Leadership Independence for SV 150, Majority Voting for S&P 100
Since 2002, Fenwick & West has surveyed the corporate governance practices of the companies included in the Standard & Poor’s 100 Index (S&P 100) and the technology and life sciences companies included in the Fenwick–Bloomberg Law Silicon Valley 150 List (SV 150).
“Insider” board leadership started lower and declined more rapidly in technology and life sciences companies in the SV 150 compared to S&P 100 companies over the last 15 years and by the 2011 proxy season, almost half of SV 150 companies did not have an insider serving as chair, though that trend has largely stalled. In the SV 150, 54% of companies in the 2019 proxy season did not have a current insider chair, compared to only 24% in the S&P 100. In the 2019 proxy season, about 34.7% of companies in the SV 150 had the same person serving as chair and CEO, compared with about 66% of S&P 100 companies.
The implementation of some form of majority voting has risen substantially. The increase has been particularly dramatic among the S&P 100 companies, rising from 10% to 96% between the 2004 and 2019 proxy seasons. Among the SV 150, the rate has risen from 0% as recently as the 2005 proxy season to 57.3% in the 2019 proxy season. Within the SV 150, the rate of adoption fairly closely tracks with company size (measured by revenue), with an approximate 66.7% rate among the top 15 (more similar to the S&P 100) and an approximate 38% rate among the bottom 50 in the 2019 proxy season.
Employer Concerns During the COVID-19 Outbreak
Employment law firm Littler Mendelson polled 912 executives in a “pulse survey” during the first weeks following COVID-19’s designation as a pandemic. Here’s what employers reported as their key concerns and actions they’ve taken in response:
• Sick pay and leave of absence issues. Determining whether to pay employees during coronavirus-related absences is a concern for 89% of respondents; 85% are adjusting sick leave policies or providing additional paid time off, or considering taking these actions.
• Staying safe. Respondents are taking several steps to keep employees safe. Most (93%) expressed concern about ensuring that workplace conditions and policies comply with applicable safety and health regulations.
• Employee morale. This also emerged as a key concern, with many respondents grappling with how to address employee anxiety and how to find the right balance in responding appropriately without panicking employees.
Virtual Annual Meetings on the Rise
The Benesch Corporate Governance Report focuses on trends and best practices at middle-market public companies with market caps ranging from $75 million to $2.5 billion. Two hundred U.S. companies were evaluated for the report.
Despite a certain level of opposition to virtual-only annual meetings, the percentage of public companies holding virtual-only annual meetings has been increasing slightly in the past few years. According to an ISS review, 7.7% of Russell 3000 companies held virtual-only meetings during the 2019 proxy season (vs. 6.8% in the year before) and some larger companies (for example, General Motors and Microsoft) went to virtual-only meetings in 2019. In addition to potentially providing cost savings to the company, virtual meetings may provide greater access to shareholders who would not otherwise be able to attend an in-person annual meeting. (Editor’s Note: This report was published prior to the COVID-19 pandemic, which has made virtual shareholder meetings much more acceptable.)