Annual Corporate Governance & Executive Compensation Survey

2019 Corporate Governance & Executive Compensation Survey

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Shearman & Sterling LLP 44 | Internal and External Forces — The Rising Importance of Corporate Culture Review 6 See Press Release, Business Roundtable, "Business Roundtable Redefines the Purpose of a Corporation to Promote 'An Economy That Serves All Americans'" (August 19, 2019). SUGGESTIONS FOR REVIEWING CORPORATE CULTURE Monitoring and measuring the impacts of corporate culture may pose challenges, but in today's governance climate, these challenges do not justify avoidance of the topic. Despite a lack of mandated standards or required reporting, there are actions that boards and executives can take to implement a multidimensional review of corporate culture, considering both internal and external constituencies. 5 6 7 8 Be cognizant of independent third-party evaluations of culture and rankings; be vigilant about existing information online and in other public forums, noting the legitimacy of sources. Have consistent communication to all stakeholders regarding cultural objectives in order to create awareness and a sense of transparency. Implement a system for monitoring cultural developments and consequences. For example, institute "culture committees" within the board and the employee ranks. Have these culture committees meet regularly to implement actions that will foster a cohesive development of cultural goals. 1 2 3 4 Identify what culture means to the company. Coordinate between the board and management to establish a culture-focused action plan that mandates concrete behaviors to help cultivate the desired culture. Utilize culture assessment tools already available from internal and external sources — mine survey data, exit interviews, hotline calls and employee engagement surveys to find themes, both positive and negative. Hire outside consultants to conduct assessments focused on culture reviews and assist in devising a strategic plan for improvement. Be self-critical and responsive to feedback. While a focus on culture may be a shift from traditional business practice, the importance of adopting this new perspective is only further underscored by the August 2019 Business Roundtable announcement emphasizing the impact of — and need for increased focus on — the role of employers in our society, including as it relates to investment in employees, customers, suppliers, communities and investors. 6 Bottom line: Management of corporate culture is essential.

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