Monthly Archives: November 2022

Supply chain strategies: For many companies, the traditional balance is shifting

Jim Kilpatrick is Global Supply Chain & Network Operations Leader and Carey Oven is National Managing Partner at the Center for Board Effectiveness and Chief Talent Officer at Deloitte LLP. This post is based on their Deloitte memorandum.

In the era of lean and just-in-time management approaches, many companies adopted supply chain strategies with a primary focus on cost and efficiency. With a formula for an effective supply chain focused on how to achieve the lowest cost with the highest level of efficiency, production facilities and suppliers of goods and services might be located virtually anywhere, as long as they could deliver to their critical customers on time at the agreed price. Supply chains, along with business strategies more broadly, became increasingly global.

In more recent years, an era in which low-probability, high-impact events have become more common, supply chains built around this formula have seen their share of challenges. Geopolitical tensions, war, increasingly severe weather, and a global pandemic, to name a few, have disrupted the flow of goods and services in unexpected and unprecedented ways. In many companies, the scale and scope of disruption over the past few years has prompted new discussions about whether supply chain strategies should give more consideration to risk and resilience.

The global pandemic was a critical driver of this shift, as regional lockdowns, infrastructure constraints, and even closed borders quickly put the spotlight on the vulnerabilities of global supply chains. Further events, such as war in Ukraine, and increasing awareness of the concentration of critical commodities in a few geographies have accelerated the discussions.


Representations & Warranties, Fraud, and Risk Shifting: An Analytical Framework

Steven L. Schwarcz is the Stanley A. Star Distinguished Professor of Law & Business at Duke University School of Law and Senior Fellow of the Centre for International Governance Innovation. This post is based on his recent paper.

In Representations & Warranties, Fraud, and Risk Shifting: An Analytical Framework, I attempt to build a systematic framework for analyzing breaches of representations and warranties (“R&W”s). Many contracts include R&Ws in order to reduce information asymmetry and to reallocate risk between the parties. When used in asset-sale agreements, R&Ws are assertions by a seller to the buyer about the quality of the assets being sold. When used in financing agreements, R&Ws are assertions by a borrower to the lender about the borrower’s financial condition, its ability to repay the financing, and the quality of the collateral. Whichever the context, I refer to the parties providing these assertions as “warrantors.”

To provide real world grounding, the Article takes into account actual R&Ws used in business and finance, starting with those used in securitization transactions. Securitizations exemplify the current controversy over the meaning of R&Ws and also broadly represent the problems because they incorporate the same types of R&Ws found in both asset sales and financings.

A warrantor that breaches a R&W normally would be liable for contract-breach damages, which are calculated as expectation damages. Expectation damages can be an inefficient remedy for R&W breach, however, because they cannot always be calculated and awarded costlessly. Parties therefore have examined alternative breach remedies. In securitizations, they’ve settled on a “cure-or-repurchase” remedy: requiring the warrantors either to correct, or “cure,” the breach or to repurchase the breaching loan—the type of underlying asset that generates cash to repay securitization investors.

Warrantors contend that this “sole remedy” should adequately shift risk. Litigating investors now counter, however, that it insufficiently shifts risk if the breaches are extensive. They also contend that extensive R&W breaches should constitute fraud and that, in the presence of fraud, their remedies should not be limited.


Remarks by Chair Gensler Before the Investment Adviser/Investment Company National Seminar

Gary Gensler is Chair of the U.S. Securities and Exchange Commission. This post is based on his recent remarks. The views expressed in this post are those of Chair Gensler, and do not necessarily reflect those of the Securities and Exchange Commission or the Staff.

Good morning. Welcome to the Compliance Outreach Program of the Securities and Exchange Commission’s Investment Adviser/Investment Company National Seminar.

My thanks to the SEC staff for organizing this seminar—particularly in the Divisions of Examinations, Enforcement, and Investment Management—and to the industry participants in the audience and on today’s panels.

As is customary, I’d like to note that my views are my own, and I’m not speaking on behalf of my fellow Commissioners or the staff.


In thinking about compliance, my mind goes to two texts—not the off-channel communications that firms are required to document[1]—but rather two texts from long ago: one from nearly 400 years ago, and another from nearly 4,000 years ago.

First, there’s Shakespeare, who wrote in his 1623 comedy Measure for Measure: “Good counsellors lack no clients.”[2]

As chief compliance officers, I think that you all seek to be considered as “good counsellors.”

