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q&a
Clearhouse
Betsy Atkins Talks to Arthur Levitt about the Current State of Boards: Part 2
Publication Date: April 19, 2018

How can boards diversify to manage change? Is the CEO Pay Ratio rule going to be effective? When should the CEO and Chairman of the Board roles be separate?

During a wide-ranging and informative interview, veteran board member and venture capitalist Betsy Atkins and Bloomberg Radio host and former SEC Chairman Arthur Levitt discuss these important topics, and more. We divided their interview into three separate articles and posted Part 1 last month. Part 2 is presented below.


Arthur Levitt: What is the best case for diversity in the boardroom and what should diversity really mean? It's not just about gender, right?

Betsy Atkins: Correct, it's about cognitive diversity: how people think differently and problem solve differently. Diversity should be the diversity of backgrounds in the board room, diversity of domain experts in the company's industry, and diversity of functional experts such as financial experts for audit committee, digital experts, and geographic diversity. It should not simply be gender. I'm not a believer in affirmative action. Hire the best people who bring you diverse thought, as that brings the best business judgment for the shareholders.

AL: You write about how companies should "manage" diversity. What do you mean by that?

BA: What I mean by managing diversity is to really look into your board composition and think about how to forward hire the optimal set of differentiated and complementary perspectives required for effective oversight. The board should be an asset that the CEO and management can leverage to help stress test future plans as well as perform broad oversight for current plans. Just as management refreshes their leadership team frequently, the board should be refreshed to meet the challenges and opportunities the company will face during the next five to seven years, given the velocity of change.

AL: BlackRock recently updated its proxy voting guidelines, adding a stipulation that it expects companies to have at least two women directors on their boards. When it comes to more women on boards, are you in favor of quotas or targets?

BA: I don't like the idea of quotas. I'm certainly supportive of embracing aspirational targets, but it has to be based on qualified people—the board shouldn't lower the quality bar to achieve a quota. Fortunately, there are plenty of qualified women and minorities out there.

AL: Why is the U.S. so far behind in either quotas or targets for getting more women on boards?

BA: While the U.S. is behind, they have made incremental progress. The 2017 Spencer Stuart U.S. Board Index reported that the percentage of women serving on S&P 500 boards in 2017 increased to 22% of all directors from 17% in 2012, and that 80% of boards now include two or more women, which represents a significant increase over 61% in 2012. The U.K. has been more aggressive, and has set a target of 33% for the number of FTSE 350 board seats held by women by the year 2020.

AL: Will companies find women for their boards if they don't specifically go looking, with some kind of pressure to diversify?

BA: I expect big changes this year, because the large index funds are now pushing gender diversity, which is going to be a huge accelerant. If boards are serious about diversity, they need to mandate that for every board seat they are going to fill at least one-third to half of the candidates on the board search panel are female. But again, diversity should be broader than gender diversity.

AL: What do you think of NYC Comptroller Scott Stringer's Boardroom Accountability Project?

BA: It's hard to establish a quantitative matrix that truly identifies diversity of thought. The concept is sound, but what boards should really be looking for is diversity of experience, so the board has multiple business models to call on from their past to solve current and future business challenges. For example, if you spent your entire 35-year career in one company, you would only have that company's model of how to approach and solve problems, only that company's "cycle time" and sense of urgency in problem solving, which is probably too slow today. The goal should be to build a high performing board that is able to access the contemporary director's business judgement ability.

The matrix is a reasonable starting point for the conversation, but ultimately the matrix is a quantitative concept and the board makes a judgement that is more qualitative than quantitative.

AL: This will be the first year that the ratio of a CEO's total compensation as compared to that of a median employee must be disclosed. What do you think of this rule?

BA: This rule will prove to be more of a media event than a driver of change. It's going to be confusing and create noise without driving valuable and actionable insight. CEO pay thresholds are completely different industry to industry: there will be a profound difference in pay ratios between a company that has the bulk of its workforce in India and that of a company with an all-American workforce that is far more highly paid. Even when comparing a company with its own peer set, again, it's a challenge to find the right peers outside of a company's direct competitors.

AL: Do you think consultants are helpful to boards in setting CEO compensation?

BA: I think compensation consultants are helpful in gathering factual data.

AL: How would you advise companies to structure CEO pay to encourage long term growth?

BA: Practical reality is that companies have to pay their CEOs relatively competitively in comparison to direct competitor peers. The long-term growth part of compensation should be based on a small number of very specific quantifiable metrics such as market share, new product introduction, and geographic expansion. The metrics are long-term and measurable, versus the typical short-term annual metrics of revenue, profit and total shareholder return.

AL: Where are you on the question of whether it is ever a good idea for the CEO to also serve as Chairman of the Board?

BA: I think it's very specific to each company. Although a majority of companies still combine the two roles, it currently stands at just over the 50% mark and that statistic is falling. In a situation where a company has a first-time or new CEO, it is a better governance practice to separate the Chairman from the CEO. When the CEO has been serving for a long time, or is successful, recognized and acclaimed, it can be viewed as a major issue by an incumbent CEO if he or she doesn't get the chairmanship when the sitting Chairman exits the board.

