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Since Corona, it has become even more important to shareholders that board members are “up to date” and available quickly. Mandates in many companies are no longer accepted.
Spring is the season of general meetings in business. Company boards of directors are now accountable to their owners. Because of the current crises, shareholders are keeping an even closer eye on the board members. That’s what Christoph Wenk, partner at Swipra, a company that specializes in good corporate governance, finds out.
«During the Covid crisis, all companies worldwide were affected at practically the same time and the boards of directors had to meet at the same time. Those who were on too many boards of directors made such ad hoc meetings more difficult,” says Wenk. The availability of board members is still an issue. This is because of the war in Ukraine, which again affects all companies more or less simultaneously.
Points list creates clarity
Therefore, the shareholders want the board members to be more available when they are needed. Wenk refers to a list that awards one point for each VR seat and a VR presidency counts twice.
So far, a maximum of five points has been tolerated. Some investors have now lowered the maximum to four points for 2022: “You are now deselecting people with five normal VR mandates,” explains Wenk. More and more shareholders expect their board members to hold a maximum of three additional mandates.
Company perspective versus investor perspective
For voting rights advisors from the Actares organization, the number of mandates is a main criterion for the approval or rejection of boards of directors. Karin Landolt, Co-Managing Director of Actares, states: Actares regularly rejects the election and re-election of people due to too many mandates: “We believe that such an accumulation of mandates is not good.”
Actares regularly rejects the election and re-election of people because of too many mandates.
However, because the large shareholders often overrule the small shareholders, control bodies are elected despite many other mandates. The accumulation of too many mandates, the so-called “overboarding”, is being observed more and more critically by the shareholders, according to Wenk.
«Experience» against availability
However, Wenk emphasizes that it is essential to differentiate between the company perspective and the investor perspective. Because the former want board members with experience and thus prefer multiple mandates, while the latter rely more heavily on availability as a criterion for good corporate governance. Two aspects that are being examined more closely because of the corona pandemic and the Ukraine war. One thing is clear: Good corporate management has become more demanding and takes time.
Investors rely more heavily on availability as a criterion for good corporate governance.