Public companies contended with more scrutiny on compensation and corporate governance issues from shareholders during the 2009 proxy season, and this trend is expected to continue. In such an environment, companies need to be ready for communications from activist shareholders so that such interactions do not rise to the level of a proxy contest. According to RiskMetrics, average support for the 50 shareholder proposals (as of June 1) relating to an advisory vote on compensation was 46.7%, up 5.2% from the average support in 2008. RiskMetrics data also show that average support for 19 proposals to require an independent board chairman increased 8.8%, to 38.1%.

Shareholder interest in compensation and governance issues will not dissipate anytime soon. As companies prepare for the 2010 proxy season, it's possible Congress may enact legislation requiring public companies to provide a say on pay vote. Public companies need to be proactive about communications with activist shareholders.

Putting a shareholder response team in place can help. This team should include key officers, along with outside counsel, a financial public relations firm, investment bank and proxy soliciting firm. A company should have developed a well-known communication policy so that everyone within the company knows whom to contact in the event a shareholder contacts him or her. The policy should clearly identify a point person from the response team who will respond to shareholder inquiries.