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digital iq
Five Ways to Raise Your Board's Digital IQ
Publication Date: November 20, 2017 

Technology is disrupting virtually every industry in some way, and a business case for digital literacy on the board is emerging. In this post, veteran board director Betsy Atkins shares five ways companies can raise their boards' digital IQ.

There can be little doubt in today's business environment that adding board members with broad experience in technology (including software, services, cloud, analytics and A.I.) will bring critical insights into the boardroom. According to a recent study by Deloitte, the percentage of public companies that have appointed technology-focused board members has grown from 10% to 17% during the past six years. For high performers—those companies that outperformed the S&P 500 by 10% or more for the past three years—this figure almost doubles to 32%.

However, board refreshment may not happen soon enough for some companies, and adding a few tech experts may not raise the digital IQ of the entire board to a level where decision making becomes nimble. In the interim, the question is, how can companies raise the digital expertise that existing board members bring to the table?

1. Conduct a technology IQ assessment.

An appraisal of the board's digital IQ should be incorporated into the annual board assessment to identify any areas of weakness. A digital IQ assessment will be different for each board depending upon the company it serves or the industry it operates in, but may examine some or all of the following elements:
  • Are there enough (or any) board members with relevant technology backgrounds?
  • Have board members worked within a variety of business models?
  • Did board members lead or serve on companies that initiated digital transformation?
  • Have board members experienced a significant change in company business model?
  • How does the board monitor technological innovations and/or looming disruptions?
  • Does the board benchmark technology adoption against competitors?
  • What metrics is the board tracking to measure progress in digital transformation?
  • Does the board meet with the company's CTO or CIO on a regular basis?
  • Is the board comfortable with change?

2. Embark on a technology learning tour.

Every company is a technology company in some way, and all boards should be continuously researching macro trends in technological innovation and digital enablement. An effective way to boost the entire board's digital IQ quickly is a technology learning tour, during which board members spend a few days immersed in one of the major technology hubs, such as Silicon Valley, China, or Tel Aviv.

The board I sit on at Schneider Electric just toured Alibaba in China. We also visited leading Chinese companies in Shanghai, Hangzhou, Shenzhen, and Hong Kong. This fall, I joined my fellow Volvo board members in meetings with Google, Amazon, venture capital groups in Menlo Park, and other cloud services providers as we seek to understand the potential for connected car infotainment. We also met with companies that specialize in machine learning and AI algorithms related to autonomous driving, to discern how advances in those technologies may apply to Volvo.

There are major macro tech trends impacting Schneider and Volvo that require their boards to establish a framework of tech knowledge in order to adequately leverage the opportunities these trends present. Schneider for example is an industrial energy management company, and board member knowledge of—and experience with—the industrial internet of things is critical as "hardware" companies like Schneider transition to develop and embed software in their infrastructure. For Volvo, cloud services, infotainment, SaaS Software, the digital customer journey, and machine learning/AI algorithms for autonomous drive are all macro trends that are directly relevant to the company's business.

3. Invite subject matter experts into the boardroom.

Continuing education can take place in the boardroom as well as outside of it. Boards can engage external digital experts to update members about emerging tech-related innovations, disruptions and risks. Boards should also monitor how competitors are leveraging technology to delight consumers, bring efficiencies to supply chains, and lower costs.

The Governance Committee of HD Supply brings in outside speakers two or three times a year for a working dinner. We've had cyber-risk speakers from FireEye and digital transformation speakers from Accenture and Boston Consulting Group. An upcoming speaker will be presenting an in-depth discussion of competitive industry assessment.

Internal company technology officers and department heads are also indispensable subject matter experts, and the board should be hearing regularly from the company's top digital managers. (I recently wrote a piece about the evolving role of the CIO.) The Volvo board's Technology and Innovation Committee regularly receives updates from Volvo's head of research and development, Chief Digital Officer, head of product development, and global head of strategy. Schneider has created a role of Chief Digital Transformation Officer reporting to the CEO. The Schneider Board will consider adding a Digital Oversight Committee.

4. Allocate time on the board agenda to technology transformation as well as cyber risks.

There is a lot of buzz right now about cyber risk and how boards should manage oversight of that—and rightly so. However, companies today face a much greater risk than data breaches and ransomware attacks: business model obsolescence. According to a study published by Innosight, businesses are disappearing at a rate of 50% every 10 years, primarily because they don't evolve quickly enough in the face of seismic shifts in consumer behaviors or technological innovations (think Blockbuster, Borders, and Radio Shack). Tenure on the S&P 500 has dropped from 33 years to 14 years during the past 7 years.

Companies that seek opportunities for competitive advantage in evolving technologies will have the greatest chance of survival. To ensure business model vibrancy, boards need to embrace tech trends and new business models, and actively consider integration of them into their companies' strategies. Board agendas should allocate time to digital transformation, just as they do cyber, general enterprise risk management and other risk mitigations.

Digital transformation is a forward-looking perspective, so it shouldn't be tasked to the audit committee (which is traditionally backward-looking). Governance committees, on the other hand, often have additional capacity to absorb tech-related strategic oversight. Governance is the board committee charged with oversight of strategic digital transformation at HD Supply.

As Deloitte reported in the study I referenced at the beginning of this article, it is becoming more common for boards to add technology committees dedicated to digital and technical transformation. Volvo's board has a Technology Innovation Committee, and the Schneider Electric board formed a Digital Transformation Committee.

5. Refresh the board with directors who lean in to change.

The velocity of change is so intense now that corporate survival depends upon the intellectual and emotional experience of people who are more comfortable leveraging change than pulling away from it. To be effective, every director today needs to have past experience navigating a company through rapid and truly transformative change.

It's also important that directors in today's business environment have job experience within a variety of enterprises and business models. If everyone around the boardroom table spent their entire career immersed in a single corporate domain or business model, the board may lack familiarity with change or the conviction to innovate. They will try to apply the one lens or framework that was effective one or two decades ago. Board members who have worked for multiple companies during their careers are more likely to have experience leveraging technologies to refresh or retool business models, bring down costs, or improve the customer journey.


Watch Betsy's interview with Nelson Griggs, President of Nasdaq Stock Exchange: Why Your Board Needs Technology Leadership.

Other popular posts featuring Betsy Atkins on the Governance Clearinghouse:
Seven Critical Elements of a Board Refreshment Plan >>
What Makes a Great Board? >>

Betsy Atkins serves as President and Chief Executive Officer at Baja Corp, a venture capital firm, and is currently the Lead Director and Governance Chair at HD Supply. She is also on the board of directors of Schneider Electric, Cognizant, and a private company, Volvo Car Corporation, and served on the board of directors at Nasdaq LLC and as CEO and Board Chairman at Clear Standards.

