The SEC’s July 1 decision to eliminate broker discretionary voting in directors’ elections could have significant consequences when it takes effect in the 2010 proxy season. In a press release last week, the Conference Board suggested board members analyze the company’s current vulnerabilities with regard to activist investors and to “regularly communicate in compliance with Regulation FD and insider trading rules with the 10 largest institutional shareholders to inform them of the business strategy, including new efforts for improving shareholder value.” Continue reading
How Will Directors Respond to SEC's Broker-Vote Rule?
The SEC’s July 1 decision to eliminate broker discretionary voting in directors’ elections could have significant consequences when it takes effect in the 2010 proxy season. In a press release last week, the Conference Board suggested board members analyze the company’s current vulnerabilities with regard to activist investors and to “regularly communicate in compliance with Regulation FD and insider trading rules with the 10 largest institutional shareholders to inform them of the business strategy, including new efforts for improving shareholder value.” Continue reading
The Business Case for Good Governance
In the wake of the economic collapse and the devastating impact of risky behavior by management in companies like Citigroup and Countrywide, corporate boards are paying more attention to their responsibility for oversight. While most of the problems developed in the financial sector, boards in other sectors are naturally concerned especially as they watch mounting legislation in Washington. Continue reading
Directors Need to Step Up to Shareholder Communication
In his entreaty to his fellow senators to support his Shareholder Bill of Rights Act of 2009, Charles Schumer notes that “one of the central causes of the financial and economic crises… is the widespread failure of corporate governance.” As he summarizes it, “too many corporate boards neglected their most fundamental responsibility—to prioritize the long-term health of their firms and their shareholders, and oversee management accordingly.” Continue reading
Shareholder Meetings Should Prompt Revitalized Communication
Many boards heaved a collective sigh of relief after this year’s annual shareholder meeting. Many, but not all. At the Citigroup annual meeting, directors fielded questions for six hours, allowing shareholders to express their frustration and pain over the devastating loss in shareholder value.
Meanwhile, in Charlotte at the Bank of America annual meeting, shareholders stripped Ken Lewis of his Chairman mantle. Given these circumstances, most directors in this season of shareholder meetings felt lucky to escape with a random interruption by a shareholder gadfly or an extended question that became a chance to pontificate during the Q&A period. Continue reading
Getting Started on a Board Communication Policy
Board-shareholder communications begin with the board, which oversees management communications to shareholders. The board can also communicate directly with shareholders when needed.
As a result of the events of the last 18 months, however, boards of directors are moving to develop more formal board communications policies and schedules. Continue reading