Shareholder Activism in the Utility Sector: Risks, Responses, and Outlook

Shareholder activism in the utility sector has intensified in recent years as activist funds that once regarded utilities as impractical targets have increasingly engaged with them to influence strategy, capital allocation, board composition, and leadership. Since 2017, Elliott Investment Management, Carl Icahn, Starboard Value, and other prominent activists have run public campaigns at major public utilities.

For boards and management teams of publicly traded utilities, understanding the evolving activism landscape, identifying vulnerability indicators, and implementing proactive preparedness measures have become important components of company oversight. This article analyzes the structural and market dynamics that shape campaigns in the utilities sector, examines the interaction between activism and the utility regulatory framework, and offers practical guidance for utilities preparing for activism in 2027 and beyond.

Shareholder Activism Continues to Grow Across Sectors

Shareholder activism set records in 2025 and has continued to accelerate in 2026. Barclays counted 255 campaigns globally in 2025 at companies with market capitalizations above $500 million, surpassing the prior record of 249 set in 2018, with the United States accounting for 55% of activity (141 campaigns, up 23% year over year) and a record number of campaigns launched in the third quarter.¹ This momentum carried into 2026. Lazard recorded 184 new campaigns globally in the first half of 2026 — the busiest six-month period on record — up 20% year over year and 38% above the five-year first-half average, with North America’s 94 campaigns also a record and US activity up 24%.² Barclays’ narrower dataset shows the same trajectory, with 136 campaigns in the first half of 2026 compared with 130 a year earlier.³

Several key features of the current environment bear directly on all companies with activism risk, including utilities:

• At larger company targets, activity is increasingly concentrated among a group of prolific activists. According to one market observer, 72 unique activists launched campaigns in the first half of 2026, below the four-year average of 97, the ten most active accounted for 41% of campaigns, and Elliott, Starboard Value, and Engine Capital collectively obtained nearly one-third of all board seats in these campaigns, each of them through a settlement.
• Activists are focusing on strategic questions such as capital allocation and M&A. Strategy-focused demands appeared in approximately 25% of campaigns in the first half of 2026, more than twice their historical share, M&A-related demands increased in the second quarter, and approximately 20% of public company campaigns called for an outright sale of the company.
• Leadership change remains a prominent campaign objective. According to one market observer, 32 US CEOs resigned in 2025 within a year of an activist campaign, and 18% of US campaigns were initiated following a CEO’s departure.
• Settlement remains the dominant path to the boardroom. Among larger companies, settlements in the US reached a record 52 in 2025, and only two proxy fights and one major withhold campaign went to a final vote in the first half of 2026, down from eight a year earlier.⁴

Activism in the Utility Sector

Utilities were rarely targeted by activists for most of the modern activism era. Regulated returns constrained the upside available to an activist, state and federal approval requirements complicated any significant share bloc acquisitions, and a dividend-oriented shareholder base presented an unlikely audience for a breakup thesis. That perceived immunity eroded over the past decade, and shareholder activism has become a feature of the utility sector. With campaign activity at record levels across the market, well-resourced activists deploying capital at scale, and M&A-related demands rising, the conditions that drew activists to utilities over the past several years are only intensifying.

Several patterns emerge from a review of activist campaigns in the utility space: 

• The size of the targets has not dissuaded activists. Many of the targets have included some of the largest utilities in the US. 
• Activists are well resourced, and several — Elliott and Carl Icahn in particular — are repeat players in the sector that know how to navigate the regulatory landscape and will use data mined from regulatory dockets against utilities as part of their campaigns. 
• Nearly every campaign has been resolved through settlement rather than a shareholder vote. Several of the country’s largest public utilities have conceded board seats without a contested election, in several cases within weeks or months of the activist’s public or private emergence. Utilities operate in a heavily regulated and politically charged environment, making them vulnerable to the negative attention that a proxy contest will often bring. Activists, who prefer to deliver results without the expense and risk of a full-fledged proxy contest, are well aware of this, and it makes utilities an attractive target.  
• The campaigns delivered results — board seats, strategic reviews, asset sales, and leadership changes — and results of this kind draw the attention of other activists.

Drivers of Activism in the Utility Sector

The utility sector presents a distinctive set of characteristics that makes it increasingly attractive to activists.

The Capital Supercycle and Recurring Equity Needs

US investor-owned utilities plan to spend on the order of $1.3 trillion on infrastructure between 2026 and 2030, driven by data center and industrial load growth, electrification, generation replacement, and grid hardening.⁵ Programs of this size often cannot be funded from internally generated cash flow alone; they require common equity, hybrid securities, and minority stake sales, each of which dilutes existing shareholders or reallocates value. Activists in the utility space know this, and they may have their “alternative financing plan” (e.g., monetizing a transmission stake instead of issuing common stock, revisiting the dividend, or selling a non-core business) ready and waiting for the right moment — when a capital expenditure increase surprises the market and exerts downward pressure on the target’s share price.

