Survey: What’s Happening at the Top 100 Largest Public Companies?

[Ed. Note: Each year Shearman & Sterling surveys board governance practices at the 100 largest U.S. public companies (determined by revenue and market capitalization). The law firm's 2015 Corporate Governance & Executive Compensation Survey, released in October, examines some of the most important governance and executive compensation practices facing boards today. Highlights from the survey follow.]

The 2015 proxy season was a year of continued evolution in the areas of corporate governance and compensation practices. Shareholder activism intensified, as more companies were the targets of activist campaigns and were forced to vociferously engage with shareholders. Key 2015 shareholder activism findings include:

• Of the 8 activist situations at the Top 100 Companies, 4 focused on M&A/spinoff transactions, 3 sought to return cash to shareholders or reduce expenses and 1 sought governance practice reform.
• In 6 of these situations, the activist used a publicly disclosed letter or presentation in the course of its campaign.

Proxy Access: In addition to the survey of the Top 100 companies, the firm surveyed a set of 122 companies, all of which received a shareholder proxy access proposal, put forth a management proxy access proposal or adopted a proxy access bylaw in 2015. Key findings include:

• Nearly all shareholder proxy access proposals put forth during the 2015 proxy season received significant support, with 89% of these proposals receiving at least a 40% vote in favor.
• 59% of shareholder proxy access proposals passed with an average vote in favor of 54%.
• 37 companies adopted, or committed to adopt, a proxy access bylaw in 2015.

Board Leadership and Diversity: The key board leadership issue — the separation of the offices of CEO and chairman — remains a hot button. The survey found that, despite increased attention and shareholder pressure in this area, CEOs at 63 of the Top 100 Companies also served as chair of the board.

Board diversity remains an important issue, and the survey found that women held approximately 22% of the total number of seats at the Top 100 Companies in 2015, a number relatively unchanged over the past three years.
In addition, of the 46 new directors added to the boards of the Top 100 Companies, only 8 (or 17.4%) were women. Other key findings:

• 16 of the Top 100 Companies have boards composed of 30% or more women directors.
• The average board tenure at the Top 100 Companies is 8.44 years.
• A woman served as the CEO at 11 of the Top 100 Companies and as CFO at 14 companies.

Compensation: Driven by the SEC's efforts to enhance compensation disclosure, 87 of the Top 100 Companies disclosed that they maintain a financial clawback policy, with 67 of those companies leaving it to the board's discretion as to whether to seek enforcement. Key 2015 findings include:

• 99% of the companies that held a say-onpay vote in 2015 received approval.
• 52 of the Top 100 Companies included some form of alternative pay disclosure in their CD&A.
• 61 of the companies provide severance benefits to one or more of their NEOs (named executive officers).
• 95 of the Top 100 Companies maintain stock ownership guidelines for their directors and executives, a slight increase from 92 companies in 2014.

The survey is available on request at Shearman & Sterling's survey web site.