Similarly, Glass Lewis indicated that it will review, on a case-by-case basis, any proposal requesting that companies disclose their median gender pay ratios. Virtual, CA. [4] Staff Statement on LIBOR Transition (Jul. In its 2020 update, Glass Lewis indicated that it will now generally recommend voting against nominating and governance committee members if a company omits a shareholder proposal in any instance other than where the Staff has explicitly concurred with a company’s argument that a proposal should be omitted pursuant to Rule 14a-8. This website uses cookies to enhance your experience. Board Oversight of Mission-Critical Risks - In June 2019,. You need to be particular with the audience and select a topic that attracts them to read the paper. Those companies that may not be directly impacted by the trade tensions, tariffs or renegotiation of trade agreements could face a material adverse effect on their business to the extent that trade concerns constrain the growth of the economy or otherwise cause adverse economic effects. That minimum increases to two by December 31, 2021, if the corporation has five directors, and to three women directors, if the corporation has six or more directors. Supermajority Vote Provisions. In accordance with Basic v. Levinson,[8] a company should consider the indicated probability of the event and the anticipated magnitude of the event in light of the totality of the company’s business activity. The reality of corporate failures, which do not only impact the company and its shareholders but negatively affect employees, local communities and other stakeholders make the call for more stringent regulation increasingly urgent. BlackRock, the largest asset manager in the world, plans to have $1.2 trillion in ESG assets in the next 10 years, and an estimated one-third of all U.S. assets under management are already sustainably invested. boards will see 2020/21 as an inflection point for corporate governance, with demands for greater attention to corporate purpose and stakeholder views, corporate culture and incentives, diversity and inclusion, the richness of boardroom dialogue and debate, and the company's (and board's) readiness for the risks and Data analytics and insights 3. Company Responsiveness. Ways to Build an Ethical Enterprise. Prerequisites: An interest in understanding legal issues specific to in-house counsel. Public companies must focus on a number of evolving disclosure and corporate governance considerations as they progress through the annual reporting and proxy season. Global Trends Predicted for 2020 Greater focus on the E&S of […] The 2020 Edelman Trust Barometer, a quantitative measure of public . ). The team at Issues Central has worked with boards and senior management teams all around the world to build improved governance practices. [7] Release No. Environmental, social and governance (or ESG) issues have been hot topics and buzzwords in corporate governance for . [4] The Staff indicates that, as companies consider transition from LIBOR and address the risks presented, “it is important to keep investors informed about the progress toward risk identification and mitigation, and the anticipated impact on the company, if material.” In this regard, the Staff provided following guidance: The joint statement notes that the companies most frequently providing LIBOR transition disclosure are in the real estate, banking, and insurance industries and that larger companies are more likely to include disclosure about the transition away from LIBOR. We will assume that you agree to this, but you can opt out if you wish. Looking at all the companies in the analysis, we see a 24 percent increase in the global average CSR strategy score. Sustainability related topics like climate change are already impacting the board room in a huge way. In-house and outside advisers are called on to provide day-to-day counseling and to address crisis situations in the corporate governance context. In many cases, companies have addressed diversity in the context of the director qualifications considered in the nomination process, and, even if the word “diversity” is not used directly, but the disclosure implies the consideration of a broad range of skills and qualifications, the Staff will raise a comment asking for the complete diversity disclosure. [10] SEC Chairman Jay Clayton, Division of Corporation Finance Director Bill Hinman, SEC Chief Accountant Sagar Teotia and PCAOB Chairman William D. Duhnke III, Statement on Continued Dialogue with Audit Firm Representatives on Audit Quality in China and Other Emerging Markets; Coronavirus — Reporting Considerations and Potential Relief (Feb. 19, 2020), available at: https://www.sec.gov/news/public-statement/statement-audit-quality-china-2020-02-19. In its Form 10-K for the fiscal year ended December 31, 2019, the company will omit the discussion of its results for the fiscal year ended December 31, 2017, pursuant to Instruction 1 to Item 303(a) of Regulation S-K, and include a statement identifying the location of the discussion presented in the 2018 Form 10-K, and the filing of that 2019 Form 10-K will operate as the 1933 Act Section 10(a)(3) update to the registration statement. Shareholder Engagement Remains a Top Priority While 2020 has been an unusual year in many facets, one thing that has remained consistent is the need to engage with shareholders. Following are few popular topics for students of financial accounting. Exclusive Forum Provisions. In addition, in light of the Staff’s September 6, 2019 announcement that the Staff may respond orally instead of in writing to some no-action requests regarding shareholder proposals. Further, the SEC notes that companies should consider the extent to which an existing regulatory disclosure framework applies to the key performance indicator or metric, such as generally accepted accounting principles or Regulation G and Item 10(e) of Regulation S-K (the non-GAAP financial measure requirements). [3] Division of Corporation Finance, Regulation S-K Compliance and Disclosure Interpretations, Questions 110.02 through 110.04 (Jan. 24, 2020), available at: https://www.sec.gov/divisions/corpfin/guidance/regs-kinterp.htm. establishing a formula-based approach to compensation for directors. In September 2018, California enacted a law that requires that public companies (defined as corporations listed on major U.S. stock exchanges) that have principal executive offices located in California must include a “representative number” of women on their boards of directors. All rights reserved. For example, Blackrock may vote against directors if less than two women serve on the company’s board, and State Street may vote against directors if there are no women serving on the company’s board. [5] Based on Hinman’s speech, a public company should continue to consider: The situation with