While companies typically spend the time and resources to understand and engage their institutional investors, retail shareholders are often overlooked or simply viewed as passive participants. Historically, proxy contests have been fought and won in the offices of major institutions, where a handful of votes decided the outcome of multibillion-dollar questions. Retail shareholders, who were typically dispersed, unpredictable, and often disengaged, easily fell into the background during the chaos of proxy campaigns. The assumption that retail shareholders would not vote (or would not vote with management’s recommendation) became embedded in corporate strategy. That assumption, however, no longer holds.
The rise of discount and zero-commission trading platforms, the democratization of financial information, and a cultural shift toward individual investing have all contributed to a more active and informed retail base. The pandemic years accelerated this trend, as millions of new investors entered the market and public companies transitioned from in-person annual meetings to virtual meetings, effectively removing the cost and time barriers that had limited participation. Currently, retail participation makes up a meaningful share of trading volume and, for many companies, a decisive portion of the shareholder base.
The emergence of a new generation of retail investors has significant implications for how companies manage activism. Companies are recognizing that retail investors, while often focused on different issues compared to large institutional investors, are motivated and capable of making their voices heard when prompted.
A company’s ability to mobilize individual shareholders can tip the scales in an activism situation. Therefore, it is more important than ever for the Company to understand its retail shareholder base, their priorities, and how to engage them if confronted with a proxy contest, “vote no” campaign, hostile bid, or broader governance challenge. This memorandum explains how the Company can effectively engage retail shareholders and amplify the Company’s activism preparedness in the coming proxy season in light of recent retail voting developments.
1. Modern Retail Shareholders
The modern retail shareholder looks different from the retail shareholders companies engaged with twenty years ago. Real-time financial news, intuitive stock-tracking tools and apps, and an endless supply of analysis have enabled retail shareholders to develop an increased level of financial fluency. This is further supported by platforms that translate complex market dynamics into accessible commentary, such as podcasts and newsletters geared toward amateur or hobby investors. Retail shareholders also benefit from the ability to share ideas with fellow investors through online communities, forums, and social networks. This constant exchange of ideas has brought the energy of the trading floor to the broader investing public, shaping sentiment in ways that can ripple quickly through the market.
Equally transformative is the ease with which companies can reach investors directly. Companies increasingly livestream earnings calls and annual meetings, allowing investors to join from anywhere and participate through digital Q&A sessions. Additionally, companies have utilized direct-to-consumer communication through social media to engage with customers and investors. This accessibility gives retail shareholders a sense of proximity to management that was once reserved for institutions and reinforces their perception of ownership and participation. The result is an investor base that feels connected to the company in which it has invested.
2. Retail Shareholder Engagement
Similar to institutional investors, retail shareholders are motivated by performance and focused on tangible results, including, among other things, earnings, dividends, and share price. However, their decisions can also be shaped by less quantifiable factors, such as their trust in management, the authenticity of a company’s messaging, their relationships with the company, and leadership’s response to pressure. A clear, credible story about strategy and results resonates powerfully, but equally important are tone, transparency, and the sense that management is acting in good faith. Engaging retail shareholders effectively, particularly during a proxy campaign, depends on a company’s ability to understand this base, take advantage of evolving communication channels, cultivate lasting relationships rooted in credibility and transparency, and simplify the mechanics of voting. Building the right team of experienced advisors can make each of these steps more effective and help ensure that engagement efforts are coordinated and persuasive.
A. Identifying Retail Shareholders and Their Priorities
Effective engagement starts with understanding the investor base. The Company should know who its retail shareholders are, how they hold their shares, and how they have voted in the past, as well as why they choose to invest, what drives their decisions, and how they respond to different types of communication. Those questions should be considered long before a proxy contest becomes a possibility.
Identifying a company’s shareholders and how their shares are held is not as simple as it seems. Rather than hold shares directly, many retail shareholders hold their shares in “street name,” meaning their shares are registered under a brokerage or custodian. This structure complicates direct outreach because companies may not have contact information for a large percentage of their base.
