Last May, Corporate Board Member surveyed more than 300 public company directors to take their pulse on the practice of shareholder engagement amid today’s boardroom reality. As proxy advisory firms continue to gain influential ground and push for new governance practices, board members shared their mixed reactions as to whether their oversight responsibilities should mandate regular communication with shareholders outside of the annual meeting and quarterly earnings calls.
At a high level, what we found is that the question goes well beyond whether engaging with shareholders is a duty of today’s public boards. It encompasses several other subsets of consideration, including the appropriate frequency of these “informal” talks with investors; the acceptable time investment by all who need to be present; the intricate task of articulating the core message and defining the depth of information that can be exchanged—as determined by senior management, counsel, and regulations; the delegation of roles and responsibilities to ensure the right expertise is at the table; and even rules of authority, since many believe the voice of the CEO should be the only one authorized to be heard publicly when speaking on behalf of the company.
Yet, if the CEO is the official representative of the company, aren’t board members representatives of the shareholders? So, amid this duality, who is best placed to address shareholders’ concerns? And how can such a large group of people arrange to speak with one voice, without compromising regulatory requirements and ethical boundaries?