The UK's Times newspaper recently reported that "leading institutional investors are gearing up for their biggest assault on corporate Britain by demanding the right to vote out the board of every listed company each year". This follows Barclays' announcement that its entire board will put itself up for re-election at next year's annual general meeting. Is such an annual vote for the entire board desirable? Will it encourage directors to act with the short-term in mind? How does it promote and encourage appropriate succession planning? What will be the impact on directors' remuneration? Would an advisory vote concerning the directors' performance be a better alternative?
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My instinct is that boards have been far too unaccountable and that annual elections might make them focus on performance for the company as a whole if their jobs were on the line each year. Only one or two would need to be removed 'pour encourager les autres'.
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