The board of the future: Highlights from the Corporate Secretary Think Tank
More than 50 corporate secretaries, general counsel and other in-house legal professionals gathered in New York City last month to discuss the latest trends in corporate governance, before heading to Cipriani Broadway for the Corporate Governance Awards.
Attendees of the Corporate Secretary Think Tank were invited to participate in interactive sessions, featuring plenty of opportunity for roundtable discussion and peer-to-peer sharing. This article highlights some of the top talking points.
The board of the future
‘When we talk about board diversity in terms of gender and racial diversity, unfortunately we’re really talking about what the board should look like now,’ said Derek Windham, vice president and associate counsel at Hewlett Packard Enterprises. He went on to talk about how conversations around board diversity should be focused on cognitive diversity, furthering the notion of diversity of thought that is often discussed. This is something Hewlett Packard Enterprise was very aware of when establishing its board following its spin-off from Hewlett Packard in 2015, Windham added.
Several panelists throughout the day discussed how the broader conversation around board diversity, and investors’ increased focus on it, is driving a more involved effort in board evaluations. Both Denise Kuprionis, president of the Governance Solutions Group, and Stephen Giove, partner at Shearman & Sterling, explained that investors are looking for enhanced disclosures, often in the proxy statement, about when board evaluations have been conducted, how they were conducted and what the outcomes were. ‘We’re getting past the tick-box exercise, and looking deeper to ensure every board director is invested in his or her duties 100 percent,’ Kuprionis said.
Jean Weng, senior vice president and deputy general counsel at Voya Financial, explained that she had noticed a significant difference in written versus spoken feedback. Directors are much more likely to be open and honest about how the board is functioning in verbal communications, whereas written communications tend to be more formal and positive, she said.
Proxy statements continue to evolve
In the last decade, proxy statements have evolved from legalese documents to broader communication tools. Theresa Molloy, vice president of corporate governance at Prudential Financial, stressed the importance of thinking about the different stakeholders that now consume a proxy statement, whether that’s investors, employees, directors, regulators, proxy advisory firms, third-party data providers or others.
For Prudential Financial, this meant thinking carefully about how it structured its proxy statement in 2018. Having witnessed the launch of the Investor Stewardship Group (ISG) and seen its six principles for corporate governance, Molloy’s team decided to base part of its reporting around the governance principles. The panelists agreed we will likely see more companies adopting a similar approach as the ISG principles become more established.
The panelists, all of whom were nominated in the best proxy statement (large cap) category at the Corporate Governance Awards, explained that this shift has made them think carefully about how they present their information. For example, Michael Rouvina, corporate governance attorney at Allstate, explained that his team will occasionally duplicate content so it can be sure investors are seeing it – knowing that the proxy summary, the CD&A and the chapter on the board are the most-read sections.
The panel also talked about enhancing the readability of the document, in line with the SEC’s Plain English Disclosure guidelines. Several of this year’s Corporate Governance Awards nominees – including Visa and Prudential Financial – introduced director interviews in certain parts of their proxy statements. For example, Visa featured short quotes from each committee chair talking about his or her personal role and the role of the committee.