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The Human Capital Management Mandate for BoardsIssue: 2021 Third QuarterFor years, companies have been moving to treat employees as an asset, not an expense. The pandemic and social protests have only intensified this trend, so that human capital management (HCM) is now a front-and-center issue. With long-term success increasingly depending on attracting, retaining and ...
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The Duty of Oversight in the Face of COVID MandatesIn the United States, vaccination of the population is not only a medical issue, but also a political and workplace issue. This has challenged boards seeking to navigate a host of competing issues, including workplace and customer safety, significant resistance to vaccination against COVID-19 — part...
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Bringing ESG Metrics and Reporting Into Alignment: A partnership between SASB and the IIRC may help boards establish ESG reporting standardsIssue: 2021 Third QuarterAs institutional investors, employees and other stakeholders focus on ESG, board members and management want consistent standards for measuring corporate efforts and advancement.The Sustainability Accounting Standards Board (SASB) and the International Integrated Reporting Council (IIRC) have worked...
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The HCM Funnel: Board Considerations for Disclosures on Human Capital ManagementInvestor demands, societal pressures and competition for employees are pushing boards to be intentional about where and how they focus on human capital management (HCM). Leading companies view HCM as a value driver and strategic differentiator.Boards should view HCM topics the same way they view oth...
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SEC Approves Nasdaq Diversity ProposalThe U.S. Securities and Exchange Commission on Friday approved Nasdaq's proposal to hold companies listed on the exchange accountable for board diversity.The new rule, proposed in December, is the first of its kind. It requires boards of U.S.-based Nasdaq-listed companies to have at least one female...
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Who's Responsible for U.S. R&D Investment?Issue: 2021 Annual ReportThe Cold War era represented the golden age for U.S. research and development (R&D) spending. First there was the massive effort to create atomic weaponry in World War II and the subsequent arms race. Then, spurred by the surprise and fear created when the Russians launched Sputnik, the first sa...
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Investment in the Future: How should the board prioritize R&D spending?Issue: 2021 Annual ReportResearch and development (R&D) spending has been at the heart of many of the United States’ technological advancements, but over the last 20 years China has made a greater investment in technology.According to a National Academy of Sciences report, federal R&D funding as a percentage of gros...
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Board Oversight of R&DIssue: 2021 Annual ReportWhether you call it research and development (R&D), intellectual property (IP) or development and operations (DevOps), creating new products and processes represent both big risks and potentially big rewards. The board needs to know what’s happening and when.Gail Lione, a board member at Badger ...
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Directors to Watch 2021: Gender Diversity in the BoardroomIssue: 2021 Annual ReportAssimilating new lessons from the past 18 months, coupled with actions associated with the evolving racial justice movement, will keep boards busy for the foreseeable future.During this time of transition, at least three of the top board agenda items of early 2020 are roaring back onto the table — d...
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How has board service changed in the wake of COVID-19, and what will board service look like in the years ahead?Issue: 2021 Annual ReportThe pandemic has driven digital transformation and the future workforce to the top of board agendas as directors continue to focus on corporate strategy, risk management and talent oversight.To become even more competitive and relevant, companies must leverage digital technology and best practices s...
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DEI as Fiduciary DutyIssue: 2021 Annual ReportIn 15 years as a board director, I’ve never seen a year more challenging than the one we’ve just shared. We’ve navigated intense disruption, economic downturn, social upheaval and deep personal loss. We’ve been connected by tragedies and deeply vital movements for racial justice. And we’ve brought o...
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A Modern Approach to Recruiting Diverse Board CandidatesIssue: 2021 Annual ReportThe emphasis on diversity, equity and inclusion (DEI) in the boardroom is shaping up to be a permanent reframing of all that boards do and, more broadly, how companies approach corporate governance writ large. Though this emphasis has been steadily increasing over the past several years, the events ...
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Going for 'Woke'Issue: 2021 Annual ReportCEOs are frequently being asked to make a statement and to take a position regarding a myriad of political and social issues. As they increasingly embrace the needs and concerns of a multitude of stakeholders, they are asserting that their companies can “do well by doing good.” Some recent studies s...
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Taming the Tiger in Your TankIssue: 2021 Annual ReportThe recent shareholder revolt at ExxonMobil has captured popular attention and interest in a significant way. It was a shock to the entire corporate community when three insurgent directors, nominated by a small activist fund over strenuous management objection, were elected to the board of such an ...
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Let Your Mission Guide Your Executive Pay: Highlighting a corporate mission could promote longer-term focus.Issue: 2021 Annual ReportMany business thinkers have criticized corporate “short-termism” that discourages crucial long-term investments in intangible capabilities. Executive pay programs get much of the blame, as even “long-term incentives” last only three years, with the goals for each year’s tranche reset annually.Those ...
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What a Difference a Year MakesIssue: 2021 Annual ReportLooking at the 2021 Fortune 500 list, one could believe DEI in corporate America has hit a tipping point.There are a record 41 female CEOs on the list (up from 37 last year, which was also a record). But more than that, two Black women CEOs made the list, and each helms a Fortune 100 company. This i...
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Directors’ use of external work email leaves the correspondence vulnerableIssue: 2021 Annual ReportEvery business depends on email to communicate with its key constituencies, including directors. However, a recent Delaware Chancery Court decision reminds us of the risks directors run when they rely on email to communicate sensitive matters. The decision provides another reason why directors shoul...
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A Decade of Say on PaySay on pay launched in 2011, born out of the SEC’s efforts to reform corporate governance under Dodd-Frank. This non-binding advisory vote, which is an annual event at most companies, allows shareholders to cast votes for or against named executive officer (NEO) compensation. Although it’s a non-bin...
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Say on Climate? Aligning Compensation and Incentives With Climate RiskIssue: 2021 Annual ReportA new governance landscape emerged in corporate America during the first half of 2021. Climate risk and transition considerations rose to the top of investors’ and regulators’ priorities, including Larry Fink’s statement that “Climate transition presents a historic investment opportunity” and Presid...
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Long-Term Stock Exchange Puts ESG Front and CenterThe Long-Term Stock Exchange (LTSE) will list its first two companies in August.The LTSE, launched last September, is meant to attract long-term investors. Its listed companies will commit to adopting strong ESG stances that benefit stakeholders, in contrast to prioritizing short-term return for sha...