NIRI Annual Conference 2024: Key takeaways
The NIRI Annual Conference was held in San Francisco on June 9 –11, bringing together investor relation professionals to explore emerging trends and developments in the governance space.
Among the key takeaways from the event include investors stepping up expectations regarding disclosure of director skillsets, as well as how activist campaigns are coming under renewed media scrutiny.
Shareholder activism gains media prominence:
High-profile activist campaigns at U.S. large-cap companies this season have faced significant media attention, making campaign outcomes all the more impactful.
- As of May 28, 2024, primary- and partial-focus activists have secured 12 board seats at U.S. large-cap companies, more than double the five secured in the first half of 2023.
- "This year, proxy contests have been big, front-page events, whereas in previous years they have taken place largely in the background. This means companies cannot ignore this space – there is the potential for an activist to target your company and make it onto the front page," said Stephanie Hill, head of index at Mellon Investments.
- Increased media coverage surrounding proxy fights has far-reaching consequences, with the potential for campaigns to cause reputational harm and impact broader stakeholder behavior.
- Cognizant of these risks, 2024 has played host to more companies reaching settlement agreements with activists. Such agreements often resulted in activists securing minority representation on corporate boards.
Investors seek disclosure of director ESG oversight:
Given improvements in corporate ESG reporting, investors are supporting fewer shareholder proposals and instead seeking disclosure of director oversight and skillsets.
- "As well as more proposals being withdrawn for agreements, some proposals are asking for reporting which has already become table stakes at this point," Rekha Vaitla, investment officer at the California State Teachers' Retirement System (CalSTRS), said.
- Going forward, investors want to understand director skillsets and ESG oversight at the board level. Director education on emerging issues is also crucial to ensure companies are prepared to navigate new challenges.
- "Director oversight and skillsets are topics we are seeing more companies disclose in their proxy statements, which is a welcome development," Brianna Castro, senior director of U.S. research at Glass Lewis, said. "We want to understand how director skills translate to oversight at the board level."
Start preparing for the SEC's climate reporting regulations:
Securities and Exchange Commission (SEC) Commissioner Hester Peirce recommended companies start preparing for the SEC's Climate Rule sooner rather than later, despite current legal challenges.
- "Litigation is not that unusual these days at the SEC, but because the rule got challenged almost immediately, companies are wondering whether to start complying or wait until the litigation is resolved. Companies should start thinking about how best to comply with the requirements now," Peirce said.
- The regulator hopes to provide clear guidance regarding the rule as soon as possible, to ensure companies do not start work on compliance and then find themselves needing to "go back to the drawing board."
Stay ahead of shareholder perceptions with Diligent Market Intelligence:
- Monitor and pre-empt activism by easily identifying activist investors, evaluate their activity strategy using activism vulnerability scores, leverage news alerts, articles and data on the strategies and success of past and current activist campaigns.
- Benchmark governance practices with access to aggregated company and peer group information like board composition metrics and executive compensation benchmarking with exclusive insights from Glass Lewis.
- Understand investor voting behavior by accessing voting insights onleading investors, to understand engagement and business priorities.
- Communicate effectively to the board with easy-to-use dashboards for alignment and better shareholder engagement.
