Grist for my mill in today’s Wall Street Journal. It’s a piece by Vipal Monga titled, “Boards Cozy Up to Investors.” It should’ve been titled, “Boards Run Scared, So They Make Nice.”
Members of corporate boards are finally feeling obliged to do what they never wanted or intended: interact with investors. They used to get away with turning to management to address any issues that arose. No longer. No longer are boards protected against shareholders who are irate or have a gripe – for increasingly shareholders threaten to act like the owners they really are.
The numbers remain small, very small. By and large shareholders remain patsies, passive investors rather than active ones. But since the say-on-pay rules mandated by Dodd-Frank have been implemented, “shareholders are increasingly likely to challenge executive pay packages they consider too generous or at odds with their own interests.” Put another way, shareholders are increasingly likely to challenge the boards who determine these pay packages. It’s only one of many reasons board members are beginning to feel the heat. Like so many others in positions of power and authority, they are are no longer immune to public pressure. It’s is why instead of continuing to operate anonymously, behind the scenes, directors are making themselves “available for direct engagement with shareowners.”.