Brookfield Business Corporation: Governance Strength Fuels Long-Term Stability and Investor Confidence

Brookfield Business Corporation (BBUC) has long been a bellwether for institutional investors seeking exposure to diversified, real asset investments. But recent developments highlight a critical underpinning of its success: a governance framework that's not only weathering scrutiny but actively bolstering shareholder confidence. The June 10, 2025 Annual General Meeting (AGM) underscored this, with directors elected with overwhelming support amid structural changes that signal a commitment to long-term value.

A Governance Stress Test, Passed with Flying Colors

At its 2025 AGM, BBUC's shareholders approved the election of all ten director nominees, with the vast majority receiving over 99% “for” votes. Even the lowest-supported candidate, John Lacey, garnered 97.22% approval—a stark contrast to governance struggles at peers like Blackstone or KKR, where leadership changes have sparked investor unease. The results reflect a stable, aligned board structure, reinforced by BBUC's dual-class shareholding: Class B Multiple Voting Shares (75% voting power) and Exchangeable Subordinate Voting Shares (25%). This setup, while sometimes criticized in activist circles, has historically insulated the firm from short-term pressures, allowing it to execute a 25-year track record of compounding value through patient capital allocation.

Structural Evolution Meets Shareholder Demands

Beyond the AGM, BBUC's parent company, Brookfield Asset Management (BAM), executed a pivotal governance overhaul in early 2025. A special shareholder meeting in January approved a restructuring plan to expand its board from 12 to 14 members, with a focus on adding U.S.-based directors to align governance with its growing North American operations. While CEO Bruce Flatt's abstention sparked brief headlines, the 99.8% approval of the resolution—backed by all other directors—highlighted institutional investors' buy-in. This move addresses a key governance gap: enhancing diversity of skill sets and geographic expertise to match BAM's $916 billion in assets under management.

The restructuring also signals a strategic shift toward transparency. By increasing board size and incorporating fresh perspectives, BBUC/BAM aims to counter lingering concerns about leadership succession and decision-making opacity. This is critical for maintaining the trust of index funds and pension plans, which now account for 68% of BBUC's shareholder base, up from 55% five years ago.

Financial Resilience as a Governance Dividend

The governance enhancements aren't just theoretical. BBUC's Q1 2025 distributable earnings rose 30% year-over-year, fueled by its insurance, real estate, and infrastructure portfolios. Meanwhile, the firm's $850 million share repurchase program—executed during market volatility—demonstrates capital discipline. This financial strength isn't accidental; it's the result of a governance model that prioritizes long-term returns over quarterly noise.

Investors should note that BBUC's 5-year total return of 142% outpaces the S&P 500's 79%, a gap largely attributable to its governance-driven focus on “essential service” assets like data centers and healthcare facilities. Even during 2022's market selloff, BBUC's dividend remained intact, supported by a 2.8% dividend yield—a rare combination of income and growth.

Risks and Considerations

No governance model is flawless. BBUC's reliance on virtual shareholder meetings has drawn criticism from minority shareholders who prefer in-person engagement. Additionally, Q3 2024 saw some institutional investors, like Manufacturers Life Insurance, reduce holdings—a sign that BBUC's valuation (15x EV/EBITDA) may be approaching premium levels. However, the firm's 90%+ retention rate among top 20 shareholders suggests core investors remain entrenched.

The Investment Case: Governance as a Compounding Asset

For long-term investors, BBUC's governance framework isn't just a risk mitigant—it's a growth accelerant. The firm's ability to execute multi-decade investments (e.g., its $3.5 billion data center platform) requires a board insulated from quarterly earnings calls. Meanwhile, the BAM restructuring reduces the risk of leadership turnover disrupting this strategy.

At current valuations, BBUC is best suited for investors with a 3+ year horizon. Its 2.8% yield offers ballast against market swings, while its asset-light business model—97% of revenue recurring—provides a moat against cyclical downturns. Short-term traders might chafe at its lack of volatility, but this stability is precisely what makes it a core holding for defined benefit plans and ETFs.

Historical backtesting confirms this strategy's suitability for long-term investors: a short-term approach of buying on earnings announcements and holding for 20 days since 2020 delivered only a 1.4% total return, significantly lagging the benchmark's 31.7%, while facing a peak drawdown of 29.4%. This underscores the risks of seeking quick gains in a stock designed for steady, governance-backed compounding.

Conclusion

Brookfield Business Corporation's governance isn't just a checkbox exercise—it's the engine of its success. With shareholder approval rates near 99% and structural changes that address evolving demands, BBUC stands out in an industry where governance controversies are rampant. For investors prioritizing stability, income, and long-term capital appreciation, BBUC remains a top-tier option. Just don't expect fireworks; this is a stock for those who value compounding over chaos.

Investment recommendation: BBUC is a hold for long-term investors. Consider adding to positions on dips below $25/share, with a 12-month price target of $28–30.