06 Jun 2018

Holding boards accountable

Morrow Sodali

Shareholders and proxy advisors are becoming more vocal, engaging with ASX-listed companies on the suitability of non-executive directors. A growing proportion are critiquing the performance and accountability of directors, particularly where there are alleged breaches of conduct or the company is underperforming.

The responsibilities of non-executive directors are both varied and increasing, so it’s difficult for investors to establish a standardised approach to evaluating board performance. Non-executive directors classified as ‘independent’ may not be socially independent from their colleagues, which may impact their ability to perform their duties without prejudice1. Shareholders continue to lack clear insight into the inner workings of boardroom dynamics, hence their characterisation as ‘black boxes’. More than ever, the investment community and broader corporate governance stakeholders are demanding a deeper understanding of the factors that influence board interactions and decision making. Consequently, strong disclosure around board performance, skills, experience and succession planning initiatives is critical.

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Topics

Governance Shareholder Activism Shareholder Communication Shareholder Engagement Australia