Proxy advisors and shareholders are important stakeholders who indirectly affect governance, but these are not examples of governance itself. The board of directors is pivotal in governance, and it can have major ramifications for equity valuation.
Across all of our interviews this year, an overriding theme was the importance of board quality and composition—and the components that go into both.
The focus on quality and composition is even greater than in previous years. Investors are motivated to hold boards accountable for company performance and are willing to take action to ensure that boards are meeting governance standards.
Governance expectations continue to rise across markets and industries. Investors and proxy advisors are relying on traditional metrics e. An enhanced The corporate governance in investor stewardship by governments and investors is impacting corporate governance globally.
Since the last financial crisis, there has been a drive for more investor accountability in how they use their influence and votes to steer the strategic direction of investee companies.
This has combined with a dramatic increase in the popularity of, and cash flows into, index tracking funds, which have increased the voting power of the major asset managers.
Institutional investors will continue to prioritize gender diversity, director skills and experiences, composition refreshment, and the appointment of directors who have enough time to dedicate to the company as key indicators of board quality.
Boards and nominating and governance committees in certain markets should expect increased votes against directors where there are fewer than two women on the board. Activists and some institutional investors will pay close attention to the number of directors with direct industry experience when assessing composition and quality.
Boards and compensation committees should expect more inquiries related to incentive compensation schemes and how they drive desired employee behavior. Many boards often feel trapped between what appear to be competing demands: Institutional investors want to see long-term shareholder value creation, and activist investors often call for short-term value enhancement.
The companies that have had the most success navigating activist campaigns have been the ones with boards that are willing to have a meaningful dialogue with activists to achieve a resolution. Boards that fight with activists will face intense scrutiny of the value-creation history of each director, both in their executive and board careers.
While climate change risk and sustainability have been emerging areas of focus for several years, investors now consider the topics to be mainstream priorities. Though companies in extractive industries are likely to receive the greatest levels of scrutiny, other sectors will also see more engagement from institutional investors.
Guidance laid out by the Financial Stability Board Task Force on Climate-related Financial Disclosures TCFD will lead to a greater investor focus on recommendations, such as the use of two-degree scenario planning to prepare for the Paris Accord goal of minimizing global temperature increase to two degrees Celsius.
Under a two-degree analysis, companies assess the risks and opportunities of climate change on the business. Cyber risk continues to be a growing concern for global investors in light of multiple security breaches in the political, government, private sector, and consumer spheres worldwide.
Cyber threats will be an important area of focus for boards to monitor.Effective leadership at Lockheed Martin isn’t only about getting results.
It’s about getting results in the right way. Our leaders are expected to continually promote ethical behavior, support diversity and make decisions that protect the health and safety of employees as well as the natural. In discussing governance at Verizon, independent Lead Director M.
Frances Keeth, says, “The Verizon Board is committed to maintaining the highest standards of corporate governance, guided by our core values of integrity, responsibility and accountability in all we do.”. The NYSE: Corporate Governance Guide (the Guide) contains summary information about legal and regulatory aspects of corporate governance and is current as of .
Governance at Vectren.
We believe effective leadership of a company must be based upon well-founded governance principles, and we must always strive to . Corporate Governance is ensuring that an organization is run in a responsible manner by ensuring accountability, transparency and compliance with due regard to its key stakeholders.
It is the whole set of legal, cultural, and institutional arrangements that determine what publicly traded. On Thursday, November 8, over industry professionals in the governance, risk and compliance world gathered together to celebrate the best of the best in GRC at the annual Corporate Secretary’s Corporate Governance Awards.