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For the full proposal of institutional investors supporting a "Fifth Analyst Call," see

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The Harvard Law School Forum on Corporate Governance and Financial Regulation, March 20, 2011 posting


The Fifth Analyst Call: Investors Seek Greater Communication with Directors

Posted by Scott Hirst, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Sunday March 20, 2011 at 10:19 am

Editor’s Note: The following posts comes to us from Deborah Gilshan, Corporate Governance Counsel at Railpen Investments, and Elizabeth McGeveran, Senior Vice President at F&C Asset Management.


A group of major and influential global institutional investors from North America, Europe and Australia , led by the UK’s Railpen Investments and F&C Asset Management, are seeking to build open and constructive dialogue with US boards of directors through a concrete, easy-to-implement solution – an idea we are calling a “Fifth Analyst Call.”

In a nutshell, companies would host an open call for their investors prior to the annual meeting – a fifth call added onto the calendar of quarterly analyst calls, with the focus on corporate governance. Prior to the annual meeting, investors consider important details related to the issuer, including whether or not to endorse a company’s compensation plan and the actions of the directors during the year. For their part, issuers produce a detailed proxy statement which represents the considered decisions of officers and directors. This is the natural time for a substantive, practical discussion about corporate governance issues, including compensation. The proxy statement offers a perfect opening for dialogue between shareholders and independent directors such as the lead director.

We would like to introduce a forum where investors can pose thoughtful questions and challenges, and hear directors’ views that are not filtered by management or by proxy advisory firms. The “Fifth Analyst Call” would also serve as an efficient mechanism for issuers to reach beyond the handful of their largest investors to their broader investor base. A recorded call is easily posted on the company’s website for wider market access.

As global investors, this sort of direct engagement on corporate governance issues is routine in other markets in which we invest, such as the United Kingdom, Australia and the Netherlands, where board directors devote substantial time and attention to discussing corporate governance issues with their shareholders.

In a speech to the National Association of Corporate Directors’ Annual Corporate Governance Conference in October 2010, SEC Chairman Mary Schapiro stated her belief that “it is vital that shareholders and board members move beyond the minimum required communications and become truly engaged in the shared pursuit of high quality governance. For boards and their companies, engagement means more than just disclosure. It means clear conversations with investors about how the company is governed — and why and how decisions are made.”

We offer the “Fifth Analyst call” as one way in which boards and shareholders can achieve this aim, and move beyond reliance on the proxy statement as the sole corporate governance communiqué. Whilst cognizant of concerns around Regulation Fair Disclosure (Reg FD) breaches, we consider that such considerations need not act as a barrier to dialogue between shareholders and board directors. In her speech to the International Corporate Governance Network in July 2009, in response to a question as to whether Reg FD may be used by some companies to avoid reaching out to shareholders, Chairman Schapiro clarified that “Regulation FD does not restrict communications between companies and their shareholders”’ nor does it “prevent companies from seeking out and listening to the views of investors.”

In the wake of the new corporate governance provisions introduced under the Dodd-Frank Wall Street Reform and Consumer Protection Act, it would be in all of our best interests to find more direct, efficient, and thoughtful ways for investors and boards to communicate. We trust that companies and their advisors will consider the merits of such a call, as shareholders and board directors undertake new ways to work cooperatively to achieve our shared interests of productive and profitable companies that are sustainable in the longer term.



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