That brings me to the second text, one written in stone: the Hammurabi Code. Written nearly four millennia ago, the code included various provisions about borrowing, lending, and interest rates related to silver and grain, the currencies of the day.[3] Even in 1700 BCE, the code’s authors understood that there were inherent conflicts of interest when it comes to finance.


2022 CPA-Zicklin Index on Corporate Political Disclosure and Accountability

Dan Carroll is Vice President for Programs and Counsel of the Center for Political Accountability and oversees the CPA-Zicklin Index, Bruce F. Freed is CPA’s President, and Karl J. Sandstrom is strategic advisor to the Center and senior counsel with Perkins Coie. Related research from the Program on Corporate Governance includes The Untenable Case for Keeping Investors in the Dark (discussed on the Forum here) by Lucian Bebchuk, Robert J. Jackson, Jr., James Nelson, and Roberto Tallarita; The Politics of CEOs (discussed on the Forum here) by Alma Cohen, Moshe Hazan, Roberto Tallarita, and David Weiss; Shining Light on Corporate Political Spending (discussed on the Forum here); and Corporate Political Speech: Who Decides? (discussed on the Forum here) both by Lucian Bebchuk, and Robert J. Jackson Jr.

In a major expansion, the 2022 CPA-Zicklin Index, the nation’s premier benchmarking of U.S. companies for transparency and accountability of their political spending, doubled its rating from the S&P 500 companies to the Russell 1000.

The Index is a nonpartisan scorecard that now gives attention to large and medium-cap U.S. companies that are not S&P 500 components. This will help protect more shareholders and others concerned about increasing risks of company political spending and will enable companies to compare, their policies and practices with those of their  peers and leaders in their industries.

Former Securities and Exchange Commission Acting Chair and Commissioner Allison Herren Lee highlighted in the Index foreword the progress made and the remaining holes that pose an even greater threat as U.S. democracy comes under heavier assault.

As she pointed out, the threat is fueled in part by corporate political money. “[C]orporations continue to pour billions of dollars into political coffers around the country, with little transparency, and thus little accountability, for the political spending decisions made in the twelve years since the Supreme Court’s ruling in Citizen’s United opened the spigot on corporate political spending,” she wrote. “The trend lines in the CPA-Zicklin Index over the past decade show some laudable increases in transparency, but the analyses also show that non-transparency around corporate influence in the political process remains a significant issue.”


Does Voluntary Financial Disclosure Matter? The Case of Fairness Opinions in M&A

Adam B. Badawi is Professor of law at Berkeley Law School; Matthew D. Cain is Senior Fellow at the Berkeley Center for Law and Business at Berkeley Law School; and Steven Davidoff Solomon is Professor of Law at Berkeley Law School. This post is based on their recent paper.

Louis D. Brandeis famously said that “sunlight is the best disinfectant” to promote vigorous and copious financial disclosure. While this principle seems like a common-sense aspiration, research has found that the social benefit of disclosure in the capital markets can be more complex and even negative. There is also a vigorous debate over the virtues of mandatory versus voluntary disclosure and the need for the former over the latter.

In Does Voluntary Financial Disclosure Matter? The Case of Fairness Opinions in M&A, recently posted to the SSRN, we use the shifting nature of Delaware disclosure requirements for fairness opinions in tender offers to assess the impact of voluntary versus mandatory disclosure in mergers and acquisitions (“M&A”) transactions. Unlike transactions structured as a merger—where the disclosure of fairness opinion details has long been required—the disclosure obligations for transactions structured as tender offers have shifted over recent decades. In this study, we scrape the details from over 900 disclosures by tender offer targets that span these changes in disclosure regimes. The sample, which encompasses 1995 to 2019, covers three distinct approaches taken by Delaware courts to tender offer disclosure. Prior to 2000, Delaware said little about the need to divulge the details of fairness opinions when a firm was the target of a tender offer. In this initial period, disclosure of these details was essentially voluntary. Around 2001, Delaware courts concluded that this information could be material to shareholders, but a series of cases in this period gave mixed messages about the level of detail required. Tender offer targets thus had to balance the costs of additional disclosure against a relatively low prospect of liability. By 2007, it became clear that a failure to disclose the relevant details of a fairness opinion would bring a significant risk of fiduciary liability. After this period, disclosure of fairness opinion details was essentially mandatory if a firm sought to avoid liability.