Every board should have a strong independent lead director, with a mechanism in the by-laws for annual review enabling rotation. All boards should have a method for orderly chairman replacement to be prepared when the need arises.

AL: You believe the most important role of the board is to choose the CEO. What do you look for in a CEO?

BA: The key thing to look for in a CEO is to match the company's CEO profile to the stage of the company. For example, if your business model is perfect, and all you need to do is a little bit more revenue, a little more profit a little faster, it would point you toward an internal candidate who can continue to implement the current strategy. If your company is going to face big transformation and change in its competitive landscape, you may want to look outside for a candidate with a transformational growth skillset and experience.

AL: What is your best advice for a new CEO faced with a new board?

BA: You need to create a rhythm of being in touch with each board member at least once a quarter. You would be well served to engage the committee chairs in working with you to create an annual board calendar of important topics that the board wants to review annually. Start every board meeting with a state of the union and clearly identify one or two topics you want the boards input and engagement on each meeting. They came to contribute and participate, and you'll lose control of the meeting if you don't point them to where you want their input.

Be sure to get a thorough debriefing on every executive session and memorialize back to the board any topics for future follow up.

For more information, read Betsy Atkins Talks to Arthur Levitt about the Current State of Boards: Part 1

***

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

Arthur Levitt is currently the host of Bloomberg Radio's "A Closer Look with Arthur Levitt" and serves on the board of directors at Bloomberg LP. Levitt was the 25th Chairman of the U.S. Securities and Exchange Commission, and in 1999, became the Commission's longest-serving Chairman until his resignation in 2001. He also serves as a senior advisor to Goldman Sachs & Co. and an advisory board member of the Knight Capital Group.



The views and opinions expressed herein are the views and opinions of the contributors 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.


 
outside insight
Clearhouse
Non-GAAP Measures: Questions and Insights
Publication Date: April 9, 2018

Cindy Fornelli is the Executive Director of the Center for Audit Quality (CAQ).

The use of financial measures that do not conform to US Generally Accepted Accounting Principles (GAAP) has long been the subject of debate—even controversy. While it has ebbed and flowed over the years, this discussion is unlikely to disappear.

Consistent with its mission to convene and collaborate with stakeholders to advance the discussion of critical issues, the CAQ held a series of 2017 roundtable discussions regarding the presentation and use of non-GAAP measures—and the opportunities to enhance trust and confidence in this information. Each roundtable was attended by approximately 20 to 25 individuals including audit committee members, management, investors, securities lawyers, and public company auditors. Because the presentation and use of non-GAAP measures can vary from industry to industry, each roundtable focused on a specific industry: pharmaceutical, real estate, and technology.

These events each began with a set of key questions, on which participants provided no shortage of insights. We have published a full report, Non-GAAP Measures: A Roadmap for Audit Committees, on the roundtables' findings, as well as a companion video that provides additional context and real-life examples of how audit committees are thinking about non-GAAP measures.

Here, we provide some high-level key themes.

Why is GAAP so important?

No discussion of non-GAAP measures can take place without a discussion of GAAP itself. At the roundtables, participants made clear that they view the GAAP information as the "bedrock" or "starting point" for the financial information that companies present. GAAP, they said, provides a useful baseline that offers comparability from one company to the next.

If GAAP is the bedrock, why do companies present non-GAAP measures?

Participants were asked to share their views on what drives the presentation and use of non-GAAP measures. Several common themes emerged from the discussion.

  • Demand from investment analysts: Participants shared that requests from investment analysts are often a primary reason company management chooses to present a non-GAAP measure. Investment analysts find that non-GAAP measures help them better understand the company's underlying business performance or forecast the company's long-term value in their proprietary models.
  • Desire to tell the company's story: Participants also acknowledged, however, that company management does not present non-GAAP measures solely for investment analysts. Rather, non-GAAP measures can be a tool to help tell a company's story and provide users of the information with insight into how management evaluates company performance internally. In some cases, non-GAAP measures are also an input into how the company compensates employees for company performance.

What are top challenges related to non-GAAP measures?

Participants acknowledged that non-GAAP measures present challenges to certain stakeholders in the financial reporting supply chain.

  • Investors are challenged by the lack of consistency in the calculation of non-GAAP measures from one company to the next. Such irregularity makes it difficult for non-GAAP measures to be compared across companies—even within the same industry. It also can be a challenge for end-users to know whether the performance reported by the press is a GAAP measure or a non-GAAP measure.
  • Management representatives indicated that they spend a significant amount of time (1) discussing what information to include in or exclude from non-GAAP measures they present, and (2) making sure the information is presented fairly and disclosed transparently.
    Audit committees noted that their challenges related to non-GAAP measures tend to be an extension of management's challenges. Audit committees want to understand the reason the company is presenting the measure, and the roles and responsibilities of those involved with the information, including company personnel (e.g., finance and internal audit) and the external auditor. Further, they want to know how the company's non-GAAP measures compare with the information presented by peer companies.

