Given the intense investor and stakeholder focus on executive pay and director performance, as well as climate risk, ESG, and long-term value creation, engagement with shareholders and stakeholders must remain a priority.
Institutional investors and stakeholders are increasingly holding boards accountable for company performance and are continuing to demand greater transparency, including direct engagement with independent directors on big-picture issues like strategy, ESG, and compensation. Indeed, transparency, authenticity, and trust are not only important to investors, but increasingly to employees, customers, suppliers, and communities – all of whom are holding companies and boards to account.
The board should request periodic updates from management about the company’s engagement activities:
- Does the company know, engage with, and understand the priorities of its largest shareholders and key stakeholders?
- Are the right people engaging with these shareholders and stakeholders – and how is the investor relations (IR) role changing?
- What is the board’s position on meeting with investors and stakeholders? Which independent directors should be involved?
In short: Is the company providing investors and stakeholders with a clear picture of its performance, challenges, and long-term vision – free of greenwashing? Investors, other stakeholders, and regulators are increasingly calling out companies and boards on ESG-related claims and commitments that fall short.
Strategy, executive compensation, management performance, climate risk, other ESG initiatives, talent, and board composition and performance will remain squarely on investors’ radar during the 2023 AGM season. We can also expect investors and stakeholders to focus on how companies are adapting their strategies to address the economic and geopolitical uncertainties and dynamics shaping the business and risk environment in 2023. Having an “activist mindset” is as important as ever.