Marty Lipton concedes that corporate executives should engage more constructively with investors and follow their recommendations on esg, stock buybacks, and long-term value.
Clearly articulated plans are necessary to gain and keep the support of these investors. A company should not leave an opening for an activist with a more attractive long-term plan.
Board participation in the development and approval of strategy should be effectively communicated in letters to these investors, annual reports and proxy statements. The description should include the major issues debated by the board and how they were resolved.
A company should recognize that ESG and CSR issues and how they are managed are important to these investors.
A company should develop and communicate its procedures for engagement by management and directors with these investors. In addition, a company should facilitate direct engagement with directors by these investors who request it.
A company should support national policies that are designed to achieve long-term value creation. A company should support major investment by government in infrastructure, a rational tax policy that encourages long-term strategies and other policies that encourage and support long-term growth on both a company and a macro basis.
These investors do not favor stock repurchases at the expense of long-term investment.
These investors recognize that there is no need for quarterly earnings guidance, if a company has a clearly articulated long-term strategy. These investors also recognize that quarterly guidance is inconsistent with the long-term investment strategies that they are encouraging.