Overboarding: New Investor Policies Causing Huge Drops in Director Support
This isn’t news to those of you who experienced it – and unfortunately, plenty of people I’ve talked to have. But this PJT Camberview memo highlights the unusually low votes that some directors are getting this year (in the 70th percentile range) – as a result of new overboarding policies at some institutional investors (especially those that were announced once proxy season was already underway, since at that point it was really too late to do anything about it). Here’s an excerpt:
In a sign of growing investor assertiveness, significant opposition to directors of Russell 3000 companies this year increased to its highest level since 2011 despite a year-over-year decrease in negative proxy advisor recommendations, according to a June ISS Analytics report. A contributor to this decline was new or stricter overboarding policies put in place by leading institutional investors such as Vanguard, BlackRock and Boston Partners. Active public company executives sitting on more than two boards were particularly hard hit, and a number of directors saw their support drop 25 or more percentage points on a year-over-year basis.
Investors’ stated concern with ‘overboarded’ directors is that they may not have sufficient time to dedicate to their roles, particularly when an activism, M&A or crisis event hits one or more of the companies on which they serve. Tighter overboarding policies may become more prevalent in the coming years, with direct implications for board diversity, succession planning and the way that directors and companies manage and track their board commitments.
-Liz Dunshee, TheCorporateCounsel.net July 17, 2019
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