2023 Silicon Valley 150: Corporate Governance Report

Richard Blake is a Partner at Wilson Sonsini Goodrich & Rosati. This post is based on a WSGR memorandum by Mr. Blake, Lillian Jenks, Courtney Mathes, and Barbara Novak.

Our 2023 Silicon Valley 150 Corporate Governance Report reviews the corporate governance practices and disclosures of the Valley’s largest public companies. This report uses the Lonergan SV150, which ranks the top 150 public companies with headquarters in Silicon Valley by annual sales. We noted the following key conclusions from our survey of SV150 corporate governance:

  • Virtual meetings are here to stay. Following the practice started during the COVID-19
    pandemic, approximately 89% of the SV150 opted to hold a virtual meeting in 2023
    rather than a physical one.
  • ESG/CSR disclosure in the proxy statement and on websites continued to remain
    strong throughout the SV150, with 84% of the top 100 companies having such
    disclosure in their proxies and 93% of the top 100 companies having such disclosure
    on their website.
  • Over three-quarters of the SV150 companies published an ESG Report on their
    website, with 98% of the top 50 companies doing so. Most of the companies that
    issued an ESG Report (81.6%) issued a single report rather than multiple reports. Over
    46% of the ESG Reports contained an independent, third-party assurance of some of
    the data.
  • Most companies discussed ESG or sustainability and cybersecurity committee
    responsibility in their proxy statements (80.7% and 86.7%, respectively). In most
    companies, ESG or sustainability was handled by the nominating/corporate
    governance committee (80.8%) and cybersecurity by the audit committee (76.2%).
    The number of standalone cybersecurity/privacy committees increased to 13.
  • Human capital disclosure continued to expand this year, with 74.7% of companies
    including such disclosure in their proxy statement. Most of the companies (73.3%)
    chose a qualitative discussion although 38.0% provided specific numbers. Of those
    companies that provided quantitative human capital information, 38 companies
    disclosed diversity numbers or percentages among employees or some subset of
    employees. A significant number of companies (59.3%) gave their compensation
    committee a mandate in the charter or proxy statement to oversee human capital
  • 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 94%) 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
    12 included it or included diversity information in comparable detail. Among the NYSE
    companies that did not include such extensive information, all but 11 companies
    identified whether the company had “diverse” directors by the company’s own definition of diverse, which generally included racial or ethnic diversity or LGBTQ+. The
    extent of average diversity on the boards of Nasdaq and NYSE companies was similar,
    with almost 30% for Nasdaq companies and almost 29% for NYSE companies. Non-binary
    directors were rare, with only one Nasdaq company and one NYSE company identified as
    including a non-binary director.
  • The SV150 is still fairly diversified in years since IPO, although none of this year’s SV150 were
    newly public. The top 50 companies continued to have substantially greater annual sales,
    market cap, and profitability than the other 100 companies.
  • The top 50 companies, on average, have up to one more director. 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, with the bottom 50 companies actually averaging a higher percentage of
    female directors (36.1%) than the top 50 companies (32.3%).
  • 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 (20.2%) is considerably higher than women CEOs
  • 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 8% of SV150 companies in 2023. Only one activism campaign resulted in
    a proxy fight, with the most frequent result being at least one director added to the board
    in a settlement with the activist stockholder.
  • Almost 95% of SV150 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 2023, just
    over half received greater than 90% stockholder approval.
  • Executive compensation perks are primarily found in top 50 companies, regardless of time
    since IPO.
  • Most companies (88%) included pay versus performance disclosure in their proxy
    statements. Revenue was the most frequent company selected measure (55.8%) with
    earnings the next most frequent company selected measure (26.4%). Among other
    performance measures included in the SV150 companies’ tabular lists, earnings was the
    most frequent (37.2%). Most companies included two or three measures in their tabular lists
    of performance measures (56 companies and 28 companies, respectively), in addition to
    their company-selected measure.

Download the full report here.

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