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Welcome to the first edition
of BoardRoom for 2018.
Last year, we launched “What Matters”, a series that profiles some of the biggest issues for directors through resources, events and courses. This edition of BoardRoom launches our first theme for the year – stakeholder and shareholder engagement.
Whether you call it shareholder engagement or shareholder activism all depends on where you sit on the issue being debated that day, but there can be no doubt that shareholders and stakeholders are now more engaged than ever before.
The KPMG Board Leadership Center has identified that engagement and activism is expected to increase with momentum for ESG issues such as climate change and board diversity increasing as investors become “more active, more assertive, and more public with their stances than in the past”.
KPMG notes that a shift in engagement has occurred: “Two or four years ago, unless you were one of the biggest [investors] … you didn’t have a realistic expectation that you would get a response from the company. That has changed.”
Growing expectations around transparency have significantly increased the pool of people and organisations interested in our businesses and the way we operate. No longer is it just our shareholders, our staff and our direct customers who have expectations of a relationship and an expectation of communication. The interested bystander now plays a huge role in our social licence to operate. The ripples of our business impact on the community and environment around us are waves – and often tsunamis that can be especially hard to surf in these social media times.
The upcoming US proxy season is going to be an interesting one. Pay is likely to remain top of the agenda, as most public companies will be required, for the first time, to include pay ratio disclosure in their 2018 proxy statements. A survey by law firm Sherman & Stirling identified that gender pay was one of the most common compensation-related shareholder proposals of the 2017 season and recommended directors seek a review of any gender pay disparity within the organisations they govern.
Pay is also likely to remain on the agenda here in New Zealand, especially since the new government has announced a review of the Equal Pay Act, a strengthening of collective bargaining rights and the potential for industry-wide fair pay agreements. Pay is no longer something private that we don’t discuss over the dinner table.
Our “What Matters” editions are intended to inform and challenge you on the issues ahead and to help lead the conversations in boardrooms around the country.
We hope this edition and the upcoming “What Matters” events at IoD branches provide food for thought.