The number of US directors who communicate directly with institutional investors has increased this year, although most of them do not look at their company’s protocols and practices governing shareholder dialogue with the board, according to a study by PwC.
About 66 percent of directors say they communicated directly with institutional investors this year, an increase from 62 percent last year, the PwC Annual Corporate Director Survey shows. At the same time, more than half of them say they don’t review their company’s policies governing subjects including which directors should do so and what topics they should discuss.
The vast majority (94 percent) of directors say they are at least ‘somewhat concerned’ about the potential for giving off mixed messages to stakeholders and almost 90 percent say they are worried about the ‘agenda’ of some stakeholders in their communications with directors.
The survey of 863 directors, more than 70 percent of whom serve on boards of companies with more than $1 bn in annual revenue, also shows that the decisions of proxy advisory firms gained influence this year on matters of executive compensation. Just over half (51 percent) of directors described the firms as at least ‘moderately’ influential, compared with 49 percent last year.
The survey shows that more than 80 percent of directors believe that proxy advisory firms use a ‘one-size-fits-all’ approach to governance and that the firms use a business model that creates potential conflicts of interest. Also, about eight in 10 directors say the policies of proxy advisory firms do not align with the needs of the company or the best interest of its investors.
About 48 percent of directors say compensation consultations are ‘very influential’ in director decisions on executive compensation this year, up from 36 percent last year, according to PwC data. And about 30 percent of directors say they enhanced their communications with their company’s employees, the largest percentage of any individual group.
