From the Latest Edition of NACD Directorship Magazine
Proxy Season Survival Tip: Make Board Composition a Priority
During proxy season, directors may feel as though they’re navigating a minefield of activist issues. Activists deployed a record $62 million on campaigns in 2017. Major institutional investors are also taking activist stances, especially in the area of board composition.
This puts boards under pressure to comply with investors’ guidelines. But how? It isn’t possible for boards to track and address many thousands of investor issues.
The article explains how boards can avert activist demands—by knowing what their shareholders are thinking and staying ahead of possible grievances. Directors can make needed changes in the boardroom by
- increasing board diversity with both female and minority members;
- strengthening risk oversight with tools and resources provided by NACD; and
- updating governance guidelines in light of those proposed by investors.
Activists can only gain a foothold if their demands resonate with a company’s shareholders. But a board can preempt activists by implementing a clear strategy for investor communications, understanding what matters most to the company’s own shareholders, and proactively and visibly addressing shareholder concerns.
This article also includes two sidebars. The first provides a summary of eight key trends in activist activity. The second introduces the top eight activist investors with insight into how they think and mount campaigns. NACD Directorship magazine is available only to NACD members, but you are invited to download a complimentary copy of this article.
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