CEOs, Help Your Board Prepare for Proxy Season

proxy seasonDear CEO,

Have you given your board the tools it needs to navigate the coming proxy season?  It’s up to you to see that your board is prepared.

The Dodd-Frank Act creates new requirements for board disclosure and greater transparency.  Governance power has shifted to shareholders, who are now empowered to hold boards and management accountable. How your board moves forward in this new environment is critical.

CEOs need to see their boards as helping them to restore confidence in the system. If you wear the mantle of both CEO and chairman, it’s even more critical that you set the tone for clear disclosure and genuine engagement with shareholders. It sends a signal that you respect their importance in the long-term health of the organization.

The new disclosure rules encourage boards to build trust with shareholders through the application of sound principles, transparent communications and actively engaging with them to secure a favorable vote. Board members will need to become better communicators.  But they need guidance in demonstrating independence and credible oversight.  Some basic communication planning should begin now.

What may prove to be a best in class approach is for the board to articulate its principles, its own “Articles of Governance” to serve as the source for board communication and shareholder engagement.  By reviewing its current identity, which resides in governance and legal documents, the board can craft a comprehensive board governance doctrine that prepares the board for the upcoming proxy season and beyond.

This proactive approach enables the board to discuss and decide in advance how it will handle critical issues.  By working through issues in an atmosphere of calm, the board is better prepared to face a crisis and even avoid or mitigate one.

Disclosure in governance is an area we understand well and we would be happy to assist you.