Skip to content

29 March, 2023

Subscribe Advertise About Us
  • My Account
  • Register
  • Log In
  • Log Out

Board Agenda

  • Governance
  • Strategy
  • Risk
  • Ethics
  • News
    • Categories

      • View All
      • Board Moves
    • net zero plans

      Investors seek commitment to net zero planning

      Climate change campaigning investors have written to 107 companies, asking for prompt proof of net...

    • Mars ESG News round-up: this week in governance

      Mars CEO defends ESG and purpose; US president vetoes anti-ESG bill; trust can negatively affect...

    • ChatGPT technology Could ChatGPT technology join the board?

      Although governance may stop artificial intelligence replacing anyone on the board today, AI may soon...

  • Insight
    • Categories

      • View all
      • Governance
      • Strategy
      • Risk
      • Ethics
      • Board Expertise
      • finance
      • Technology
    • non-compete clause

      When employees become the competition

      How might you be affected by a global move towards the banning of employment contract...

    • data decision

      How to boost decision making

      Innovative digital tools can help boards to deliver against strategic objectives, but it is the...

    • remote working

      Navigating the new world of work

      Firms need to focus on building an inclusive environment and a culture of trust to...

  • Comment
      • View all
    • uncertainty in 2023

      Being a CEO in 2023: how to navigate uncertainty

      Agility, planning in the shorter term and bravery will all stand chief executives in good...

    • A week of business moving to the centre of human rights

      A week of events signals the initiatives underway to have companies play a central role...

    • audit reform IIA Why we need audit reform right now

      There is an "urgent need" for reform to the audit landscape as well as internal...

  • Interviews
      • View All Interviews
      • Podcasts
      • Webinars
    • life sciences podcast Reform of NHS levy ‘harms UK competitiveness’

      Boards in the pharmaceutical and life sciences sector face increasingly difficult decisions, according to a...

    • Board priorities 2023 Board priorities 2023: tact, trust and transparency

      We asked key figures what would help boards this year. The answers ranged from 'smarter...

    • Group of investors/shareholders in glass building Climate issues likely to figure prominently at next year’s AGMs

      A recent webinar heard that say-on-climate voting is expected to rise, while ESG remains a...

  • Careers
      • View all
      • Selection
      • Board Moves
    • female ceo Less than a third of FTSE 100 executives are women

      In Europe as a whole, only 7.7% of top companies’ chief executives are female, gender...

    • board size Performance declines as boards grow in size

      Researchers found that investment dropped by 2-3 percentage points as companies passed from 12 to...

    • Silicon Valley governance Silicon Valley improves its governance

      Big technology companies are stealing a march over other top corporates when it comes to...

  • Resource Centre
      • White Paper Downloads
      • Book Reviews
      • Corporate & Advisory Services
    • Diligent report

      Forrester: The Total Economic Impact Of Diligent Board & Leadership Collaboration

      Diligent Board Leadership & Collaboration reduced the risk of confidential material loss, supported decision-making, and...

    • Gender diversity barometer

      Barometer of Gender Diversity in Governing Bodies in Europe

      The 2023 Barometer of Gender Diversity in Governing Bodies in Europe looks at the 16...

    • geopolitical risk airmic

      Navigating geopolitical risk

      Today, the future feels less secure, and optimism is more restrained. Taking decisions in an...

  • Events
  • Search by topic
    • Governance
    • Strategy
    • Risk
    • Ethics
    • Regulation
    • ESG
    • Investor Relations
    • Selection
    • Board Expertise
    • finance
    • Technology

Board independence revealed as key issue for investors in 2020

by Gavin Hinks on September 16, 2019

Nearly two-thirds of investors say proxy adviser ISS should recommend voting against the election or re-election of a board chair if they are not “independent”, regardless of the overall independence of the board.

SIngle red chair in a white boardroom

Image: ImageFlow/Shutterstock

The independence of company chairs in Europe could figure heavily in the deliberations of one of the chief proxy advisers as it formulates its policies for the 2020 season of annual meetings.

Institutional Shareholder Services (ISS) found that nearly two-thirds (62%) of investors who responded to a survey believe the proxy adviser should recommend voting against the election or re-election of a board chair if they are not “independent”, regardless of the overall independence of their board.

That said, a majority of non-investors (company directors and corporate advisers) believe ISS should stick with its current policy of only recommending a vote against any board director, including the chair, “if their non-independence would lead to the board being considered insufficiently independent overall”.

The results draw ISS into either prioritising independence as a general board quality or as an aspect of each individual board member.

The results come as part of ISS’s annual Global Policy Survey. The research is conducted each year in advance of the proxy adviser compiling its voting policies for the following season. A draft policy is expected to be published for consultation later this year.

ISS received 396 responses for this year’s survey, 128 from investors and 268 from non-investors.

Last year a paper from ISS executive director Subodh Mishra noted that board independence was an “evolving” issue in Europe. While German and Austrian boards exhibited high levels of independence (excluding worker representatives), despite facing no formal corporate governance requirements, boards in other countries struggled to meet the clearly defined thresholds set by their national codes.

However, the paper noted that independence tended to improve as watchdogs updated their guidelines.

“As countries update their corporate governance standards, they make incremental changes to board independence requirements,” the paper says. “In general, higher board independence standards tend to correspond with higher levels of board independence.”

Limits on board positions

The ISS survey also questioned respondents on overboarding—the issue of how many board positions directors have in their portfolios—only to reveal contrasting views.