Private Capital Premiums and the Sum-of-the-Parts Thesis

Private infrastructure investors have been acquiring utilities and utility assets at prices well above public market valuations. Blackstone Infrastructure agreed in May 2025 to acquire TXNM Energy for $61.25 per share, a 23% premium to its unaffected 30-day average trading price; a partnership led by CPP Investments and Global Infrastructure Partners completed its $6.2 billion take-private of ALLETE in December 2025; and a consortium led by GIP and EQT agreed in March 2026 to acquire AES at an enterprise value of approximately $33.4 billion, a transaction AES stockholders approved in June 2026. Minority stakes in transmission businesses have changed hands at earnings multiples well above those at which the parent companies trade: AEP sold a 19.9% interest in two of its transmission subsidiaries to KKR and PSP Investments in 2025 at 30.3 times trailing earnings, a multiple the company itself described as a significant premium to its stock price. To an activist, the gap between private market values and public trading multiples is the core campaign thesis: The pieces are worth more than the whole. Campaigns built on that premise press boards to monetize assets, separate businesses, launch formal strategic reviews, or explore a sale of the company.

Execution Risk in a Politically Charged Environment

Utilities are executing capital plans in an unusually demanding environment. Electricity affordability has become a prominent political issue ahead of the 2026 midterm elections. Meanwhile, and against that political backdrop, investor-owned utilities requested approximately $31 billion of rate increases in 2025 alone, and utility bills have risen roughly 40% since 2021.⁶ New generation faces multi-year interconnection queues, large-load customers such as data centers are prompting new state rules (including Texas’s Senate Bill 6), customers and regulators are showing fatigue with successive rate increases, and storm recovery costs continue to climb. In this setting, a delayed project or an adverse rate case becomes evidence an activist can cite that management is not executing its strategic plan and that a change is warranted.

Transaction-Oriented Activism and Deal Pressure

Because genuinely hostile acquisitions of utilities are exceedingly rare — a function of the complex regulatory framework, among other factors — activists generally position themselves as catalysts for negotiated transactions that boards might not otherwise pursue. For example, Elliott’s campaigns at Evergy and Duke sought a sale and separation, respectively, and Starboard’s campaign at Algonquin Power & Utilities Corp. sought a divestiture of non-core assets. 

The Regulatory Overlay: Deterrent and Battleground

The utility regulatory framework shapes activism in the sector in several key ways.

Under the Public Utility Holding Company Act of 2005, any person that acquires 10% or more of the voting securities of a public utility or of its holding company becomes a “holding company,” and the Federal Energy Regulatory Commission (FERC) has generally treated an acquisition of 10% or more of a public utility’s voting securities as conveying control that requires prior authorization under Section 203 of the Federal Power Act.⁷ By default, FERC’s regulations grant a blanket authorization for acquisitions that leave the investor below 10% of ownership. FERC has granted case-specific authorizations permitting large passive asset managers to hold up to 20% of ownership subject to conditions, including that the investor remain eligible to report on Schedule 13G and refrain from seeking board representation — conditions an activist cannot satisfy.⁸

A shareholder seeking board representation through activist engagement can also trigger FERC review. FERC authorization was required before Carl Icahn’s designees could vote at FirstEnergy in 2021 and at AEP in 2024, notwithstanding stakes below 10%. 

At the state level, state utility regulatory commissions in many jurisdictions require prior approval to acquire control of a utility or its holding company, with “control” presumed at thresholds that vary by state. Maryland’s statute, for example, reaches any acquisition of the capability to exercise “substantial influence” over a utility.⁹ Nuclear plant licenses require Nuclear Regulatory Commission (NRC) consent for indirect transfers of control and premerger notification under the Hart-Scott-Rodino Act, and where relevant, the Committee on Foreign Investment in the United States (CFIUS) review applies as well — all of which add significant regulatory complexity.

Despite the challenges, activists have adapted to the regulatory framework. Activists generally stop share acquisitions well below 10%, supplement their positions with cash-settled swaps for economic exposure, and rely on the fact that index funds and a small number of large institutions decide contested votes. Over the past decade, sub-5% positions were sufficient to obtain board changes at several of the largest utilities. Where board representation requires regulatory approval, activists have simply accepted non-voting seats while approvals are pending, as Icahn’s designees did at both FirstEnergy and AEP. 

Regulators themselves have also become part of the proxy contest landscape. The Kansas and Missouri utility commissions opened dockets to examine Elliott’s influence at Evergy; the Maryland commission spent two years examining whether Icahn’s FirstEnergy designees gave Icahn “substantial influence” over Potomac Edison before concluding in 2023 that they did not. Consumer advocates protested Icahn’s Section 203 application at AEP after the CEO’s departure. That scrutiny did not deter any of the activists involved: Elliott continued to press Evergy toward a sale and later sought FERC approval to increase its NRG stake to 20%, and Icahn’s FirstEnergy designees remained on the board until 2023.¹⁰

Activists have also learned to use the regulatory record to their advantage. Icahn’s Southwest Gas campaign used a prior Nevada commission staff report finding that the utility had disregarded a commission order on pipe replacement as one of its arguments against management.¹¹ Companies should assume that rate case filings, commission orders, and intervenor testimony may be mined by activists for campaign material.