To address challenges, should non-GAAP measures be standardized?

Not necessarily. Representatives from management at all of the roundtables indicated that standardization may limit their ability to tell their companies' story.

The real estate industry makes use of a supplemental standardized non-GAAP measure: funds from operations (FFO). The FFO measure, which was defined by Nareit, is in widespread use and is recognized by the Securities and Exchange Commission. That said, in addition to reporting Nareit defined FFO, companies report various forms of FFO (e.g., adjusted FFO, normalized FFO, company FFO). So even within one industry that has agreed on a standardized non-GAAP measure, there are still variations on how it is reported.

Why is dialogue so important around non-GAAP measures?

Participants emphasized the significant judgment involved in determining how to treat a one-time transaction or event in non-GAAP measures, and they agreed that company management and audit committees strive to execute good judgment when making these decisions. To that end, many companies have enhanced the rigor of their presentation and disclosure of these metrics.

There was consensus among participants that audit committees can promote rigor related to non-GAAP measures by having a dialogue with company management as well as internal and external auditors. Among other things, this dialogue can help the audit committee to set clear expectations regarding the roles and responsibilities—relative to non-GAAP measures—of each member of the financial reporting supply chain.

What is the external auditor's non-GAAP role?

In a nutshell, the external auditor's opinions on the company's financial statements and, when required, the effectiveness of the company's internal control over financial reporting (ICFR) do not cover non-GAAP measures. Professional auditing standards indicate that the auditor should read non-GAAP measures presented in documents containing the financial statements (such as annual and quarterly reports) and consider whether non-GAAP measures or the manner of their presentation is materially inconsistent with information appearing in the financial statements or a material misstatement of fact.

Though external auditors do not audit non-GAAP measures as part of the financial statement or ICFR audits, audit committees and management may consider leveraging the external auditors as a resource when evaluating non-GAAP measures.

How can the audit committee enhance its non-GAAP role?

At the roundtables, there was wide recognition of the benefits of increased audit committee oversight and involvement with non-GAAP measures. The CAQ's full roundtable report offers audit committees insights on the way forward. It is available free of charge at the CAQ website.

***

Also from the CAQ see Preparing for the Leases Accounting Standard: A Tool for Audit Committees. This tool is designed to help audit committees exercise their oversight responsibilities as companies implement the new lease accounting standard, which will begin to take effect in January 2019.

***

A securities lawyer, Cindy Fornelli has served as the Executive Director of the Center for Audit Quality since its establishment in 2007.


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.


 
public policy
Clearhouse
Revitalize Biotech with these 5 Policy Initiatives
Publication Date: April 3, 2018

In this post, Charles Crain of the Biotechnology Innovation Organization (BIO) highlights five legislative and regulatory reforms that he believes would address some of the principal challenges facing biotech companies that go public. Notably, several of these proposals are modest revisions to existing SEC rules and federal legislation, including the JOBS Act. These proposed reforms are consistent with Nasdaq's comprehensive blueprint for stronger, more robust public markets: The Promise of Market Reform: Reigniting America's Economic Engine.

1. Bring transparency to short seller positions

Biotech companies, many in the pre-revenue phase, are easy targets for short sellers. That's primarily due to a lack of liquidity in their stocks and blinded FDA clinical studies that make it easy to circulate false information in the market to drive down stock prices. This includes a new spurious breed of short sellers who initiate patent challenges for the sole purpose of driving the stock price down to make money. This disturbing behavior is highly damaging to industries that are based on intellectual property—like biotech.

BIO has been working with Nasdaq to advocate for increased transparency around short selling positions, which would help inform the market and prevent biotech companies from being taken advantage of by investors who don't have the best interest of long-term investors (and patients of these potentially life-saving drugs and therapies) at heart.

2. Establish SEC oversight of proxy advisory firms

Proxy advisory firms have developed an outsized market influence over biotech companies, relative to their theoretical mission. These firms claim they're only providing recommendations to investors, but what they're actually doing is inserting their own judgment over investors, company management, and corporate boards in terms of how companies should be run.

In an industry like biotech, which has a unique business model that isn't directly comparable to other industries, these one-size-fits-all recommendations can be misleading to investors and damaging to the companies themselves.

BIO and Nasdaq both support the Corporate Governance Reform and Transparency Act, a bi-partisan bill that has already passed the House of Representatives. This bill provides for SEC oversight of proxy advisory firms, and BIO believes it will help reduce conflicts of interest and allow investors to make informed proxy voting decisions.

