14 Mar 2018

AGMs 2018: Investors target strategy and board composition

IR magazine

Investor relations and governance teams working on and around AGMs this proxy season should be paying particular attention to the stories their companies are telling about strategy, who is on the board and ESG-related efforts, according to new research.

A Morrow Sodali survey finds that 68 percent of institutional investor respondents cite as highly important ‘the quality and completeness of [a company’s] disclosures on business strategy and issues of material importance’ when making voting decisions on director elections and other agenda items.

Sixty-six percent of respondents point to board composition as being highly important when deciding on AGM votes. Sixty-three percent say the company’s ESG policies and practices are key. Fewer – though still a notable proportion of – respondents point to a firm’s quality of shareholder engagement (51 percent) and ‘the availability of its board members to communicate directly with shareholders’ (39 percent).

Morrow Sodali chair John Wilcox tells IR Magazine that the focus on skills and experience highlights the growing importance of boards’ stewardship and imposing high standards on themselves. There is a trend among institutional investors toward understanding what goes on inside companies and on their boards, and therefore they want to understand the skill sets among directors, he says.

The good news for companies is that this marks a step away from investors having a ‘checklist mind-set,’ Wilcox adds. Even if a company doesn’t meet best practices, this approach by investors gives the firm a chance to explain how it operates – more along the lines of the ‘comply or explain’ model often seen in Europe, he explains.  

Go to IR magazine article.

Topics

ESG Governance Shareholder Activism Shareholder Communication Shareholder Engagement Global