According to the Washington Post, investor groups are taking a two-pronged attack against lax corporate governance: they are pushing for legislation that gives shareholders more power and they will use shareholder meetings as a forum for holding directors accountable for oversight.
Proposals being submitted for inclusion in upcoming company proxies include
- The right to call a special meeting
- Independent board chairman
- The end of the supermajority vote requirement
- Review/report on political spending
Over 60 boards have proactively adopted “say on pay” in addition to those institutions that are required to offer shareholders an advisory vote on compensation by virtue of the TARP funds they received. How involved is the board in writing and reviewing the proxies? What do they know about the sentiment of their shareholders on these issues?
In the current environment, boards should be actively engaging with shareholders.