When Phillips 66 shareholders delivered a split decision in May 2025—electing two of Elliott Management’s nominees while keeping two company directors—it marked a pivotal moment in activist investing. The energy giant narrowly survived what observers called a “barroom brawl” in the boardroom, with Elliott achieving something unprecedented: winning board seats at an S&P 500 company without support from the “Big Three” index funds BlackRock, Vanguard and State Street. For Elliott, it was their first-ever proxy vote in a U.S. public company after more than 100 activist campaigns, proving that even the most seasoned activists can still face costly, uncertain battles. The Phillips 66 fight exemplifies today’s proxy landscape, where activist campaigns continue at record levels but companies are increasingly willing—and able—to fight back effectively.
In an era of intensifying shareholder scrutiny, shareholder activism is a growing threat for many companies. At our recent Board Forum, Howard Brownstein, CEO of The Brownstein Corporation and former board member, P&F Industries, A.M. Castle and PICO Holdings; Pat Tucker, Americas head of M&A, activism & governance at FTI Consulting; and Derek Zaba, partner, co-chair, shareholder activism and corporate defense practice at Sidley Austin led an interactive session walking board members through the anatomy of a proxy fight, outlining critical steps to prepare, respond and—if necessary—defend under pressure.
1. Understand that activism doesn’t always mean conflict. Companies often find themselves aligned with activists’ goals—even if they’re approached with aggressive tactics. Zaba emphasized that a measured evaluation is essential: “Half the time, and I shouldn’t say half the time, but a number of times that activists show up, the company doesn’t disagree with them… Maybe the answer is, we just need to get through this because we’re heading in the same direction.” Boards must separate emotional reactions from fiduciary responsibilities. Brownstein reminded attendees to “avoid the tendency to automatically have any bias against what the activist wants to do… The whole thing may be a blindingly brilliant idea. Who knows? The point is, you’re a fiduciary.”
2. Maintain control of shareholder communications. Uncoordinated board member responses to activist outreach can be risky. Brownstein recommended boards formalize how communications are handled: “It’s not a bad idea if you are in a publicly traded company board to have a shareholder communication policy in place… so that you don’t have every board member talking to an activist.”
3. Don’t be rushed into reactive decisions. As nomination deadlines approach, pressure from activists often increases—but boards should resist being coerced into hasty moves. As Tucker warned, “Any move you make with or without the CEO will be read as a meaningful signal of where the board is going.” Zaba added, “If the board thinks this is the person that should be running the company, that’s tough to settle… Just because one 1 percent or 5 percent shareholder thinks that doesn’t mean it’s the right answer.”
4. Be ready to engage, all the time. Preparation must, by nature, be proactive. “The best work is done on a clear day,” Brownstein said. Tucker stressed the basics: “You really need to know who your team is. A legal advisor, your PR advisor. And you should know who’s that first phone call.” He added, “It’s easy for an activist to write a press release in a day. Sometimes, it can take a company a week. You don’t really get that time.”
5. It’s not always a fair fight. Activists may present misleading or incomplete narratives. Tucker emphasized the asymmetry: “A big piece of activism is information asymmetry,” he said. “[The activist] has plans, it’s likely worked on them for years, it knows where it’s going, but it is not going tell you everything.”
And finally, no matter what, keep the focus on the business. While proxy battles demand attention, Brownstein reminded directors of their core job: “There’s a company to run,” he said. “Don’t forget your main job is oversight of the company.” Zaba agreed: “There is no silver bullet to win a proxy contest, but there is a silver bullet to lose one, and that is to absolutely blow the quarter right before the vote.”
