Directors' Cut

"Financial reporting oversight" from PwC is an instructive resource for orienting new audit committee members and informing existing audit committee practices as relates to overseeing the company’s financial reporting. The guide includes links to numerous practical resources and sample dashboards (linked in this post for your convenience).

Deloitte’s “Governing a relevant, effective, and valued internal audit function” discusses the importance and substance of the new Global Internal Audit Standards (effective January 9, 2025) with a focus on the role of the audit committee in the Internal Audit function’s successful adoption and implementation of the new standards.

The CAQ / Ideagen Audit Analytics: “Audit Committee Transparency Barometer 2024” (online here) reveals trends in S&P 1500 audit committee practices and associated disclosure. See key takeaways here.

KPMG revealed board gender, racial/ethnicity, and sexual orientation diversity disclosure and associated director search criteria statistics for the S&P 500 and Russell 3000 as of June 2024. See key takeaways here.

Spencer Stuart’s “2024 S&P 500 New Director and Diversity Snapshot” reveals numerous statistics on the profile of new directors and the representation of diverse directors on S&P 500 boards based on proxy statements filed between May 1, 2023, and April 30, 2024.

KPMG’s “From military service to board service” reveals trends in board representation of senior military officers among S&P 500 boards, commonly identified skills and attributes, and investor perspectives on retired military board representation. The resource also suggests considerations for evaluating senior military board nominees and successfully transitioning from the military to the boardroom.

“AllianceBernstein’s Case for Multigenerational Corporate Boards” discusses recent research correlating multigenerational board age diversity to higher returns across most GICS sectors notwithstanding fairly significant sector variations.

Transparent Disclosure flagged a noteworthy director qualifications proxy statement disclosure that defines what the company deems most relevant for purposes of identifying desired director skills and experiences and how those skills and experiences translate to specific candidate qualifications.

Skadden’s “How Long Is Too Long? Activists Continue To Target Director Tenure” discusses the trend toward proxy advisors, activists, and other investors targeting directors with more than nine years of tenure as non-independent. The resource, which includes S&P 500 term and age limit policy data, aims to help companies take the offensive on disclosure and board refreshment to mitigate the potential for challenge to longstanding, value-add directors.

The SEC charged a former CEO, Chairman, and director of a public company with proxy disclosure rule violations for his failure to disclose a close personal relationship with a company executive that vitiated a director independence determination and associated disclosure. See McDermott, Will & Emery’s memo.

The NACD’s 2024 Blue Ribbon Commission report: “Technology Leadership in the Boardroom: Driving Trust and Value” offers recommendations for robust and proactive board oversight of the company’s use of technology and data. Coverage includes—among other things—board and committee oversight structure considerations; effective delegations of authority; and suggested metrics for management reporting to the board on technology readiness and impact.

The annual “2024 CPA-Zicklin Index of Corporate Political Disclosure and Accountability” benchmarks corporate political spending practices and disclosure among the S&P 500 and the balance of the Russell 1000. See key takeaways on board oversight here.

Spencer Stuart’s pulse survey of nearly 800 public and private company directors reveals actions taken by boards to address CEO succession planning over the last 12 months. See key takeaways here.

ESG Incentive Practices at S&P 500 Companies” from Meridian Compensation Partners benchmarks the use of ESG-related metrics in short- and long-term incentives granted to CEOs at S&P 500 companies based on proxy statements filed between April 16, 2023, and April 15, 2024. See key takeaways here.

Compensation Advisory Partners reported that 75% of the largest 100 US public companies disclosed shareholder-approved director compensation limits in their 2024 proxy statements, a bare majority of which apply to both cash and equity-based compensation. See additional key takeaways here.

Semler Brossy's "ESG + Incentives 2024 Report" benchmarks the prevalence and types of ESG metrics being used by the S&P 500 in their executive compensation programs. See key takeaways here.

DLA Piper’s “Compensation committees: Best practices for paying it right” suggests equity grant practice considerations for compensation committees to effect their oversight responsibilities. Recommended action items relate to or encompass the content of the committee charter, adoption of a formal equity grant policy, proper delegation of authority, timing and strategic alignment considerations, monitoring of grant impacts and market practices, and disclosure.

Debevoise & Plimpton’s “Rethinking Clawback Policies for the 2025 Compensation Season” identifies considerations relevant to adopting discretionary compensation clawback policies that extend beyond those required by the SEC and exchange listing standards with reference to proxy advisor policies and institutional investor guidelines, as well as corporate governance and compliance and risk management practices generally.

Pearl Meyer’s “Technology Oversight and the Role of the Compensation Committee” offers a framework and considerations for the integration of technology into the responsibilities of the compensation committee and, specifically, into executive compensation and succession planning.

Spencer Stuart's annual Board Index imparts robust benchmarking data on numerous aspects of S&P 500 board composition, organization, and process-related practices. Select key takeaways are here. Access highlights, industry sector comparisons, and benchmarking results by topic here.

