Corporate Governance

Shearman & Sterling LLP Preparing the Board for Human Capital Management Oversight and Disclosure | 29 Companies may also consider categories of human capital information and measurements that investors and other stakeholders have asked the company to disclose or that peer companies disclose. Human capital management issues in shareholder proposals (both for the company and for competitor or peer companies) should be reviewed. In addition, companies should consider the categories of human capital measurements that have been advocated for by strong proponents of these disclosures such as public pension funds and social impact funds. For example, the Human Capital Management Coalition (HCMC), a group representing large and influential public pension funds, has proposed the following measures. 44 21 15 5 3 1 53 44 21 15 5 3 1 53 Compensation committee, executive compensation committee or management compensation committee (unchanged) Of the Companies that Added a Word(s) to Committee Name that Indicates a Human Capital Focus in Addition to Executive Compensation, the Key Words Used in the Name Include 44 21 15 5 3 1 53 Name has changed to indicate a focus in addition to executive compensation HCMC Human Capital Measurements Name of Committee Responsible for Executive Compensation A company that identifies how human capital issues relate to business planning and risk management and builds selected categories of human capital measurements will take a strong first step in developing the robust body of year-over-year human capital data necessary for its board to fulfill an expanded human capital management oversight role. Of course, companies, in certain instances in collaboration with their boards, will need to select among these categories with discretion, considering the particular business and industry of the company and the company's specific human capital goals. Are boards already beginning to expand their oversight role from the narrow focus on executive compensation to the broad scope of workforce issues at large? One indication is the name given by the Top 100 Companies to the board committee focused on executive compensation, which suggests that some boards have made this change or are preparing to do so. Many of these names are no longer simply "compensation committee," but instead use key words indicating a broader focus, as shown on the right. Workforce Demographics Number of full-time and part-time workers, number of contingent workers Workforce Stability Turnover (voluntary and involuntary), internal hire rate Workforce Composition Diversity, pay equity ratios Workforce Health and Safety Work-related injuries and fatalities, lost day rate Workforce Productivity Return on cost of workforce, profit/ revenue for full-time employee Management development, management planning, leadership development or talent development 44 21 15 5 3 1 53 Human resources, management resources, people resources, personnel or talent Benefits Succession Human capital

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