2022 Silicon Valley 150 Corporate Governance Report

Richard Blake is a Partner, Courtney Mathes and Barbara Novak are Associates at Wilson Sonsini Goodrich & Rosati. This post is based on a WSGR memorandum by Mr. Blake, Ms. Mathes, Ms. Novak, Jose Macias and Jason Chan.

The SV150 is released each year by Lonergan Partners, and is comprised of the 150 largest public companies in Silicon Valley, based on annual sales. Among the SV150 are some of the most influential technology and life sciences companies in the world. We noted the following key conclusions from our survey of SV150 corporate governance.

  • Following the practice started during the COVID-19 pandemic, almost 92% of the SV150 opted to hold a virtual meeting in 2022 rather than a physical one.
  • ESG/CSR disclosure in the proxy statement and on websites continued to remain strong throughout the SV150, with more than 85% of the top 100 companies having such disclosure in their proxies and almost 85% of the top 100 companies having such disclosure on their website.

  • Most companies discussed ESG/CSR and cybersecurity committee responsibility in their proxy statements (74.3% and 86.5%, respectively). In most companies, ESG/CSR was handled by the nominating/corporate governance committee (73.8%) and cybersecurity by the audit committee (79.9%). The number of standalone cybersecurity/privacy committees doubled to 10.
  • Human capital disclosure exploded this year, with 72.8% of companies including such disclosure in their proxy statement. Most of the companies chose a qualitative discussion rather than providing specific numbers. A smaller, though still significant, number of companies (52%) gave their compensation committee a mandate in the charter or proxy statement to oversee human capital matters.
  • Voluntary proxy statement disclosures in general and proxy summaries also continued to remain prevalent throughout the SV150, depending on the type of disclosure, although it continued to be the case that these are much more likely to be implemented by top 50 companies—and shareholder proposals are almost always directed to top 50 companies.
  • Almost all Nasdaq companies (approximately 91%) included the new board diversity matrix in their proxy statements rather than on their websites. Adoption of the Nasdaq board diversity matrix was not common among NYSE companies, although seven included it.
  • The SV150 is still fairly diversified in years since IPO, but the top 50 companies have substantially greater annual sales, market cap, and profitability than the other 100 companies.
  •  The top 50 companies, on average, have up to 1.5 more directors. In addition, directors at the top 50 companies have longer tenure, are older, and are more likely to be subject to mandatory retirement policies. Female directors, however, are more common throughout the SV150.
  • Companies more than 20 years from their IPO are significantly more likely to have an independent chair than any other demographic factor.
  • The number of women executive officers (almost 20%) is considerably higher than women CEOs (6%).
  • The top 50 companies are much more likely to have a non-classified board, majority voting, proxy access, and ability for stockholders to call a special meeting or act by written consent. Years since IPO also plays a role in these decisions.
  • Activism affected over 10% of SV150 companies in 2022 and was more prevalent the lower the company’s annual sales. Only one activism campaign resulted in a proxy fight, with most resulting in at least one director being added to the board in a settlement with the activist stockholder.
  • Almost 94% of SV 150 companies that have chosen say-on-pay frequency have adopted annual say-on-pay votes, and of the companies that took a say-on-pay vote in 2022, almost 58% received greater than 90% stockholder approval.
  • Executive compensation perks are primarily found in top 50 companies, regardless of time since IPO.
  • Clawback policies are in place throughout the SV150, regardless of years since IPO, but almost none of the current clawback policies comply with the new SEC rules approved in October 2022.

Download the full report here.

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