Additionally, brokers, custodians, and other securities intermediaries cannot disclose to a company the identity of any beneficial owners who object to that disclosure (referred to as objecting beneficial owners or OBOs). Federal securities law prohibits companies from contacting OBOs directly. A company may contact shareholders or beneficial owners who do not object (referred to as non-objecting beneficial owners or NOBOs) directly, but SEC rules require that proxy materials be forwarded to them by the intermediaries. As a result, the OBO-NOBO distinction adds further complexity because companies do not know what portion of their retail ownership is made up of OBOs and cannot contact those investors directly. (For more information, see Securities Transfers and Proxy Voting on Practical Law.)
To reach this dispersed audience, companies often work through intermediaries, such as brokers, custodians, and proxy solicitors, who can help identify and mobilize retail shareholders. Engaging activism counsel and an experienced proxy solicitor early can also help a company test outreach strategies and better understand how different segments of investors are likely to respond. Advisors can provide insight into historical voting patterns and predict where shareholders are likely to align with management and where additional engagement may be needed to clarify the company’s strategy and strengthen support. (For more information, see Developing Relationships with Proxy Advisory Firms on Practical Law.)
As to shareholder priorities, understanding both the “hard” (financial) and “soft” (non-financial) motivations of a company’s shareholder base helps tailor the messaging and broader investor relations strategy. Although some investors may have been drawn to consistent dividends or stable cash flow, others may be focused on innovation and the company’s position on environmental or governance issues. Knowing what drives each segment of the shareholder base allows management to craft communications that speak to those priorities in clear, credible terms, which in turn builds relationships with shareholders.
Investing early in analytics and proxy-solicitation data to understand the company’s ownership composition, historical voting behavior, and engagement preferences can become key to mobilizing shareholders when the time comes. Just as importantly, understanding the motivations behind those numbers helps management build genuine relationships with shareholders. Together, these insights allow management to focus communication where it matters most and to anticipate potential vulnerabilities long before an activist appears.
B. Communication Strategies
A company’s approach to engagement must evolve along with its shareholder base. Mobilizing shareholders, particularly during a proxy campaign, requires companies to pursue an integrated communication strategy that spans both established and emerging platforms. Investor calls, press releases, and proxy materials remain effective, but with the right tools and advisors, companies can expand their reach through digital and social media channels.
During a proxy campaign, digital platforms provide a way to “get out the vote” at scale. Companies can leverage customized websites to drive the narrative of a proxy campaign and to house campaign materials neatly in one place, ensuring ease of access for shareholders. Companies can also use social media channels such as LinkedIn, Instagram, Facebook, or X to highlight the stakes of a proxy campaign, humanize management’s position, and reinforce the company’s strategy in language that resonates beyond the institutional audience. Through YouTube, podcasts, and virtual events, companies can put senior leaders directly in front of retail shareholders, allowing management to explain decisions, dispel misinformation, and make the case for long-term value creation in a more personal and accessible format.
When companies align messaging across social media, digital, and traditional channels, they reinforce credibility and define the narrative. Advisors, including public relations firms, proxy solicitors, and legal counsel, play a vital role in shaping and coordinating this outreach. They help ensure accuracy, regulatory compliance, and tone, while providing an external perspective on how messages resonate across different investor segments. Engagement with retail shareholders is about more than visibility — it is about connection. Companies that engage authentically and communicate with purpose turn outreach into alignment and awareness into votes.
C. Including Retail Shareholders in the Corporate Narrative
Ultimately, mobilizing shareholders depends on how connected they feel to the company and its leadership. During a contested campaign, investors who view the company as their company and who see themselves as part of its success are far more likely to stand with management. The goal is to make shareholders feel that a challenge to the company’s direction is not only an attack on the board but also a test of the company’s shared vision and values. That sense of ownership does not happen overnight. It begins long before an activist appears, through regular updates, transparent disclosures, and consistent communication that builds credibility and trust over time. Retail shareholders who already believe in management’s story are far less likely to be persuaded by an activist narrative.
Several companies have demonstrated how integrating shareholders into the corporate narrative can shape the outcome of a campaign. In its 2017 proxy contest with Trian Partners, Procter & Gamble, facing a razor-thin margin separating victory and defeat, focused heavily on reminding shareholders that the company’s future was a shared investment, not a debate between management and an outsider. That framing resonated with retail shareholders and ultimately helped secure the company’s narrow victory.
