Monday, August 10, 2020 / 05:00 AM / By Proshare
Research / Header Image Credit: EcoGraphics
Shareholder's influence over Board action used to be strong during the years of late Mr. Akintunde Asalu was President of Nigeria's premier shareholder's association. Since the Asalu days, a few other associations have emerged, but the collective impact of these associations have been tame.
The less powerful corporate shareholders are, the less transparency and internal control shareholders expect to see. The more vocal corporate shareholder lobbyists are in influencing Board decisions the more integrity there is in the running of businesses.
The best combination of shareholder and Board power is where both are strong. The strength of both corporate parties ensures that management is effective and efficient and return on equity (ROE) is high and sustained.
Weak shareholders allow Boards to become complacent; this in part explains why poor performing companies tend to delist from the Exchange as soon as they realize that they may be on the path to recovery, hard-pressed Boards do not want their affairs on the pages of newspapers or online media and opt to keep their operations beyond prying public eyes.
Illustration 12: Shareholders Power Matrix
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