How healthy are our companies? 3) Lead for the longer term

https://www.flickr.com/photos/53801255@N07/8737945758

So, with the call from investors and the shorter term outlook of even company Boards themselves, it is not so surprising that activist investors are driving so much change. And in the broader definition of activists, governance teams at the largest institutional holders are themselves playing a role of change agent.

Investors are doing a lot to drive improved transparency and accountability of boards. The cause of proxy access over the last year has shown that "American businesses are increasingly bowing to investors’ demands for greater boardroom clout, with dozens of companies revising their bylaws in recent weeks ahead of this year’s annual meetings." (Investors Gain Greater Clout Over Boards - WSJ). Wal-mart investors have driven Board level discussion on such important issues as wages and guns.

Boards must now engage more pro-actively in this environment. The sinecure is over. It is time to dedicate the time and effort to position their companies in much better standing with the investment environment. From that position, their companies can position their long term strategies and plans in the right way to gain support for those plans. Business drives our economy, and companies know themselves best. Great ideas and talent can win the arguments, whatever the stakeholder scrutiny.



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Wal-Mart Fights Bid to Curb Gun Sales - WSJ: A U.S. appeals court showdown looms next month for Wal-Mart Stores Inc. in a case with potentially broad impact on how much influence investors can have over their companies.

Investors Gain Greater Clout Over Boards - WSJ: "American businesses are increasingly bowing to investors’ demands for greater boardroom clout, with dozens of companies revising their bylaws in recent weeks ahead of this year’s annual meetings. Proxy access, embraced by 117 U.S. companies during 2015, gives shareholders more power to oust directors and influence corporate strategy by letting them list competing board candidates on ballots for annual meetings. About 21% of S&P 500 companies have adopted proxy access, up from about 1% in 2014, according to Institutional Shareholder Services, a major proxy-advisory firm. Big businesses that handed investors the keys to their boardrooms last year include General Electric Co., AT&T Inc., Apple Inc., Citigroup Inc., Occidental Petroleum Corp. and McDonald’s Corp.  These companies typically changed corporate bylaws so owners with at least 3% of their shares for at least three years can propose a significant portion of board members."

The Rise (and Likely Fall) of the Talent Economy - HBR: by Roger L Martin. "As Steven Kaplan, of the University of Chicago, and Joshua Rauh, of Stanford, pointed out in a recent paper, the top 25 hedge fund managers in 2010 raked in four times the earnings of all the CEOs of the Fortune 500 combined...What are those 25 people doing? Essentially, the business of a hedge fund is to trade."

Focusing Capital on the Long Term - Developing Longer-term Mindsets: "We are developing practical tools and approaches to help institutional investors and corporate directors enhance long-term value creation."