Activism Preparedness Is a Year-Round Responsibility

Based on proxy season trends, boards should treat activism preparedness as an ongoing discipline.

Shareholder activism remained a key consideration for boards during the 2026 proxy season, even though relatively few campaigns proceeded to a contested vote. The practical takeaway for directors is that activism preparedness should be treated as a recurring board discipline, not a narrow defense exercise. Boards should identify vulnerabilities early; consider how an activist might critique the company's strategy, performance, governance, or compensation practices; and engage with shareholders before concerns escalate.

Proxy contests tell only part of the story. While they remain the most visible form of activism, they capture only part of the investor activity that matters to boards. Many campaigns are resolved before shareholders vote, often through settlements that include the appointment of activist-backed directors to the board or other commitments.

Possible Vulnerabilities

Strategy, mergers and acquisitions, and capital allocation remained recurring themes prompting shareholder activist action during the 2026 proxy season. High-profile campaigns underscore the pattern: Activists pressed companies, including Devon Energy Corp., Ashland, and Fiserv, to pursue sales, asset divestitures, or portfolio separations.

This reflects a broader tilt toward transaction- and strategy-driven demands in a rebounding deal market. Activists often target gaps between stated priorities and measurable progress, including margin performance, cash-flow generation, balance sheet discipline, portfolio focus, and the expected timing of returns.

Activist critiques do not require a board to defend every past decision in detail. However, they do require a credible explanation of the board’s decision-making framework, the alternatives considered, and the milestones management and directors use to judge whether the strategy is working. In practice, that means being able to articulate why the board favored its chosen path over other options and the measurable milestones and time horizon it is using to gauge progress.

That narrative becomes especially important after a significant acquisition, divestiture, restructuring, leadership transition, or shift in capital allocation priorities. These are inflection points where the strategic rationale is already in place, but the results have yet to catch up, creating a window in which activists can shape the story if the board does not.

Compensation can attract activists when executive pay appears disconnected from performance or the shareholder experience. A failed or low-support say-on-pay vote can give activists an additional argument that the board is out of step with investors.

Pending US Securities and Exchange Commission (SEC) changes may raise the stakes. An SEC rule proposed in May would allow companies with a public float below $2 billion—roughly 81 percent of public companies—to become non-accelerated filers, which would reduce the number of required disclosures on executive pay. This matters most to small- and mid-cap boards. Since investors and proxy advisors will still expect decision-useful information, boards may choose to disclose beyond the minimum, rather than let reduced disclosure become a vulnerability of its own.

Boards should also consider how compensation decisions are viewed within the broader corporate story. While the first concern is whether pay tracks overall performance, discrete decisions carry their own risk: Large one-time awards, retention grants, or transaction-related payouts can become a flashpoint in an activist's critique, even when the underlying rationale is sound. Clear disclosures and regular engagement—at least annually—with investors can help explain why the compensation committee made certain decisions and how they support shareholder value.

2026 Russell 3000 Activist Proxy Contests for Board Seats

Source: FactSet Research Systems

Note: Includes annual meeting dates from Jan. 1, 2026, through June 30, 2026. Excludes campaigns at Victoria’s Secret & Co. and Jack in the Box, which ultimately converted to “Vote No” campaigns, and STAAR Surgical Co., where an activist called for votes against a merger at a recent special meeting. One contest at Genco Shipping & Trading initially sought six seats, but four dissident nominees were withdrawn prior to the vote. 

Activists often focus on boards they believe have overseen prolonged underperformance, unsuccessful strategic initiatives, or capital allocation decisions that have not delivered expected results. Board composition and refreshment, including director skills, tenure, succession planning, committee leadership, and alignment with strategy, remain recurring themes of activist campaigns.

The universal proxy card has made this issue more practical for activists by increasing attention on individual board members rather than complete director slates. An activist can now focus on whether director nominees have the right profile to be of value to the board. As a result, nominating and governance committees should ensure that published director biographies, skills matrices, committee assignments, and refreshment disclosures do more than satisfy baseline disclosure expectations.

Board Action Items

The themes of the 2026 proxy season suggest boards should continuously prepare for investor engagement. A useful starting point is to conduct the same outside-in review an activist or skeptical investor might perform, typically on an annual basis.

Directors can take the actions below when conducting this review. In practice, most of the underlying analysis is prepared by management and outside advisors; the board's role is to direct that work, test its conclusions, and decide how to respond.

Assess governance and board vulnerabilities. Review board composition, tenure, refreshment, committee structure, and skills alignment, as well as voting results and shareholder feedback with management.

Strengthen the investor narrative. Pressure-test management’s explanation of how governance, strategy, and compensation decisions support long-term value creation, and confirm it holds up against a skeptical outside view.

Support targeted shareholder engagement. Direct management to identify priority investors by holding size and influence and catalog the concerns those investors are likely to raise so that the board can prepare its own engagement priorities.

Review compensation and transaction-related risks. Evaluate pay-for-performance alignment, one-time awards, retention grants, change-in-control arrangements, and related messaging.

Prepare for activist and investor scrutiny. Clarify who speaks for the company and how the board and management coordinate in a live situation, develop talking points, and work with external advisors.

Companies that assess vulnerabilities, strengthen governance practices, and engage shareholders early will be better positioned if pressure arises.

The views expressed in this article are the authors’ own and do not represent the perspective of NACD.

Aon is a NACD partner, providing directors with critical and timely information, and perspectives. Aon is a financial supporter of the NACD.