Why is it important?
Accountability promotes ongoing effectiveness, encourages performance and instils confidence and trust. A demonstration of corporate accountability acknowledges responsibility for actions and decisions and the importance of stakeholder views.
Boards must demonstrate accountability for their companies. This includes a preparedness to seek the right information, challenge management, and take appropriate remedial action when things go wrong. We expect directors to be adequately informed about key business issues and properly equipped to oversee management’s delivery of the company’s strategy.
We support the introduction of annual director elections as it drives a more sophisticated and targeted approach to director accountability and provide a regular and timely opportunity for boards and investors to consider director performance. Annual director elections would assists in furthering the culture of engagement with investors and promotes responsiveness.
We reject assertions that annual director elections would promote short-term thinking or risk aversion. There is no evidence to suggest this has occurred in jurisdictions that have already adopted annual director election.