Almost half of US institutions unhappy with quality of shareholder engagement, PwC survey finds
Investors in the US are unhappy with how boards communicate with them, according to a PwC survey that finds 48 percent of institutional shareholders are ‘dissatisfied’ with board engagement.
Shareholder engagement ranks second on a list of common investor complaints, according to the survey, which finds that 61 percent of respondents consider the assessment of director performance inadequate. At the same time, however, almost half (48 percent) say they have seen an increase in the frequency of communication with directors of companies they invest in.
The survey asked respondents to describe the level of direct communication with various directors, executives, proxy advisers and regulators over the course of the last year or last three years. Over the course of the last 12 months, direct communications with executives improved for 39 percent of US investors, the survey shows. About 27 percent report more exchanges with proxy advisory firms and 24 percent say they have heard from regulators more often.
Such changes are more pronounced over the past three years, with 55 percent of investors saying they collaborated with directors more, 42 percent seeing improvements in access to executives and 30 percent reporting better lines of communication with proxy advisory firms. More than a third (36 percent) of respondents say regulators are talking more.
The survey, which focuses on investors’ opinions of boards of companies they invest in, also shows that 73 percent of respondents engage with companies on the results of say-on-pay votes, while 70 percent seek contact on other issues related to executive compensation. About 67 percent engage on a company’s overall governance profile, while 55 percent discuss events in the media.
Large investors, or those with at least $1 bn in assets under management, are even more likely to highlight pay, with 82 percent engaging on both say-on-pay votes and executive compensation. At 27 percent, far fewer seek to engage companies on issues in the media.
When asked to rate the importance of certain attributes in a director, 82 percent of investors emphasize the importance of financial expertise. Risk management expertise comes next, mentioned by 79 percent of investors, followed by operational expertise, at 76 percent.
The number of investors who say they focus on director independence when deciding whether to vote in favor of a director candidate, meanwhile, has surged to 90 percent this year from 75 percent in a survey last year.