3. Allow pre-revenue small businesses to maintain SOX 404(b) exemption for 10 years

External auditing of a company's internal controls, as required by SOX 404(b), is expensive for small businesses, potentially costing upwards of $500,000 annually. That money could otherwise be spent on life-saving R&D, and given the simple business model and straightforward corporate structure of small biotech firms, the benefits don't justify the costs. These companies typically have 30 or 40 employees, almost all of whom are scientists, so there's not much complicated financial maneuvering going on; clinical trial results and scientific data are more material concerns.

The JOBS Act was tremendously helpful to the biotech industry; more than 250 emerging biotech companies relied on provisions in the law to help them go public. This compares to just 55 biotech IPOs in the five years before passage of the JOBS Act. The positive impact of this legislation was due in part to the five-year exemption from the SOX 404(b) external auditing requirements granted to emerging growth companies. However, it can take upwards of 15 years to develop a biotech drug, not five, so the cost burden of external auditing is still going to hit some companies in their pre-revenue phase.

BIO has endorsed the Fostering Innovation Act, a bi-partisan legislative solution to reduce the cost of auditing internal controls. The Fostering Innovation Act extends the five-year exemption to 10 years for certain pre-revenue companies. Given that it's a very targeted piece of legislation (only the smallest of companies are still pre-revenue at year six), we have been able to get strong congressional momentum behind this solution, which has already passed the House.

4. Expand the SEC's definition of "non-accelerated filer"

The SEC's non-accelerated filer definition, which scales compliance requirements for small businesses (including a SOX 404(b) exemption), is presently limited to companies with a public float below $75 million. In BIO's view, that limit is too low: a 20 or 30-person biotech may be valued as high as $150-$200 million. That doesn't mean such a company actually has $200 million sitting in their bank account to be spending on Section 404(b); it means their investors are optimistic about the company's potential to fight devastating diseases one day in the future.

BIO is working with the SEC, as well as allies like Nasdaq, to expand the definition of a non-accelerated filer to allow companies with a public float below $250 million to qualify, and to add a revenue component that exempts pre-revenue companies from SOX 404(b) compliance. This will allow pre-revenue companies to focus investor funds on R&D, instead of external auditing that doesn't provide additional value to investors.

Based on the SEC's initial analysis, there are 782 additional public companies that would be added to the universe of non-accelerated filers if the public float limit was raised from $75 million to $250 million. Assuming each of these companies spent on average of $500,000 per year in external auditing, expanding the definition would divert nearly $400 million from compliance to R&D and business development. On the flip side, investor exposure is minimal. If the SEC makes this small, technical change to the definition, only 0.03% of the total float in the market would be exempted from SOX 404(b) compliance via the non-accelerated filer exemption.

5. Implement tax code reforms that incentivize investment in pre-revenue innovators

While 90% of BIO's membership is in the pre-revenue phase, the remainder are revenue-generating companies that have long been hamstrung by high corporate tax rates in the U.S. BIO member companies were therefore very pleased that Congress was able to lower the corporate rate, move to a territorial system, and maintain the R&D credit in the Tax Cuts and Jobs Act. The reduction in the corporate rate will allow those companies more capital to invest in R&D in the United States, and create opportunities to pursue partnerships and mergers with smaller biotech businesses (which is often how smaller biotech companies fund the next stage in their research).

More could be done, however. There are tax policy levers that Congress can pull on the pre-revenue side to incentivize innovation for these small businesses and pre-revenue companies, including investor-side incentives and rules to help companies better utilize net operating losses (NOLs) and/or R&D credits, neither of which pre-revenue companies can use because they don't have a tax liability to offset. For example, BIO supports allowing a small R&D company's NOLs to be carried forward after a financing round or M&A event, rather than being limited by Section 382 of the tax code. We also want to make sure the qualified small business stock rules in Section 1202 work as effectively as possible to attract investors to growing biotechs via the Section's 100% capital gains exclusion.

For more information, read Nasdaq Talks to Congressman Sean Duffy and Vitae Pharmaceuticals' CEO Jeff Hatfield about Proxy Advisor Legislation and Short Selling Transparency >>

***

Charles Crain is the Director of Tax & Financial Services Policy at the Biotechnology Innovation Organization (BIO). Charles's portfolio includes capital markets, securities, accounting, and tax policies that impact BIO's member companies, including the JOBS Act, legislation to enhance capital markets access for emerging companies, market structure reform, decimalization and tick size, and small company auditing standards. Charles serves as BIO's representative to the Equity Capital Formation Task Force and the SEC Government-Business Forum on Small Business Capital Formation.

BIO is the world's largest trade association representing biotechnology companies, academic institutions, state biotechnology centers and related organizations across the United States and in more than 30 other nations. BIO represents more than 1,100 biotechnology companies, academic institutions, state biotechnology centers, and related organizations.


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.


 
proxy season
Clearhouse
Planning for Proxy Season: 5 Ways to Engage Investors through Voluntary Proxy Disclosure
Publication Date: March 9, 2018

To help companies plan for the 2018 proxy season, Nasdaq's Governance Clearinghouse will post a series of articles over the coming months that highlight new developments in technology, upcoming regulatory changes, and tips for enhancing your company's proxy presentation and readability.