Digital Transformation Catalyzes Diversity in Nasdaq Company Boardrooms
Publication Date: November 16, 2017 

"Every company is now a technology company, and boards increasingly require a new kind of director," says Coco Brown, founder and CEO of The Athena Alliance, an organization dedicated to preparing executive women for board service and facilitating board matches. A veteran of the Silicon Valley tech industry, Ms. Brown talked to Nasdaq about how digital transformation is disrupting traditional board composition and creating new opportunities for women to make meaningful contributions in the boardroom.

Despite increased pressure from investors, gender diversity on boards is improving at a glacial pace of just 1% per year. Why? Because boards are still accustomed to—and most comfortable with—appointing former and current CEOs and CFOs of large enterprises, and women comprise a very small percentage of those roles.

There is, however, an intriguing exception to the male majority in the boardroom: the gender composition of non-executive digital directors. Russell Reynolds has been tracking statistics on digital directors in the boardroom since 2013. Their most recent survey tracking digital directors appointed to the boards of the Global 300 uncovered encouraging trends:

  • 37% of Global 300 digital directors are women.
  • 58% of digital directors added to Global 300 boards between 2014-2016 were women.
  • Global 300 boards with a digital director have greater gender parity than traditional boards.
The advent of digital directors heralds a larger evolution taking place in the boardroom. Companies today face a wide range of threats and opportunities related to digital transformation, most of which didn't exist 10 years ago. These include cyber risk, technology innovations (including AI and machine learning), business model shifts, digital marketing, and brand management. The rapid pace of change has left traditional boards lacking in two fundamental areas:

Cognitive and relational diversity: Cognitive refers to diversity of thought, while relational diversity is the ability to relate to a company's constituents directly (customers, employees, and communities).

Modern digital competence on a mass scale: Any company that expects to be around 5-10 years from now will need to digitize supply chains, sales engines, business processes, and customer and employee engagement, if it hasn't already.

Savvy boards recognize that to stay competitive, they must address these deficits, and continuing to recruit board members from the ranks of former CEOs and CFOs is not the answer. It is becoming increasingly common for boards to "widen the aperture" beyond traditional executive roles to recruit non-executive directors who have engineering, technology, operations, human resources, and marketing backgrounds. As a result, a whole new generation of thought leaders is beginning to take seats at boardroom tables:

  • Human Resources Officers (CHRO, CPO): These are a company's workforce and culture experts and are under-represented in the boardroom. They also advise on compensation, succession planning, stock programs, and employee and community relations.

  • Digital Technology Officers (CIO, CISO, CTO, Chief Product Officer, Cyber Security): These experts are attuned to some of the biggest technology-related threats, challenges and opportunities of the next 3 - 5 years.

  • Digital Delivery & Operations Officers (Head of Business Strategy, CMO, COO, Chief Customer Officer, Chief Revenue Officer): These roles have a pulse on the industry, shifting business environments, and evolving business models; they also have connections that can make a big difference.
Recent data indicates that recruiting outside of the CEO/CFO realm and into other C-Suite roles in small to mid-cap companies, or even SVP/VP roles of mid to large cap companies may accelerate progress towards gender parity in the boardroom: Russell Reynolds reported that while the total number of female directors of Global 300 companies stands at just 19%, women represented 26% of all digital directors appointed to Global 300 company boards between 2014-2016.

A number of Nasdaq companies have recently "widened the aperture" in board refreshment, appointing women to help lead their digital transformation in the boardroom, including:

Axon Enterprise, Inc. (Nasdaq: AAXN): Julie Cullivan is CIO and Senior Vice President of Business Operations at ForeScout Technologies, Inc. (Nasdaq: FSCT). Axon can leverage Julie's extensive sales operations, IT, and cybersecurity expertise as the company transforms its product line through AI and cloud technologies.

Banner Corporation (Nasdaq: BANR): Merline Saintil is the head of operations of Intuit's (Nasdaq: INTU) product and technology group. Banner recruited Merline to bring information technology expertise to the financial company's board.

Forrester Research, Inc. (Nasdaq: FORR): Yvonne Wassenaar, former CIO of New Relic and current CEO of Airware, is described by Forrester as "a thought leader in cloud, big data analytics, and business digitization." Forrester tapped Yvonne for the board to help guide the company as it undergoes the digital transformation of its business.

MobileIron, Inc. (Nasdaq: MOBL): Jessica Denecour is CIO of Varian Medical Systems. MobileIron believes its shareholders will benefit from Jessica's expertise in using IT to positively influence business outcomes.

Morningstar, Inc. (Nasdaq: MORN): Caroline Tsay is a technology start-up founder and former online channel division vice president at Hewlett Packard Enterprise. Morningstar's investment services have moved from analog to digital technologies, and Caroline has the mix of leadership experience and information technology expertise that Morningstar's board needed.

Telenav, Inc. (Nasdaq: TNAV): Karen Francis DeGolia is on the board of AutoNation, the largest automotive retailer in the U.S., and Executive Chairman of AcademixDirect, a technology marketing company serving the education industry. She joined the board of Telenav last December and was recently named Lead Director, adding her extensive experience in the automotive industry and emerging mobility technologies to Telenav's board.

Another unexpected statistic came from the Russell Reynolds survey mentioned earlier: 78% of the Global 300 still has no digital representation on the board. As companies continue to awaken to the realization that they need digital innovation expertise and diversity of thought on the board, women will find opportunities in greater numbers to demonstrate value and relevancy in the boardroom.


Coco Brown is founder and CEO of the Athena Alliance, an organization dedicated to advancing diversity in the boardroom by preparing executive women for board service and facilitating board matches. Before founding the Athena Alliance, Brown served as the president and chief operating officer of Taos, an information technology consulting and services company based in San Jose, California. She is also the founder and CEO of Executive Kinections, a Silicon Valley consultancy that advises executive teams in strategic planning and organizational design.

The views and opinions expressed herein are the views and opinions of the author at the time of publication and may not be updated. They do not necessarily reflect those of Nasdaq, Inc. The content does not attempt to examine all the facts and circumstances which may be relevant to any particular company, industry or security mentioned herein and nothing contained herein should be construed as legal or investment advice.

governance news
October's Must Reads
Publication Date: November 7, 2017

Each month, we will scour the web to bring you the news items and thought leadership pieces you need to get the governance advantage.

1. Advice from a Board Veteran: How Boards Can Become More Effective – Boardroom Resources
Cindy Fields, a former President and CEO of Victoria's Secret Direct and former board member with multiple public companies, cites examples and gives her opinion on how boards can be more effective, including the importance of clarity and communication between the Board and the executive management team.

