A great deal of focus by Activists has been on the Board of Directors of companies, usually focused on the board's approach to CEO compensation, strategic oversight, outreach to major investors and so on.
The focus has now moved to the Board Members themselves. The key examples of recent attention have been on “over-boarding” – setting a limit on the number of boards a Director may sit on.
The other has been board “refreshing.” This matters to Institutional Investors.
For example, long-tenured Directors are of concern to investors and of course their attendance at Board Meetings.
The most recent spotlight has been on Director Compensation, with lawsuits having been filed, challenging compensation of Directors.
The prudent approach is for companies to evaluate their Board Members in light of the attention being placed on Board Members. Then, adopt a policy on tenure, the number of boards that a Director can sit on - publicize the policies adopted, and to provide a closeout of the compensation issue seek shareholder ratification as an Advisory vote on Director’s compensation.
It is best to get out ahead of the curve and foreclose an issue Activists can exploit.
From your Friends at Laurel Hill
INDEPENDENCE | EXPERIENCE | RESULTS