Proxies are increasingly recognized as investor engagement opportunities, and many public companies are taking advantage of this opportunity to evolve their proxy statement from compliance documents to communication tools. The previous post in this series outlined tips for utilizing interactive proxy platforms to improve design and readability, as well as track reader analytics. In this article, we focus on enhancing proxy content to help investors better understand why your board—and its governance and compensation programs—are right for your company.

The concept of "voluntary disclosure" may seem counterintuitive, but strict adherence to mandated disclosure requirements won't always leave investors appreciating your board's view on corporate governance and executive compensation. For example, a significant concern investors have about executive compensation is how pay supports strategy, but the SEC does not require companies to disclose this.

It's also important to remember that many proxy voters are governance and compensation generalists, versus experts in your industry. If your board has adopted a strategy or risk management protocol that falls outside of accepted best practices, institutional proxy voters may not have the time or resources to research why that tactic is the right one for your particular company.

A proactive approach to guiding the investment community's perception of your company has never been more critical, as we head into a climate of collaborative activism. After reading open letters to CEOs and directors from Blackrock and Vanguard, and reviewing Morrow Sodali's 2018 Institutional Investor Survey, we've narrowed it down to these five investor concerns for the 2018 proxy season and provide tips for highlighting your board's approach to these issues.

1.   Disclose the Company's Approach to Shareholder Engagement

Vanguard's most recent open letter to board directors states that shareholder engagement "is a process, not an event." Larry Fink announced in his 2018 letter to CEOs that Blackrock's investment stewardship model has radically shifted focus from proxy voting to engagement with companies.

Investors want evidence that companies are cultivating open-ended dialogue with them, versus communicating on a transactional basis relative to specific issues or votes. Many companies disclose their shareholder engagement activity by including charts in their proxies that outline shareholder engagement events by season. Consider going a step further by adding a table that shares feedback your company has received from its shareholders, and the actions taken by the company in response to that feedback.

2.   Outline the Board's Role in Setting Strategy

"A central reason for the rise of activism—and wasteful proxy fights—is that companies have not been explicit enough in their long-term strategies," states Larry Fink. Boards that clearly articulate their role in creating (and their understanding of) their company's strategy for long-term value creation are in a much better position to have short-term decisions supported by shareholders and the investment community.

Consider including high-level disclosure of the board's role in setting and reviewing company strategy within the proxy.

3.   Demonstrate How Pay Aligns with Strategy

Companies devote entire sections of their proxies to the compensation discussion and analysis section (CD&A), but don't always make it easy for investors to answer their questions about pay: Does compensation of top executives support the company's strategy?

Consider making the CD&A section easier to navigate through the use of a "roadmap," detailed table of contents, and/or executive summary, which will help proxy voters quickly find the answers they are looking for. The executive summary at the beginning of the section will have greater impact if it includes the "why" of compensation decisions, versus just the "what."

The pay ratio disclosure rule is a mandated disclosure, but some companies also discuss gender pay equity (due to increased shareholder focus on this issue). Others are addressing the pay for performance question by including graphs or other visual elements to illustrate the alignment between pay and performance, including performance relative to peers.

4.   Prove the Quality of Your Board

The range of complex issues that boards are increasingly called upon to navigate makes it critical to have a strong, experienced and forward-thinking team in the boardroom. Investors want to determine at a glance whether the board has the independence, skillsets, tenure, age, and diversity it needs to avoid group think and identify both opportunities for long-term growth and looming threats.

It is becoming a best practice to summarize highlights of board composition visually with skills matrices and infographics. Descriptions of leadership structure, the board refreshment process and statistics, and the director evaluation process are also key data points.

Many companies do not include metrics on racial or ethnic diversity in their proxies; however, board diversity continues to be a top concern of investors and activists, so if your company has a good diversity story to tell, don't be shy about disclosing it.

5.   Highlight How the Company Manages Sustainable Growth

Investors focus on ESG issues are not going away any time soon—93% of the institutional investors surveyed by Morrow Sodali report that "ESG integration into investment decision making is either fully integrated or progressing towards full integration." These investors want companies to provide more detail around ESG risks and opportunities, including "enhanced disclosure around materiality and sustainable metrics linked to long-term business strategy."

Each year, more companies address corporate social responsibility and sustainability in their IR websites, annual reports, and proxies; many are publishing stand-alone environmental impact or sustainability reports. Consider enhancing ESG proxy disclosure by tying sustainability and corporate social responsibility efforts to results—but balance any such disclosure against potential liability concerns.

When refreshing and enhancing your company's proxy, don't focus entirely on cosmetic enhancements at the expense of robust content. Any investment in an intuitive, interactive proxy platform is wasted if investors don't understand—or agree with—your company's governance and compensation programs.

In case you missed it!

