Shareholder voices are louder than ever to the corporate ear!  According to the recent Ernst & Young study, “Four key trends of the 2012 proxy season,” there is a positive trend toward increased company-shareholder engagement and strengthened board communications.  The study states that “the steady increase of investor influence is compelling institutional investors to strengthen their governance programs and be more accountable for their own role in shaping the capital markets.”Why do shareholders now have a bigger role in corporate decisions?  The study describes that “boards are using engagement to address investor concerns, secure support for proposals put to a shareholder vote and mitigate potential exposure to activism by increasingly well-coordinated and vocal investors.”

With increased shareholder engagement, corporations will benefit from improved shareholder relations, as a result of a better understanding of and responsiveness to shareholder concerns.  However, they will be challenged to “strike a balance” between investor responsiveness and ensuring that “their governance practices are appropriate to the company’s specific circumstances.”  They will also need to develop communication plans for successful shareholder dialogue.  The benefits and challenges will promote corporate transparency and open communication in the investor community.

To learn more about the 2012 proxy season trends, click here.

 

By Brittany VanderBeek, Intern