The year 2026 began with several events that have created significant volatility in the markets. The U.S. taking military action in Venezuela and threatening action against other South American nations, uncertainty surrounding protestor deaths during civilian uprisings in Iran, and the U.S. Department of Justice initiating a criminal investigation into Federal Reserve Chairman Jerome Powell are among events that have investors across the globe spooked.

Corporate board members should be aware that shareholders may be a bit more on edge over the next few months, and nervous investors are more likely to approach directors about their concerns. As proxy season draws near, boards will be highly scrutinized and changes in board composition will on the agenda of some shareholder activists. More moderate shareholders may also question whether boards, as currently constructed, have the skills and experience to handle what is turning out to be an increasingly volatile environment. 

Smaller publicly traded companies may be especially vulnerable to this type of criticism from their largest shareholders. Take workforce solutions company TrueBlue, for example: even though the board recently added two new directors to address areas of perceived deficiency, one of its largest shareholders is pushing for three candidates it has selected. In a letter to the TrueBlue board, EHS Management, LLC said that while adding the two new directors was an “initial step toward meaningful change,” the board still needed:

• Seasoned and independent staffing executives to provide credible strategic, operational and cultural direction;
• Experienced technical product leaders with a proven record of building or scaling digital platforms;
• Capital allocation and markets expertise in the areas most relevant to the company’s performance (including M&A); and
• Increased insider ownership and financial “skin in the game” by independent board directors (for greater accountability).

The issues identified by TrueBlue’s shareholder are similar to what some boards may face in the coming months. Board can attempt to correct issues and avoid shareholder angst by considering the following:

Reassess market risks given new developments domestically and globally. It may be necessary for board members and management to determine if projections and assumptions for 2026 are still valid based on world events and market volatility. Any adjustments in strategy should be immediately communicated to investors. If there is confidence in prior projections, the reasons why the board still stands by those prior projections should be communicated to shareholders as well.

Determine how any new risks and market realities affect the long-term nature of the business. Like with the advancement of AI, some market disruptions may require a new strategic approach to the business, operational and cultural direction of the company. Any board members that do not align with that thinking may need to be replaced. New risks and market developments may require moving away from one product line in favor of another to facilitate long-term growth. The value of each board member’s expertise may change with the strategic direction of the company. Adjustments to board composition may be needed.

Communicate a willingness to add to board expertise. Sometimes when market conditions change, board composition requires necessary adjustments. A board can convey an openness to improving composition and expertise without condemning its current makeup. Some expertise can be added through third-party consultants while the board vets other suitable nominees that can replace current members in the future. If certain shareholders have critically needed expertise, consult with them and allow them to help solve problems before they force a vote to remove current board members.

Compensate executives and board members with more company stock than cash to improve decision-making. EHS Management believed TrueBlue’s board would do more to avert company losses if they had more “skin in the game.” Expect more shareholders to suggest this adjustment to compensation as market risks increase. Boards will need to prepare a response if shareholders propose such a move.