Board-Shareholder Communications

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Monday’s closing plenary brought boardroom and shareholder investor representatives together to discuss improving communications. The moderator, NACD President and CEO Ken Daly, was joined onstage by The Honorable Victor Fazio, director of Northrop Grumman, Ice Energy, and the U.S. Capitol Historical Society; Anne Sheehan, director of Corporate Governance for CalSTRS; Debra Perry, director of Korn/Ferry International, BofA Funds Series Trust, and Sanford C. Bernstein Fund, Inc.; and Robert Schifellite, president of investor communication solutions for Broadridge Financial Solutions, Inc.

The session began with a frank discussion about the implications and lessons learned from “say on pay” and “say when on pay.” Fazio began by saying that the lessons were a “work in progress” and they were still in the process of improving communications and disclosures. He continued by saying that the say-on-pay rules likely improved the alignment between goals and pay. Ultimately, Fazio saw the new rules as an “opportunity to communicate better with… shareholders.”

Anne Sheehan saw the issues a bit differently and said the latest say-on-pay results weren’t successful in improving communications between shareholders and directors. Sheehan suggested that boards and investors weren’t making enough effort to actually communicate when say-on-pay voting results fall below a certain threshold. She continued by saying that when a vote fell below 75-percent to 80-percent approval, directors should take it as a sign to communicate with investors. Schifellite agreed with this notion and said that when you have anything lower than 80-percent approval, “you have a real problem.”

Daly followed up by asking, “What do you do when you’re only getting 74 percent?” Perry summarized the panel’s response by saying that any say-on-pay outcome was a “blunt instrument” and both parties need to rely more on communication.

To this end, Schifellite offered a Broadridge product that is meant to bridge the divide between the investor and director community through the power of technology. Broadridge’s Shareholder Forum provides a solution for directors to directly communicate with verified investors, both retail and institutional.

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