It Doesn’t Pay to Avoid Your Investors;
Take a Trip to Keep Their Faith
Fulton County Daily Report 01.04.10
By Nancy Davis
Recent articles in the national press followed Goldman Sachs’ tenuous discussions with shareholders regarding the controversial issue of executive compensation. The firm ultimately agreed to give shareholders the right to an advisory vote on executive compensation.
While we may not come to agreement on the merits of the debate or the suitability of the outcome, the activity itself should not be brushed aside lightly. Shareholder rights are a hot topic. Best practices suggest it is worthwhile for public companies to conduct “governance road show” meetings with the investment community before controversial issues arise.
Those with proxy voting responsibilities are usually not the same individuals who manage the investment portfolios. A governance road show allows an introduction of company management to a proxy committee member. The meetings normally offer insights and open dialogue about corporate governance practices and proxy voting policies. Both parties can benefit.
While “say on pay” is a hot shareholder topic, there are many others. Also worthy of attention in these road sessions are:
- The basic principles that dictate the governance policies for the organization.
- The underlying code of ethics.
- Standards of practice.
- Accountability for management and employees.
- The compliance programs in place that minimize risk.
- An overview of financial and operational controls.
- Internal and independent audit procedures.
- Board of Director composition, skills and experience
- A review of executive compensation policies
- Provide insight to variability, benchmarking and board approval
- Show its ties to performance and vesting criteria.
Leave time in your meeting to gain an understanding of the investor’s proxy voting guidelines and procedures. Do they adhere to the recommendations of an independent advisory firm? That could be helpful as you enter the next proxy season.
Meetings aside, your company Web site should have easy-to-read content regarding corporate governance policies and the executive management team. However, don’t rely on this or on road shows as your sole means of communicating important information with the investment community. Continue to build a relationship with your major investors and a series of one-on-one meetings with them could provide welcome support in the event controversial proxy issues arise in the future.
About Nancy Davis
Nancy Davis leads The Ledlie Group’s investor relations and business planning programs. She has more than 20 years of leadership experience in corporate finance, strategic planning and public accounting. As Vice President of Investor Relations for six years at BellSouth Corporation, she represented BellSouth to the financial investment community and managed shareholder services for more than 1.2 million shareholders. She successfully led the investor relations organization during a period of significant change and competitive market transformation in the telecom industry.
About The Ledlie Group
A communications-based consultancy, The Ledlie Group helps leading business executives make decisions, capture market position, improve workplace relations, prepare for and manage crises, strengthen community relations and develop media strategy. Family-owned and operated, The Ledlie Group has a leadership with more than 100 years experience in corporate communications. For more information, please visit www.theledliegroup.com.