On August 6, 2021, the Securities Exchange Commission (the “SEC”) approved Nasdaq Rules 5605(f) and 5606 on board diversity, which are the first of their kind to be implemented on a national scale in the United States. They are controversial, opposed by SEC Commissioners Hester Peirce and Elad Roisman, and may face legal challenges. While there has been no indication that the NYSE will follow,...
Companies that count State Street Global Advisors as an investor should review its CEO Cyrus Taraporevala’s just-released annual letter on its proxy voting agenda, which has significant updates on voting policies with regard to board and workforce diversity. Indicating that State Street’s primary challenge as an investor is the lack of publicly available racial and ethnic diversity data, the CEO states: In 2021, we will...
Corporate secretaries of public companies will soon be updating their D&O questionnaires for the 2021 proxy season, and they should consider whether to include a question that allows directors to self-identify as diverse. While companies may be hesitant to raise the issue, increasingly, they are being asked for diversity data on their boards and employees. In recent news: The California governor has signed into law...
Effective as of June 11, 2020, the Washington State legislature has amended the Washington Business Corporation Act (“WBCA”) to require public companies to either have a gender-diverse board of directors by January 1, 2022 or comply with new board diversity disclosure requirements. A public company will be deemed to have a gender-diverse board of directors if, for at least 270 days of the fiscal year...
On February 6, 2019, the SEC’s Division of Corporation Finance released Compliance and Disclosure Interpretations (identical Questions 116.11 and 133.13) advising companies on how they should disclose directors’ self-identified specific diversity characteristics (such as race, gender, ethnicity, religion, nationality, disability, sexual orientation or cultural background) in proxy statements. In brief, Corp Fin would expect the company’s discussion of directors’ experience, qualifications, attributes or skills pursuant...
ISS released its annual update of frequently asked questions on its US Compensation Policies on December 20, 2018 (preliminary updates had been released in November). The updates are effective for shareholder meetings occurring on or after February 1, 2019. There are nine new or materially updated questions, which are summarized below: #19 Will any of the quantitative pay-for-performance screens change in 2019? No. The screens...
ISS recently announced the 2019 updates to its proxy voting policies, which can be found here and which will be applied to annual meetings held on or after February 1, 2019. Among the various updates provided by ISS, the following policies are particularly relevant for our clients, because they expand the circumstances in which ISS may recommend votes against director candidates: Absence of Board Gender...
Human nature being what it is, the law, in its wisdom, does not presume that directors will be competent judges of the fair treatment of their company where fairness must be at their own personal expense.[1] According to the Delaware Supreme Court in In re Investors Bancorp, Inc. Stockholder Litigation, when equity awards are granted to directors under a stockholder-approved equity incentive plan that gives...
Following the 2016 election, corporate governance circles have focused intently on what will happen in the nation’s capital with regard to a potential roll back of the current regulatory regime. While attention given to Congress and the SEC for the possible direction of corporate governance is not misplaced, future changes in this arena will most likely come from investors, and they have their own agenda...
As the 2017 proxy season winds down, one clear take-away is that shareholder proposals attempting to modify the terms of previously adopted mainstream proxy access bylaws did not fare well. Many of these proposals focused solely on the aggregation limit, seeking to increase the number of shareholders (usually 20) that are required to meet the minimum ownership threshold (usually 3% of outstanding shares) in order...
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