Shareholder Activism and Board Evaluation: Spotting Weaknesses Before Activists Do

Shareholder activism has become a structural feature of European capital markets, not a fringe risk. As Caroline Ruellan, President of SONJ Conseil and of Le Cercle des Administrateurs, framed it during the Decisive Board webinar hosted by Euronext Corporate Solutions, the rise of activism sits at the crossroad of two trends — hyper-transparency and accountability — and it puts board governance under direct, public scrutiny. A rigorous board evaluation is the most reliable way for directors to identify the governance vulnerabilities an activist would target, and to fix them before they become a campaign.

Why shareholder activism is rising in Europe

Three forces have pushed activism from a US phenomenon to a European reality. The first is the move of listed companies "from the shadow to the light", in Caroline Ruellan's phrase: boards now operate under continuous public scrutiny rather than periodic disclosure. The second is the rise of accountability as a governance principle in itself. Investors, but also stakeholders more broadly, expect companies to justify strategic decisions and engage in dialogue, not simply announce outcomes. The third is hyper-transparency: the volume and granularity of public information about company performance, ESG posture, executive pay, and board composition has expanded dramatically.

"The rise of shareholder activism is at the crossroad of transparency and accountability. Shareholders, but not only shareholders, consider they may have a direct or indirect interest to challenge company directors and executives."

Together these forces produce a market in which an activist position can be built quickly, communicated publicly, and amplified by aligned investors and stakeholders, including those who may not even hold shares. The legal exposure of individual directors has increased in parallel: it is now realistic for an activist campaign to escalate to challenges of director liability, not just to a vote on strategy.

What activists target on the board side

Activist campaigns are tactically diverse, but the governance vulnerabilities they exploit are remarkably consistent. The targets cluster in five areas:

Weak or unaccountable chair leadership. Activists routinely test whether the chair has set a coherent strategic direction and held management to account. A chair widely perceived as deferential to a long-tenured CEO is a recurring target. The handling of evaluation findings concerning the chair is therefore a governance hygiene factor, not a private matter.

Agenda imbalance. Boards that spend most of their time on compliance and operational details, and very little on long-term strategy, give activists a clear narrative line. One Admincontrol customer rebalanced their agenda from a roughly even split to 70% strategy, 20% risk, 10% compliance after evaluation revealed the imbalance. That kind of restructuring is far easier to defend than a board pack dominated by historical reporting.

Information asymmetry between management and directors. If directors cannot demonstrate that they have access to complete, timely information, and that they have actively challenged management's framing, activists will argue that oversight has degraded into rubber-stamping. Admincontrol Board Portal exists in part because the audit trail of how information reaches directors is now itself a piece of governance evidence.

Skill gaps and stale composition. Boards without identifiable expertise in cybersecurity, climate transition, or sector-specific regulation are exposed when those topics drive performance. So are boards where average tenure is high and refreshment is slow.

Compliance-mindset evaluation. A board evaluation conducted as paperwork, with no visible follow-up, signals to activists that governance discipline is shallow. The structural failures that undermine most board evaluations become activist exhibits when a campaign begins.

Board evaluation as an early-warning system

The strategic value of a serious board evaluation is not just internal improvement; it is also competitive intelligence. The board that runs a rigorous, honest, externally facilitated evaluation gets to see its weaknesses first, in private, with time to act. The board that does not is informed of those weaknesses by an activist letter, in public, on the activist's timeline.

"Board evaluation is a first unique opportunity for the company, and for the executive and non-executive directors, to detect vulnerabilities and weaknesses ahead, before the others do, and mostly activists."

This reframing matters. Most boards approach evaluation as a regulatory exercise driven by the corporate governance code, perhaps with a developmental rationale layered on top. Reframing it as the cheapest, fastest, most confidential form of activist defence changes the level of seriousness directors bring to the process. The questions get sharper. The action plan gets more aggressive. The follow-up gets stricter.

ecoDa, the European Confederation of Directors' Associations, frames evaluation as a cornerstone of corporate governance precisely because it touches every other governance dimension: board dynamics, decision-making quality, board composition, succession. Each of these is a potential activist target. An evaluation that probes all four addresses the activist case before it can be made.

Five questions activists will probe — and your evaluation should answer first

If you want a practical bridge from evaluation discipline to activist resilience, run your board through these five questions. They are precisely the questions a credible activist research process will run on you.

An activist who probes these questions and finds confident, evidenced answers tends to move on. An activist who finds gaps writes a letter.

Building activist resilience: a structural checklist

Resilience to activism is built, not declared. The structural elements are well established and broadly aligned with the recommendations of ecoDa and major European corporate governance codes:

• External evaluation every three years, conducted by an independent consultant (not by a search firm that recruits the board).
• Internal evaluation every year, with year-over-year benchmarking that creates a visible trajectory.
• An action plan with named owners and milestones, integrated into agendas and reviewed at every meeting.
• Genuinely independent committees, particularly nomination and audit, with the chair excluded from the nomination committee.
• A clearly defined chair role, including information stewardship and agenda discipline, evaluated annually.
• A skills matrix updated against current strategic risks, with refreshment plans where gaps appear.
• An audit trail on the evaluation process itself: who participated, what questions were asked, how findings were handled. Admincontrol Board Evaluation provides this evidence trail by design.

Florence Priouret, Chair of the SFAF Board of Directors, made a related point during the webinar: a strong action plan is one with milestones and named owners. Slippage that is privately tolerated becomes publicly indefensible if an activist surfaces it.

Disclosure: what to share, what to protect

The disclosure question is where governance hygiene meets investor relations. Detailed evaluation findings should remain confidential — directors will not speak honestly otherwise. But a high-level summary of the process, scope, methodology, and the broad themes of the action plan should appear in the corporate governance section of the annual report. ecoDa has been explicit that shareholders should be able to engage substantively with the evaluation process, and that requires meaningful disclosure.

The right disclosure does three jobs at once. It signals discipline to passive investors. It pre-empts the easiest activist criticisms. And it gives engaged investors an opening for constructive dialogue, which is almost always preferable to a public campaign. The middle ground — saying the evaluation was conducted, without describing process or outcomes — is the worst of both worlds: visible enough to be tested, vague enough to be dismissed.

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