Forum Home Page [see Broadridge note below]

 The Shareholder ForumTM`

Fair Investor Access

This public program was initiated in collaboration with The Conference Board Task Force on Corporate/Investor Engagement and with Thomson Reuters support of communication technologies. The Forum is providing continuing reports of the issues that concern this program's participants, as summarized  in the January 5, 2015 Forum Report of Conclusions.

"Fair Access" Home Page

"Fair Access" Program Reference


Related Projects 2012-2019

For graphed analyses of company and related industry returns, see

Returns on Corporate Capital

See also analyses of

Shareholder Support Rankings


Forum distribution:

More confusion about professional engagement proposals


For other recent news reports of professional proposals to address responsibilities for investor communications, see

NOTE: To clarify confused reports of its Task Force recommendations in the article below, The Conference Board provided the following statement for distribution to Forum participants. (Full reports of the Task Force recommendations can be found here.)

In his July 22 New York Times article, Andrew Ross Sorkin rightly acknowledges the increasing focus on and practice of directors and investors engaging directly. However, in his piece, Mr. Sorkin misrepresents the view of The Conference Board Governance Center Task Force on Corporate/Investor Engagement. While it is true that the Task Force does not advocate that corporate directors and investors engage directly on every routine issue, the Task Force supports directors speaking directly with investors, particularly in special circumstances such as when investors have lost confidence in a company’s board or management. The directors from institutional investors and from public companies who participated on the Task Force agree that direct engagement between directors and investors on every routine matter is not only impractical given the widely diversified portfolios of most institutional investors, it would not be a good use of time for either investors or directors.


Source: New York Times DealBook, July 21, 2014 column

DealBook Column

Investors to Directors, ‘Can We Talk?’

By  ANDREW ROSS SORKIN    July 21, 2014 8:45 pm

David P. Frick, a member of Nestlé’s executive board, reportedly said that the company’s largest shareholders declined an offer to meet with the chairman or did not show up at the meetings. Credit Michael Buholzer/Reuters

What if lawmakers never spoke to their constituents?

Oddly enough, that’s exactly how corporate America operates. Shareholders vote for directors, but the directors rarely, if ever, communicate with them.

Within the clubby world of directors, communicating with shareholders, big or small, is overtly frowned upon: “We endorse the principle that direct engagement involving directors should not be a routine method of engagement for most U.S. companies and for most investors,” according to the Conference Board Governance Center Task Force on Corporate/Investor Engagement.

That’s why it was so unusual for the chairmen of at least 1,000 large United States public companies to receive a letter this month from a group of shareholders representing more than $10 trillion in assets with a demand: Talk to us. The letter, signed by representatives of some of the biggest investment groups, including BlackRock, Vanguard and Calstrs, insisted that boards open up.

“Engagement between public company directors and their company’s shareholders is an idea whose time has come,” wrote the group, known as the Shareholder-Director Exchange. “We believe that U.S. public companies, in consultation with management, should consider formally adopting a policy providing for shareholder-director engagement.”

What was uncommon about the letter was that it came not from activist investors like Carl C. Icahn or William A. Ackman, but from institutional investors that until recently had traditionally always supported whatever a company’s board recommended. Now, those investors want a dialogue.

The reason boards have long shunned speaking with investors is multifaceted. Management — the chief executive, chief financial officer and so on — usually have meetings with the company’s biggest shareholders. Some directors avoid meetings. worried about speaking with one voice. Most don’t consider it their responsibility. Some are anxious about accidentally disclosing sensitive information. A memo to directors on this topic from the law firm Latham & Watkins was explicitly titled “Dangerous Talk?”

Some chief executives are insecure and don’t want shareholders to get too close to their boards for fear they will have undue influence. After all, most directors rely directly on management and their presentations to understand what’s going on inside the company and what shareholders think.

And then there is this: “Many top executives seem to think that board members cannot be trusted with such interactions,” according to Harvard Business Review. “Yet if directors cannot be trusted to meet with and listen to shareholders, how can they be expected to competently govern a corporation?”

