One of 2014’s biggest corporate governance stories was the seemingly inexorable rise in board-shareholder engagement with real-time, two-way interaction between public company board members and institutional investor representatives.

This article examines that story and assesses the underlying drivers that suggest growth will continue over the next decade.

2014: the year of engagement

In 2014, a number of regulators, standards setters and private coalitions in major capital markets took action to support such engagement. In brief:

•United States: In February, the Shareholder-Director Exchange (SDX), a working group comprising leading independent directors and representatives from large and influential US public companies and institutional investors, released the SDX Protocol. This offered guidance to boards and shareholders of US public companies about when board-shareholder engagement is appropriate and how to make the interactions more effective. Later in the year, institutional investors in the SDX working group sent a letter to Russell 1000 companies in the United States, endorsing the SDX Protocol.

In March, as part of a project on investor engagement, the Conference Board Governance Center released its own recommendations regarding board-shareholder engagement. Polls from the second half of 2014 suggest that more board members are communicating directly with institutional investors. PwC reported that 66 per cent of boards of US public companies communicated directly with institutional investors, compared to 61 per cent the prior year.