NYC Comptroller's Office Elaborates on Boardroom Accountability 2.0 Campaign

By Randi Morrison posted 12-05-2017 09:42

  

Skadden's "Preparing for the Shareholder Proposal Season" is particularly noteworthy for its summary of NYC Assistant Comptroller Mike Garland's recent remarks concerning the Comptroller's current Boardroom Accountability Project 2.0 board diversity-focused campaign:

Mr. Garland noted the view that many companies already utilize a version of a director skills matrix in their board succession planning and that the Boardroom 2.0 matrix was intended to be illustrative and not prescriptive. Mr. Garland said the New York City Comptroller viewed disclosure of race/ethnicity and gender as extremely important. Finally, Mr. Garland noted that initial responses to Boardroom 2.0 have been positive and that there is no current plan for a shareholder proposal campaign comparable to the New York City Comptroller’s proxy access shareholder proposal campaign.

The current iteration of the Boardroom Accountability campaign is among a number of shareholder proposal-related topics anticipated to occupy a role in the 2018 proxy season and discussed in the memo, which summarizes the key points addressed by panelists (including the NYC Assistant Comptroller) in a recent Skadden webinar.

As previously reported, according to Equilar based on 2017 proxy statements:

  • 18.4% of the 500 largest US-HQ'd and listed companies ("Equilar 500"), and 7.7% of the Russell 3000 included a skills matrix in their 2017 proxy statements
  • Diversity was included as an attribute for 18.8% of directors included in Equilar 500 matrices
  • 45.1% of the Equilar 500 disclosed board composition by gender
  • 39.8% of the Equilar 500 disclosed race or ethnicity
  • 57.1% of the Equilar 500 included director photos

A recent Society benchmarking survey (112 respondents) revealed these and other noteworthy statistics regarding current matrix use and disclosure practices:

  • 72% of respondents' currently use a board skills and/or attributes matrix or similar tool for internal planning purposes or to assist with proxy disclosure drafting.
  • Approximately 23% of respondents currently disclose a board skills and/or attributes matrix in their proxy.
  • For those respondents that currently include a matrix in their proxy that discloses information about each individual director, 26% disclose skills & experience; 17% disclose tenure; 16% disclose independence; and 12% disclose age. Very few of this group disclose race/ethnicity, gender, or sexual orientation.
  • 55% of respondents currently disclose in their proxy individual directors' board diversity attributes other than skills, experience and independence, but most of that group (87%) does so in a non-matrix format. Of those that make this disclosure - in whatever format - nearly 90% disclose age; 83% disclose tenure; 55% disclose gender; and 40% disclose race/ethnicity. Disclosure of gender and race/ethnicity is sometimes made indirectly, e.g., via photos (most common), prefixes.

See also the sample director age, tenure, gender and diversity disclosures and graphics, and board skills matrices and associated discussions beginning on page 88 of Donnelley's 2017 Guide to Effective Proxies, and additional resources here and here.

Equilar's board matrix data is included in its more comprehensive annual "Board Composition and Recruiting Trends" report. This report is complimentary to Equilar subscribers, who can access the report by logging into their accounts. Society members who are not Equilar subscribers may contact Equilar to request a complimentary report.

This post first appeared in last week's Society Alert!
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