There has been a shift in the corporate governance world relating to shareholder engagement. Shareholders are exerting more influence than ever on how boards and management teams operate. We have seen a trend to an “investor-centric” model in which institutional investors and shareholder activists demand greater transparency, including more engagement with independent directors.
Shareholders are eager for more personal interactions with directors where they can discuss topics like board composition, executive compensation, and management performance and even how companies choose to allocate their capital.
The majority of directors have become more comfortable with direct board-shareholder communications around corporate governance issues and have made significant strides in establishing protocols and practices to structure their communications with investors. For these reasons, it’s important that boards use a thoughtful and proactive approach when considering shareholder engagement.