Tag: ESG

What Changing Director Demographics Tell Us about Board Work

The forces that are shaping business are changing as much as they are intensifying, and with that comes evolving needs for board oversight. Given the extreme turbulence of 2020, NACD partnered with Main Data Group to empirically describe the size, shape, and structure of Russell 3000 boards. MyLogIQ also provided additional data to supplement our work. The research, which is collected in the forthcoming NACD publication Inside the Public-Company Boardroom, looks at the dimensions of market capitalization and three-plus year market trends to assess how boards are changing. Board turnover in particular illuminates shifts in board demographics, in terms of gender diversity, skill sets, and overall size.

Boards and Committees Are Getting Larger

According to Main Data Group, the average board size has grown steadily between 2017 and 2020. In 2017, the average board size consisted of 9.88 members, and today that figure stands at 10.13; in the Russell 3000, this means the addition of more than 1,000 board seats. Small- and mid-cap companies have largely driven this trend, whereas large- and mega-cap companies have seen, on average, a slight decrease in board size: 12.29 members down to 12.12.

‘Next Wave’ of Talent on the Engagement Agenda

Boardrooms are abuzz about human capital. This is largely due to the Covid-19 pandemic’s impact on the workforce, SEC updates to disclosure requirements, and a growing investor consortium prodding companies to get a handle on workforce strategy and related disclosures.

Investors are asking for more details on emergency succession planning, workforce turnover and the talent pipeline as companies work through leadership changes during the crisis. Directors should be prepared to field questions about succession planning during upcoming engagement sessions.

While a number of companies put CEO succession plans on hold this year, data shows, sources say boards need to take a deep dive into the talent pipeline of the entire organization to ensure the right leaders and teams are in place to navigate through future turmoil.

…According to the public company intelligence provier, MyLogIQ, 94% of the S&P 500 disclosed responsibility for succession planning in 2020 proxies, up from 93% in 2019 and 90% in 2018.

Are These America’s Greenest Big Companies?

As the global environment deteriorates, a growing number of American companies have started to go, or have gone, “green.” There is no single definition of what that means. Some have begun to increase recycling. Others have cut greenhouse gas emissions. Still others plan to become carbon neutral. Among these measures needs to be a commitment… Continue reading Are These America’s Greenest Big Companies?

Are These America’s Greenest Big Companies?

As the global environment deteriorates, a growing number of American companies have started to go, or have gone, “green.” There is no single definition of what that means. Some have begun to increase recycling. Others have cut greenhouse gas emissions. Still others plan to become carbon neutral. Among these measures needs to be a commitment to the environment at the board of directors level. Over the past several years, some of America’s biggest public corporations have added environmentally/sustainability-focused board committees.

These committees are designated by a small number of names, such as Corporate Responsibility Committee; Corporate Social Responsibility Committee; Environmental Committee; Environmental, Health and Safety Committee; Public Responsibility Committee; and Sustainability Committee. It is impossible to say exactly what these committees do without attending them or reviewing meeting transcriptions, but U.S. Securities and Exchange Commission disclosures from some offer direction about what they do and how they function. So do the governance statements of the companies themselves.

Sixty-two S&P 500 companies have had this type of board subcommittee for at least four years, according to MyLogIQ. Among the largest are Ford, Gap, Johnson & Johnson, JPMorgan and Nike.

Enforcement to ‘Hammer’ Diversity Laggards

While hundreds of California companies have moved to comply with the state’s women on boards law, the state has not penalized nor brought any enforcement against companies that have ignored aspects of it, from neglecting to file required disclosures to failing to recruit any women.

Additionally, the data that has been published by the office of the secretary of state appears to contain numerous discrepancies compared to companies’ public filings, according to a report compiled by public company intelligence provider MyLogIQ that examines the most recent data published by the state, and compares it with regulatory filings as of March 9, 2020.

Sources say the discrepancies illustrate some of the challenges in collecting data, and regulating and enforcing issues related to board composition. For instance, wellness and supplements seller Youngevity International was identified by California secretary of state Alex Padilla’s office as having complied with the law by having a woman on the board, Michelle Wallach. Wallach had been a board member since 2011 and served as chief operating officer of the company. She is also the wife of Youngevity chairman Stephan Wallach. However, in order to comply with Nasdaq listing rules requiring that the board comprise a majority of independent directors, Wallach and another director resigned on Feb. 13, 2020. Although she remains listed on the company’s website as a board member, she is no longer a director and the company has no women on its board.

‘Significant Movement’ in Adding Women to Boards

As states other than California contemplate board quota laws and federal regulators consider legislation concerning mandated board-level diversity disclosure, the women on boards law in California so far has led to an influx of new directors with backgrounds in finance and technology who also hold C-suite roles.

According to a new report from data intelligence provider MyLogIQ, which compared the California secretary of state’s March 2020 Women on Boards status report to public company filings, among the 330 California companies that filed 2019 disclosures with the state, 308 have at least one female board member and only 22 companies didn’t have women directors as of March. (See companion story, “Enforcement to ‘Hammer’ Diversity Laggards,” in this issue.)

Among the boards that have moved forward in recruiting women, the recruiting has added value, sources say. Some new female board members have also gone on to serve as committee chairs and lead directors.

How Women Will Save The Future, One Corporate Board at a Time

Getting more women into the corporate boardroom has been a high priority governance issue for several years globally.

While there has been progress, has it been enough?

According to data from MyLogiq, 30% of corporate directors are female for the companies in the Dow 30, while only 23% are female for companies in the Russell 3000 index.

Deloitte reports that women only hold 16.9% of board seats globally even though between 2008 and 2015, 32 countries enacted some type of boardroom gender quota.

As a macro benchmark, the World Bank estimated that 50.52% of America’s population and 49.58% of the global population was female in 2018. Deloitte’s research reports that Norway and France come closest to these percentages, with female directors comprising 41% and 37% of the boardroom.

E+S Proposals Soar as Covid-19 Upends Proxy Season

The coronavirus pandemic has turned investor dialogue upside down ascompanies go dark on negotiations and investors reset priorities at the start of an unprecedented proxy season.

Shareholders have filed a host of proposals for the 2020 proxy season, once again largely focusing on environmental and social issues. Indeed, issues such as climate change, gender pay equity and political spending are cropping up in proxies, although sources say investors may be hesitant to vote for proposals as companies focus efforts on navigating the Covid-19 pandemic.

According to a recent report from Proxy Impact and As You Sow, proponents filed 429 proposals on ESG issues for the 2020 proxy season as of February 21, up from 366 last year. Most of the proposals (53%) involved social issues; 31%, environmental issues; and 16%, governance or other issues.

However, it is early in the season. Only 96 proposals appeared in proxy statements at 59 Russell 3000 companies as of April 3, according to data from public company intelligence provider MyLogIQ. Of those, 24 have gone to a vote and four have passed.