Of the investors, 42% said “four” public company board positions was the right limit for directors, while 45% said that a maximum of two board roles should be set for chief executives (inclusive of their CEO position).

Meanwhile, among non-investors the position was slightly different: 39% said non-executives should be subject to no limit, while 36% said CEOs should also be subject to no mandatory threshold. Each board, they said, should be free to decide the limits they consider appropriate.

A tough stance from ISS on overboarding would be in line with movement elsewhere. Fund manager LGIM this year said executive directors should have no more than one extra board position.

BlackRock has also recently toughened its own position, suggesting non-executives should have to explain why they have more than three positions.

The ISS survey also asked respondents about climate change. Sixty percent of investors said “all companies should be assessing and disclosing climate-related risks and taking action to mitigate them where possible.”

But in a finding that may surprise many, when asked if their organisation should consider climate a “high priority” in risk assessment, 35% of non-investors chose the option: “Maybe—each company’s appropriate level of disclosure and action will depend on a variety of factors including its own business model, its industry sector, where and how it operates, and other company-specific factors and board members”.

One in 20 investors said that climate change risks were  “too uncertain” to be factored into corporate risk assessment models. More than one in ten—11%—of non-investors agreed with them.

Other recent research from ISS seems to show company directors and investors beginning to agree more often on the importance of ESG factors.

Research shows that the number of withdrawn proxy proposals—a widely accepted measure of boards compromising on an investor proposal—has risen significantly, especially proposals relating to the environment. ESG-related withdrawn proxy proposals now amount to 27% of the total, up from 20% in 2018 and 17% the year before.

  • Facebook
  • Twitter
  • Google+
  • LinkedIn
  • Mail

Related Posts

  • Facebook owner Meta names Tony Xu as board director
    January 18, 2022
    Meta logo and Facebook logo

    Xu is co-founder, chief executive officer and chair of DoorDash, the leading online food delivery company in the US.

  • Howard Schultz rejoins Starbucks board as interim CEO
    April 11, 2022
    Starbucks sign outside shop in Warsaw, Poland

    The coffee giant’s founder has returned to the boardroom as Kevin Johnson retires after five years at the helm.

  • Veolia board names Estelle Brachlianoff as next chief executive
    January 27, 2022
    Veolia logo on website

    Chief operating officer Brachlianoff will take over as Veolia CEO from Antoine Frérot in July, with Frérot remaining as chair.

  • Investor interference: how should your board respond?
    April 4, 2022
    A group of investors

    You must resist telling investors to stop interfering, however tempting—your board does not want to gain a reputation for hostility.

For thoughtful journalism, expert insights on corporate governance and an extensive library of reports, guides and tools to help boards and directors navigate the complexities of their roles, subscribe to Board Agenda

board independence, climate change risk, investors, ISS, non-executive independence, overboarding, Proxy advisers

Search


Sign up to our Newsletter

Receive independent news, thoughtful journalism & expert insights about leadership, corporate governance & key boardroom issues straight to your inbox every week.

SIGN UP

Follow Us

 

 

 

 

Most Popular

  • Could ChatGPT technology join the board?
  • Larry Fink puts focus on finance and inflation
  • Call for FTSE 100 companies to give guidance on ethics
  • News round-up: this week in governance
  • ESG resilience requires leaders to manage without certainty

Featured Partner Profile

Diligent

Diligent

Diligent Corporation, which was founded in 2001, is headquartered in New York, NY with a European HQ in London. Diligent’s modern governance platform empowers leaders and teams at every level of the organisation to digitally transform and create ...

Featured Partner Resources

2022 AGM Season Forecast: An Eye on The Horizon

To help prepare for AGMs in 2022, Equiniti (EQ) hi...

Stakeholder Engagement: A Roadmap for UK Plc Boards

This guide aims to provide directors and their col...

Digital Boards: How Technology Adoption is Driving Culture Change and Resiliency

Digital tools proved their worth to boards during ...
Leadership in AI report

Leadership in AI

This report from Board Agenda and Mazars, in assoc...
Creativity in a Crisis: a Boardroom Map for Innovation

Creativity in a Crisis: a Boardroom Map for Innovation

In the uncertain times at the height of any crisis...
Board Directors Guide to D&O Liability Insurance - November 2020 - AIG & Board Agenda

Board Directors' Guide to D&O Liability Insurance

Directors face liability over a range of new threa...
Leadership-in-Risk-Management-Board-Report

Leadership in Risk Management: Board Report

Board Agenda, in association with Mazars and INSEA...
Director's Guide to Internal Investigations

A Director's Guide to Conducting Internal Investigations

An internal investigation must be handled meticulo...

 


 

ADVERTISE – FREE CORPORATE LISTING

FREE - Add your company profile to our Corporate & Advisory Directory.
ADD

ADVERTISE – PROMOTE YOUR REPORTS & WHITEPAPERS

FREE - Add your company profile to our Corporate & Advisory Directory.
Add Resource

Register Free

Register to receive free article views, selected resource downloads, and all the latest news alerts straight to your inbox. Register


  • Editors & Contributors
  • Editorial Advisory Board
  • Corporate & Advisory Services
  • Media Marketing Solutions
  • Contact Us
  • Careers
  • Board Director Network
  • Terms & Conditions
  • Privacy Policy
  • Cookies
  • Sitemap
|