2. Board and management contributions to corporate culture – EY
This EY report highlights ways in which the Board of Directors should work closely with management to ensure that the corporate culture is appropriate for the company's goals.

3. NACD Summit: AI to Shape the Future of Corporate Governance – Equilar
Artificial Intelligence (AI) was the focus of several panel sessions at the National Association of Corporate Directors (NACD) Global Business Leaders' Summit in Washington D.C. this October. This Equilar article summarizes a presentation of a keynote speaker at the Summit which illustrates the value of AI.

4. Give Your Shareholders a Bonus: Leverage Pay Transparency to Build Confidence – Semler Brossy
This Semler Brossy article describes why a transparent pay program with effective design and execution is a surrogate for good governance. The author identifies four best practices boards should employ to capitalize on the clarity of compensation matters.

5. Three Guidelines for Taking Action on Board Evaluation Results – Boardroom Resources
According to PwC's Annual Corporate Directors Survey, over half of corporate directors (51%) say that their board did not make any changes as a result of their last self-evaluation. This article addresses three practicable ways boards can begin to translate the evaluation insights to action.

6. Wisconsin's congressional delegation seeks to both protect, curb whistleblowing - Wisconsin Center for Investigative Journalism
Stephen Kohn, head of the Washington, D.C.-based National Whistleblower Center, stated that the whistleblower is "the key to fraud detection, to uncovering corruption and to uncovering violations of the law." This article identifies proposals made by members of Wisconsin's congressional delegation that could both hurt and help whistleblowers.

7. PCAOB alerts auditors to scrutinize revenue recognition – Accounting Today
The Public Company Accounting Oversight Board released a new practice alert to help auditors looking at how clients have implemented the Financial Accounting Standards Board's new accounting standard on revenue recognition. The standard takes effect in 2018, directing companies to follow a new, five-step method for determining when, and in what amounts, to recognize revenue in financial statements.
Read Staff Audit Practice Alert >>

8. Climate Change of More Concern to Investors than to Corporate Directors – PWC
A PwC report finds that on some subjects there is a wide disparity between the directors who oversee corporate strategy and the company's investors. The report concludes that "directors are clearly out of step with investor priorities in some critical areas," especially with regard to climate change and sustainability and board composition.
Read the PwC report here >>

9. The Next Phase in Sustainability Disclosure Is Coming – Bloomberg Technology
The Sustainability Accounting Standards Board (SASB) released its draft standards for Environmental, Social and Governance (ESG) disclosure, launching a 90-day public comment period which ends on December 31, 2017. SASB founder Jean Rogers discusses, among other things, how companies are addressing sustainability in filings today and how these reports could look going forward.
Davis Polk discusses the draft standards >>

10. Shearman & Sterling Releases 15th Annual Corporate Governance & Executive Compensation Survey
Shearman and Sterling released its 2017 Corporate Governance & Executive Compensation Survey of the 100 largest U.S. public companies. This year's survey examines important governance and executive compensation practices and identifies best practices and emerging trends.

11. Nasdaq's Blueprint for Market Reform: A Q&A with Nasdaq's CEO on revitalizing the U.S. Capital Markets –
In spring 2017, Nasdaq released a report, "The Promise of Market Reform: Reigniting America's Economic Engine," that includes a series of recommendations on market structure, proxy voting and corporate governance, litigation, taxes, and long-termism. In this Q & A, Nasdaq President and CEO Adena Friedman, discusses the inspiration for developing this blueprint, how listed companies have responded and what market participants can expect from this initiative.
Read Q&A with Nasdaq President and CEO, Adena Friedman >>
Read more about Nasdaq's blueprint for market reform here >>

12. CEOs Explain How They Gender-Balanced Their Boards – Harvard Business Review
For the first time in eight years, the percent of women on U.S. corporate boards declined last year. The authors of this article believe that Board appointments are highly influenced by CEOs. They interviewed CEOs who successfully reached board parity to learn how they did it, the benefits of board gender parity, and the obstacles involved.

Ransomware Payment: Legality, Logistics, and Proof of Life
Part Two: Investigation and Response
Publication Date: November 6, 2017 

This is the second in a three-part series of white papers authored by Cybersecurity expert John Reed Stark. The series offers guidance for boards of directors on the legal issues, logistical considerations and financial implications of responding to ransomware threats.

When confronted with a ransomware attack, the options all seem bleak. Pay the hackers – and the victim may not only prompt future attacks, but also has no guarantee that the hackers will restore their dataset. Ignore the hackers – and the victim may incur significant financial damage or even find themselves out of business. The only guarantees during a ransomware attack are the fear, uncertainty and dread inevitably experienced by the victim. That is why it is critical for all companies to approach ransomware response in a thoughtful, careful and meticulous manner, which is the focus of Part Two of this three-part series.

This three-part series of articles provides guidance on the legal issues, logistical considerations and financial implications when managing ransomware threats, including an exposition of the unique issues which can arise when seeking proof of life and opting to meet the monetary demands of ransomware attackers.

Part One of this series, Background and Reality, provided the keys to understanding the impact of recent ransomware strains, including a discussion of the nature and growth of ransomware; the dangerous aspects of some recent ransomware attacks; and the role (or lack thereof) of law enforcement when managing a ransomware attack.

Part Two of this series, Investigation and Response, examines the intricacies involved in ransomware response, including ransomware investigative tactics; ransomware payment logistics; and the legalities of ransomware response.

Part Three of this series will cover the remaining range of key ransomware essentials, such as notification requirements; ransomware remediation; and ransomware cyber insurance.


John Reed Stark is President of John Reed Stark Consulting LLC, a data breach response and digital compliance firm. Formerly, Mr. Stark served for almost 20 years in the Enforcement Division of the U.S. Securities and Exchange Commission, the last 11 of which as Chief of its Office of Internet Enforcement. He also worked for 15 years as an Adjunct Professor of Law at the Georgetown University Law Center, where he taught several courses on the juxtaposition of law, technology and crime, and for five years as managing director of a global data breach response firm, including three years heading its Washington, D.C. office. Mr. Stark is the author of, "The Cybersecurity Due Diligence Handbook," available as an eBook on Amazon, iBooks and other booksellers.

Effective Boards and the Need for Emotional Intelligence
Publication Date: October 31, 2017

In this Q&A, Nasdaq talks to Caren Merrick, veteran board member, angel investor and entrepreneur, about the importance of emotional intelligence or "EQ" on boardroom dynamics.