SEC Finalizes New Clawback Rules

Mike Kesner is Partner, and Lane Ringlee is Managing Partner at Pay Governance LLC. This post is based on their Pay Governance memorandum. Related research from the Program on Corporate Governance includes Rationalizing the Dodd-Frank Clawback (discussed on the Forum here) by Jesse M. Fried.

Introduction and Background

On October 26, 2022, the Securities and Exchange Commission (SEC) adopted the final rule requiring that all listed companies adopt and disclose a clawback policy as required under Dodd-Frank. These final rules follow the SEC’s issuance of proposed rules in July 2015, which laid dormant until the re-opening of two separate comment periods in October 2021 and June 2022.

The new clawback rule requires that a listed company adopt and disclose a policy for the recoupment of incentive compensation from its current and former executive officers in the event the company is required to prepare “an accounting restatement due to material noncompliance” under the securities law (colloquially referred to as a “clawback” policy).

The final rule also requires national exchanges to prohibit the listing of any security of an issuer that does not develop and implement a clawback policy that complies with the new rule.

Recap of the Final Rules

The key provisions of the final clawback rules include the following:

Covered Group

  • Applicable to current and former executive officers (Sec. 16 definition) who received incentive-based compensation during the three fiscal years preceding the date of the restatement
  • Newly appointed executive officers are not subject to clawback for prior periods (this is a modification from the proposed rules)


  • Restatements that correct errors that are material to previously issued financial statements (“big R” restatements), or
  • Restatements that correct errors that are not material to previously issued financial statements but would result in a material misstatement if (i) the errors were left uncorrected in the current report or (ii) the error correction was recognized in the current period (“little r” restatements)

– Excludes “out of period” adjustments (corrections of immaterial errors recorded in the current period)

– Excludes revisions due to internal reorganizations impacting reportable segment disclosures or changes in capital structure (e.g., stock splits, stock dividends, etc.)


How Twitter Pushed its Stakeholders under the (Musk) Bus

Lucian Bebchuk is the James Barr Ames Professor of Law, Economics, and Finance and Director of the Program on Corporate Governance at Harvard Law School; Kobi Kastiel is Associate Professor of Law at Tel Aviv University, and Senior Fellow of the Harvard Law School Program on Corporate Governance; and Anna Toniolo is Postdoctoral Fellow at the Program on Corporate Governance of Harvard Law School. This post is based on their forthcoming essay, “How Twitter Pushed its Stakeholders under the Bus.” Related research from the Program on Corporate Governance includes The Illusory Promise of Stakeholder Governance (discussed on the Forum here); Will Corporations Deliver Value to All Stakeholders? (discussed on the Forum here), by Lucian A. Bebchuk and Roberto Tallarita; For Whom Corporate Leaders Bargain (discussed on the Forum here); Stakeholder Capitalism in the Time of COVID (discussed on the Forum here); Does Enlightened Shareholder Value Add Value? (discussed on the Forum here), all by Lucian Bebchuk, Kobi Kastiel, and Roberto Tallarita; and Corporate Response to the War in Ukraine: Stakeholder Governance or Stakeholder Pressure? (discussed on the Forum here), by Anete Pajuste and Anna Toniolo.

Our forthcoming essay, “How Twitter Pushed its Stakeholders under the Bus,” offers a case study of Elon Musk’s Twitter acquisition. Given the strong current interest in this acquisition, we discuss, in this and subsequent posts, some of our findings and their implications for current debates on stakeholder capitalism.

An epic battle has been waged this year between Twitter and Elon Musk after Musk tried to get out of the acquisition agreement between them. Twitter won, and its shareholders and corporate leaders captured large financial gains as a result.

While the battle between these two sides has attracted massive media coverage, we believe that insufficient attention has been paid to another group that was expected to be affected by the deal – Twitter’s “stakeholders” (that is, its non-shareholder constituencies). In particular, our analysis concludes that, notwithstanding their stakeholder rhetoric over the years, when negotiating the deal, Twitter’s corporate leaders chose to push their stakeholders under the (Musk) bus.

That is not because Twitter’s corporate leaders were pushed over by Musk. To the contrary, Twitter’s leaders obtained from Musk, and fought hard to keep, large monetary gains for shareholders (a premium of about of $10 billion), as well as for the corporate leaders themselves (who together made a gain of over $1 billion from the deal). In exclusively focusing on these monetary gains, however, Twitter’s leadership elected to disregard stakeholder interests.

