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Shearman & Sterling LLP INTRODUCTION When special committees are properly formed and functioning, they can lead to more favorable outcomes for the company and its board of directors. A recent example is the decision of the New York Court of Appeals dismissing a legal challenge to the 2012 Kenneth Cole Productions "going-private" transaction, based in part on the transaction having been approved by a fully functioning special committee of independent directors. Shareholder Activism Shareholder activism continued to gain momentum, with seven of the Top 100 Companies being faced with activist campaigns over the past year. Activist investors continued to target an increasing number of large, established corporations that may have thought they were relatively immune from such approaches until recently. However, certain recent activist situations have highlighted the reality that activist campaigns, even where initially successful, can leave the targeted company We are pleased to share Shearman & Sterling's 2016 Corporate Governance & Executive Compensation Survey of the 100 largest US public companies. This year's Survey, the 14th in our series, examines some of the most important governance and executive compensation practices facing boards today and identifies best practices and emerging trends. Our analysis will provide you with insights into how companies approach governance issues and will allow you to benchmark your company's corporate governance practices against the best practices we have identified. Special Committees Special committees of independent directors are an important tool for boards that can facilitate the discharge of their fiduciary duties in connection with evaluating change of control transactions, shareholder derivative litigation, as well as investigations into potential misconduct at the company. The 2016 Survey was produced under the leadership of the following Shearman & Sterling partners: Richard Alsop, John Cannon III, Stephen Giove, Doreen Lilienfeld and Rory O'Halloran. 2 | Introduction