Issue link: https://digital.shearman.com/i/1035494
Shearman & Sterling LLP IPO Corporate Governance | 53 GOVERNANCE PRACTICES ADOPTED BY IPO COMPANIES The percentage of companies adopting a classified board and supermajority voting provisions decreased in 2017 as compared to 2016, the first year the ISS policy on newly public companies went into effect. Notably, the adoption rate fell considerably as compared to 2015. In addition, the percentage of IPO companies in 2017 permitting stockholders to call special meetings and act by written consent modestly increased compared to both 2016 and 2015. Although the percentage of companies with multi-class equity structures increased in 2017 as compared to 2016 and 2015, this may have been due to a time lag in impact of the ISS policy given problematic capital structure was introduced into the ISS policy on newly public companies in 2017. It remains to be seen whether the 2017 cohort represents the start of a sustained shift in IPO governance practices. Consistent with the prior years' surveys, many 2017 IPO companies adopted certain other corporate governance practices that may face ISS scrutiny in the future: 89% 78% 75% 2015 2016 2017 84% 84% 93% 90% 91% 85% 94% 94% 80% 92% 91% 80% 95% 97% 83% 98% 97% 100% Adopted a classified board Adopted an exclusive forum provision Did not provide stockholders with the right to call special meetings Required a supermajority vote for certain amendments to the certificate of incorporation Stockholders cannot remove directors without cause Did not provide stockholders with the right to act by written consent 92% 94% 81% Plurality voting in uncontested director elections Board can increase the size of the board unilaterally 29% 19% 39% Multi-class equity structure