engagement cheatsheet Flashcards
How are boards responding to gender diversity?
Boards appear to be responding to push for gender diversity on boards. Percentage of boards withno woman directors is down to 9.8%(from 13% last year and 19% the year before).
Parity is still a long way off though,
asaverage percentage of women on boards is 23%.
We are seeing more women in
board leadership positions- mostly as committee chairs.
How is our gender diversity policy changing for 2022?
We are increasing our gender diversity threshold to at least 2 women on R3K boards comprised of 7+ directors. Although they decreased this year, we expect to see more gender diversity withholds next year due to this increased threshold.
How is GL responding to state and index requirements?
we will recommend in accordance with board composition and diversity disclosure requirements set forth in state laws and index listing requirements when they come into effect.
How are copanies disclosing raceial/ethnic diversity?
We saw more companies than ever disclosing board racial/ethnic diversity. Approximately 73.7% of S&P 500 companies holding a meeting during season disclosed racial/ethnic diversity metrics at an aggregate or individual level, compared to 29.1% last year.
How is the disclosure around racial/ethnic diversity?
Extremely rapid improvement in disclosure in this area. Overall disclosure improved as well, as we rated 21% more companies as “good” than last year. Rating based on: disclosure of director skills, Rooney rule, definition of diversity for director candidate considerations, and disclosure of board racial/ethnic diversity.
Disclosure example of ethnic/racial self-ID
Edison International
How is the disclosure around E&S Oversight?
Approximately 57% of Russell 1000 addressed board oversight responsibility for E&S issues.
What sectors did you see e&s oversight disclosure?
Disclosure was most common in Utilities, Energy, and Materials sectors, and least common within IT and Communications Services.
What is GL seeing about director skills?
Continuation of demand from shareholders regarding disclosure on composition and skillset of the board. NYC Comptroller launched the Board Accountability Project 2.0 in September 2017, which requests board skills matrices. Crux is board effectiveness and evaluations even if matrices not cross-comparable . Around 36% of Russell 1000 disclosed skills matrix in 2021, up from 31% in 2020.
What is GL seeing about director opposition?
84 directors failed to receive majority support from shareholders in 2021 proxy season, 17 more than last year (about a 25% increase). As of August 2021, 12 of these directors are no longer serving on the board as a result. That’s 2x as many directors who left boards this year than last year.
What is GL seeing around director support?
Large majority of directors received high level of support from shareholders; average support level was 93.8%, down from 94.5% last year. We recommended supporting nearly 90% of directors, consistent with 2020. While they remain outliers, the rising number of failed elections may suggest that directors are being held accountable for things like E/S issues/oversight, things that fall outside of traditional proxy voting policies (corporate governance issues like board independence, leadership, etc.)
What was the argest driver of majority opposition this year ?
Largest driver of majority opposition this year was ongoing compensation concerns and/or an insufficient response to shareholder dissent regarding compensation issues.
The the most common drivers of majorty opposition to directors from greatest to least?
compensation: (1)ongoing concerns or insuffienct response to shareholders, (2) overboarded and failed to implement a shareholder propolsal, (3) adopted poison pill and adopted forum selection, (4) excessive director against votes, (5) gender diversity concerns, (6) no lead independent director, (7) independence concerns, (8) failure to implemnt approved say on pay freuqency.
