Yearly Archives: 2019

Key Findings

• Board Gender Diversity: Majorities of both investors (61 percent) and non-investors (55 percent) agreed with the view that board gender diversity is an essential attribute of effective board governance regardless of the company or its market. Approximately 27 percent of investors tended to favor a market-by-market approach to reviewing board gender diversity, while 24 percent of non-investors tended to favor an analysis conducted at the company level.
• Director Overboarding: Investors and non-investors diverged on the question of measurement of director overboarding. A plurality of investor respondents (42 percent) indicated four public-company boards as the appropriate maximum limit for non-executive directors. A plurality of investor respondents (45 percent) also responded that two total board seats is an appropriate maximum limit for CEOs (i.e., the CEO’s “home” board plus one other board). A plurality of non-investors responded that a general board seat limit should not be applied to either non-executives (39 percent) or CEOs (36 percent), and that each board should consider what is appropriate and act accordingly.
• Board Chair Independence: Concerning the U.S. market, survey participants were asked to identify factors that suggest the need for an independent chair in the context of a shareholder proposal. Investor respondents cited poor responsiveness to shareholder concerns as the most commonly chosen factor that strongly suggested the need for an independent board chair. Additional factors included governance practices that weaken or reduce board accountability to shareholders (such as a classified board, plurality vote standard, lack of ability to call special meetings and lack of a proxy access right). Concerning European markets, 62 percent of investors supported the policy position of a potential vote against the election of a non-independent chair solely based on the principle that the board chair should be independent. Most investor and non-investor respondents, 89 percent and 70 percent, respectively, indicated that they would apply the same approach in European markets where companies are more likely to combine the roles of CEO and Chair as in markets where separating the roles is the norm.
• Climate Change Risk Oversight: Sixty percent of investor respondents supported the idea that all companies should be assessing and disclosing climate-related risks and taking actions to mitigate such risks where possible, while 35 percent of investor respondents indicated that climate disclosure and action may depend on company-specific factors, including the business model, industry, and location of operations. Only 5 percent of investors indicated that the possible risks related to climate change are too uncertain to incorporate into a company-specific risk assessment model.

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