Corporate Governance at Mid-Market Companies
By April Hall

Survey finds most companies have independent chairs, and a rise in dual-class stock structures

A new survey of mid-market public companies sheds light on a host of corporate governance practices, from board size to stockholder activity.

The study, by law firm Benesch, looked at companies with market caps ranging between $200 million and $1.50 billion.

Here are some of the findings:

Classes of Stock: Public companies maintaining dual classes of stock have increased, according to other governance reports, but Benesch found the mid-market companies they surveyed were not following that.

Board size: Among the companies surveyed, 85% of the companies have a board of directors with seven or more members; 69% of the boards have between seven and nine directors.

Frequency of director elections: When looking at all the surveyed companies’ boards of directors, the companies are roughly split 50-50 as to whether directors are elected annually or on a staggered basis. More specifically, 55% of the companies conduct annual director elections; 45% of the companies have directors elected on a staggered basis. When directors are elected on a staggered basis, they are predominately elected every three years.

Vote standards in uncontested elections: Of the companies surveyed, 76% had a “majority” vote standard for uncontested director elections. Though a majority vote standard is clearly prevalent among the companies surveyed, this majority falls below that of major public companies. According to the Council of Institutional Investors, 90% of S&P 500 companies maintain a majority vote standard for uncontested elections.

Committee chair independence: Almost all of the companies surveyed have independent committee chairs and all members of the committees are independent with few exceptions. The main exceptions occur where there is a controlled company or no requirement for a standing nominating or compensation committee (e.g., Nasdaq-listed companies). For the audit committee, there are no exceptions — all audit committee chairs and all directors on such committee are independent in the survey sample.

 


Other related articles

  • Purpose, Human Capital and Profits: Five factors to drive enduring shareholder value
    Published February 19, 2020
    By John Bremen, Don Delves and Amy DeVyler Levanat
    Regardless of a boards position on the purpose versus profits debate human capital issues are an essential component of their discussions on how to drive shareholder valuenbspWhy There are welldocumen ...
  • ESG Disclosure and Compliance: Navigating the Confusion
    Published February 19, 2020
    By Ken C. Joseph and Nicole Y. Lamb-Hale
    Shifts in the social economic and geopolitical landscape place boards under pressure to expand their obligations well beyond the direct needs of their corporation and its shareholders In addition to g ...
  • An Action Plan for a Purposeful Board
    Published February 19, 2020
    By Ram Charan
    There is a drumbeat growing in support of the idea that investing in employees the community and all stakeholders as the Business Roundtable BRT chairman Jamie Dimon has said is the only way to be suc ...
  • They Had One Job
    Published February 19, 2020
    By Doug Raymond
    Corporate directors are justifiably concerned about their potential liability when agreeing to serve on a board particularly that of a public company It would be naïve for a director to dismiss the p ...