Pushed under the bus were Twitter’s employees, which the company fondly called “tweeps” over the years. Although Twitter has for long promised to care for its tweeps, Twitter’s leaders did not attempt to look after, or even raise with Musk how the tweeps would be affected by the negotiated deal.

Instead, Twitter’s leaders chose to allocate the very large monetary surplus produced by the deal entirely to shareholders and the leaders themselves. They chose not to use any part of this surplus to provide any monetary cushion to the tweeps who would lose their positions post-deal. To illustrate, allocating even 2% of the monetary gains that ultimately went to shareholders and corporate leaders to employee protection would have enabled providing a substantial monetary cushion to the about 50% of the tweeps who got the axe shortly after the deal’s closing.

Notably, Twitter’s leaders did not even hold negotiations or discussions with Musk to ensure that tweeps would learn of their lay-offs in a humane way rather than infer it after getting disconnected in the middle of night, or that the move away from the remote work environment to which Twitter expressed a commitment would be gradual rather than sudden.

Also pushed under the bus were the mission statements and core values to which Twitter’s corporate leaders had long pledged allegiance. In negotiating the terms of the transaction, Twitter’s corporate leaders did not negotiate with Musk for any constraints or even soft pledges with respect to maintaining such commitments post-deal. Twitter’s leaders seem not to have even held discussions with Musk regarding his plans in this respect, as they told employees they had no information on these plans. Twitter’s leaders elected to proceed in this way despite warning and indications that Musk could well abandon some or all of Twitter’s strong pre-deal commitments.

Twitter had for long communicated commitments to having a mission and not just a profit goal, and to advancing values such as civic integrity, excluding hate speech, upholding human rights, and even supporting Ukraine in its defense against aggression. But these commitments seem to have received little attention or weight from Twitter’s leaders when they negotiated the Musk deal.


ESG and C: Does Cybersecurity Deserve Its Own Pillar in ESG Frameworks?

Subodh Mishra is Global Head of Communications at Institutional Shareholder Services. This post is based on an ISS Corporate Solutions memorandum by Senior Editor, Paul Hodgson.

The ransomware attack on the Colonial Pipeline in May 2021 was just one of many signs that environmental and cybersecurity risk are closely connected. Thefts of personal information during a cybersecurity breach erode trust on the part of customers investors, employees and other stakeholders, demonstrating the link between cyber risk and social risk. The new disclosure and reporting requirements embedded in the Security and Exchange Commission’s latest regulations governing the oversight of cybersecurity underline the link between governance risk and cyber risk.

All this evidence shows that either cybersecurity is already part of ESG, and, perhaps, a more appropriate abbreviation should be ESGC. Most enterprise risk management policies have already expanded their oversight from purely financial risk to these other areas, including cybersecurity. Cyber risk can be as harmful to a company’s reputation and value as any other ESG issue, and the damage is inflicted and experienced in much the same way. As cyberattacks increase in size and frequency, the direct and indirect damage to companies — including loss of customer confidence, reputational damage, potential impact on the stock price and possible regulatory actions or litigation — arguably touches all aspects of ESG.

This convergence of these of risks is widely recognized across companies, investors and governments. The World Economic Forum’s Global Risk Report 2022 notes that the five main areas of risk are economic, geopolitical, social, environmental and technological. According to an RBC Global Asset Management Responsible Investment Survey, asset managers rank cybersecurity as their second-biggest concern among ESG-related themes. That places it above the environmental risks of climate change and water and the governance risk of shareholder rights and voting. The only ESG-related theme of higher concern is the governance-related risk of anti-corruption.


Preparing for the 2023 Proxy Season in the Era of Universal Proxy

David M. Silk and Sabastian V. Niles are Partners and Carmen X. W. Lu is Counsel at Wachtell, Lipton, Rosen & Katz. This post is based on a WLRK publication by, among others, Mr. Silk, Mr. Niles, Ms. Lu, Andrew Brownstein, Steve Rosenblum and Adam Emmerich. Related research from the Program on Corporate Governance includes Universal Proxies (discussed on the Forum here) by Scott Hirst.

