In recent decades, shareholder activism has rarely been a topic of concern. Today, shareholder activism is a lot more common. Various incidents and economic changes have eroded much of the trust that boards and shareholders long enjoyed. Shareholders of today are taking a proactive approach to board performance. The change in the relationship has prompted boards to be more receptive to shareholder activism. In fact, some board directors see value in the feedback that they get from shareholders. PwC published its Annual Corporate Directors' Survey, in which 80% of board directors indicated that shareholder activism was forcing them to take a strong look at capital allocation, strategy and execution.
The 5 Mistakes Boards Make With Shareholder Activism
Before boards can effectively engage with shareholder activists, they need to be aware of some of the common mistakes companies make that prompt shareholder activism. Following are five top mistakes that companies make:-
Failing to Know What an Activist Knows
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Failing to Refresh their Boards
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Not Being Transparent About the Opportunities They're Pursuing
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Failing to Establish Relationships Between the Board and Shareholders
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Failing to Use Technology to Support Board Activities
How Boards Can Prevent Shareholder Activism
Something that can really make a difference in talks with activist shareholders is divulging that the board uses Diligent Boards and the suite of software solutions that comprise Governance Cloud for managing board activities. The Board Assessment tool is a valuable complement to the Nom Gov, the succession planning tool that helps boards narrow down their top choices for board director and CEO vacancies. The tool allows boards to define their search by demographics, age, experience, region, sector, discipline and other demographics for over 125,000 potential candidates. Succession planning committees can use the tool to gain insights into the board's current strengths and weaknesses by looking at individual directors and the whole board. In our business world that is constantly moving, shareholders want the assurance that boards have the right technology infrastructure in the boardroom to meet governance challenges head-on. That means fewer mistakes. Diligent is a top innovator and the leader behind the concept of modern governance. Modern governance is the practice of empowering leaders with technology, insights and processes to fuel good governance that organizations require to thrive and endure in today's fast-paced world.Media Highlights
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