Among the takeaways revealed by PwC's "2024 Annual Corporate Directors Survey" of ~500 public company directors are these relating to board composition, peer perceptions, board evaluations, board priorities, ESG oversight, and cybersecurity. See PwC’s key takeaways online here.

"Private Company Board Compensation and Governance Survey" from Compensation Advisory Partners and Family Business and Private Company Director magazines reveals select benchmarking data on director pay and governance practices based on a survey of respondents representing predominantly (61%) wholly family-owned or majority family-owned or controlled companies. Key governance-related findings are summarized here.

EY’s “How board committee responsibilities and structures are changing” provides much sought-after benchmarking data on S&P 500 board committee structures and remits based on 2024 proxy statement disclosures and trend data since 2021 (and earlier in certain cases). See key takeaways here.

A&O Shearman's "Corporate governance & executive compensation survey" contains an abundance of benchmarking data for the 100 largest US public companies, as well as a focused review of a number of hot topics including  GenAI governance, Delaware law developments, and the impacts on US companies of EU sustainability disclosure requirements. See key cybersecurity-related takeaways here.

Society members across sizes and industries weighed in on their new director and committee member orientation and onboarding practices. See key takeaways here.

“Board Practices & Composition: 2024 Edition” from The Conference Board and Esgauge, in collaboration with KPMG, Russell Reynolds Associates, and the Weinberg Center for Corporate Governance, reveals benchmarking data on board composition (including director qualifications and skills) and diversity, director overboarding policies, director orientation and education practices, board evaluation practices, board committee structures, and more.

Wilson Sonsini’s “2024 Silicon Valley 150 Corporate Governance Report” benchmarks numerous corporate governance practices and trends among the 150 largest Silicon Valley companies (based on annual sales)—largely concentrated in the technology and life sciences industries.

PwC’s “Why good boards make bad decisions” discusses common behavioral tendencies that can impede board effectiveness and suggests ways in which boards can affirmatively address them to support a positive board culture and group dynamics and promote better decision making. The piece includes suggested action items relating to board evaluations, composition and recruitment, leadership, and meeting practices, and sample board evaluation questions targeting these behavioral factors.

“Leveraging Advisory Boards: A Strategic Solution for Public Company Management Teams” from Woodruff Sawyer explains the potential uses of an advisory board to the management team or the board of directors; advisory board composition and size; common types of advisory boards; advisory board compensation amounts and structures; and topics commonly addressed in an advisory board agreement. The post includes links to other relevant resources.

In addition to providing context regarding boards’ use of GenAI for its activities, Gartner’s "Enhanced Board Oversight Using AI" includes noteworthy examples of routine board processes that may benefit from the use of GenAI and examples of ways in which management may use GenAI to support its reporting to and communications with the board.

“Board Packs: The Elephant in the Boardroom” from the NACD and Board Intelligence shares key findings from a survey of directors on their views of board meeting materials and offers guidance on the substantive content, presentation, length/volume, and timing of distribution of board books and reports / materials included therein.

Nasdaq’s 2024 Global Governance Pulse revealed noteworthy practices and trends on board succession, directors’ skills & experiences, board evaluations, and more.

Nasdaq’s “Emerging Issues for Boards” shares leading practice governance tips and considerations across eight key areas: board effectiveness, leadership, agility, and resilience; strategy & risk management; global instability; emerging technologies; sustainability; regulations; institutional investor, stockholder, and stakeholder engagement; and talent, leadership succession, and executive compensation.

The Society and certain other organizations have long maintained listings of reputable, established director/board education program offerings. See the latest compilations of director education program opportunities from the Society, Cooley, Gibson Dunn, and Woodruff Sawyer.

Teneo’s “DEI Will Survive” reveals the results of its analysis of DEI disclosures in 250 S&P 500 sustainability reports, which was aimed at understanding the impacts of the anti-DEI sentiment on disclosure and underlying practices. See key takeaways here.

Civil rights groups urged Fortune 1000 companies to remain committed to their DEI programs, policies, and practices in the face of the current anti-DEI sentiment, noting the positive implications of diversity, equity, and inclusion efforts on corporate talent and performance.

The Conference Board’s “DEI Under Pressure” demonstrates companies changing their terminology around DEI in response to peer practices, media coverage, and employee pressures, with practices trending toward the use of demographic-specific terms in favor of broader, more “inclusive” terms perceived as less likely to spark legal and political opposition.

More than 30% of ~40,000 investors participating in Vanguard’s proxy voting choice pilot launched in February 2023 selected its Company Board-Aligned Policy, which defers to the portfolio company board’s recommendations on proxy proposals, compared to 43% who chose the Vanguard-Advised Funds policy; 24.4% who chose Glass Lewis’s ESG Thematic Voting Policy; and 2.3% who selected Vanguard’s “Not Voting” Policy.