The universal proxy card, which came into effect on September 1, 2022, represents an important development in shareholder voting: for the first time, all shareholders will be able to vote for their preferred mix of board and dissident director nominees at a contested meeting. While the framework by which major institutional shareholders and the influential proxy advisers ISS and Glass Lewis evaluate proxy contests remains unchanged—dissidents will still need to make a compelling case for change and propose proportionate solutions and qualified nominees—the universal proxy card may meaningfully change the dynamics of contested elections. One consequence is clear: individual director candidates will face increased scrutiny by shareholders and proxy advisors. Shareholders will be able to engage in “elective surgery” and opt away from individual board-nominated candidates whose skills, backgrounds, experiences and contributions compare unfavorably in their view relative to those of individual dissident nominees. With shareholders—and the proxy advisory firms—now able to “cherry pick” from among the entire set of board candidates in a contested election, both the board and dissidents will be expected to more clearly communicate and demonstrate the strengths of each individual nominee.

The universal proxy card rules also come at a key juncture in the economic cycle. Macroeconomic headwinds, trading multiple compression and a bearish earnings outlook have all aided the resurgence of shareholder activism. Investor focus on ESG issues also remains strong. The past proxy season saw a record number of shareholder proposals and continued uptick in private engagement. It is possible that some proponents (including smaller social activists that have previously submitted Rule 14a-8 proposals) may seek to leverage the lower cost of entry created by the new universal proxy card rules to nominate directors as part of ESG-oriented campaigns.

The new universal proxy rules will require a review of company bylaws to ensure that appropriate amendments are implemented to provide sufficient notice and time to prepare for a contested election. Companies would also be well advised to review their preparatory practices prior to their next annual meeting, including board and management readiness, shareholder engagement and outreach, proxy statement and related public disclosures, and board refreshment and composition strategies. We summarize our recommendations below.

Summary of Key Rule Changes

The universal proxy rules require the use of proxy cards listing the names of all director candidates in a contested election, regardless of whether the candidates were nominated by the board or shareholders. Shareholders will be able to “mix and match” their votes for dissidents and board nominees. The new rules also set forth minimum solicitation and notice requirements, including the requirement that dissidents solicit holders of a minimum of 67% of the voting power of shares entitled to vote in the election. Unlike proxy access, the universal proxy rules do not impose minimum ownership thresholds or holding periods nor do they cap the number of nominees. Each side will need to conduct its own solicitation and may use notice and access to deliver its proxy materials and comply with the requisite solicitation requirements. In addition, the “short slate” rule has been eliminated, and the “bona fide nominee” rule has been amended to include nominees that consent to being named in any proxy statement for the applicable shareholder meeting.

Notably, the Securities and Exchange Commission (“SEC”) has not mandated identical universal proxy cards. The new rules require proxy cards to list all nominees, to distinguish among board, dissident and proxy access nominees, to use the same font type, style and size to present all nominees, and to disclose the maximum number of nominees for which voting authority can be given, but the board and dissidents have free reign to make tactical decisions on how to group nominees, including whether to identify nominees recommended or opposed by their side. The likelihood is that dissidents nominating fewer candidates than seats will specify which board-nominated candidates they oppose and which they do not oppose.

Bylaw Amendments

The scope of bylaw amendments in response to the universal proxy rules should be considered in the context of a company’s overall governance profile and structural defenses, but we recommend that all companies at least consider making the following changes:

  • Requiring the dissident’s nomination notice to include a representation that the dissident intends to solicit proxies from shareholders representing at least 67% of the voting power of shares entitled to vote on the election of directors;
  • Requiring the dissident to comply with the universal proxy rules and to provide reasonable evidence thereof prior to the shareholder meeting; and
  • Requiring the dissident to use a proxy card color other than white, which will be reserved for the company’s exclusive use.

In addition, to the extent companies are considering updates to their advance notice bylaws, such amendments should be unambiguous and reasonably serve to provide the company and shareholders with relevant information. Bylaw updates adopted on a “clear day” will receive greater judicial and shareholder deference than changes adopted amid a proxy contest, and in light of the possibility of an increase in proxy contests in the years ahead, now may be a good time to review and update bylaws to reflect evolving market practices.

Proxy Season Engagement

The best preparation for any proxy contest occurs in peacetime, and companies should continue to build relationships and credibility with their investors in the context of their ongoing engagement meetings with investors for the benefit of all board members. Given the limited opportunities for directors to meet with investor stewardship teams during the year, companies should consider how to strike the right balance between introducing newer directors to investors and bringing familiar faces who are more experienced with shareholder engagement. Meeting agendas may also need review; additional time may need to be allocated to allow a robust discussion of board composition and effectiveness. During a proxy contest, it will be helpful if most or even, in certain circumstances, all directors are prepared to engage with key shareholders and proxy advisors.

