Company directors should...


1. Understand their duties as directors under the Companies Act 2006, and in particular acknowledge the relevance of considering long-term factors, including relevant environmental, social and governance issues, and the reputation of the company for high standards of business conduct, in fulfilling their duty to promote the success of the company.

2. Acknowledge that long-term value creation in the interests of shareholders is best served by strategies which focus on investing appropriately to deliver sustainable performance rather than treating the business as a portfolio of financial interests.

3. Act to ensure that the intermediation costs associated with a publicly traded company are kept to a minimum.

4. Ensure that corporate reporting is focused on forward looking strategy.

5. Facilitate engagement with shareholders, and in particular institutional shareholders such as asset managers and asset holders, based on open and ongoing dialogue about their long-term concerns and investment objectives.

6. Provide information, in the context of corporate reporting and ongoing shareholder engagement, which supports shareholders’ understanding of company strategy and likely long-term creation of value, including by agreeing a range of performance metrics relevant to the company.

7. Communicate information to shareholders which aids understanding of the future prospects of the company, even if this means going beyond (but not against) the strict requirements of accounting standards, for example on market valuations.

8. Not allow expectations of market reaction to particular short-term performance metrics to significantly influence company strategy.

9. Refrain from publishing or highlighting inappropriate metrics which may give a misleading impression of anticipated future company performance.

10. Be paid in a way which incentivises sustainable long-term business performance: long-term performance incentives should be provided in the form of company shares to be held until after the executive has retired from the business.

Read the next section:
Regulatory background to Stewardship Engagement

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