BulletProofBlog the blog on crisis communications

A recent Dennis K. Berman column in the Wall Street Journal seems to confirm the realization of what many boards fear most in a sluggish economy - activist shareholders are taking greater control of corporate governance.

Berman points out that since 2006, activist shareholders have been awarded board seats at 218 companies - of which only 28 were the result of proxy fights. He goes on to point out that activist shareholders "have already won or wrestled concessions in nearly 60 percent of 78 completed or threatened proxy contests of 2008, the highest percentage ever."

All indications point to a continuation of this trend in 2009, which poses a significant question for boards of directors moving forward: How can boards remain relevant in what Berman calls "the post-revolutionary period of the Shareholder Era?"

First, boards must realize that when the company is losing money - or at least not making as much money as before - vulnerability increases exponentially. It' s open season on corporate leadership these days, and as such, boards must ready themselves to respond in a credible, timely fashion when shareholder prerogatives appear at odds with a chosen course.

And second, they must beat what Berman refers to as "friendly hostiles" at their own game. Increasingly, hostile acquirers will pass over boards and take their cases directly to the shareholders. Boards must inoculate themselves against such attacks by engaging in aggressive investor and media relations programs that communicate fiscal health and stability in times of relative clam, leaving them well-positioned to resist when an attractive suitor comes knocking.