Quorum Update: The Shareholder-Director Exchange Provides New Tools for Boards (Quorum, March 2014)


In the October 2013 issue of Quorum, Jim Woolery, Cadwalader’s Chairman-elect, noted that “the evolving dynamic between boards and the shareholders they serve presents new challenges that require a different set of tools in the boardroom… Relations among boards and shareholders of all types should be rethought with an eye toward identifying differences in perspectives in a timely manner.”

In order to address these challenges, in February Cadwalader announced a notable and innovative initiative, the Shareholder-Director Exchange (SDX). SDX represents the collective best thinking of a group of leading independent directors and representatives from some of the largest and most influential long-term institutional investors – including BlackRock, Vanguard and State Street – on why, how, and when boards and institutional investors should engage directly with each other.

Working closely together, this group of directors and institutional investors – together with Cadwalader and its partners Teneo Consulting and Tapestry Networks – developed the SDX Protocol, which presents the best practices of leading companies and investors in a way that fosters greater dialogue among market participants for the benefit of all parties.

The 10-point SDX Protocol provides guidance to public company boards and shareholders on when engagement is appropriate, and how to make these engagements more effective and beneficial to both parties. By relying on the SDX Protocol, boards will now have a set of tools aimed at demystifying the engagement process with investors, and, importantly, ensuring that this process works effectively for both parties and ultimately results in greater overall value for all shareholders.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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