Fidelity’s updated Proxy Voting Guidelines layer additional director independence criteria on top of relevant listing standards, as detailed here.

LGIM’s updated deforestation policy articulates its deforestation-related approach and minimum expectations for companies in “deforestation-critical” sectors. Companies that fail to meet LGIM’s minimum expectations to have both a deforestation policy and program should expect a vote against the re-election of their board chair. Access additional information here.

T. Rowe Price’s proxy voting summary for the 12-month period ended June 30, 2024, largely reflects a company-specific approach to evaluating proxy proposals in light of particular facts and circumstances and consistent with its proxy voting guidelines. See key takeaways here.

In addition to voting and engagement statistics, State Street’s Q2 2024 “Stewardship Activity Report’ includes deep dives on its environmental and social-related voting support and engagement for the first half of the year.

Wellington Management released an updated Engagement Policy that details its engagement approach with portfolio companies, including its prioritization of engagements based on company-specific, risk-based materiality.

According to its “2024 Annual Stewardship Report,” Dimensional most frequently voted against management’s recommendations at its portfolio companies on proposals relating to shareholder rights and defenses, followed by compensation, and extraordinary transactions.

CalPERS released an overview of its voting practices and decision making for the 2024 proxy season. See key takeaways here.

BlackRock released its updated engagement priorities, stewardship principles, US proxy voting guidelines for the 2025 proxy season, and other expectations documents. See Fenwick’s summary of key updates.

More than 35 primarily US-based investment stewardship professionals responding to PwC’s 2024 Stewardship Investor Survey provided instructive insights on their US portfolio proxy voting and engagement. See key takeaways here.

Georgeson’s “Big Three & Advisor Insights on Key 2024 US Topics” shares voting data for BlackRock, State Street, and Vanguard on key 2024 proxy season proposals with noteworthy outcomes. The report also summarizes ISS and Glass Lewis voting recommendations on these topics.

Deloitte’s On the Board’s Agenda: “Brand and reputation stewardship” provides examples of the types of factors that impact the amorphous but critical topic of corporate reputation and suggests ways in which the board may effectively oversee this area. The resource includes a list of boardroom “conversation starters” on this topic.

Protiviti’s “Board Risk Reporting in Disruptive Times” offers sound guidance to management on a disciplined approach to reporting to and engaging with the board on enterprise, emerging, and “ordinary course” risks.

Harvard Business Review’s “What Companies Should Be Asking Their Security Teams Right Now” offers a framework for companies seeking guidance on how to balance the need, efficacy, and costs associated with executive security that entails a methodical evaluation of the current threats, vulnerabilities, and consequences. Each pillar of the assessment is accompanied by suggested questions to ask and relevant commentary and tips.

A&O Shearman’s “Personal protection: perk or necessity?” discusses the disconnect between the SEC’s interpretation of executive security arrangements as disclosable perks, which often prompt criticism from investors, proxy advisors, employees, and the media, and companies’ reality of executive security as a necessity that enables executives, particularly CEOs and other top leadership figures, to perform their duties.

ISS identified changes in focus of shareholder proposals; companies’ progress on addressing climate risks and improved disclosure; and better targeting by investors, in addition to potential investor retraction in response to stakeholder pressure and scrutiny, as among the drivers of continued reduced median support for climate change-related shareholder proposals in 2024.

Beneficial for companies as well as investors, Ceres’ “Guidance for Investor Engagements with Directors on Climate Risk Governance” outlines a suggested good governance framework for climate-related issues; describes potential private and public board-level engagement “escalation” tactics investors may consider based on historical actions to date; and poses questions that may inform investors’ climate-related engagements with directors.

A coalition of investors and asset managers called on six major food and beverage manufacturers to adopt one or more internationally recognized Nutrient Profiling Models and regularly publicly disclose healthiness metrics for their entire global product portfolio.

Diligent’s “The hot seat” documents reduced voting support for S&P 500 key committee chairs, and Nom/Gov Chairs in particular, as investors increasingly hold particular board or board committee members accountable for corporate practices that are typically addressed in varying degrees of specificity in institutional investor and proxy advisor voting policies.

ISS’s “Tax Transparency: A Key Element of Sustainability Reporting” provides an overview of current country-by-country reporting of tax information by multinational large/mega-cap companies regionally and by sector. The information is presented in the context of increasing international regulatory and other stakeholder expectations for tax transparency.

PRI released a Company Assessment Framework and associated guidance for its nature stewardship initiative—“Spring”—that looks to cross-sector indicators included in the World Benchmarking Alliance Nature Benchmark to assess company performance on business operations and supply chain management and indicators from the Global Standard on Responsible Climate Lobbying and InfluenceMap’s biodiversity assessment to assess targeted companies on their corporate political engagement.