Annual Corporate Governance & Executive Compensation Survey

2018 Corporate Governance Survey

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Shearman & Sterling LLP 26 | Board Oversight of Sexual Harassment and Misconduct Claims AN OUNCE OF PREVENTION CONCLUSION Many companies have recently reevaluated their sexual harassment policies, and boards may wish to review those policies with the help of advisors. The time is ripe for boards to ask where the company stands on compliance, reporting and employee education. To be effective, policies must provide clear and effective reporting channels. The board should understand existing reporting protocols, including under what circumstances reports are escalated to the board and, importantly, whether the board thinks that the triggers that prompt board notification are appropriately calibrated. Additionally, the board should ensure that employees can – and feel like they can – report up without fear of reprisal. Outside reporting channels like anonymous hotlines and neutral third parties, and mandatory reporting by senior Dealing with sexual harassment and misconduct in the workplace is a difficult undertaking for any company and the board. Early engagement by the board through education and advance planning can alleviate those burdens in the event of such a crisis and avoid potential shareholder claims against the company and the board. employees, can increase the effectiveness of any internal reporting program. Training on proper workplace conduct should not be overlooked – and should be provided on a regular basis at all levels, including to senior executives and board members. Companies should keep records of the training programs that have been instituted and work to ensure full participation. Thorough record- keeping of harassment reports, even those that are ultimately deemed unsubstantiated, may help the company detect patterns and better evaluate claims. Finally, boards must bear in mind their role as stewards of corporate culture. Sending a clear message from the board on the importance of workplace safety, and its zero tolerance of sexual harassment, as a core element of corporate culture is important.

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