Directors:How Did You Do at Your Annual Meeting?

Annual meetingAs the 2013 Annual General Meeting season comes to a close, shareholders continue to make their presence known. Shareholders are taking action: eliminating classified boards, voting against directors who are perceived to be ineffective stewards, such as the museum executive who chaired the risk committee of JP Morgan Chase during the “London whale” scandal, and casting “no” votes on executive pay programs.

Even boards that won say-on-pay approval need a strategy and plan to manage shareholder engagement.

A review of your annual meeting is a smart place to start.

So, directors, what did you learn at the annual meeting? What will you do over the course of the next year to ensure that you understand your shareholders’ concerns, both large and small?

Did any board members speak at the meeting? Was a director designated in advance to speak for the board? Did the chair of the compensation committee respond to shareholder’s questions on the executive pay program? Was he or she trained and prepared to offer the “why” of the story?

What were the surprises? Did you hear new issues or concerns from shareholders? Did management respond to board questions? How would you rate your performance in appropriate communication to those in attendance? These are items that should have board attention.

Does it make sense to adopt a strategy to make next year’s annual meeting a chance for shareholders to “kick the tires” and get to know who is representing them in the boardroom? How could you go beyond the proxy to help them see that your experience and expertise are adding to the company’s value? What steps can you take now to ensure that you are fostering a better understanding of the value you bring in your role as a director?

Strategic boards understand that shareholders are now part of the governance dialogue and need to feel that they’ve been heard. Boards with effective shareholder engagement programs are able to listen to shareholders. Directors who understand shareholder concerns are able to both provide responsible oversight and effectively convey that the board is responsibly fulfilling its role to create long-term value for shareholders.

Begin now. The clock is ticking for the 2014 proxy season.

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