After a two-year slumber brought on by the financial crisis, activist investors have suddenly awakened. The resurgence is driven in part by the sudden emergence of U.S. private equity firms as activist investors. This change in the corporate climate means that publicly traded companies must position themselves so that they do not become targets of these investors.

How can this be done? The answer is for directors to proactively engage these investors, thereby maintaining open lines of communications and building good will. This means that boards need to take into account the concerns these activist investors raise over a company’s stock performance, governance practices and perceived weaknesses in the business operation. In so doing, directors are better situated to thwart adversarial actions and “staged” revolts by certain activist investors.

After all, activist investors can have a profound impact on the overall composition and direction of a board. For starters, activist investors bent on driving the agenda of a company can attempt to pick up seats on corporate boards of directors. These investors can also wage public battles that tarnish a company’s image—accusing directors of everything from conflicts of interests to lax governance practices.

And the impact of shareholder activism on board operations only promises to grow with the recent Securities and Exchange Commission ruling regarding the Dodd-Frank Act’s “say-on- pay” provision. The provision allows shareholders of public companies the right to weigh in on executive compensation. This right will likely subject executive compensation packages to greater levels of public scrutiny. The impact of this heightened investor activism may also force compensation committees to reexamine compensation plans and address increased regulatory requirements.

A healthy relationship between directors and activist investors does not mean that directors cede complete control. But proactive engagement does mean that directors consider investor proposals seriously and articulate a clear a strategy for enhancing corporate value. As NACD has learned from its experience in convening investors and directors to discuss expectations and shared goals, it is important for boards to establish processes for shareholder communications. Specifically, boards should implement strategies for engaging large, long-term shareholders in dialogue about issues pertaining to the company’s future and corporate governance.

At NACD’s February 22 Virtual Roundtable, institutional investors and long-term shareowners spoke candidly with corporate directors about various issues, such as executive compensation. When controversial topics like executive compensation arise, independent directors—such as the board chair, lead director, or appropriate committee chair—should be a part of board communications with shareholders. This type of proactive board communication with shareholders can go a long way toward minimizing shareholder resolutions.

Of course, public battles with investors will erupt from time to time. To minimize the bad publicity and other fallout from these battles, boards must prepare themselves for crises ahead of time. A key step is for a board to understand the strengths and perceived weaknesses of its company’s structure and corporate governance policies. That allows the board to develop comprehensive plans that incorporate member responsibilities and provide a clear path for the company to present its direction to shareholders.

Activist investors cannot, and should not, be ignored. By addressing their concerns and making an effort to share common goals, directors can lessen the chance of confrontations with shareholders while promoting good corporate governance.