Issue link: https://digital.shearman.com/i/1019978
Shearman & Sterling LLP 32 | Shareholder Engagement: Using Proxy Statements and Corporate Websites CORPORATE GOVERNANCE POLICIES As the movement towards transparency in corporate governance continues, companies have been posting various governance policies on their corporate websites. There is a considerable variability in the extent to which the Top 100 Companies posted their various corporate governance policies on their corporate websites, and many do not post them at all. The Top 100 Companies have also taken different approaches as to whether "Stand-Alone" Policy Part of Corporate Governance Guidelines a particular policy is formulated as a "stand-alone" policy or is embedded into its corporate governance guidelines. Some companies do both — in addition to having a policy set forth in their corporate governance guidelines, they also present that policy on a "stand-alone" basis. Some of the most commonly found policies on corporate websites and the location of these policies are shown to the left. Related Person Transaction Policy Insider Trading Policy Stock Ownership Guidelines Pledging/ Hedging Policy Lead Independent Director Responsibilities Claw- Back Policy 26 55 11 2 9 24 13 8 8 10 79 9 Eighty-one of the Top 100 Companies have a lead independent director and 19 have an independent board chair. As shown in the above chart, all 81 companies disclose the responsibilities of the lead independent director, including 10 companies that set those duties forth in a separate governance document. Of the 19 Top 100 Companies that have an independent board chair, disclosure of such persons' responsibilities is made in corporate governance guidelines (nine companies), proxy statement (10 companies) or by-laws (13 companies). Data in the above chart and below commentary is not mutually exclusive, as some companies disclose these policies and/or responsibilities in multiple places. POTENTIAL FUTURE ACTIONS As disclosures in proxy statements and corporate websites continue to evolve as a means to communicate a company's governance philosophy and its approach to specific governance issues, the following items are worthy of consideration: • Use the proxy statement to describe the board's perspective on key governance matters, such as a description of the board's self-evaluation process and its management succession planning process • Use the proxy statement to describe how the company defines and addresses relevant environmental and social matters and how the company engages in political spending/lobbying, including the board's oversight role of these matters • Provide comprehensive director gender and ethnic diversity and other demographic disclosures on a disaggregated basis in the proxy statement • Present director experience/ qualifications/attributes/skills information in a matrix format in the proxy statement • Present average director age and tenure information in the proxy statement • Include a letter from the CEO, board chair and/or lead independent director that includes a discussion of his or her perspective on the company's governance as part of the annual meeting communications • Include a corporate governance and executive compensation "highlights" section in the proxy statement that presents an overall picture of the company's governance philosophy and key governance practices And do not forget the corporate website as a vehicle for communication on governance. Consider updating the corporate website to include downloadable and printable copies of the following: • Corporate governance guidelines • All committee charters • Certificate of incorporation • By-laws • Key governance policies