Q: Based on your experiences as a board member and a former CEO, how would you complete this sentence: "For a board to be effective . . ."

A: For a board to be effective, its members must demonstrate emotional intelligence. I don't see much written about the impact of emotional intelligence or EQ on board dynamics, yet it's an issue that someone raises almost every time I speak about boards. A general lack of EQ seriously handicaps a board's ability to problem-solve and make informed decisions.

When a board is recruiting a new member, emotional intelligence and relationship building skills are as important to vet as subject matter expertise and experience. Some of the biggest board blowups I've observed had to do with a board member who was more ego-driven to be a star contributor, or didn't know or respect the difference between their role and the CEO's role, or dug in and refused to budge on a particular issue.

A measured approach to navigating highly-charged situations is another often overlooked and undervalued ingredient of an effective board. When disagreements are handled poorly, boards can build factions and become very political.

Q: How has EQ impacted the boards you are sitting on now?

A: I am fortunate at this point in my career to be sitting on some of the most effective boards I've ever been associated with. The boards I'm serving on now have excellent EQ: We don't always agree on everything, but when we do disagree we are mindfully very constructive in our approach to resolving issues.

One board I sit on in particular, the Metropolitan Washington Airports Authority (MWAA), which oversees the $800m business operations of Washington Dulles International Airport and Washington Reagan National Airport in addition to the $6b Dulles Corridor Metrorail and other entities.

This board presents a unique challenge to the CEO Jack Potter, because his board members are all appointees. I've learned a great deal watching Jack cultivate a productive boardroom dynamic between a group of individuals he had no say in appointing, who were each put in place to represent distinct constituencies.

When there are disagreements—and there often are—Jack's approach is deliberative, measured, and involves all of the stakeholders. He's patient, asks a lot of questions and implements a rigorous process to analyze the pros and cons in order to uncover what's really at stake. He's also encouraged board members to think more regionally in their approach to governing the Authority. Since Jack became CEO and began implementing this approach, the MWAA board is functioning at a higher level than before and, I believe not coincidentally, our bond ratings have gone up.

Q: A board can be comprised of successful executives who represent a perfect balance of the right professional skillsets, yet still be dysfunctional. True?

A: Absolutely true. As an angel investor, I'm hyper aware of the high number of startups that ultimately fail, and one of the biggest reasons for that failure rate is investors having a different agenda for a company than its founders.

As an entrepreneur, I'm somewhat biased. In an ideal world, founders could build their public company boards from scratch with people who are wise, aligned, generous and completely independent. In reality, it's difficult to launch a company without using outside capital, so newly-public boards are often faced with the possibility of competing stakeholder agendas. It's very important to get transparency and clarity around those agendas right at the beginning, so the board can build consensus. Otherwise, there is a high risk of factions developing among board members aligned with existing investors versus those aligned with the CEO.

Alignment doesn't mean the board won't disagree—there should always be healthy debate in the boardroom—but alignment does significantly increase the odds of reaching constructive solutions and sustainable growth. This is important, because CEOs find it challenging to rotate investors off a board when major disagreements become a stumbling block.

Entrepreneurs are becoming increasingly savvy to the investor/founder alignment issue, and mindful of it when shopping for capital. I recently met a woman who walked away from venture funding because her investor changed the terms at the last minute. She decided, rather than bring on an investor board member who had their own agenda, she would patiently pursue other sources of funding.

Q: Are there any other factors, in addition to stakeholder alignment and EQ, which contributed to your own company's successful transition from a basement startup to a publicly-traded enterprise?

A: I learned from my own experience that the personal networks of board members are an indispensable resource in scaling a new company, particularly when it reaches an accelerated growth phase. A company requires different skillsets from the board at different stages of its lifecycle: During the early phase, a company is consumed with early wins and surviving; once it gains momentum, it needs board members with experience in scaling an enterprise from $20 million to $200 million, for example. Seasoned executives know the patterns involved in rapid growth, can spot challenges ahead, and help a company block and tackle.

When we took webMethods public, our entire board—angel investors, venture capitalists, founders, and management—were all focused on growth. We deliberately composed a board that was skewed toward functional expertise in growth, and had extensive personal networks we could leverage to make introductions to potential customers, influencers, partners, and key critical employees.

There are a lot of technology startups here in the D.C. region, because so many people here work for government agencies on various projects requiring a high level of technical expertise: DOE, Homeland Security, and EPA, just to name a few. When local tech innovators leverage their technical expertise and experience to start companies, one of the smartest things I consistently see them do is tap former agency heads to join their boards. Not only does the company get that person's technical and government expertise, but it gains access to their network and benefits by association from their professional credibility.

Q: If you knew then what you know now, is there anything you would have done differently when launching your own company?

A: Now that I'm a sitting board member, I realize in my past leadership roles, I should have taken much better advantage of my board members' expertise and the wisdom of their experiences. CEOs—myself included—move so fast defending so many fronts that they don't give themselves the time to check in with directors to discuss challenges or opportunities. Sadly, they leave a lot of valuable insight on the table.

Q: What is the greatest challenge boards face right now?

A: I think the greatest challenge most boards face is trying to stay ahead of what is going on in their markets and industries, and trying to imagine what the future looks like in light of major shifts in local and global economies. Obviously cybersecurity is a huge concern. My boards are requiring more and more of my time to stay current on market and industry dynamics to identify opportunities for the company to create value and avoid crippling risks.

Diversity in the boardroom is crucial for companies to successfully navigate the rapid pace of change happening now: not just gender and ethnicity, which are important, but also diversity of perspective, skillsets, age, and professional disciplines. Boards can no longer afford to be composed solely of former CEOs and CFOs, because they need functional expertise in customer relationship management, digital marketing, cybersecurity, ERP systems, and social media marketing (which is a huge new frontier for boards to understand and tackle).

I learn something new every time I meet with my boards: we have people who have led private equity ventures, enterprise resource planning, supply chain ventures, enterprise marketing, and technology. The questions and insights that come from the diverse perspectives seated around the table at these meetings are impressive and very educational.


Caren Merrick is the CEO of Caren Merrick & Co. Previously, she was founder and CEO of Pocket Mentor, a mobile application and digital publishing company that provides leadership development and career advancement. Caren currently serves on the boards of the Metropolitan Washington Airports Authority, WashingtonFirst Bankshares, Inc. (Nasdaq: WFBI), and The Gladstone Companies (Nasdaq: GAIN, GLAD, GOOD, LAND). She is also a co-founder and former Executive Vice President of webMethods, Inc., a business-to-business enterprise software solution, which went public on Nasdaq before being acquired.

