Once again, Georgeson and Cuatrecasas have analyzed the behavior of foreign institutional investors and their proxy advisors in the IBEX-35 companies and the top 40 companies on the Spanish continuous market during the proxy season, to help them prepare for their next shareholders meeting and anticipate investors’ demands.
The report, “Corporate Governance and Institutional Investors: Preparing for the 2020 Proxy Season,” was presented at the Cuatrecasas Madrid headquarters.
Board refreshment: more diversity, transparency and planning
Yet again, the structure and make-up of boards of directors was one of the most important issues of the 2019 proxy season, as the good governance of a listed company requires board members who are qualified and spend enough time carrying out their duties. Yet again, the structure and make-up of boards of directors was one of the most important issues of the 2019 proxy season, as the good governance of a listed company requires board members who are qualified and spend enough time carrying out their duties. There were more votes against in the Top 40 on the Continuous Market than in the Ibex-35, probably because Ibex-35 companies are more used to following international good governance standards.
Institutional investors demand more diversity on boards of directors (in the broad sense of the word, including knowledge, skills, experience and geographic origin). Only with an adequate combination of profiles on the board can companies deal with the growing complexity they face and enrich the decision-making process from different angles. Companies must predict their needs to determine which competences and skills they need on their boards of directors and ensure the selection processes for new directors are fit to meet those needs. Those predictions should be reflected in a matrix of board competences, which should ideally be public. Currently, only five Ibex-35 companies publish their competence matrix. The appointments and remuneration committee will be essential both in assessing the performance of the board and its committees and in renewing their members.