21 Nov 2016

A new role for the annual Board Evaluation

Client Memorandum 2017 - John Wilcox, Morrow Sodali

The #1 governance issue in today’s markets is board effectiveness and accountability.  Shareholders under the influence of activists, proxy advisors and advocacy groups are scrutinizing every detail about boards – composition, qualifications, rationale and business consequences of their policies, as well as their handling of a various risk factors relating to corporate culture and sustainability.  Greater board transparency is their goal.

 In response to this challenging environment, the client memo for 2016-17 written by Morrow Sodali Chairman, John Wilcox, explores the possibility that the annual board evaluation process might offer directors a way to be better informed about shareholder expectations and explain their decisions without violating disclosure rules or sacrificing confidentiality and privacy.  The minimal regulations governing board evaluation arguably create an opportunity for boards to provide their own customized narrative discussion, particularly in cases where shareholder opposition is anticipated.  We expect that greater understanding of board actions could reduce the need for engagement campaigns and in some cases prevent activism.

The 2017 Client memorandum has been posted on Small Cap Italia blog and on the Elite web platform, from London Stock Exchange.

 

Topics

Directors General Meetings / Proxy solicitation Governance Shareholder Activism Shareholder Communication Shareholder Engagement Succession Planning Global