty,” says Remick. While capital allocation is always a concern, Remick anticipates investors questioning directors more pointedly around balancing investments with returns, driving innovation, and managing their asset portfolios. 

As investments in AI grow, investors want to know how directors are overseeing its impact on business-model changes and workforce needs. Korn Ferry vice chairman and co-leader of board services Dennis Carey expects debate around M&A strategy, asset sales, and hiring or layoff plans, among other questions. Or as he puts it, “Are firms holding or folding assets, investing more or less, and keeping people or letting them go?” 

Bruce Goldfarb, President and CEO of proxy-solicitation firm Okapi Partners, says climate and diversity proposals are still very important to investors as well. But he doesn’t expect them to be as “noisy” as in past proxy seasons, when such proposals were alternately cheered or decried. To be sure, climate-related risk and opportunity ranked as the top priority in the survey among investment managers, while workforce and board diversity ranked third. “Leaders and directors need to be aware that investors still have a view on these issues,” says Goldfarb. “They may just be less willing to express it publicly.”

CEO and director succession is another spotlight issue for investors this proxy season. Indeed, some turnover has already occurred in the boardroom, with activists winning 51 board seats in proxy contests globally so far this year, a 34% year-over-year increase. Michelle Lowry, a professor of finance at Drexel University’s LeBow School of Business, says political and economic uncertainty is helping to accelerate board transformation. “Shareholders want to know the board has the right expertise to think through these situations and evaluate the inevitable trade-offs,” she says. 

CEO turnover is accelerating as well, with 646 leaders exiting in the first quarter of 2025, a 4% increase over last year and a quarterly record. The top two reasons for leaving were “stepping down” and “resigned,” in some cases as a result of activist activity. Experts say shareholders, especially activists, are moving faster to remove CEOs for poor performance. Meanwhile, some leaders are choosing to leave rather than navigate through the volatility and uncertainty of the business and political landscape. As a result, succession planning is even more of a priority than in years past, says Joe Griesedieck, vice chairman and managing director of board and CEO services at Korn Ferry. “There’s a lot more to discuss in terms of making sure successors have the transformational capabilities needed for the future,” he says. 

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