Seven Tactics to Engineer Better Boardroom Dynamics
Publication Date: October 24, 2017 

Boardroom dynamics can make or break the effectiveness of a board. In this post, Joan Conley, Senior Vice President and Corporate Secretary at Nasdaq, shares seven tried and true tactics for engineering better boardroom dynamics.

Proxy season has come and gone, new board members have completed their orientations, and many corporate boards are wrapping up summer strategy sessions. New board members bring new boardroom dynamics—and shifting dynamics may for a period of time impact the effectiveness of a board. On the other hand, excellent group dynamics can optimize board productivity for shareholders. Nasdaq's playbook for creating a healthy team dynamic in the boardroom includes the following tactics for facilitating director engagement, innovation, and candor in the boardroom.

1. Acclimate new directors to board culture.

Even public company directors need a safe place to ask "dumb" questions. At Nasdaq, we share an overview of board culture during orientation of new directors. Between the board chair, the CEO, and myself, our new directors have the resources to confidentially ask off-line questions related to the board culture, operations, and meeting protocol.

Be prepared to answer questions that delve into the granularity of board culture, including the cadence of the board meeting, how to refer to the board chair, when to ask the CEO direct confidential questions, when to inject comments during the board meeting, and how offline conversations should be handled. Knowing these details in advance can alleviate concerns of new board members, allowing them to focus on building important working relationships and tackling board agenda items.

2. Review boardroom etiquette with new directors.

Generally, the boardroom etiquette list of "dos" and "don'ts" closely mirrors the rules we learned early in life: listen, contribute, take turns, ask questions, treat everyone with respect. However, boardroom culture and rules of order may vary widely from company to company. Providing an overview of the general protocols followed during a company's board meetings can encourage participation in a meaningful way.

3. Avoid over-processing new board members.

There is a clarity of vision that comes with a fresh perspective. The observations made by new board members during their onboarding phase and early meetings are insightful and valuable. It's therefore important to educate a board member about the company's business and culture enough to hit the ground running at their first meeting, but without interfering with the insights and candor a fresh set of eyes brings to the table.

4. Facilitate communication between corporate management and board members.

Energized and enthusiastic directors are keys to positive boardroom dynamics. At Nasdaq, the onboarding program is individualized. We strive to satiate board members' appetites for knowledge related to the areas of our business they are passionate about, whether it's technology, fintech, M&A, market trading, or regulation.

For example, if a board member comes to us with expertise in technology, we have them spend time with Nasdaq's CIO, Brad Peterson, and his team. We also expand their horizons by having them meet with all of the other Nasdaq business unit leaders to cross-pollinate the board member's technology expertise with education and experiences in other areas of Nasdaq's business.

Board members who make tangible contributions stay focused and engaged. In my experience, the more often we bring board members together with executives and business unit teams to share knowledge, the more energized Nasdaq's boardroom dynamics become.

5. Engage all directors.

A board member sitting on the sidelines at any meeting represents a lost opportunity for the group to benefit from hearing and debating potentially important questions, concerns or insights. Listen to who speaks and who doesn't speak during board meetings and employ a strategy to engage all board members. Such a strategy might include:

  • Drafting call-out questions to be used by the board chair to elicit input from all directors.
  • Reserving efforts to elicit engaging discussions from all directors during executive sessions of the board.
  • Allowing directors to process and develop their input ahead of time by alerting them of, and educating them about, key agenda issues in advance.
  • Having the board chair or CEO reach out to board members offline, to solicit their ideas and concerns and find out what may be holding them back.
Typically, once a director has successfully been encouraged to speak in a board meeting, they will continue to do so.

6. Rotate committee memberships.

Rotating committee memberships keeps viewpoints fresh, exposes board members to new aspects of the company's business and governance, and creates new working relationships among board members—all of which contribute to effective boardroom dynamics and the optimization of board productivity for shareholders.

7. Leverage seating arrangements.

There's an art to managing seating arrangements to maximize positive group dynamics, and I recommend every Corporate Secretary pay close attention to it. It's important to plan who sits next to whom during meetings and dinners, based on a number of variables:

  • Which members don't know each other well yet?
  • Which members need to engage based on the meeting agenda?
  • Whose turn is it to sit next to the Chair?
  • How can unproductive side-bar conversations be prevented?
Reviewing seating arrangements for meetings and dinners ahead of time with the CEO and chairman of the board is an extremely productive use of time and contributes to a more successful board meeting.

For more insights from Joan Conley, read Onboarding New Directors: Beyond the Board Manual >>


Joan Conley is Senior Vice President and Corporate Secretary of Nasdaq and its global subsidiary organizations and, in that role, is responsible for the Nasdaq Corporate Governance Program and Nasdaq Ethics Program. She also serves as Managing Director of the Nasdaq Educational Foundation and is a Director of the Nasdaq Entrepreneurial Center Board.

The Rise of the Investor-Centric Activism Defense Strategy by Peter Michelsen and Derek Zaba of CamberView Partners
Publication Date: October 17, 2017

CamberView Partners provides advice to public companies on engagement and shareholder relations, activism and contested situations, sustainability and complex corporate governance matters.

Shareholder activism is often thought of in binary terms: activist v. company, dissident nominees v. company directors. Media coverage dramatically frames the "showdown" of prominent and press-savvy activists taking on companies as both sides seek the upper hand on the way to the ballot box. While an "us vs. them" mentality makes for a compelling narrative, this framework has a major flaw: it doesn't include shareholders, who are the most important constituency in driving the outcome of proxy contests.

Gaining the support of shareholders, in particular large institutional shareholders, through a well-crafted "investor-centric" activism defense strategy is increasingly the key to success in activism situations. Below we outline how activism defense and the investor landscape have evolved and why the "investor-centric" strategy has become the optimal path to victory for most proxy contests, regardless of whether they culminate in the withdrawal of the activist, a shareholder vote or a mutually agreed settlement.

Where it Began – Tactics, Tactics, Tactics

Five years ago, it would not have been uncommon to find a whiteboard on the wall of a company boardroom in a contested situation filled with a list of tactical measures to thwart the activist's campaign: poison pills, changing bylaws, moving meetings to remote locations, lawsuits, and shifting record dates. The primary focus of a tactical strategy was to outmaneuver the hostile acquirer or activist, the latter of which was more often than not pursuing a straightforward "sell the company" or "lever up and distribute" thesis and had limited ability to sustain a multi-year campaign.

