AGM season will need to be more revealing study shows
Institutional investors want more detailed information about boards of directors, business strategies and environmental, social and governance (ESG) policies from the companies they invest in.
The demand was discovered in a survey of 49 global institutional investors with a combined AUM of U$31 trillion by global consultancy Morrow Sodali.
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Investors looking ahead to the 2018 annual meeting season identified three key areas where portfolio companies can improve:
- Clear articulation of a company’s business strategy and goals;
- Directors’ skills, qualifications, experience and individual contribution to the effectiveness of the board;
- Detailed business rationale for board decisions and their alignment with strategy and financial performance
The survey highlighted that diversity is less important to investors than directors’ skills and experience and that executive pay will come under greater scrutiny.
There is also expectation that collaboration of investors around a broader range of annual shareholder meeting topics will increase exponentially this year.
Activists may find that they get greater support from institutional investors as long as they have credibility.
Finally, ESG policies are either fully or near-fully integrated into investment decision making. Investors also expect more detailed information around materiality and sustainable metrics linked to long-term business strategy.