Two Critical Trends For Public Company Boards

March 2018 Overture



Public company Boards are much in the public eye – sadly frequently for the wrong reasons. While still aspirational, the public company Board has become a much less comfortable place to sit. Business disruption and increasing shareholder and stakeholder scrutiny combine to create a near perfect storm for many of our major companies.  It helps to explain recent patterns in IPOs as well as the shrinking number of listed versus private companies.

In Fidelio’s work of building public company Boards – through Search, Evaluation and Development – we see two clear Boardroom trends emerging:

1. A heightened focus on composition of the Board and the Executive team

2. A significant increase in shareholder engagement

Both trends clearly place additional demands on the Board. But the focus on composition and greater shareholder engagement also contribute solutions to some of the toughest problems that Boards face. As Larry Fink recently commented in conversation with McKinsey: “I actually love being a public company because this process of board oversight forces stronger behaviours.”

Similarly, as Fidelio supports Chairmen in building Boards fit for the future, we also see these two very clear trends – focus on composition and increased shareholder engagement – in the first instance creating an extra burden on Boards but in the medium term having the potential to significantly increase Board effectiveness.

Board and Executive Composition

Shareholders and regulators have always cared about the calibre and composition of the top team. Traditionally questions arose when things went wrong. This is changing. Fidelio is now finding a much higher level of interest with shareholders and regulators seeking to understand the wisdom of appointments at a much earlier stage and asking Boards probing questions about who is sitting at the top table and why. Boards face increasing scrutiny on composition as follows:

Shareholder Engagement

The second clear trend that Fidelio discerns is a heightened expectation of Board level engagement with shareholders. In the UK, for example, following the introduction of the Stewardship Code in 2012, shareholders have clearly taken seriously their responsibility to engage with investee companies.  While traditionally investors focused on engagement with management, the Stewardship Code led to an increased scrutiny of governance and correspondingly greater dialogue with the Board. Nor is this trend confined to the unitary Board. We also see evidence of shareholders in German and Dutch companies with two-tier Boards for example seeking greater access to the Supervisory Board. This in turn has had the following impact of Board behaviour:


Fidelio is an advocate for the important role public companies play and the distinct contribution of public company Boards. As disruption and anti-business sentiment picks up, the role of public company Boards becomes increasingly unenviable but all the more important. Shareholders are right to insist on greater insight into how Board appointments are made and how they align with the strategic objective of the business. Smart shareholders also track how diversity is being hard-baked into a company’s decision making and risk management framework. The governance of Search has arrived.

Equally we are seeing the ability of a public Board to engage effectively with both shareholders and stakeholders as being a differentiator. It’s symptomatic of a well-run company. This too is influencing Board composition as well as Board development with shareholder engagement being woven into the induction process. Boards also care increasingly about who occupies the IR office. This is too important to leave to a chance recommendation by a friendly banker.

A commitment to the governance of Search, as well as a deep understanding of shareholder engagement at Board and Executive level underpins Fidelio’s approach to Evaluation, Development and Search. Indeed these themes recur through Fidelio’s A Seat at the Table Programme for senior female Executives and Directors as we build the pipeline of tomorrow’s female CEOs and Chairs. Thus Fidelio continues to make a critical and highly innovative contribution to Boards fit for the future.

For further information on Fidelio’s contribution to building Boards fit for the future through Search, Development and Evaluation, please contact us.

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