Corporate Governance

Shearman & Sterling 4 | Shareholder Engagement SHAREHOLDER ENGAGEMENT: ANOTHER YEAR OF EVOLUTION INSIGHTS By Stephen Giove and Kyungwon (Won) Lee While a shareholder engagement mentality is now firmly entrenched among leading companies, actual engagement practices continue to evolve. While in-person meetings, telephone calls, webcasts and conferences are the hallmarks of successful engagement, disclosures made by companies are increasingly being focused on and relied upon by investors. This has occurred for pragmatic reasons – including constraints on the time of both senior management / directors and investors, as well as the difficulty explaining a wide range of complex material in brief encounters. For these and other reasons, there has been a meaningful increase in "voluntary" corporate governance disclosures over the past several years as a shareholder engagement technique. The company's proxy statement has become the focal point for disclosure of a company's governance structures, policies and practices, including those relating to shareholder engagement. Interestingly, leading companies have been significantly increasing the degree to which they address corporate governance topics in their proxy statements, beyond those that are required to be disclosed under SEC rules. "VOLUNTARY" DISCLOSURES ARE INCREASINGLY ADDRESSING THE FOLLOWING TOPICS: EXTENT OF SHAREHOLDER DISCLOSURES In this article we examine several aspects of the shareholder engagement disclosures made by the Top 100 Companies in their 2017 proxy statements and, when relevant, compare our findings to the results of our 2016 survey of the Top 100 Companies. 74% of the Top 100 Companies made shareholder engagement disclosures in their 2017 proxy statements. The "Commonsense Corporate Governance Principles (2016)" provides: Robust communication of a board's thinking to the company's shareholders is important. There are multiple ways of going about it. Director Self-Evaluation Process 1 Sustainability Efforts 3 Management Succession Planning 2 Climate Change Efforts 4 5 Political Contributions / Lobbying 6 Shareholder Engagement " "

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