Read Planning for Proxy Season: It's Time to Consider an Interactive Proxy >>


 
international womens day
Clearhouse
Ten Ideas to Get More Women into the Boardroom
Publication Date: March 07, 2018

"As the world moves from capitalism into the era of talentism, competitiveness on a national and on a business level will be decided more than ever before by the innovative capacity of a country or a company.  In this new context, the integration of women into the talent pool becomes a must."
World Economic Forum, The Global Gender Gap Report 2017

In honor of International Women's Day, we placed a call to action soliciting suggestions on how companies—and women themselves—can overcome the barriers to diversity in the boardroom.  Not surprisingly, we heard from those most immediately impacted by gender inequality in the boardroom:  women who aspire to serve on boards, those who are board members already, and the professionals who recruit and coach talented women for board service.

These women hold leadership positions across a wide spectrum of Corporate America, representing the cybersecurity, FinTech, IT, education and healthcare industries. They have helped grow successful start-ups, global consulting firms, and enterprises; several have resumes that highlight significant contributions to iconic brands such as PayPal, Adobe, and Cisco. 

At Nasdaq, we have a unique opportunity to begin facilitating solution-oriented conversations that are candid, illuminating and productive.  It is our hope that these conversations spark innovative and practical ideas to help Corporate America harness the intellectual might of its entire talent pool. 

We selected ten submissions to share with you, based on the diversity of thought and creativity of approach to help companies (and women themselves) break through the glass ceiling of Corporate America's boardrooms.


1. Present board candidates on a blind slate.

"Many people have heard of symphonic tryouts, where candidates are hidden behind a screen so that search committees are forced to listen to the way each musician played a piece without the distraction of visual demographics.  If your company has engaged a search firm, insist that they deliver a "blind" slate that includes 50% non-traditional candidates, initially presented without demographic background or title.  This process adjustment will likely produce a more inclusive finalist list and broaden the perspective on what value the next director can bring."

Angela Brock-Kyle
Audit Chair of Infinity Property and Casualty Corporation (Nasdaq: IPCC); Trustee of Guggenheim Rydex Funds; Founder and CEO of B.O.A.R.D.S.


2. Standardize a board readiness assessment process.

"Increase the supply of board ready women by developing a standardized board readiness assessment process.  This includes creating a 'board readiness assessment' based on company size, business credentials, and qualification criteria; encouraging women executives to take the readiness assessment to identify gaps in the skillsets they need for the boardroom; and establishing mentoring and coaching programs to prepare them for boardroom service."

Helen Yu
Chief Growth Officer at Clinc; Advisory Board Member at Jebbit and C-Suite Accelerator Program; Founder and CEO at Tigon Advisory Inc.


3. Infuse the board with digital savvy.

"In 2017, 45% of new board openings were filled by first-time board members (up from 32% in 2016), of which 42% were female. This is closer to the 50/50 intake that will eventually lead to parity. I believe one of the drivers behind this increasing appetite for first-timers on boards is that disruptive technology (in particular AI) is creating an opportunity for visionary leaders to embrace digitization and apply it to their business models. Boards need to consider adding members fluent in innovation, digitization, leading change and envisioning the future of work. Many of these leaders are women, currently in the leadership teams of transformational companies across all industries."

Marcia Morales-Jaffe
Senior Advisor at McKinsey & Company; Industry Advisor at BetterWorks; former Chief People Officer at PayPal


4. Take risks and seek opportunities to visibly solve problems for businesses and industries.

"I believe more executive women should take more risks in solving problems within their current businesses and industries.  The vast majority of my peers—women who serve on public company boards—share that they achieved their first board position because a CEO or board member had seen them in action: speaking at a conference, assuming a highly visible leadership role in professional organization, or making a name for themselves by contributing excellent work in their current companies."

Caren Merrick
Board Member of Gladstone Companies (Nasdaq: GLAD, GAIN, GOOD, LAND) and Metropolitan Washington Airports Authority


5. Expand the definition of "talent pool."

"What's going to overcome the barrier of the 'shallow pool' misperception is an expanded definition of the board-ready talent pool.  There are roles within organizations that may not have the scope of the CEO, but that can best serve the needs of the organization, such as engineer, CIO, CTO, CMO, etc.  The emphasis should be on diversity of skillset, beyond gender or race."

Karen Walker
SVP & Chief Marketing Officer at Cisco Systems, Inc. (Nasdaq: CSCO)


6. Add advisory role positions to corporate boards.

"The pipeline of qualified women candidates for boards can be increased by adding advisory roles to the board, with a focus on technology, cybersecurity, and disruptive business models.  Bringing up female leaders who are one to two levels down from the CEO will also augment the pipeline of available women candidates for recruitment."

Meerah Rajavel
Chief Information Officer at Forcepoint


7. Establish "three women on the board" as a corporate governance best practice.

"While much focus in the past has been placed on increasing the percentage of female directors, another approach would be to focus on the absolute number. Research by Harvard Business Review in 2006 revealed that: 'A clear shift occurs when boards have three or more women. At that critical mass, women tend to be regarded by other board members not as "female directors" but simply as directors, and they don't report being isolated or ignored.' Recommendation of a 'three women' benchmark by authoritative governance entities . . . could be a catalyst for increasing the number of women appointed to boards."

