New guide reinforces benefits of engagement on director nominations

The PRI has launched a paper outlining the benefits and challenges of investor-company dialogue on director nominations, featuring best practices and lessons learnt from the US and France. 

Engaging on director nominations: an investor guide emphasises that greater disclosure from companies on their nominations process can help shareholders assess the quality of corporate governance structures. Equally, it underscores the need for investors to be proactive on this front by, for example, asking investee companies questions on issues related to: succession planning; existing board composition; the skills, experience and qualifications of nominees; and board performance reviews. 

Overall, the report finds that a blend of market forces and peer pressure, aided by investor engagement, are driving up standards of corporate governance in relation to how directors are appointed – a positive development for companies and their shareholders. However, there is no room for complacency on either side. 

Olivia Mooney, Manager, Corporate Governance, at the PRI said: “Director nominations and elections represent some of the most fundamental ownership rights for shareholders, with the role of investor-company dialogue in corporate governance gaining prominence. Drawing on top-level insight gleaned from the US and France, our latest guide reinforces why a robust nominations process is crucial for board effectiveness and, ultimately, company and shareholder success.”

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