Shareholder activism has forced companies to become more attentive to investors in recent years and is prompting greater focus on corporate governance, says SEC chairman Mary Jo White.
Speaking to a conference on governance held by European and US officials and experts, White added that the public perception of activist investors has changed since the 1980s and 1990s and they now receive wider support and more engagement from corporations.
‘I think most would agree that the advice on how to respond to shareholder engagement today is quite different from the advice companies were getting 30 years ago, or even 10 years ago,’ she said. ‘The process has become less defensive and more proactive. We are seeing a concerted effort to persuade shareholders of the wisdom of management’s choices and practices. That is a good thing.’
The chairman made the comments in an opening speech at the 10th annual Transatlantic Corporate Governance Dialogue organized by the European Corporate Governance Institute at the SEC’s headquarters in Washington, DC. The conference was also scheduled to discuss the power of proxy advisory firms and other governance-related issues.
White called on companies to work to further increase shareholder engagement, including direct engagement from members of the board. ‘Engagement with shareholders should mean more than just mailing out the annual proxy statement and conducting the annual meeting,’ she pointed out. ‘It should mean proactive outreach, and clear, direct and honest communications about how and why decisions are being made.
‘Companies must work to inform their shareholders, to convey information about their governance policies and practices and to convince shareholders to vote, on the merits, for the company’s nominees for directors and for management’s proposals. And the board of directors is – or ought to be – a central player in shareholder engagement.’
White also acknowledged dramatically opposing views on the role of proxy advisory firms on governance, saying they ‘are seen by some as enhancing shareholder engagement’ while ‘others assert that proxy advisory firms are impeding true shareholder engagement.’
The comments came ahead of a roundtable hosted by the SEC today to discuss in depth the power and role of proxy advisory firms.
