Indicators of invigorated activism abound. In January, activist Nelson Peltz launched a proxy battle in opposition to Disney, the corporate’s first. He known as it off in February solely after Disney promised main restructuring. In the meantime, 5 dissidents have launched a marketing campaign to serve on the board of mattress maker Purple Innovation. Third Level has introduced plans to launch a Bathtub & Physique Works board problem. And Mortgage Depot is dealing with a proxy contest sponsored by its personal government chair, now merely chair (having misplaced his CEO position).

This new and seemingly frenzied exercise was impressed partially by the Securities and Trade Fee’s (SEC) new common proxy rule, handed in 2021 and efficient for all annual conferences held after Aug. 31, 2022. Now proxy voting playing cards for public firms enable shareholders to pick out candidates from two completely different slates–the one from the shareholder and the one from the corporate’s unbiased nominating and governance committee (or its equal). Beforehand, shareholders needed to decide one slate or the opposite. Now they’ll combine and match candidates.

In the meantime, the variety of firms that may avail themselves of such proxy playing cards is rising. Proxy entry, which has been growing for the reason that 2010 SEC rulemaking permitting it, offers the mechanism wanted to be used of such a card. (Absent proxy entry, dissident shareholders should nonetheless mail out their very own playing cards as previously.) At this time, two-thirds of the S&P 500 and one-fifth of the Russell 3000 have proxy entry, in response to analysis from the Council of Institutional Buyers–and even to at the present time, shareholders are nonetheless proposing it the place it isn’t but in pressure. 

A 2011 authorized problem from the Enterprise Roundtable and Chamber of Commerce vacated the SEC rule that may have mandated such entry, however that court docket ruling solely slowed the widespread adoption of proxy entry–it didn’t forestall it. The brand new proxy entry frontier is to broaden the insurance policies already in place. This spring, a proxy proposal at Apple desires to boost the minimal variety of shareholder nominees on a card from one to 2. Most firms have proxy entry insurance policies that guarantee at the very least two shareholder nominees and few (14%) set a minimal of just one nominee, notes the proposal.

What do these new venues for activism imply for boards?

As extra special-interest dissidents wrest board seats by way of the brand new mix-and-match proxy voting card, there can be a interval of painful adjustment for boards focused by activists.

Nonetheless, dropping management of the proxy course of could also be simply the jolt that boards wanted to do a greater job with nominations, evaluations, and communication.  

In our NACD remark letter on common proxy, which was quoted within the launch of the ultimate rule, we stated that the mix-and-match strategy was suboptimal. The “key to glorious board composition,” we stated, “begins with a sound slate–the best-case situation–put forth by an unbiased nominating committee that has thought of shareholder nominees thoughtfully.”

Moreover, we expressed the hope that boards would “proceed to enhance their work in creating optimum boards and in speaking their strategies for attaining them.” Particularly, we famous that firms are “making extra intensive voluntary disclosures about director abilities and {qualifications}, board range, board succession planning, board evaluations, and audit committee monetary specialists.”

Lastly, we stated that if boards proceed to enhance their work in creating optimum boards and in speaking their strategies for attaining them, “proxy contests will change into uncommon.”

I nonetheless imagine that right this moment–even with proxy entry and the common proxy card in extensive use. I urge all boards to do a greater job in director nomination and analysis–and to make their processes clear. Let this new wave of shareholder activism be a wake-up name to us all.

Peter R. Gleason is the president and CEO of NACD.

The opinions expressed in Fortune.com commentary items are solely the views of their authors and don’t essentially mirror the opinions and beliefs of Fortune.

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