Today, investors and proxy advisory firms are more skeptical of actions taken by the Board that appear purely tactical or are otherwise perceived as impinging upon shareholder rights. Often, these actions carry the risk of souring investors who might otherwise be willing to support the company but feel disenfranchised from decisions that materially impact the value of their portfolio company. While such tactics may still be part of the activism defense toolbox, they should be considered with great care and in the context of their impact on maintaining support from companies' increasingly diverse and sophisticated shareholder base.

The Activist-Centric Defense Strategy

As tactical considerations became less effective as an activism defense strategy, boards turned their focus directly to the activists and their agendas. Specifically, some companies took actions with the goal of either preempting the activist or appeasing them, aiming to implement enough of the activist's thesis to make the remainder of their demands not worth fighting for. The resonant concept was that boards should "think like an activist." In some cases, these actions resulted in a settlement with the activist or the activist withdrawing after achieving a partial, but "sufficient," victory.

However, in present times the major problem with a defense strategy focused primarily on addressing the concerns of an activist is that while the activist may have been satisfied by the outcome, some or many of the activist viewpoints may not have been shared by the broader base of long-term investors. In fact, in recent years, there has been significant pushback from large institutional investors, whose risk profiles and investment time horizons often differ from those of a vocal activist fund, about the practice of companies reaching settlements without receiving input from other shareholders. An unsettled shareholder base can leave companies vulnerable to a follow-on campaign either by the initial activist or another activist with a different agenda.

Evolution of the Investor Landscape

The evolution of defense strategies has occurred against a backdrop of recent tectonic shifts in the investor landscape that have reinforced the centrality of the broader, long-term shareholder base in activism situations. The oversight failures of the early 2000s and 2008 financial crisis spurred many investors to become more active owners and voters. Over time, governance-focused institutional investors have built out their proxy voting teams, which has allowed them to engage with a broader range of companies and other market players. Activism itself has undergone a transformation, with activists seeking to shed their "corporate raider" label while building relationships with investors. Additionally, active managers under pressure to generate alpha are more receptive than ever to activist theses.

Underlying all of this is the increasing concentration and acceleration of fund flows into passively managed index funds and ETFs over the past several years. Today, the top five institutional shareholders hold more than 20%, on average, of S&P 500 companies and one of the three biggest index funds (BlackRock, Vanguard and State Street) is the largest single shareholder in 88% of companies in that same index. These passive investors are increasingly important as they tend to have a longer-term perspective which results in them being more willing to support a company if they believe in its long-term strategy regardless of potential short-term negative impacts to the business or stock price.

The growth of assets held by passive investors has also heightened the focus on corporate governance and board-related matters across the market. These topics are now a critical focal point in activism campaigns. As a result, success in an activist situation now increasingly requires companies to persuade and win the support of a range of constituencies much broader than the traditional portfolio manager and buy-side analyst community, including governance teams, proxy advisory firms and key asset owners such as public pension funds.

The Investor-Centric Defense

The evolution of the investor landscape, in addition to the aforementioned problems that have arisen with prior defense strategies, has elevated the concept of an "investor-centric" defense strategy. Unlike previous strategies, this approach begins well before an activist arrives with their demands and is built on companies understanding their investors' concerns through years of engagement and relationship building. As the Chairman and CEO of Vanguard recently wrote, quoting a corporate CEO during one of their engagements, "You can't wait to build a relationship until you need it."

Rather than "think like an activist," the right approach for companies is to "think like a shareholder representative": engage with investors, understand and incorporate their perspectives, and educate them on why the company is pursuing a particular strategy, particularly before an activist appears. Ongoing dialogue enables companies to build credibility with key decision-makers within both the investment and governance teams at institutions, even if there are topics where these disparate teams are not in complete agreement. Even in situations where there is a large and supportive base of retail investors, it is these key decision-makers who will make the ultimate difference between winning and losing.

While companies typically have very active investor relations efforts focused on portfolio managers and research analysts, they must also understand how to engage with all investor constituencies that will drive outcomes in a potential activist situation.

For actively-managed funds, where communication during an activism situation is frequent, feedback will generally be more direct and the decision-making process will be primarily focused on core economic issues. Companies that have built buy-in for their strategy in advance of a fight by being responsive to feedback from these funds will benefit from a higher probability that these investors will vote with management.

On the other hand, governance-focused investors often enter a fight with a limited understanding of the company and are concerned about a range of strategic, financial and governance elements. Building trust with this constituency often means demonstrating that the company has the right board in place to evaluate and oversee long-term strategy, and that the board is operating with a focus on the best interests of shareholders. While this trust can be established in the fast-paced environment of a proxy fight, companies that have proactively built relationships with governance teams and proxy advisors will generally fare better than those that are scrambling to do so under a stormy sky.

With all of this in mind, it is clear that companies in an active defense situation must evaluate every decision through the lens of how investor constituencies will view the action and how it will affect the potential vote. Even if a threatened proxy contest ends in settlement, the leverage that companies have in negotiation derives primarily from the support of these key investors.

Takeaways for Issuers

The delicate balance among boards, management teams, investors and activists is a constantly-changing equation. Over the past several years, a small number of asset managers have amassed trillions of dollars of assets and significant power. These investors represent the ultimate "swing vote" that can effectively determine the outcome of an activist situation and are more willing than ever to exercise their vote. Activists have adapted their approaches to appeal to this increasingly powerful bloc of voters, while public companies have been somewhat slower to proactively build relationships beyond traditional investor relations efforts.

Given these new dynamics, it is critical that companies view their potential actions through an investor lens, whether three weeks before a meeting or during the off-season. A key step is engagement and relationship-building with all key investor constituencies before being confronted by an activist. If an activism situation occurs, company management and board will be able to draw on the trust generated with key decision-makers, will have had the opportunity to tell their story on critical strategic and governance issues, and will have heard and addressed the feedback and concerns of their investors.


Peter Michelsen is President and Co-Head of the Contested Situations Practice of CamberView Partners.

Derek Zaba is a Partner and Co-Head of the Contested Situations Practice of CamberView Partners.

CamberView Partners provides advice to public companies on engagement and shareholder relations, activism and contested situations, sustainability and complex corporate governance matters. CamberView helps its clients succeed by providing unique insight into investors' perspectives on long-term value creation, interpreting the evolving governance landscape and creating proactive strategies to stay ahead of investor challenges.

CamberView's services include: Shareholder Engagement, Governance Advisory, Sustainability, Complex IR Strategy, Say on Pay, "Vote No", Environmental, Social and Governance Shareholder Proposals, Activism Defense, Hostile M&A, Complex "Friendly" M&A, and Defense Preparedness.


