Shareholders should back only qualified directors

RECENTLY, I went to a rather sparsely attended AGM. Before the voting for the election of the directors began, I asked the chairman a number of questions.

The board has four independent directors, three of whom (including the chairman) having served between 10 and 12 years; the board and committees are relatively inactive based on formal meetings; the company pays additional fees for chairs and members of each committee, including for an executive committee that had no formal meetings during the past year; director fees appear on the high side relative to similar-sized companies and based on the number of directors and how active the board and committees are; and it has a wholly non-executive board of directors. I did not have deep concerns about the company but wanted to understand the board's rationale.

The chairman and another independent director were cordial in answering my questions. However, I was not fully convinced that the board was paying sufficient attention to board renewal and did not feel there was sufficient rationale provided for certain resolutions. I voted against some resolutions. To me, it was the company's responsibility to provide sufficient justification for shareholders to support a resolution.