Corporate Governance
and ESG
Factors Affecting Stakeholder
Relationships and Corporate
Governance
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Corporate Governance
and ESG
Factors Affecting Stakeholder
Relationships and Corporate
Governance
1. Market Factors
2. Non-Market Factors
Market Factors
Shareholder Engagement Shareholder Activism Competitive Forces
Factors Affecting Stakeholder Relationships and Corporate Governance
1. Market Factors 2. Non-Market Factors
Shareholder Engagement Shareholder Activism Competitive Forces
company’s interactions with its shareholders
This
AGM company’s
board and
management
is great!
Board of Directors
Shareholders
Management
more communication/
contact with
shareholders
Factors Affecting Stakeholder Relationships and Corporate Governance
1. Market Factors 2. Non-Market Factors
Shareholder Engagement Shareholder Activism Competitive Forces
The The company has
board is not AGM communicated the
qualified situation with us and
enough! we trust they are doing
their best!
Board of Directors
Shareholders
The company Management
Change the
is doing so badly entire board!
the entire The
management team management
should be fired! remuneration is
too high!
Dissident Shareholder Groups
Factors Affecting Stakeholder Relationships and Corporate Governance
1. Market Factors 2. Non-Market Factors
Shareholder Engagement Shareholder Activism Competitive Forces
Strategies by shareholders to create change within the company / modify its behaviour.
We demand change!
Proposal for
shareholder
Board of Directors
resolution
Management Activist Shareholders
Raise the issues to other
shareholders / public
Shareholders
Factors Affecting Stakeholder Relationships and Corporate Governance
1. Market Factors 2. Non-Market Factors
Shareholder Engagement Shareholder Activism Competitive Forces
Strategies by shareholders to create change within the company / modify its behaviour.
You are not
allowed to
pursue legal We demand change!
action through
the court!
Shareh
older
Board of Directors deriva
tive
lawsui
ts
Management Activist Shareholders
against the directors,
management, and/or
controlling shareholders
Factors Affecting Stakeholder Relationships and Corporate Governance
1. Market Factors 2. Non-Market Factors
Shareholder Engagement Shareholder Activism Competitive Forces
We demand change!
Board of Directors
I need to take a
Management more active role to Activist Shareholders
increase the value
of my shares!
Hedge funds are
predominant
shareholder activists
Factors Affecting Stakeholder Relationships and Corporate Governance
1. Market Factors 2. Non-Market Factors
Shareholder Engagement Shareholder Activism Competitive Forces
can help align managerial interests with those of its shareholders
Better focus on
shareholder
interests, else we Corporate Takeover
get voted out!
replacement of entire board
and/or management
Board of Directors
Proxy contest
shareholders are persuaded to
Better focus on vote for group seeking control
maximising Group seeking control
Management
shareholder
wealth, else we
get sacked!
Shareholders
Factors Affecting Stakeholder Relationships and Corporate Governance
1. Market Factors 2. Non-Market Factors
Shareholder Engagement Shareholder Activism Competitive Forces
can help align managerial interests with those of its shareholders
Corporate Takeover
replacement of entire board
and/or management
Board of Directors
Tender Offer
shareholders sell their shares
SharesShares
to group seeking control Shares
Management Group seeking control
Shareholders
Factors Affecting Stakeholder Relationships and Corporate Governance
1. Market Factors 2. Non-Market Factors
Shareholder Engagement Shareholder Activism Competitive Forces
can help align managerial interests with those of its shareholders
We can’t let Corporate Takeover
this happen!
replacement of entire board
and/or management
Board of Directors
Hostile Takeover
acquire company without SharesShares
SharesShares Shares
management consent Shares
Management Group seeking control
Anti-Takeover Measures
Staggered Board Not good Shareholder Rights Plan “Poison pill”
for us!
dilutes the value of shareholder requires shareholders to fork out extra
voting rights by eliminating the cash to buy additional shares if a
ability of shareholders to replace takeover group’s holdings reach a
the entire board at once Shareholders certain threshold.
Factors Affecting Stakeholder Relationships and Corporate Governance
1. Market Factors 2. Non-Market Factors
Non-market Factors
Legal Environment The Media Corporate Governance Industry
Factors Affecting Stakeholder Relationships and Corporate Governance
1. Market Factors 2. Non-Market Factors
Legal Environment The Media Corporate Governance Industry
Common Law System Civil Law System
e.g UK, US, India, HK e.g Japan, France, Germany
I am bound to
My rulings can rule based only on
become the law! specifically
enacted laws
Able to appeal for judge to rule Generally not possible to convict
against management actions that when an action is not expressly
are not expressly forbidden by law forbidden by law
Creditors Shareholders
Factors Affecting Stakeholder Relationships and Corporate Governance
1. Market Factors 2. Non-Market Factors
Legal Environment The Media Corporate Governance Industry
Shareholder disputes
with management are
more legally complex
Creditors
RIGHTS generally
more clearly
defined than Shareholders
RIGHTS
Factors Affecting Stakeholder Relationships and Corporate Governance
1. Market Factors 2. Non-Market Factors
Legal Environment The Media Corporate Governance Industry
In the past
Shareholders
Board of Directors
Media
Public Opinion
Management
Dissident Shareholders
Factors Affecting Stakeholder Relationships and Corporate Governance
1. Market Factors 2. Non-Market Factors
Legal Environment The Media Corporate Governance Industry
Today
Better make Shareholders
sure we are on
our toes!
Board of Directors
Media
Public Opinion
Management
@iamactivist
directors and management have more The board is not doing their job in
incentive to be transparent and communicate protecting the interests of PQR Corp’s
more openly with shareholders shareholders!
Dissident Shareholders
Factors Affecting Stakeholder Relationships and Corporate Governance
1. Market Factors 2. Non-Market Factors
Legal Environment The Media Corporate Governance Industry
Board of Directors Corporate Governance
Industry Shareholders
Best Practises Corporate
for Corporate Governance
Management
Governance Rating for
PQR Corp
Factors Affecting Stakeholder Relationships and Corporate Governance
1. Market Factors 2. Non-Market Factors
Legal Environment The Media Corporate Governance Industry
mandate
US-registered
Mutual Funds proxy vote in
best interests of
catalyst fund investors
Corporate Governance
Industry
Factors Affecting Stakeholder Relationships and Corporate Governance
1. Market Factors 2. Non-Market Factors
Legal Environment The Media Corporate Governance Industry
mandate
US-registered
Mutual Funds proxy vote in
best interests of
fund investors
Helped to
promote better Corporate Governance
corporate Industry
governance
Factors Affecting Stakeholder Relationships and Corporate Governance
1. Market Factors 2. Non-Market Factors
Market Factors
Shareholder Engagement Shareholder Activism Competitive Forces
Non-market Factors
Legal Environment The Media Corporate Governance Industry
Factors Affecting Stakeholder Relationships and Corporate Governance
1. Market Factors 2. Non-Market Factors
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