This study examines shareholder activism that manifests in shareholder derivative litigation, in which shareholders often demand corporate governance reforms. Consistent with the notion that shareholders use litigation as a supplement to shareholder proposals, we find that the presence of shareholder-sponsored proposals is positively associated with the probability of derivative lawsuits filed in the subsequent year. This association is stronger for firms with higher excess compensation, suggesting that shareholders are more likely to file lawsuits when the benefits are higher. However, we find that entrenchment provisions are negatively associated with the filing of derivative lawsuits. Further evidence suggests that the negative association is due to higher costs for activist shareholders to intervene in corporate governance for firms that had adopted more entrenchment provisions. Our study provides novel insights into the role of activist shareholders in the filing of derivative litigation.