Brexit is likely to continue to evolve throughout 2020; therefore, companies will need to monitor those developments and assess how those developments impact their overall risk profile. a 42.5 percent increase). This website uses cookies to improve your experience while you navigate through the website. Download all three reports to get more insights into the key corporate governance trends in the Americas, EMEA and Asia-Pacific. With respect to compensation committee members, Glass Lewis will now generally recommend voting against the compensation committee members when a company adopts a frequency for its shareholder advisory vote on executive compensation that is not in line with the results from a plurality of shareholders voting on this topic pursuant to Exchange Act Rule 14a-21(b). If you want to streamline your corporate governance in 2020, adopting a board portal software to make board meetings and board communications run smoothly and securely is a move in the right direction. When reviewing filings under its selective review program, the Staff has often asked that companies break out cybersecurity risks into a separate risk factor, rather than including the risk in a broader risk factor that addresses a variety of other concerns that the company faces. 2017 Corporate governance seminars. Data Governance always has been a complicated issue for most organizations. Intelligent automation 2. After the rules became effective, some companies expressly disclaimed any policy on diversity, but the Staff consistently raised a comment requesting the “policy” disclosure whenever diversity is mentioned in a filing. Nicholas is the CEO and Co-Founder of Informed 365, an Australian based tech company that specialises solely on better sustainability outcomes. While ISS had previously defined a “new nominee” as an individual who had not already been elected by shareholders and who joined the board after a problematic governance provision occurred, ISS has adopted a broader definition of “new nominee,” such that any individual being presented for election by shareholders for the first time is a new nominee. Introduction This year, as in the previous five years, Russell Reynolds Associates interviewed over 40 global institutional and activist investors, pension fund managers, proxy advisors and other corporate governance professionals to identify the corporate governance trends that will impact boards and directors in 2021. CII is a nonprofit, nonpartisan . Refinitiv analysis shows robust corporate governance is connected to better financial results and crisis resilience. A frequent area of Staff comment on cybersecurity risk factor disclosure has been to ask that the company address any actual or attempted attacks or breaches in order to put the risk factor disclosure in context, even if those breaches or attacks did not have a material adverse impact on the company’s business. China’s growth stands out, with a huge increase of 55.4 percent, resulting in a 90.5 percent reporting rate. But opting out of some of these cookies may affect your browsing experience. The SEC proposed to adopt new paragraph (i) of Item 407 of Regulation S-K in February 2015. This year's most popular articles covered everything from corporate purpose to the ethics of AI. The SEC states that companies should consider what additional information may be necessary to an understanding of the key performance indicator or metric presented, indicating that it would generally expect, based on the facts and circumstances, the following disclosures to accompany the key performance indicator or metric: The SEC indicates that companies should consider whether there are estimates or assumptions underlying the key performance indicator or metric or its calculation and “whether disclosure of such items is necessary for the metric not to be materially misleading.” When a company changes the methodology used to calculate or present a key performance indicator or metric, the SEC indicates that a company must consider the need to disclose, to the extent material: The SEC notes that a company may need to recast prior metrics to conform to the current presentation to place the current disclosure in an appropriate context. A company must evaluate whether it has an affirmative disclosure obligation that would require the company to address the risks and uncertainties arising from the coronavirus outbreak, including any upcoming SEC periodic and current reports, potential securities offerings, ongoing share repurchases, or other public statements (such as earnings announcements or investor day presentations). Compensation and benefits impacts of COVID-19. I would like to receive the Refinitiv Perspectives newsletter. The GDPR, which extended the scope of EU data protection laws to companies processing data of EU residents, as well as the California Consumer Privacy Act and other data privacy laws adopted in other jurisdictions around the world, have created new risks and uncertainties for companies that obtain, store, and process data of employees, customers, suppliers, contractors, etc. 1 Skill Fellowship Credit (s) Event Summary. Compliance and regulations 6. ISS policy is to “[v]ote for management proposals to institute open-market share repurchase plans in which all shareholders may participate on equal terms.” In its 2020 update, ISS codified its existing policy application and expanded its guidance to vote for management proposals that grant the board authority to make open-market repurchases, as long as there are no company-specific concerns, including greenmail, the use of buybacks to inappropriately manipulate incentive compensation metrics, or threats to the company’s long-term viability. evidence that the board has failed to intervene when management’s interests are contrary to shareholders’ interests. GD FAQs: Content. ), In EMEA, a published sustainability report leads to a 37 percent increase in the likelihood of the company having a policy for reducing the use of natural resources and environmental impact of its supply chain. In this regard, the Staff observes that companies may be exposed to material risks of “theft of proprietary technology and other intellectual property, including technical data, business processes, data sets or other sensitive information.” The Staff also states that, while there is no specific line-item requirement under the federal securities laws to disclose “information related to the compromise (or potential compromise) of technology, data or intellectual property,” the SEC’s disclosure requirements apply to a broad range of evolving business risks and disclosure about such matters may be necessary in risk factors, management’s discussion and analysis, the business description, legal proceedings, disclosure controls and procedures, and/or financial statements.
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