Note from the editor: This week’s Diligent Minute is guest-authored by Josh Black, editor-in-chief of Diligent Market Intelligence and a leading expert on shareholder activism and proxy season. I’m delighted to hand him the pen for this issue so you can head into proxy season with the clearest possible view of the landscape:

As editor-in-chief of Diligent Market Intelligence, I spend my time on the data behind shareholder behavior – from activist campaigns and proxy voting to board composition and executive pay. Drawing on our proprietary datasets, and our recent reports Shareholder Activism Annual Review 2026 and Proxy Season Preview, here are five dynamics that boards should keep in mind this proxy season.

1. Fragmented influence, less predictable votes

Political and regulatory pressure is pushing some large institutions to rethink their reliance on proxy advisors, and advances in AI are making in-house voting and policy customization more feasible. That may sound positive to corporate leaders long frustrated with one-size-fits-all recommendations, but it also means less predictable vote outcomes as more investors diverge from common benchmarks.

At the same time, many institutions are dialing back routine engagement, expecting boards and management to surface issues proactively rather than waiting to be asked.

Board takeaway: Do not assume “business as usual” on proxy advisors or engagement. Sharpen your own narrative and don’t be afraid to confront potential concerns head-on.

2. Pressure to demonstrate AI oversight

Investors increasingly expect boards to own the AI agenda, which presents both pros and cons:

• Activist funds are pressing companies to deploy AI more aggressively to lift margins and growth.
• Asset managers are asking tougher questions about AI governance: data privacy and security, model risk, bias and compliance, and how AI-related decisions are escalated to the board.

Board takeaway: Treat AI oversight like cyber and climate: clarify responsibility at the board and committee level, define risk appetite, and align disclosure with your internal governance reality.

3. Compensation as a flashpoint — and activist signal

If equity markets weaken into proxy season, boards should expect less tolerance for pay structures perceived as insulated from shareholder experience - even if the vote technically covers 2025 compensation, when performance was strong.

Our Shareholder Activism Annual Review 2026 finds:

• A high correlation between failed “say on pay” votes and subsequent activist targeting.
• A rising focus by activists on compensation, including targeted withhold campaigns against compensation committee members.

Board takeaway: Pressure-test your 2025 pay outcomes through a 2026 lens. Focus on alignment with total shareholder return, rigor of performance metrics, and how you explain discretion and one-off awards.

4. Activists are leaning hard into M&A

M&A-related demands were up sharply last year and are likely to rise further. With financing markets open and many companies still trading below perceived intrinsic value, activists see deals as a direct lever to unlock returns.

Boards and management teams should:

• Control the narrative around planned transactions with clear strategic and financial logic.
• Plan coordinated investor engagement immediately after deal announcements.
• For companies with underperforming share prices or ongoing turnarounds, work with advisors on activism vulnerability assessments.

Board takeaway: Assume any significant deal will be stress-tested in public. Prepare your strategic rationale, valuation case and engagement plan before activists do it for you.

5. It’s easier to work with shareholder proponents than against them

Many expected shareholders to pivot from non-binding proposals to more aggressive withhold campaigns against directors after the SEC’s temporary pullback from no-action relief. Instead, litigation has mainly pushed companies to place proposals on the ballot or negotiate withdrawals in exchange for policy changes, which is often a more manageable outcome.

Board takeaway: Treat shareholder proponents as negotiation partners. Early, pragmatic engagement on policy changes can blunt litigation risk and reduce the likelihood of more disruptive escalation.

We’ll continue to monitor how these trends evolve across the season – particularly the interaction between AI oversight, compensation outcomes, activism risk and shareholder proposal dynamics — and will share our data-driven insights as patterns emerge.