Shareholder influence under question: ICGN conference

The ability to appoint and dismiss company board directors is the most important shareholder right according to an overwhelming majority of delegates at the International Corporate Governance Network (ICGN) annual conference, who were more cautious on whether shareholders could actually influence corporate governance once they had the right to vote.

Delegates at the conference, which was attended by more than 430 institutional investors and their service providers in Sydney, Australia this week, believe the prime purpose of shareholder rights is to ensure the accountability of boards.

Through interactive sessions at the conference, the delegates voted that the most effective way to incentivise the best boardroom behaviour was to have more diversity on the board, and more truly independent directors.

However while the conference talked a lot about the right to vote, only slightly more than half of the delegates had faith that once shareholders had the right to vote that they could sufficiently improve corporate governance in companies, according to an impromptu vote of delegates, by Anita Skipper head of corporate governance, Aviva Investors UK.

The key to improving corporate governance, according to delegate votes, was more active and engaged shareholders, while mandatory disclosue of share owners engagement policies, resources and actions was the key to getting share owners to act like owners.

The feedback also found that 78 per cent of delegates believe that mismanagement of conflicts of interest contributed to the global financial crisis.

Suggestions for improving the management of conflicts of interest including the disclosure of all significant conflicts to shareholders and how they have been dealt with, and exclusion of conflicted directors from all discussions and voting issues where they have conflict.

ICGN has members in 45 countries with a collective funds under management accounting for more than $10 trillion.