TheCorporateCounsel.net

Nearly half of 550 companies worldwide surveyed in 2015 saw their directors meeting with investors in the past year, but North American companies had by far the lowest rate of director/investor interaction (26%, compared to e.g., Developed Asia at 81% and most other regions within the 50% – 60% range), according to BNY Mellon’s 2015 Global Trends in Investor Relations Survey.

Engagement highlights include:

• The director most likely to participate in investor meetings is the lead director or board chair, although a corporate “chaperone” is usually still present – with 61% of IROs and 55% of management also in attendance.
• Of the companies whose directors participated in investor meetings, most said such participation is standard company practice (54%), and most were prompted by investor request.
• 24% of companies reported having a written policy regarding interaction between directors and investors.
• The most common topics for investor meetings with participation of directors are company strategy (82%) and management performance (50%).
• 21% that said they do not believe directors should be in direct contact with investors.
• The number of companies that have strategies in place to communicate with key investors on corporate governance issues on a regular basis increased from 37% in 2013 to 46% in 2015. Those companies reported that the top issues addressed with key investors were board composition (76%), transparency and disclosure (71%), and remuneration (60%).
• More than half of companies still don’t see ESG outreach as part of their investor strategy.

See also MoFo’s blog, which highlights results across various survey topics.

Survey: Strategic Assumption Concerns are Concerning

KPMG’s recently issued report on the board’s role in strategy simply provides more evidence of a trend toward the board’s greater and ongoing engagement with management, scrutiny and healthy challenge of strategic plans and underlying assumptions, and active participation in shaping strategy – from what was historically quite often a once/year cursory review and approval of the management-only developed strategic plan. The report is based on late-2015 roundtable input from more than 1,200 directors and senior executives across the country who shared their views on the board’s role in strategy in the context of increasing global volatility and uncertainty.

Among the noteworthy roundtable survey (of approximately 200 directors & C-suite executives) findings:

• 95% are either very or somewhat concerned that the high degree of uncertainty and volatility poses a significant threat to their company’s strategy.
• 78% are either very or somewhat concerned that management tends to use “more of the same” assumptions re: key factors and uncertainties in the external environment in setting strategy.
• 49% are only “somewhat satisfied” and 14% are not satisfied that management has an effective process to scan and monitor changes in the external environment on a regular basis in order to test the continuing validity of the critical assumptions at the core of the company’s strategy.

See the report’s Ten Recommendations for Strategy Engagement, this Accounting Today article, and my prior blogs on the board’s role in strategy:

– Board Approach to Strategy & Risk
– Redefining the Board’s Role in Strategic Planning

More on “The Mentor Blog”

We continue to post new items daily on our blog – “The Mentor Blog” – for TheCorporateCounsel.net members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:

– Revenue Recognition Standard: Implementation Benchmarking & Guidance
– SEC Enforcement Action Database Launched
– Cybersecurity: The Board’s Role
– Survey: It’s Time to Brief Directors on Related Party Transactions Standard
– Survey: Corporate Governance & Exec Comp Practices of Top 100 Companies

– by Randi Val Morrison