Engagement Policies with Active Institutional Investors

Shareholders play a direct role on corporate governance by providing information and discipline.  In today’s turbulent and dynamic scenario, sharpened by the speed of securities transactions raised by technology, the information provider role played by shareholders may be blurred as a market “thermometer”.  Therefore, to provide discipline became large shareholders’ most crucial aspect on corporate governance.

Mr. Vegard Torsnes today advocated on the investors behalf.  Even though NBIM has a strict focus on long term, reliable, that will demand no outflows in the short term and, thus, equity driven investment profile, the high number of assets under the fund’s administration makes deep involvement with all of them unviable.  Nevertheless, integration with operations are desirable, because it establishes a point of contact, increase investor influence and create awareness on the board in case of stake increase.

However, why should company management want to increase shareholder involvement?  Mr. John C. Wilcox clarified the issued by stating that it is important for management to avoid defense posture, create a proactive management relations and increase participation and support. Also, he believes that companies are accountable for closing relationship with shareholders and concluded that “companies get the shareholders they deserve”.

Overall, it is possible to infer that close relationship between these parties are both ways desired.  Constructive attitudes towards shareholders should be on management agenda, but it demands deeper change in the mindset.

November 16, 2012 by Cristiano Cittadino Oliveira/ Fundação Getulio Vargas #CouncilBusinessandSociety

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