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Time for a Boardroom Reckoning

While executive pay got the most attention at this year's annual general meetings, investors and the public are deeply concerned about several other issues as well. Some are better known than others, but all will require urgent attention in the coming months.

LONDON – Gone are the days when annual general meeting season – the time of year when executives and directors of publicly traded companies gather to report on their activities, accounts, and plans to shareholders – went by unnoticed. Ever since the 2012 “Shareholder Spring,” shareholders have stopped acting as passive recipients of companies’ reports or obedient rubber-stampers of their plans and pay packages, and started actively and publicly questioning board decisions, airing grievances, and submitting proposals for change. This shift is long overdue, and it will transform how business operates, whether companies like it or not.

Over the years, the number of issues that attendees have taken up during annual general meetings has grown exponentially. In fact, as several large-scale investors have told me, there are so many issues in need of attention that it can be difficult to prioritize them. Still, some issues have taken on particular prominence.

This year, the issue that was raised most frequently was executive pay. What stands out is that discussion of the issue was based not just on a sense of unfairness arising from extreme pay disparities and an apparent lack of regard for performance, but also on hard evidence, including a clearer understanding about how pay packages and bonuses work. This raises the likelihood that current grievances will result in real change.

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