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03 June 2019 • Articles

Listed @ ASX

Tone from the Top. Culture and strategy must be a twin focus for boards when engaging with investors

Proactive and regular engagement with boards helps investors evaluate a company’s culture, purpose and reputational risk. Thoughtfully-planned interactions between boards and investors have become critical, strategic exercises. They feed into how investors vote and should minimise the impact of opportunistic activism. When we ask investors what their goals are when engaging with boards and management, most are focused on two things: understanding the company’s business strategy and capital allocation and insight into how the board oversees corporate culture, wrote Maria Leftakis, Morrow Sodali's CEO Australia, on Listed@ASX.

Directors will continue to be judged on their competency, with investors also shining a spotlight on boardroom transparency. Among the many factors investors include in their assessment of individual board members, skills and independence remain critical factors. They also expect professional experience, followed by gender and ethnic diversity. Investors also want boards to undertake regular and robust evaluations on their performance, either internally or by an external party. In line with the fourth edition of the ASX Corporate Governance Principles and Recommendations and the local appetite to assess whether a board is fit for purpose, the board skills matrix is becoming an important strategic tool to articulate director skills alignment with strategy and renewal, Leftakis continued.

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