K. Sue Redman
Advisory Board Member of GreenFig; Former Audit Committee Chair and Board Member of Apollo Education Group; President of Redman Advisors; Executive Professor at Mays Business School at Texas A&M University


8. Give female candidates on the board slate an "at bat" with a governance committee interview.

"Last year, several of the world's largest institutional shareholders—including BlackRock Inc.State Street Global AdvisorsVanguard Group, and New York City Pension Funds—announced their intent to hold boards accountable for insufficient gender representation.   Having these big index funds pushing gender diversity is going to be a huge pressure point and accelerant for progress, so I expect big changes this year.  Companies can take proactive action to include high caliber, new directors who bring cognitive diversity to the boardroom by insisting that their governance committees include a minimum of 35% (but ideally 50%) of female candidates on the board search slate—and include those women in the interview process after pairing down the first pass slate. If governance committees meet these very capable potential colleagues, I'm confident we will see a significant uptick in women in the boardroom."

Betsy Atkins
Board Member, Lead Director and Governance Chair at HD Supply Holdings, Inc. (Nasdaq: HDS); Board Member at Schneider Electric and Cognizant Technology Solutions Corporation (Nasdaq: CTSH); President and Chief Executive Officer at Baja Corp.


9. Establish apprenticeships for corporate boards.

"Mandate that each public board have two apprentice positions that are filled by women who are qualified but don't have board experience yet.  The selected women will hold these roles for 1-2 years.  The board apprentice roles wouldn't have voting rights, but participate in all the board meetings, observing and gaining first-hand experience.  Apprentices would also get up to two hours per quarter of one-one coaching with members of the board.  The advantage of this approach to the board is a low-cost, low-pressure way to become acquainted with talented women and exposed to diversity in the boardroom.  It also builds a pipeline of qualified board candidates for the company.  For the female apprentices, this approach builds confidence and increases the attractiveness of their candidacy for various board positions."

Vijaya Kaza
Chief Development Officer at Lookout, Inc.


10. Broaden and deepen the board's networks.

"For those board directors who are 'stuck' in their networks, I would encourage them to move away from an 'inside out' approach that assumes their next great board director is already in their professional network. We can all be guilty of staying in our own bubble, but those who have the courage to take an 'outside in' approach to developing a high-performing board will be richly rewarded with one that is dynamic and productive.  The prescription for boards is quite simple: create broader and deeper networks that will ultimately improve the long-term value of the companies and stakeholders they serve.  There are now networks like the Athena Alliance and theBoardlist that offer tailored services for boards to find women executives who are ready, and actively searching, for directorships. Furthermore, almost every traditional executive recruitment firm now has a diversity practice to help find fresh candidates who can enrich boards."

Leilani C. Latimer
VP Global Marketing, Partnerships & Commercial Operations at Zephyr Health


Nasdaq thanks each of these talented women for sharing their ideas and empowering women to serve in the boardrooms of Corporate America.  We also thank Coco Brown of the Athena Alliance, who inspired this article with her uniquely insightful and balanced perspective on this issue.

Please help us continue this important conversation by writing to us at governancenews@nasdaq.com with your own thoughts and ideas about improving gender balance in the boardroom.

For more information, read 5 Barriers to Gender Parity in the Boardroom.

***

The views and opinions expressed herein are the views and opinions of the contributors 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.

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data privacy
Clearhouse
Five Things Your Company Can Do Now to Prepare for GDPR
Publication Date: March 1, 2018

Enforcement of the EU's General Data Protection Regulation (GDPR) begins in just a few months on May 25th of this year. Consistent with the EU's approach to privacy as a "fundamental human right," the regulation requires businesses established outside of the EU to protect personal data and individuals' privacy rights when offering goods and services in the EU or monitoring the behavior of EU citizens. Companies that fail to comply face steep fines (up to four-percent of total "turnover" or revenue). The business case for compliance with GDPR goes beyond fines from the EU: Poor data security can costs businesses dearly in terms of data breach mitigation costs as well as consumer confidence and trust.

Time is running out for U.S. companies transacting business in the EU to become "GDPR ready," but given that the GDPR leaves much to interpretation, the exact requirements of the law are likely to evolve over time. Michael Kallens, Associate General Counsel, Ethics and Compliance at Nasdaq, shares practical advice for companies in the midst of ensuring their privacy programs meet GDPR's and EU regulator expectations.

1. Think of May 2018 as milestone, not a deadline.

GDPR is a standards and principles-based law, rather than prescribing precise technical requirements. Formal guidance from the EU is pending on many fronts, so there is a great deal of uncertainty about what exactly the law requires, how it will be interpreted, and how it will be enforced.

