Recently, I talked to Michael Levin – of “The Activist Investor” fame – about his recent note entitled “Radical Board Transparency” that is an idea for a new type of shareholder engagement. If your role has been to serve as a gatekeeper for the board, you’ll have to be open-minded on this one for a minute to consider it. It’s food for thought – and I’m not sold on it myself.
As laid out in greater detail in his note, Michael’s idea is to allow investors (both portfolio managers and proxy committee members) to interact directly with directors. Directors would be trained not to break the law (including Reg FD) – and to really know the company’s business and they would interact with investors without chaperones.
- The benefit to companies is that directors would better understand what investors are looking for. Companies also would benefit by having investors that are more (hopefully) comfortable with the board, which comes in handy if an activist makes that company a target.
- The benefit to investors would be that they would have a better relationship with the board, becoming more comfortable (hopefully) with those stewards. They wouldn’t necessarily have access to better material information – but they would have a better feel for who is watching the store.
- The benefit to directors would be a better understanding of what investors want. And a better understanding of the company too as they did their homework in advance of investor engagement.
Anyway, let me know what you think…
