Recent Trends in Board Composition and Refreshment in the Russell 3000 and S&P 500

Merel Spierings is Senior Researcher at The Conference Board ESG Center in New York. This post relates to Corporate Board Practices in the Russell 3000, S&P 500, and S&P MidCap 400: Live Dashboard, a live online dashboard published by The Conference Board and ESG data analytics firm ESGAUGE, in collaboration with Debevoise & Plimpton, the KPMG Board Leadership Center, Russell Reynolds Associates, and The John L. Weinberg Center for Corporate Governance at the University of Delaware.

Independent Director Experience

Qualifications and Skills

While business strategy is the most cited experience for directors, the share of board members whom companies report as having such expertise continues to decline. In the S&P 500, the percentage of directors with such experience—as reported in the proxy statement or other disclosure documents—declined from 70 percent in 2018 to 59 percent in 2023. In the Russell 3000, the decline was even more pronounced, from 68 percent in 2018 to 55 percent in 2023.


Preparing your 2023 Form 20-F

Connie I. Milonakis is a Partner and Maxim Van de moortel is Counsel at Davis Polk & Wardwell LLP. This post is based on a Davis Polk memorandum by Ms. Milonakis, Mr. Van de moortel, Michael Kaplan, Yasin Keshvargar, Michael J. Willisch and Reuven B. Young.

What’s new for the 2023 Form 20-F


In July 2023, the SEC adopted final rules that mandate cybersecurity incident and risk management disclosures for public companies. These final rules require FPIs to make annual disclosures on Form 20-F to describe the company’s (i) processes to assess, identify and manage cybersecurity risks, (ii) board oversight of such risks, (iii) management’s role and expertise in assessing and managing such risks and (iv) assessment of whether any risks from cybersecurity threats have materially affected, or are reasonably likely to materially affect, the company (see new item 16K of Form 20-F).


Attorney General Barr Could Use Some Help On Delaware Law

The Honorable J. Travis Laster is Vice Chancellor at the Delaware Court of Chancery. This post is based on his article and is part of the Delaware law series; links to other posts in the series are available here.

The universe regularly provides reminders to remain humble, including reminders that having expertise in one area does not make you an expert in adjacent areas. Former Attorney General Bill Barr recently provided one of those reminders with his opinion column in the Wall Street Journal, titled Delaware Is Trying Hard To Drive Away Corporations.

There are many legal topics where AG Barr has vast knowledge and experience. On those subjects, his opinion should carry weight. His column demonstrates that Delaware law is not one of them.


SEC’s SolarWinds complaint Demonstrates Regulator’s Aggressive Enforcement on Cybersecurity

Brock Dahl, Timothy Howard, and Pamela Marcogliese are Partners at Freshfields Bruckhaus Deringer LLP. This post is based on a Freshfields memorandum by Mr. Dahl, Mr. Howard, Ms. Marcogliese, Elizabeth Bieber, Beth George, and Mark Appleton.


Recently, the Securities and Exchange Commission (“SEC”) filed a complaint in the Southern District of New York against the SolarWinds Corporation, a network and infrastructure management company, and also named the company’s Chief Information Security Officer as an individual in the action. The SEC’s complaint alleges that the defendants defrauded investors and customers through internal control failures, as well as a series of misstatements, omissions, and schemes that obscured SolarWinds’ deficient cybersecurity practices and the cybersecurity threats it was facing. The SEC alleges the disclosure deficiencies violated the antifraud provisions of the Securities Act of 1933 and of the Securities Exchange Act of 1934, and the control failures violated the reporting and internal control provisions of the Exchange Act. Finally, while the SEC has recently issued cybersecurity rules that will come into effect in December, these allegations are all founded on existing regulations that do not invoke the requirements of the new rules. We summarize the case below and suggest a number of precautions companies can take in contemplation of this more aggressive SEC posture regarding cybersecurity compliance.

2023 Climate Disclosures in the Russell 3000 and S&P 500

Steve Newman is a Contributing Author at The Conference Board ESG Center in New York. This post relates to a Conference Board research report authored by Mr. Newman and is based on Corporate Environmental Practices in the Russell 3000, S&P 500, and S&P MidCap 400: Live Dashboard, a live online dashboard published by The Conference Board and ESG data analytics firm ESGAUGE. Related research from the Program on Corporate Governance includes The Illusory Promise of Stakeholder Governance (discussed on the Forum here) by Lucian Bebchuk and Roberto Tallarita; Does Enlightened Shareholder Value add Value (discussed on the Forum here); and Stakeholder Capitalism in the Time of COVID (discussed on the Forum here) both by Lucian Bebchuk, Kobi Kastiel, and Roberto Tallarita; How Twitter Pushed Stakeholders Under The Bus (discussed on the Forum here) by Lucian A. Bebchuk, Kobi Kastiel, and Anna Toniolo; and Restoration: The Role Stakeholder Governance Must Play in Recreating a Fair and Sustainable American Economy – A Reply to Professor Rock (discussed on the Forum here) by Leo E. Strine, Jr.

