Boardroom Tools

Investor Engagement During COVID-19

By NACD Staff


Committees and Roles

In brief: During times of crisis, directors face many challenges in fulfilling their duties. Despite their many competing obligations, the board’s primary responsibility is still to the shareholders. This tool intends to help directors gain a better understanding of what investors expect to hear about when engaging with boards during the COVID-19 crisis, and how boards can create effective crisis management plans with investors in mind:

  • Based on a thorough review of investor letters, NACD provides insight into investors’ expectations for shareholder engagement amid the crisis.

  • Directors will learn what investors expect from the board’s oversight of board composition, financial resiliency, human capital, and operational risk. 

  • Directors will gain an understanding of which key operational topics investors expect to be addressed in crisis-management plans.

Most relevant audiences: nominating & governance committee members, General Counsel, Corporate Secretary, Lead Director

COVID-19 has disrupted every facet of business, including investor engagement. While management teams are heads down focused on ensuring business continuity and financial resiliency, directors are stepping up by engaging with investors directly. As directors prepare for investor engagement, it’s critical to remember that investors are not monolithic. Some investors are forging forward with their original ESG agendas, while others are following the Principles for Responsible Investment guidelines: “Most discussions with affected companies and sectors should be re-focused on issues relating to COVID-19 and the response to it. Discussions on other topics should be postponed where possible to allow management and boards the ability to focus on crisis management.” To help directors prepare for these conversations, NACD has reviewed investor letters, engagement guides, and webinars to create a list of the top engagement topics.

The focus on the board’s compensation committee has never been sharper. The components of compensation plans and the link between compensation and company performance are under intense scrutiny from shareholders, employees, policymakers, the media, and other stakeholders. The Report of the NACD Blue Ribbon Commission on the Compensation Committee revisits NACD’s 2003 Report of the NACD Blue Ribbon Commission on Executive Compensation to highlight the new environment in which compensation committees—and, more broadly, boards—are now operating. It recommends that the compensation committee and board work together to establish an executive compensation philosophy that supports the company in creating long-term, sustainable value.

The report includes ten specific recommendations for compensation committees to consider when evaluating their compensation philosophies. It also provides practical tools, such as sample compensation committee charters, a compensation committee assessment, and guidance on executive employment contracts.