Report: Institutional Investors Want More Accountability, Engagement From Corporate Boards In 2016

A report, released recently by executive search firm Russell Reynolds Associates, interviewed institutional investors to find out what governance trends they foresee in 2016.

Likely trends include more shareholder engagement – especially on ESG issues – and a sharper focus on board diversity and composition.

From the section of the report dealing with the United States:

— There will be a focus on improving the quality of engagement between investors and boards, including through individual meetings between investors and board leaders. Some institutional investors have been disappointed by their encounters with directors, describing conversations as formulaic and scripted. The less authentic and more scripted the conversations, the more institutional investors questioned the quality and effectiveness of the board.

— Investors are pushing to have boards designate one or two directors as point people who will engage with investors meaningfully and appropriately about the board’s role in strategy development, executive compensation, and CEO succession planning.

— Boards will start to look for more investor-savvy directors, whether from the investment community or from the ranks of current and former CEOs and CFOs who have dealt with investors regularly.

— At the same time, investors will be under pressure to improve the quality of their own engagement with boards—for example, by limiting “gotcha” questions.

Read the full report here.

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