Open your mindset to the bigger picture: for a better annual meeting ... look beyond the annual meeting.

• Author: Silverman, David
• Position: INVESTOR RELATIONS

IN THE WAKE of the financial crisis, the long-term trend of boards and management teams listening to the perspectives and ideas of their major shareholders has gathered new momentum. Boards are working harder in an environment of greater regulatory accountability, and more companies than ever are earnestly trying to take good governance seriously. Yet annual meetings remain emblematic of the limitations of the process-oriented approach to corporate governance to which most companies still adhere.

For the most part, companies still approach the annual meeting primarily as a requirement that must be satisfied, and secondarily as an employee communication event. For many companies the annual meeting is the only time during the year when they ostensibly discuss the board with their investors. Despite the fact that boards are generally more qualified, more engaged, and more knowledgeable about their companies than ever, the prevailing goal of most annual meetings--"bring it to closure"--harkens back to an era of unimpressive boards.

I believe companies should be marketing governance as a strength, emphasizing that shareholder capital has the right people and the right structure around it to provide long-term value. A bigger-picture approach to corporate governance by boards and their companies not only would benefit investors, it also could help address the common complaint among management teams over "short-termism" within the investment community.

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As a long-term shareholder--Blue Harbour typically takes significant minority positions in companies that are open to our ideas for unlocking value, and we expect to hold our positions for a multi-year time period while companies execute their strategies--I believe the quality of the board and management and their willingness to promote transparency is absolutely critical. Over a three-year time horizon, any company's circumstances can and will change in unknowable ways, whether due to the economy, currency fluctuations, technological developments, new competitors or a host of other variables. So even more important than the quality and credibility of any particular set of assets or business strategy is the skill and experience of the board and management team that I'm relying on to regularly test and reassess the strategy and adjust it or overhaul it as changing conditions require.

Provide the tools

If companies want to attract long-term shareholders--the kind of shareholders who, for example, will support a temporary reduction in earnings for the betterment of long-term value, or stick with a company through a rough period and in so doing dampen stock volatility--they should provide the tools for understanding their long-term potential. No shareholder should expect a company to provide, for example, detailed...