Proxy Disclosures

As directors face more scrutiny and their roles become ever more complex, it may be time to take a closer look at proxy materials and related disclosures and processes, including D&O questionnaires, director skills matrices and director biographies. Heightened expectations regarding oversight of risk, climate, human capital, cybersecurity and other issues have led to growing investor and regulatory demand for disclosures, as evidenced by the SEC’s recent rulemaking and comment letters. The director skills matrix provides companies an opportunity to communicate and explain the specific substantive skills they believe are critical to the business and the order of priority given to such skills. A well-crafted director skills matrix can effectively highlight the strength of the company’s overall board composition and demonstrate the contribution each director brings to the board. Director biographies can also be leveraged to support the case for each director, highlighting particularly relevant or valuable aspects of their experience.

Board Composition and Refreshment

While dissidents will still need to make the case for change to secure the support of shareholders and proxy advisors, directors who are publicly perceived as having vulnerabilities such as lacking independence, having long tenure, being “overboarded” or just underperforming will face greater scrutiny, and likely face a higher risk of defeat in a proxy contest. Whereas in the past, companies have been able to successfully focus on the collective strength of the board, ISS has already indicated that it “will continue to highlight to clients those nominees from either party who, during our engagements, appear particularly well-qualified.” In preparation for future proxy contests, in addition to providing clarity on strategic and business priorities, boards may need to further refine their approaches to board refreshment and composition (along with director training and education), including paying particular attention to concerns regarding long tenure, overboarding, diversity and relevant expertise and skillsets. In the universal proxy era, shareholders and proxy advisors may be more focused on the individual qualities and skill sets of the director candidates from each side.

Universal proxy marks a new phase of corporate governance. A direct consequence of the rules is increased scrutiny of individual directors and their role on the board. In addition to bylaw amendments to ensure clear understanding of the voting process and timely compliance with the new rules, companies should also look to leverage public and private opportunities to build investor confidence and trust in the board as a whole as well as each member of the board.

Gender Diversity in TSE Prime Market Boards: an open letter from ACGA

Jamie Allen is Secretary General, Neesha Wolf is Supporting Research Director at Asian Corporate Governance Association. Kei Okamura is Portfolio Manager at Neuberger Berman East Asia and Japan Working Group Chair at ACGA . This post is based on their open letter published in the Asian Corporate Governance Association. Related research from the Program on Corporate Governance includes Politics and Gender in the Executive Suite (discussed on the Forum here) by Alma Cohen, Moshe Hazan, and David Weiss; Will Nasdaq’s Diversity Rules Harm Investors? (discussed on the Forum here) by Jesse M. Fried; Duty and Diversity (discussed on the Forum here) by Chris Brummer, and Leo E. Strine. 

This post is based on an open letter by ACGA. Below is the text of the letter with minor adjustments to eliminate the correspondence-related parts.

The Asian Corporate Governance Association (ACGA) recently formed a working group of members and other interested investors to discuss the issue of gender diversity on Japanese listed company boards. We are writing to share our thoughts and suggestions on this topic.

There is a growing appreciation that a diverse board is a key driver of strong corporate governance, which is essential to preserve and enhance long-term corporate value. In this context, gender has become a key component of the responsible investment policies of many asset owners and institutional investors around the world, with an increasing number voting against companies with single-gender boards. The issue is gaining traction in new listing regulations as well as corporate governance codes in many jurisdictions. And there is a growing discussion worldwide as to whether enough is being done to promote women to senior management roles in preparation for directorships. As ACGA has found in our engagements with Japanese companies, a diversified boardroom tends to promote more dynamic discussion of a company’s long-term strategy and enhances board effectiveness. There is a growing appreciation that a diverse board is a key driver of strong corporate governance, which is essential to preserve and enhance long-term corporate value. In this context, gender has become a key component of the responsible investment policies of many asset owners and institutional investors around the world, with an increasing number voting against companies with single-gender boards. The issue is gaining traction in new listing regulations as well as corporate governance codes in many jurisdictions. And there is a growing discussion worldwide as to whether enough is being done to promote women to senior management roles in preparation for directorships. As ACGA has found in our engagements with Japanese companies, a diversified boardroom tends to promote more dynamic discussion of a company’s long-term strategy and enhances board effectiveness.


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