Tag: ESG

Where Does ESG Oversight Fit on the Board?

As investors continue to pressure boards to take up environmental, social and governance (ESG) issues, directors are facing the question of where that responsibility lies on the board. Should the full board be responsible for ESG oversight, or is the subject important enough for a stand-alone committee? Or, should already established committees take responsibility? Agenda readers are divided, but about half think it’s a full-board job, according to the latest quarterly Directors’ and Officers’ Outlook Survey.

Out of 66 respondents, the largest segment (45.5%) says their full board has responsibility for ESG risk oversight. Meanwhile, 10.6% say audit committees should oversee ESG and the same proportion would assign ESG to risk committees, while 22.7% say they would designate it to an “other” committee.

Companies are also increasingly establishing ESG, sustainability or corporate social responsibility (CSR) committees to handle the heavy workload required for these issues. According to data from public company intelligence provider MyLogIQ, in 2019, 174 Russell 3000 companies disclosed having a stand-alone sustainability-focused committee, up from 142 in 2018. So far in 2020, 35 Russell 3000 companies have disclosed a sustainability-focused committee in public disclosures. However, according to the D&O survey, only 3% of the 66 respondents indicated their board had a stand-alone sustainability or ESG committee. The other 7.6% say their board had not discussed the issue.

Amid #MeToo Scandals, Alphabet Lawyer Is Highest-Paid Legal Chief

Top legal officers are becoming increasingly valuable to corporations, at least according to the rising number of digits in some of their compensation packages.

Pay for the general counsel (GC) and chief legal officer role reached a five-year high, according to data released last month from compensation consultancy Equilar and executive search firm BarkerGilmore.

This latest research “brings to light the expanding role of the GC and the increased compensation associated with their seat at the table,” said BarkerGilmore managing partner John Gilmore in a statement.

ESG Risks Trickle Into Financial Filings

Investors in 2019 have increasingly turned their attention to environmental, social, and governance (ESG) topics, and are demanding more information on how companies are thinking about the potential long-term risk and opportunities related to specific environmental and social factors. As companies prepare for the 2020 proxy season and engage with shareholders, directors should understand the current state of ESG risk reporting in public filings.

Standards setters such as the Sustainability Accounting Standards Board and the Taskforce on Climate-Related Financial Disclosures provide frameworks to disclose ESG risks that could have a financial impact. Despite, or perhaps due to, the myriad standards and suggested disclosure frameworks, companies struggle to identify the most relevant risks to disclose, and where in their reporting to disclose them. In 2019, 66 percent of companies in the Russell 3000 Index discussed ESG risk but approaches varied widely.

To help directors and their management teams understand the current landscape of ESG risk disclosure, NACD mined MyLogIQ – Multidimensional Public Company Intelligence’s data to identify trends in 10-K filings, specifically in the risk-factors section and in management’s discussion and analysis of financial condition and results of operations (MD&A). While companies may describe risks anywhere in their 10-K filings, they must list all major ones in the risk-factors section. Previously, risks were listed in the MD&A, a practice that continues in some companies.

Cyber Disclosures Raise Flurry of New Concerns

The largest companies are gradually telling investors more about the pains they’re taking to protect their own information as well as customers’ privacy. Yet some industries are reporting those efforts better than others, according to new studies.

A growing number of firms have fallen into step with last year’s guidance from the Securities and Exchange Commission to disclose their cyber-security risks and what management and the board are doing to address them. For instance, according to a report from the EY Center for Board Matters, more than half of Fortune 100 companies reported in 2019 proxy statements and annual reports that they sought to recruit new board members with cyber skills versus only 40% the year before.

Also, more companies have decided to place oversight of cyber risk in non-audit committees. It was 28% of the Fortune 100 this year compared to 21% in 2018. (Please see chart at the bottom.)

Industrial Firms Report Big Swings in Typical Worker’s Pay

A union job at a shipyard, mine or factory usually comes with a steady paycheck, but some U.S. industrial companies are having a hard time figuring out who their typical workers are and how much they make.

Several S&P 500 companies in the industrials and materials sector posted big swings in what they said their median worker was paid in 2018 compared with 2017, according to an analysis by The Wall Street Journal of annual disclosures for hundreds of big U.S. companies as provided by MyLogIQ.

Shipbuilder Huntington Ingalls HII -0.88% Industries Inc. and potash producer Mosaic Co. MOS -0.72% reported the typical worker got half as much as the year before. At Honeywell International Inc., HON 0.06% it was 33% higher.

McDonald’s CEO Makes an Hour What the Average Worker Makes a Year

McDonald’s Corp. (NYSE: MCD) has been among the American companies that pay its workers the least. As some evidence of the ongoing pay problem at the fast-food chain, the U.S. Securities and Exchange Commission has released the compensation of McDonald’s CEO Stephen Easterbrook. He was paid $15.9 million in 2018. That is 2,124 times the median employee salary of $7,473. It means that Easterbrook, who has been CEO since 2015, earns in an hour what it takes a median employee to make in a year, according to data from public company intelligence firm MyLogIQ.

Easterbrook’s pay ratio is the sixth highest among chief executives included in MyLogIQ’s data. In our earlier report on the 100 highest-paid CEOs, Easterbrook was number 57. It is not the first year he has been paid well. He made $21.8 million in 2017.

Biden’s Climate Test

Former Vice President Joe Biden (D., Del.) is running for President again. And one of Donald Trump’s 2016 rivals thinks that Mr. Biden is the most formidable of the potential 2020 rivals.

The website Mediaite notes that former New Jersey Governor Chris Christie, who ran against Mr. Trump in the last round of Republican primaries, sees a potential GOP problem in the Midwest:

Typical Worker’s Pay Nears $200,000 at Oil Refiner

It was a fruitful year for the rank and file at oil-and-gas companies, from Exxon Mobil Corp. XOM 0.25% to Phillips 66. PSX -2.57%

Oil-and-gas drillers and refiners had some of the highest-paid median workers in the energy and utility sectors in 2018, according to The Wall Street Journal analysis of annual pay disclosures for hundreds of big U.S. companies as provided by MyLogIQ.

Houston-based Phillips 66 paid its median worker $196,407, the highest of any company in the sector.

Phillips was followed by Anadarko Petroleum Corp. at $183,445.