The Shareholder-Director Exchange — which was created by the law firm Cadwalader, Wickersham & Taft and the corporate advisory firms Teneo and Tapestry Networks — has drafted what it is calling the SDX Protocol, a series of guidelines it hopes public companies will adopt and publish to determine when shareholder and director engagement is appropriate.

The guidelines suggest that companies decide under what circumstances a shareholder’s request to meet with directors should be granted: to discuss the board’s composition or management performance, for example. The point is that companies should decide, in advance and transparently, how they plan to communicate directly with shareholders long before a proxy fight were to develop.

Of course, there is a potential downside to all this transparency: If a board becomes too enamored with a particular view from a set of shareholders, it could lead to short-term thinking that undermines long-term performance.

A new study by the Institute for Governance of Private and Public Organizations, looking at a series of other studies about the value of activism, determined that “the most generous conclusion one may reach from these empirical studies has to be that ‘activist’ hedge funds create some short-term wealth for some shareholders as a result of investors who believe hedge fund propaganda (and some academic studies), jumping in the stock of targeted companies.”

There is also the problem of unfair access. Large investors might have the opportunity to meet with directors while small retail investors almost certainly never will.

There is, oddly enough, a counterintuitive reason that shareholders and directors don’t speak. The shareholders despite saying they want a dialogue, actually aren’t interested. According to Tapestry Networks, at a conference, a member of Nestlé’s executive board, David Frick, “talked about a program to invite its largest shareholders to meet with the chairman in various cities in the U.S. and Europe. He said shareholders had either declined or simply didn’t turn up to the meetings.”

Even so, last year’s proxy season showed that only a quarter of the companies in the Standard & Poor’s 500-stock index “publicly reported engagement efforts or policies in their proxy statements,” according to the Shareholder-Director Exchange.

In the age of activism that is clearly not going away, it would seem that some form of engagement from directors with shareholders — rather than directors simply taking their cues from management — would go a long way toward helping boards work on behalf of all shareholders rather just the most vocal.

A version of this article appears in print on 07/22/2014, on page B1 of the NewYork edition with the headline: Investors Ask Boards, ‘Can We Talk?’

Andrew Ross Sorkin is the editor at large of DealBook. Twitter: @andrewrsorkin

A version of this article appears in print on 07/22/2014, on page B1 of the NewYork edition with the headline: Investors Ask Boards, ‘Can We Talk?’

Copyright 2014 The New York Times Company



This Forum program was open, free of charge, to anyone concerned with investor interests in the development of marketplace standards for expanded access to information for securities valuation and shareholder voting decisions. As stated in the posted Conditions of Participation, the purpose of this public Forum's program was to provide decision-makers with access to information and a free exchange of views on the issues presented in the program's Forum Summary. Each participant was expected to make independent use of information obtained through the Forum, subject to the privacy rights of other participants.  It is a Forum rule that participants will not be identified or quoted without their explicit permission.

This Forum program was initiated in 2012 in collaboration with The Conference Board and with Thomson Reuters support of communication technologies to address issues and objectives defined by participants in the 2010 "E-Meetings" program relevant to broad public interests in marketplace practices. The website is being maintained to provide continuing reports of the issues addressed in the program, as summarized in the January 5, 2015 Forum Report of Conclusions.

Inquiries about this Forum program and requests to be included in its distribution list may be addressed to

The information provided to Forum participants is intended for their private reference, and permission has not been granted for the republishing of any copyrighted material. The material presented on this web site is the responsibility of Gary Lutin, as chairman of the Shareholder Forum.

Shareholder Forum™ is a trademark owned by The Shareholder Forum, Inc., for the programs conducted since 1999 to support investor access to decision-making information. It should be noted that we have no responsibility for the services that Broadridge Financial Solutions, Inc., introduced for review in the Forum's 2010 "E-Meetings" program and has since been offering with the “Shareholder Forum” name, and we have asked Broadridge to use a different name that does not suggest our support or endorsement.