Hugessen Consulting Dinner for Directors and Active Investors

December 2017

In November 2017, Hugessen Consulting hosted a dinner in New York City with investors and directors in our network to discuss and exchange perspectives on the ever-expanding role of investors in the governance of publicly-traded companies. Dinner was attended by a mix of experienced US and Canadian corporate directors and shareholder representatives across a spectrum of investing models: private equity, hedge fund, and active managers. We were also joined by members of our NYC-based partner, Steven Hall & Partners.

We summarize below select themes from the discussion:

Developing a Sound Strategy and Tying Compensation to It

  • The importance to shareholders of having issuers articulate a strategy to create economic value for shareholders was discussed; once a sound strategy has been developed to achieve this goal, compensation design and metrics should follow
  • There was much discussion about desirability from the shareholders’ perspective for incorporating return on capital metrics in executive compensation programs to compliment growth metrics

Director Led Engagement Between Directors and Shareholders

  • Agreement from both directors and shareholders on the benefit of and need for meaningful discussion led by independent directors on important board-level topics (e.g. oversight of strategy, performance, executive compensation)

What the Shareholder Community Can Do

  • Recognition that shareholders “have no one to blame but themselves” for sustained misalignment between company performance and executive pay; there has been limited action from institutional shareholders to use available tools (e.g. outreach to boards, and voting against directors and/or Say-on-Pay when there is no (or limited) responsiveness)