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Corporate Governance

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Corporate Governance

Shareholder-director engagement

The corporate governance landscape is changing. Investors and companies are increasingly focused on more effective governance practices, in conjunction with the greater frequency and scale of activist campaigns, and the increasing reliance on proxy advisory services. 

These changes have led long-term institutional investors and US public company boards to review their approaches to shareholder-director engagement. More institutional investors are seeking meetings with the public company directors they elect – and more directors are accepting these requests. Some boards are proactively requesting meetings with significant shareholders.

The trend has attracted attention, including from US Securities and Exchange Commission (SEC) Chair Mary Jo White. In December 2013, she emphasized the importance of direct engagement by stating, "the board of directors is – or ought to be – a central player in shareholder engagement."

Not all public companies, boards, and investors support additional engagement, but all should be prepared for more frequent engagement requests.


  • The Shareholder-Director Exchange (SDX™ Protocol)

    Over the last two years Tapestry Networks has been asked for guidance on why, how, and when US board directors and investors should engage directly with each other. Tapestry, Cadwalader, Wickersham & Taft, and Teneo Holdings, together with Broadridge Financial Solutions, brought together directors and investors to answer this question. That working group, the Shareholder-Director Exchange (SDX™), developed the 10-point SDX Protocol which provides guidance to public company boards and institutional investors on when direct engagement is appropriate and how to make it valuable and effective.

  • Board-shareholder engagement

    Michelle Edkins, managing director and global head of corporate governance and responsible investment at BlackRock, and Colin Melvin, CEO of Hermes Equity Ownership Services joined audit committee chairs for a discussion of board engagement with shareholders. Both boards and shareholders stand to gain from deeper engagement, and each should reach out to the other. The investor guests also said that they are interested in more information on audit-related issues.

  • A dialogue with institutional investors

    Directors face increasing pressure to meet directly with their companies' largest institutional shareholders. Lead Director Network members met with Shawn Johnson of State Street Global Advisors and Richard Breeden of Breeden Capital Management to discuss the upswing in board-shareholder engagement, topics for board-shareholder discussion, and the benefits and risks of direct engagement. Members and guests concluded by identifying effective board-shareholder engagement practices.

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