Climate Risk Disclosure Are on the Rise but Remain the Domain of Large Companies and Regulated Industries

Climate risk disclosures increased in 2022 from the previous year, with S&P 500 companies still the most likely to disclose; specifically, 60% of companies in the Russell 3000 Index still did not report climate risk in 2022, compared to only 26% of companies in the S&P 500.


Market Response to Racial Uprisings

Bocar Ba is Assistant Professor of Economics at Duke University, Roman Rivera is a Postdoctoral Scholar at the IRLE at University of California, Berkeley, and Alexander Whitefield is a Ph.D. student of Applied Economics at University of Pennsylvania. This post is based on their recent paper.

In 2020, the Black Lives Matter (BLM) movement gained significant traction in the United States following the killing of George Floyd. The movement, which resulted in the largest sustained protest in U.S. history, sparked numerous debates about the role of policing in the U.S. and how it intersects with systemic racism (New York Times, 2020).  Many in the BLM movement, which popularized the slogan “Defund the Police,” advocate for shifting funds from police departments to non-policing alternatives. In Market Response to Racial Uprisings, we study how such uprisings influence firms with connections to law enforcement. Specifically, do demands for racial justice damage companies that contract heavily with the police? Or does social unrest only amplify demands for policing and increase the profitability of such firms?


2024 Benchmark Policy Guidelines – US

Courteney Keatinge is Senior Director of Environmental, Social & Governance Research at Glass, Lewis & Co. This post is based on her Glass Lewis memorandum.

Guidelines Introduction

Summary of Changes for 2024

Glass Lewis evaluates these guidelines on an ongoing basis and formally updates them on an annual basis. This year we’ve made noteworthy revisions in the following areas, which are summarized below but discussed in greater detail in the relevant section of this document:


Taking Personhood Seriously in Corporate Law

Asaf Raz is a Research Fellow at the University of Pennsylvania Carey Law School. This post is based on his article, forthcoming in the Columbia Business Law Review, and is part of the Delaware law series.

The evolution of corporate law is tied to developments, or often shocks, in the broader social and legal landscape. A well-recognized example is the 1980s hostile takeover era, as summarized by Delaware Chancellor William Allen: “the secure ground upon which the accepted suppositions of corporation law had been premised[, up to the late 1970s, had broken] apart.” Similar “constitutional moments” for corporate law took place with the Citizens United and Hobby Lobby Supreme Court decisions of the previous decade, and with the corporate purpose discussion that re-emerged in mid-2019, and today remains at the forefront of corporate law scholarship and public debate.


SEC Risk Factors Disclosure Analysis

Dean Kingsley is a Principal and Matt Solomon is a Senior Manager at Deloitte & Touche LLP. Kristen Jaconi is an Associate Professor of the Practice in Accounting and Executive Director at Peter Arkley Institute for Risk Management at the USC Marshall School of Business. This post is based on their recent Deloitte report.

Many S&P 500 companies disclosed they have not experienced past material cybersecurity incidents; however, geopolitics and remote work have heightened cybersecurity risk.

The past 12 months have continued to demonstrate significant volatility and uncertainty in the business environment and broader society, including tectonic shifts in disruptive technologies like Generative artificial intelligence (AI), continued economic upheaval, systemic banking risks, complex domestic and global politics, rising workforce activism, ongoing regulatory reform, devastating natural disasters, and the long-term effects of the pandemic. Public companies continue to be challenged to create and protect enterprise value and stakeholder trust in the face of these and other significant risks.

In this context, Deloitte and the USC Marshall School of Business Peter Arkley Institute for Risk Management (USC Marshall Arkley Institute for Risk Management) have conducted their third annual review of risk factor disclosures of Standard & Poor’s (S&P) 500 companies, identifying key trends in the nature and form of these disclosures. This analysis has shown that companies are continuing to report an average of almost 32 risk factors, covering a wide range of risk domains, including strategic transactions, financial, economic, operational, technology, cybersecurity, informational technology, data security, and privacy, legal, regulatory, and compliance, intellectual property, human capital, and market risks. Opportunities remain to better align external risk reporting with internal risk management and reporting processes, improve the readability and categorization of risks, and make disclosures less generic.


SEC Outlines 2024 Examination Priorities

Aaron Gilbride and Marlon Q. Paz are Partners and Naim Culhaci is a Counsel at Latham & Watkins LLP. This post is based on a Latham memorandum by Mr. Gilbride, Mr. Paz, Mr. Culhaci, Laura Ferrell, Jamie Lynn Walter and Stephen P. Wink.

On October 16, 2023, the Securities and Exchange Commission’s (SEC) Division of Examinations (the Division) published its annual examination priorities for 2024 (2024 Priorities), which focus on “certain practices, products, and services that [the Division] believes present potentially heightened risks to investors or the integrity of the U.S. capital markets.” The Division will prioritize areas that pose emerging risks to investors or the markets, as well as examinations of core and perennial risk areas. The 2024 Priorities include certain of these focus areas, but are not an exhaustive list.


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