Similarly, during the 2024 proxy contest, Disney reinforced the message that the company and shareholders were in the fight together when it invoked feelings of nostalgia by releasing statements from influential Disney supporters such as George Lucas, former Disney CEO Michael Eisner, Walt Disney’s family members, and Roy O. Disney’s grandchildren. The statement from Roy O. Disney’s grandchildren said, “[activists] have little to no knowledge of what Disney truly means to people like you,” further driving home that shareholders are part of the company.
At the same time, activists have become adept at appealing to emotion as well as logic. Activists often frame campaigns around accountability, purpose, or fairness, and perceived failures of management to uphold those ideals. Companies that articulate their purpose clearly and tie it to tangible results are better positioned to withstand those appeals. Retail shareholders in particular respond to authenticity. They want to believe that management both understands and believes in the company’s mission, and when they feel genuinely included in that story, they are less likely to be swayed by activist claims that the company is unresponsive or out of touch.
Activism, at its core, is about more than votes. It is about relationships. Even small gestures, including town halls, accessible webcasts, or direct responses to shareholder questions, can have outsized impact. Over time, these efforts reinforce trust and belonging. When investors feel heard and are part of the narrative, they are not only voting for a slate of directors but also defending a company they helped build.
D. Shareholder Voting Processes
Even the most compelling story has limited impact if shareholders do not vote. Connected and informed retail shareholders may still disengage if the voting process feels cumbersome or is confusing. Simplifying that process is one of the most direct ways to strengthen retail participation.
During a proxy contest, companies must provide clear, concise voting instructions, reminders, and user-friendly tools that guide shareholders through the process. Additionally, companies must employ a streamlined outreach strategy so investors do not feel overwhelmed by mixed messages. Engaging experienced proxy solicitors and communications advisors early can help companies use what they already know about their shareholder base to make this outreach smarter and more effective. Data gathered through ongoing analysis (including ownership composition, historical voting patterns, and participation trends) can reveal which groups are most responsive and which may require additional attention. Retail shareholders who have consistently supported management in the past can be reminded and re-engaged, while those who have abstained can be targeted with clearer explanations of what is at stake. Companies should direct their resources and efforts where they will have the most impact.
Public company issuers are beginning to explore creative ways to increase retail voting participation. Exxon Mobil Corporation’s recently proposed retail voting program offers a clear example of this principle in practice. In September 2025, the SEC confirmed that it would not recommend enforcement action if Exxon Mobil implemented this program, which allowed retail shareholders to authorize the company to vote their shares in line with the board of directors’ recommendations.
In its no-action request letter, Exxon Mobil noted that nearly 40% of its outstanding shares were held by retail shareholders, yet only about one-quarter of those shares were voted at the previous annual meeting. Further, Exxon Mobil stated that over the five years preceding the request, approximately 90% of retail shareholders who did vote supported all of the board’s recommendations. Exxon Mobil recognized a clear disconnect between retail sentiment and retail turnout and sought to close that gap by making participation more accessible. (For more on the Exxon Mobil retail voting program, including Exxon Mobil’s obligations, see SEC No-Action Letter Allows Exxon Mobil to Implement Retail Voting Program on Practical Law.)
While it is unclear how Exxon Mobil’s program will play out and the adoption of a retail voting program like Exxon’s may not be practical or advisable for all public company issuers, the lesson is straightforward. Companies should seek to remove obstacles that prevent shareholders from acting on their support. Convenience alone will not guarantee engagement, but a targeted outreach strategy can make the difference between an investor who intends to vote and one who actually does.
3. Key Takeaways
The landscape of shareholder activism is continually changing and so are the tools required to navigate it. For boards and management teams, success in navigating a contested proxy campaign depends on preparation long before an activist appears. Companies best positioned to withstand activist pressure are those that know who their shareholders are, communicate with them effectively, make participation accessible, and maintain relationships that extend beyond the proxy season.
Understanding the composition and motivations of the shareholder base provides the foundation for all forms of engagement. Meeting investors where they are, through both traditional and digital channels, ensures that the company tells its story. Simplifying the voting process turns communication into action, while consistency and transparency build the trust that keeps shareholders invested in the long term.
Ultimately, shareholder engagement is a relationship, not a checklist. Retail shareholders are no longer passive participants. They are active stewards whose voices can shape outcomes and reputations alike. In an era when every vote counts and every voice carries, understanding and empowering all shareholders can be the difference when faced with a formidable activist.
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I look forward to discussing this at your convenience.
