Board Governance

Non-CEO Chair roles and pay have been evolving, as illustrated by the results of this Meridian Compensation Partners’ study of non-CEO Board Chairs at the 500 largest U.S. companies. The results provide insight into choices companies are making as to type of COB role (e.g., prior CEO vs. independent chair) and how the role will be paid (e.g., as an employee or as a director).

Protectionism and trade issues and financial and political stability. These are just a few of the issues today’s CEOs are concerned about, according to the seventh annual NYSE Euronext CEO Report.

What were the top-of-mind issues for visitors to Boardmember.com in 2011? Articles from our annual legal issue as well as corporate political donations, Dodd-Frank, and the NYSE’s acquisition of Corporate Board Member were all topics of interest to those relying on Boardmember.com for corporate governance news in the past year.

How will the ISS’s new approach to evaluating pay-for-performance and new proxy voting guidelines, announced in fall 2011, as well as the subsequent updates released this week, affect boards in 2012?

As activist investors have become the driving force behind the sale, spin-off, or restructuring of a number of public companies, directors have become increasingly focused on the array of tactics designed to put pressure on public company boards of directors. As activists are learning, with success comes scrutiny. One activist investor tactic that has drawn the attention of boards and regulators is the use of derivative securities. Since derivatives allow activists to create an economic position in a company’s shares that is far greater than the percentage of the shares they actually own, this scrutiny is certainly appropriate.

Goldman Sachs’ board of directors did not breach its fiduciary duty to shareholders through its pay-for performance based compensation structure, according to an Oct. 12 ruling by the Delaware Chancery Court.

Bobby Burchfield, a partner in the law firm of McDermott Will & Emery LLP based in the firm’s Washington, D.C. office, recently spoke with Jamie Reeves, managing editor of special projects at Corporate Board Member, about the issues related to corporate political spending that are top of mind for boards of directors as the 2012 presidential election nears.

“Public companies should follow ongoing developments regarding proxy access closely and engage their significant shareholders regarding their perspectives on this issue.”

In the seemingly inexorable expansion of shareholder rights, the right to act by written consent is gaining traction, although some companies are trying to set conditions so that this shareholder right can only be exercised in a highly restricted fashion, similar to the right to call special meetings. As a result, expect the issue to be vigorously contested.

“Early movers are informed, meaning they obtain the right information at the right time and have the right tools in place to analyze the information that supports decision making. While they may be the first to react or may decide not to act at all, they are usually among the first to recognize a shift in markets.”