The views and opinions expressed herein are the views and opinions of the author at the time of publication and may not be updated. They do not necessarily reflect those of Nasdaq, Inc. The content does not attempt to examine all the facts and circumstances which may be relevant to any particular company, industry or security mentioned herein and nothing contained herein should be construed as legal or investment advice.

Nasdaq Talks to . . . Express Scripts' CEO Tim Wentworth about Why He Believes Inclusion is the Soil in which Diversity can Flourish and Contribute to Competitive Success
Publication Date: October 9, 2017

Express Scripts Holding Company (Nasdaq: ESRX) is a Nasdaq-100 company that believes "diversity and inclusion are the foundation on which success and growth are built." This company walks the talk, from the boardroom to the front lines of its workforce. The Express Scripts board is over 40% gender and ethnically diverse, while the company's 26,000-strong workforce is nearly 70% female and 40% minority. The average age of Express Scripts' workforce is 43 and over a third of its management personnel are under age 48.

Nasdaq spoke with Tim Wentworth, CEO of Express Scripts, to find out how the company built a culture based on holistic diversity and inclusivity, and nurtured it into a competitive advantage.

Q: Express Scripts states in its proxy that "broad-based diversity is an important attribute of a well-functioning board." Can you share how diversity contributes to the effectiveness of your board?

A: I'm one of the luckiest CEOs in America, I have a tremendous board that collectively understands and collaboratively analyzes the issues we face in a way they couldn't do if they weren't so diverse.

Many companies view diversity as a goal, rather than a byproduct of how you build the culture, how you run the company, and how you build a governance model. Express Scripts is focused on patients and operates within a very complex health-care system, so it was natural for us to recruit people to the board who represent a broad range of perspectives and come from different backgrounds. It was imperative to create an environment where those views are fully contributing to the mission of making us a better-governed and more effective company.

Express Scripts' commitment to diversity and inclusion starts at the very top of the company, and that is a very powerful dynamic for me as a CEO—and a powerful motivator of our employees.

Q: Express Scripts diversity and inclusion model extends to its workforce. How has Express Scripts achieved such a diverse workforce and why does the company view diversity in its workforce as a competitive advantage?

A: Our workforce deliberately reflects the patients we serve and Express Scripts has been very intentional about diversity for a long time. Diversity of race, gender, age and thought means we reflect our patients and clients and understand their individual needs much better. Our governance committee and our broader board have made diversity a priority. There is not a board meeting that I attend where we don't talk about the diversity of our workforce broadly—and our board specifically—and ask if we are doing enough.

Inclusion is the soil in which diversity can flourish and contribute to competitive success. We continually build programs and initiatives that support our demographically shifting workforce, which ensure we get the best from everybody who comes in the door. By engaging our employees in recognizing and legitimizing the differences that we all bring to work—and identifying how they make us a better company—we have created a workforce that is biased towards action.

Our inclusion model is based on three pillars: culture, engagement and leadership. We built six broad-based employee resource groups (ERGs) that have focused our cultural diversity initiatives and business strategies from the ground up. Every one of the ERGs has an executive sponsor. We have nearly 5,000 employees participating, which on a benchmark basis is very high for a company our size. More importantly, our employee-survey results tell us that members of these groups are the most engaged and the most likely to recommend us as a place to work.

Employees judge us by how we treat, engage with, and support that community. Our resource groups make employees feel better about the company they work for, and that's a very important byproduct of executing inclusion well.

Q: What can other Nasdaq companies learn from Express Scripts about the benefits of a culture of inclusion and diversity?

A: Diversity and inclusion create a culture of unity that benefits everybody. Employees feel part of something larger than themselves; they are no longer just members of a particular community or department, but part of a diverse and unified company from the board all the way to the entry-level of the workforce.

Our employees acknowledge that they work for a company where the words match the music—a company that is committed top to bottom to inclusion. This provides motivation that goes beyond a 3% pay increase.

The benefits of diversity extend to the fiduciary duty of every public company—creating value for shareholders. In Express Scripts' case, this means fulfilling our mission of putting medicine within reach.

Our shareholders can be confident that our board is seeking, and thoughtfully considering, input from across the entire organization in pursuit of that mission. Express Scripts' solid foundation of diversity and inclusion drives alignment around our broader mission, because our employees don't question whether they are included—they know their voices count.

Q: Many companies claim they have a hard time finding diverse candidates for board service. Can you share how Express Scripts overcame that obstacle?

A: There's no question that it's a challenge to diversify a board, but the real obstacle is ensuring the company is attractive to diverse talent in the first place. The goal should be recruiting talented leaders who represent diverse perspectives and come from diverse backgrounds.

Express Scripts' culture works for us when we are recruiting board members. When we were searching for a new board member a couple of years ago, our candidate pool included two extraordinary African-American leaders. These two individuals had unique and important skill sets related to Express Scripts' corporate mission. As a board, we quickly realized we had a chance to bring on two diverse and highly sought after board members, and after minimal discussion decided it wasn't an either/or proposition. The fact that both of these talented individuals were interested in us is indicative of the fact that they felt our culture and our board was going to be a welcoming place for them to contribute.

Kathy Mazzarella, who is the Chief Executive and President of Graybar Electric Co., is another example of a highly talented candidate who was attracted to our board. She's a tremendously strong leader with a great skill set. She saw in us what we see in ourselves – a diverse board that attracts strategic thinkers who can help solve healthcare's biggest challenges.

Q: How does the Express Scripts governance committee define "diverse slate of candidates" to a search firm?

A: It all starts with what your board needs from a skill-set standpoint. It's not sufficient to have a diverse board that doesn't have the right skill sets. All our board members bring complementary skill sets to achieving our business goals and growing value for our shareholders.

The challenge to our search firm was very simple: "These are the skill sets we need. Go find us diverse leaders who have those skills."

We don't mandate a ratio for the slate, beyond sharing our bias towards diversity. I'm not going to fire a search firm that can't bring me a 40% diverse slate if they can bring me one or two terrific diverse candidates we can consider based on the skills that we need on the board.

We also turn to our own board to add people, they know and have worked with, to the slate. An advantage of having a diverse board is that they are a great resource in finding and attracting other highly qualified and diverse candidates.

Q: What are your thoughts on why the diversity needle is moving slowly in corporate America?

A: For the most part corporate America has very good intentions, but a big part of the problem is limiting the talent pool to CEOs. As a sitting CEO myself, I'm not going to be on other company boards. I've got enough to do, right now.

Competition for qualified diverse candidates is increasing because board diversity is in the governance spotlight now. The board members we recently added had many other companies that would have loved to retain them, so we're very grateful that our mission and our culture attracted them.

