Considering a Shareholder Engagement Policy — The What, Why and How

September 29, 2016

Corporate Governance Quarterly Update
Today, many shareholders may feel that the traditional investor communication and relations model is not adequate. Often, written communications are viewed as impersonal and outdated and shareholder meetings typically occur only annually and are rarely seen as leading to meaningful dialogue. Moreover, corporate governance is evolving and shareholders have more effective power to elect their own representatives to the board. For example, according to Institutional Shareholder Services Inc., 2015 was the first year when a majority of all US companies have had some form of majority voting and annual elections. Further, US companies are increasingly adopting proxy access bylaws that provide shareholders with another means of communicating potential dissatisfaction with the board or management. In response to these changes, companies should consider establishing an effective two-way communication structure with shareholders by adopting a formal shareholder engagement policy.

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