How Activists Profile Utilities

Activists searching for utility targets review a broad range of performance, financial, structural, and governance indicators.

On performance and valuation, activists compare total shareholder return and earnings multiples against a target’s peer group, as this data generally signals underperformance to the market. Activists can also act opportunistically and engage in swing trading, paying particular attention to targets with stock prices that have retreated from recent highs. A target trading significantly below a 52-week high can serve both as an attractive entry point and as a ready-made “the stock is down” narrative. 

On the balance sheet and capital plan, activists will analyze the size of the capital program relative to market capitalization, the proportion to be funded with equity, credit-metric headroom, and the sensitivity of earnings guidance to financing assumptions. Rate case outcomes, earned versus authorized returns, and regulatory lag are also examined for evidence of execution failures or future risk. When it comes to evaluating a utility’s portfolio composition and assets, activists look for units in the business that private capital may, based on comparable deals in the market, value at a higher multiple than the public market trading price. While governance considerations are seldom the sole reason for an activist campaign, activists will assess factors such as director tenure, board leadership structure, refreshment history, say-on-pay and director support trends prior to initiating a campaign against a target.  

Preparedness for Activism at Utilities

The companies best positioned to preempt and manage activist situations are those that assess vulnerabilities in advance, build durable shareholder relationships, and establish response frameworks before pressure emerges.

• An internally conducted vulnerability analysis, performed before an activist emerges, is critical. For utilities, the analysis should address, as applicable, the capital plan and its financing mix, equity needs and dilution, the private market value of separable assets relative to the consolidated multiple, rate case and regulatory execution, load-growth assumptions, dividend policy, governance profile, and peer benchmarking.
• Companies should be prepared to explain capital allocation and financing decisions. Transparent communication regarding the sequencing of equity, hybrid, and asset sale financing, the rationale for retaining or monetizing particular assets, and the standalone value of the integrated enterprise can preempt the alternative plan an activist would otherwise present.
• Develop a clear view of the company’s long-term standalone strategy. Companies should develop or update an internal assessment of the standalone strategy against the alternatives activists commonly propose, including transmission monetization, business separations, and a sale of the company, and understand the regulatory feasibility and timeline of each.
• Boards should periodically assess and refresh their governance profile. Directors with tenures far above the index average, a combined chair and CEO structure, and declining say-on-pay or director support are the indicators most likely to attract a withhold campaign. Refreshment undertaken on the board’s own initiative is far more persuasive than refreshment conceded under pressure.
• Treat the regulatory framework as part of the structural defense profile. The approval requirements described above — FERC review under Section 203, state change-of-control statutes, NRC consent, and HSR and CFIUS review — make a hostile acquisition difficult from a regulatory perspective and effectively cap an activist’s voting stake below 10%. However, these protections do not necessarily keep a shareholder activist out of the boardroom. Activists can build sub-10% positions supplemented with swaps, run their proxy campaigns through the annual meeting, and accept non-voting seats or observer roles while approvals are pending. Boards should therefore map in advance the federal and state approvals and the timelines that a change in control, a non-independent board designee, or each transaction an activist is likely to propose would require, recognizing that because the framework protects against an acquisition rather than a proxy contest, the bylaws, governance profile, and shareholder engagement remain the operative default structural protections to an activist campaign. 
• Modernize the bylaws on a clear day. Universal proxy and the Delaware Supreme Court’s 2024 decision in Kellner v. AIM ImmunoTech have reset expectations for advance-notice provisions: narrowly defined terms, disclosure aligned with Schedule 13D, an affirmative duty to update, and procedures addressing withdrawn or non-compliant solicitations.¹² Companies with shareholder special meeting rights should confirm that request procedures, ownership definitions, and record-date mechanics are in place. Amendments adopted in the ordinary course, well before the nomination window opens, are considerably more defensible than amendments adopted with a dissident at the door. 
• Companies should prioritize proactive shareholder engagement. Dissent that surfaces in a say-on-pay vote or a director’s support level rarely originates with proxy advisors alone; it reflects the pay and tenure policies of large institutions whose votes will decide a contest. Off-season engagement should address those policies directly and document the board’s responsiveness.
• Scenario planning and response protocols are essential. A response team, stock and website surveillance, a “break-the-glass” plan, and a decision tree for responding to a Schedule 13D, a public letter, or a nomination notice should be in place before the advance-notice window opens. For utilities, the plan should also address communications with regulators, legislators, and customers, who will be an audience for any campaign.
• Treat settlements as a pause rather than a resolution. Standstills expire and designees depart, and the record across sectors shows that activists frequently return when they do. Preparedness should not lapse while a cooperation agreement is in force.

While activists may identify real areas of vulnerability, the existence of such risks does not mean an activist’s proposals are appropriate, workable within the regulatory framework, or aligned with long-term shareholder and customer interests. Boards and management teams nonetheless benefit from understanding the activist’s thesis and underlying assumptions. Careful review of the analysis supports sound decision-making, creates a record of constructive engagement, and places the company in a stronger position to respond.