Given that environment, companies are going to need to broaden the search aperture a bit—perhaps looking at CEOs recently retired, or executives who weren't CEOs but do have C-suite experience. Rick Palmore, for example, was General Counsel at General Mills, one of the most admired companies in America.

If companies expand their searches to SVP-level candidates who have CEO potential or broader leadership potential, they can find high-quality candidates who will benefit from the experience and bring important skills to the table. A talented division president who is diverse and has high potential would be a strong board member for many companies.

Q: If a company doesn't have a diverse board today, what is a first step in that direction?

A: Start with a very honest conversation about the true level of commitment to diversity and inclusion, and what the path is going to be to change the composition.

The path to board diversity isn't just bringing in a face, it's acknowledging that things need to evolve to allow leaders to be successful and contribute in a meaningful way. The board needs to ask honestly "Are we committed to creating an environment where a woman or a minority can be highly productive?"

That journey also starts with the employee base. Prospective board members are going to notice if a board doesn't match its aspirations with its own employee base. If the board is honest about its culture, and the culture of the company it is governing, the rest will follow naturally.

Q: How does a board that has no diversity convince a talented minority or female candidate to join them?

A: Have the courageous conversation around how you got to this point, and have the conviction to share that honest conversation with talented candidates. Focus on where you want to get to, set a course and be tenacious in achieving your goals. Talented, diverse board members are available. Make them available to your company.

Express Scripts Holding Company (Nasdaq: ESRX) is the largest independent pharmacy benefit manager in the United States and has been recognized by numerous organizations for their commitment to diversity and equality. Express Scripts scored 100% on both the Human Rights Campaign Foundation's 2017 Corporate Equality Index and the U.S. Business Leadership Network's 2017 Disability Equality Index. For the past two years, Express Scripts was also included in DiversityInc's 25 Noteworthy Companies.


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In the News
SEC Speech: Governance and Transparency at the Commission and in Our Markets
Publication Date: November 15, 2017

In a recent speech, SEC Chairman, Jay Clayton, discussed the SEC's agenda. Among the items he highlighted was the proxy process, including how investors participate in corporate governance at public companies. He stated that, given the core role of the proxy process in public company governance, the Commission should be "taking a hard look at whether the needs of shareholders and companies are being met." Citing several factors such as retail shareholder participation and shareholder proposals, Chairman Clayton indicated that the current proxy process may be too cumbersome and stated that he believed the Commission should solicit "updated feedback from market participants about what works and what does not work in our proxy system."


SEC Issues Guidance on Shareholder Proposals
Publication Date: November 6, 2017

The SEC Division of Corporation Finance has published new guidance in a Staff Legal Bulletin on excluding certain Rule 14a-8 shareholder proposals. The bulletin contains information about the Division's views on: the "ordinary business" and the "economic relevance" exceptions, each of which is a basis for exclusion of a shareholder proposal; proposals submitted on behalf of shareholders; and the use of graphs and images in proposals. In particular, the bulletin notes that "ordinary business" and "economic relevance" exclusions often involve difficult judgment calls, which a company's board is generally in a better position to make and encourages companies to include in requests for no action relief a discussion that reflects the board's analysis and details the specific processes employed by the board to ensure that its conclusions are well-informed and well-reasoned.


Society for Corporate Governance Complimentary Directors' Cut Newsletter
Publication Date: November 2, 2017

The Society for Corporate Governance is now offering complimentary access to its Society Alert - Directors' Cut® newsletter. This quarterly online newsletter is a compilation of governance-related news from the preceding quarter's weekly Society Alerts, geared with a view toward director and C-suite audiences. Each issue covers a range of relevant developments and guidance in areas such as audit/financial reporting, board composition, board and key committee oversight, M&A, risk, and sustainability, as well as institutional investor developments and perspectives.

Read the 3rd Quarter Newsletter >>

Subscribe here >>

Center for Audit Quality releases the 2017 Main Street Investor Survey
Publication Date: October 30, 2017

The Center for Audit Quality conducts an annual survey of U.S. retail investors, which measures confidence in U.S. capital markets, global capital markets, public companies and audited financial statements. The 2017 survey reveals that 85% of investors have confidence in investing in the U.S. capital markets, and that 63% of investors feel confident in corporate boards of directors. This year's survey also illustrates that investors are watching developments in Washington, D.C. closely and are concerned with the risks to the economy posed by the national debt, cyber-attacks on financial information and the capital markets, and global political unrest.


ISS Requests Comment on Draft Policy Changes
Publication Date: October 30, 2017

ISS is seeking comment from institutional investors, issuers, and other market constituents about 13 discrete voting policies for 2018, three of which apply to companies on U.S. markets: Non-employee Director Pay – ISS would adopt a new policy generally providing for adverse vote recommendations when there is a pattern of excessive non-employee director pay; Gender Pay Gap Proposals – ISS would adopt a new policy clarifying how it will make recommendations about proposals for companies to report whether a gender pay gap exists, and if so, what measures will be taken to address the gap; and Poison Pills – ISS would update its policy and recommend against all board nominees, every year, at companies who maintain a long-term poison pill that has not been approved by shareholders. The policy comment period closes on Nov. 9.


Proxy Advisory Firm Reform: Upcoming Conversation with Rep. Sean Duffy and Other Experts
Publication Date: October 26, 2017

Nasdaq, the U.S. Chamber Center for Capital Markets Competitiveness and the National Investor Relations Institute (NIRI) will host a discussion on November 8th, regarding H.R. 4015, Corporate Governance Reform and Transparency Act. This legislation was recently re-introduced by Congressman Sean Duffy and seeks to mitigate and balance the influence of proxy advisors by subjecting them to SEC registration and oversight. H.R. 4015 aims to improve the quality of proxy advisory firms; enhance the protection of investors; and foster accountability, transparency, responsiveness and competition in the proxy advisory firm industry.


H.R. 4015 >>

Access a replay of the discussion >>

SEC Approves Changes to Auditor Report
Publication Date: October 25, 2017

The SEC approved a new PCAOB rule that requires significant changes to certain public company audit reports, including disclosure of critical audit matters and auditor tenure. These changes are intended to make the auditor's report more informative. SEC Chairman Jay Clayton issued a statement that investors will benefit from understanding how auditors viewed complex matters and urging implementation of the revised standard in a way that avoids frivolous litigation costs, defensive, lawyer-driven auditor communications, or antagonistic auditor-audit committee relationships. Mr. Clayton also noted that the PCAOB intends to monitor the results of implementation, including consideration of any unintended consequences.

Read Mr. Clayton's statement here >>

Read the SEC Approval Order here >>

Read Nasdaq's comment letter on the PCAOB proposed rule here >>

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