Home -> Law Blog Directory -> Corporate & Securities Law Blogs -> Institutional Shareholder Services -- Corporate Governance Blog

Corporate & Securities Law

: Institutional Shareholder Services -- Corporate Governance Blog

Board-Shareholder Dialogue: Why They?re TalkingSubmitted by: Stephen Deane, Governance Exchange

For all the talk about board-shareholder dialogue, there has been little information about what goes on when the two sides sit down to talk. A new RiskMetrics report seeks to fill that gap by presenting case studies of six companies whose board members met directly with investors to discuss corporate governance and executive compensation.

In researching and writing the paper, I was struck that everyone interviewed ? board directors, corporate executives, and investors ? all spoke positively about their experiences. Underlying that unanimity, though, is a wide variety in the approaches that boards are taking in their dialogue with shareholders. Pfizer?s directors famously met with the company?s largest shareholders in a vigorous two-way discussion on compensation practices. For other companies, such as Bristol-Myers Squibb, the meeting was more of a listening exercise for board directors. The board at McDonald?s Corp. brought in a panel of outside experts for a half-day discussion on an issue raised by shareholders. Home Depot engaged in dialogue to rebuild relations with investors. Lead Director Bonnie Hill met with shareholders who were highly critical of the company?s compensation practices ? and then returned to show how the board had taken their viewpoints into account. UnitedHealth engages with shareholders in two ways: on an ad hoc basis, and in a separate, formal shareholder advisory committee on board nominations. Occidental Petroleum has adopted features of a road show in an expanding series of meetings with investors.

Late last month, when Oxy announced that its board had approved a Say on Pay policy and would support federal ?say on pay? legislation, Chairman and CEO Ray R. Irani paid tribute to the dialogue. He observed, "In recent years, we have engaged in direct discussions with stockholders on various important governance issues, including 'say-on-pay???

Looking ahead, the market downturn will likely spark a rise in board-shareholder dialogue.

To find Key Findings from the report, please click here.

The full version of the report is available on Governance Exchange ? an online community exclusively for board directors, corporate executives, and institutional investors. Governance Exchange provides an innovative, secure and high-quality online environment to facilitate constructive dialogue on corporate governance. For more information on Governance Exchange, please click here.

Full post as published by Institutional Shareholder Services -- Corporate Governance Blog on February 10, 2009 (boomark / email).