The Corporate Governance Intelligence Council Blog

SASB Comment Period Still Open

The comment period for SASB “Exposure Draft of the Standards” is open until December 21, 2017.  This process will culminate in ratification of the standards, scheduled for early 2018.

If you haven’t done so already, we recommend you review the industry-specific, redlined version of the Exposure Drafts and supporting documents detailing the basis for conclusion.  The drafts detail industry-specific sustainability topics and guidance for accounting and disclosure of related items.

You can access the SASB draft here:

SSGA Expands Push for Board Diversity

State Street Global Advisors recently announced that it will expand its efforts to push for greater gender diversity on boards. The asset manager began this initiative in 2017, targeting companies in the US, UK and Australia.  In this latest announcement, they stated they will begin applying the same focus on boards in Canada and Japan in 2018.

In 2017, SSGA voted against director candidates at 400 US companies which currently have no women at all on their boards.

SSGA has identified Canada and Japan as two countries that have relatively low levels of female representation on company boards.  Approximately one quarter of Russell 3000 presently have no female directors, compared to 40 percent of companies on the TSX and 55 percent of Japan’s TOPIX 500.

Rivel Prism Webinar – Activism 2.0

On November 1st, Dave Bobker was joined by Jim Woolery, Head of M&A and Corporate Governance, King & Spalding, and Steve Frankel, Partner, Joele Frank, for a discussion on the latest developments on shareholder activism.

Activism 2.0: The New Paradigm

Jim and Steve provided a very insightful look at the strategy of investment funds, the evolving activism landscape and proactive steps for companies to take. We discussed the importance of open dialogue with investors on a growing number of topics, and the challenges many companies face in determining which investors to contact, how to gain an audience and how to assess relative strengths and weaknesses.

You can listen to the full presentation here: Activism 2.0: The New Paradigm

If you would like to receive a copy of the presentation, or discuss how your company can effectively engage investors on any of the issues discussed on the webinar, please contact Dave Bobker at

Pay Ratio Disclosure Location?

I know most of us would rather put this straight in the trash can but, due to the requirements of Section 953(b) of the Dodd-Frank Act and Item 402(u) of Reg S-K, pay ratio disclosure will need to be part of your 2018 proxy statement. The SEC has not provided specific guidance as to the exact location of this disclosure in your proxy. To date, about 50% of companies have furnished this information in the CD&A, with the remainder placing it elsewhere in the document. As the ratio is most likely not part of the compensation discussion, it’s fair to argue that this should not reside in the CD&A. In fact, as more companies file, it is likely that this data will less often reside in this section. Depending upon the company culture, document structure and final ratio relative to peers, perhaps the best place for this disclosure is in the proxy summary. Or toward the end of the document, after the awards table? Or just before the FAQ section toward the back of your proxy?

Regardless of where it’s included, it cannot be hidden. And keep in the mind, the real focus should be on the language itself as well as understanding who your audience is and how they will likely use this information.

Activists Reduce Board Diversity, Say Multiple Studies

Shareholder activists and their supporters often tout governance-related benefits that emerge at companies they target. Some of these benefits may be grossly overstated according to two separate studies from proxy advisory firm ISS and Bloomberg News.

The ISS report examined shareholder activist appointments and company appointments made in response to activism from 2011 to 2015. The study found that of 380 board seats at S&P 1500 companies, only 8.4% were female. This compares with 25% for all new appointees to S&P 1500 companies over the same period. Rates for ethnically diverse candidates were equally low at these activism-affected firms with diverse appointments at 5%, compared to a sector average of 13%.

Bloomberg examined 174 activist-related appointees at S&P 500 companies during the same timeframe and found only 7 (or 4%) were women.

In the companies included in the ISS study, the number of all-male boards grew from 13% to 17%, and the number of all-white boards rose from 52% to 56%.

This lack of diversity among activist nominees comes in stark contrast to a growing push for increased gender and ethnic diversity at US public companies. Major institutional investors, including BlackRock, State Street and Vanguard, are demanding that boards include more women and people of color, often citing research that shows diverse groups make better decisions and lead to greater profitability. These, and other major shareholders, have publicly committed to voting against the re-election of board members at companies that fail to adequately address gender and ethnic imbalances.