As companies prepare to meet the regulation's enforcement date of May 25, it's important to remember that an entire eco-system will impact how this law is applied. This includes:

  • Enforcement and audits (which will not occur until after May 2018);
  • National laws implementing the GDPR, which can add or vary requirements in the regulation;
  • Intersection of the GDPR with other laws, such as MiFID2, ePrivacy, and employment laws;
  • General best practices and industry-specific best practices;
  • Customer requirements, especially if the company is a processor, in the B2B space or delivering services to large multi-national companies;
  • Actions by public interest groups;
  • Shareholder expectations; and
  • Events including privacy incidents, hacks, and data mishandling.
Even if a company has put in place compliance measures to meet core elements by May, it will need to adjust the program and monitor for any changes as the initial enforcement actions and cases alleging non-compliance will bring more clarity to how obligations will be applied in practice.

2. Prioritize, plan and get buy-in.

When developing the plan to become compliant with GDPR, consider all the necessary stages of rollout: outreach to build initial awareness, baselining compliance program and identifying improvements, operationalizing enhancements, and maintaining continuing compliance. A project of this magnitude requires a formal project manager in addition to subject matter experts to allocate work, manage tasks and provide rigor and accountability around the effort. The project needs to include a clear transition point where the effort will convert from a "project" to an ongoing, operational compliance program that will continue indefinitely.

Consider the following when prioritizing compliance activities and/or enhancements:

  • Tasks with long lead times or dependencies like programming or system changes;
  • Changes to core business processes (as opposed to minor adjustments or changes to contingent/ancillary processes);
  • Processes like data mapping that involve data calls, which always take a longer time to complete than estimated;
  • Regulatory impacts particular to your company's industry, including requirements needed to comply with customer commitments or continue to deliver services; and
  • Opportunities for privacy to be incorporated with other change efforts (e.g., existing projects to improve information security or data governance).
Once the plan comes together, buy-in and continued engagement from senior executives is critical to ensuring the plan will be adhered to and necessary decisions are escalated to the right level.

Companies should not try to do everything at once but rather prioritize based on needs and risk. During the awareness phase of the project, publicize the project plan, including the calendar for implementation. A good outreach and awareness effort will provide details to the departments and functions that will be involved in compliance, while simultaneously communicating how the project will be staged so the teams know when requirements relevant to them will be addressed.

3. Build out the implementation team and delegate.

Responsibility for building up to compliance with the GDPR should be distributed throughout the organization, with leads reporting to a central project team and supported by compliance – not compliance doing everything for everyone. Any enterprise of significant size will need to establish a formal project management structure using well-established governance practices for significant change management projects, including a steering committee, a project manager following project management discipline, subject matter experts, and work streams with assigned leads.

The GDPR will affect virtually every type of professional discipline supporting the organization, including HR, marketing, audit, law, and finance. Professional organizations in each of these disciplines are setting up forums and crafting best practices to support compliance. Corporate compliance should encourage project leads within these various disciplines to be engaged with their professional associations to gather best practices and remain informed. It is important to ensure that the project does not become a "legal project" or an "information security program" as success is dependent on engagement in all departments throughout the organization.

Beyond what the law requires, companies serving as data processors need to consider the legal obligations that GDPR introduces directly on the data processors as well as customer requirements and market practices of competitors. To help account for this, sales and account management teams should also be involved.

4. Document, document, document.

A core tenant of privacy compliance is to "say what you do and do what you say" regarding personal data handling. With GDPR, contemporaneous documentation of how customer data is being handled within the organization is critical. A key update to the law is maintaining a record of processing regarding each type of personal data used by the organization. Documenting processes is a tedious task, but one that requires assigned responsibility to ensure it is completely in a timely manner and consistently maintained. Companies should consider requiring key business owners to certify to the accuracy of their portions of the record of processing similar to how they certify compliance with SOX requirements.

5. Account for cultural challenges to compliance.

A company's culture can have greater impact than policies and procedures on compliance; therefore, any GDPR compliance program needs to account for the culture of the organization. Consider whether the company is a "hoarder of information," "asks forgiveness rather than permission when innovating" and other ways corporate culture may impact data privacy compliance. And as with any major change, a plan to build to compliance with the GDPR should consider ways to influence the levers of change within the organization. Any such change should look to build on the strengths of the culture to achieve compliance.



Learn more about Nasdaq BWise and how BWise can support your organization with all aspects of GDPR compliance >>

***

Michael Kallens is an Associate General Counsel in Nasdaq's Office of General Counsel and a senior member of Nasdaq's Global Ethics and Compliance Team. Michael has led industry working groups on developing best practices for corporate ethics programs and is a frequent speaker on ethics and compliance topics. In 2014, he received the Outstanding In-House Counsel Award from the Association of Corporate Counsel-National Capital Region for his work in the area of corporate ethics and compliance.


 
regulation
Clearhouse
Nasdaq Proposes to Modify Shareholder Approval Rules
Publication Date: February 21, 2018 

During 2016 and 2017, Nasdaq solicited comments from, and held discussions with, market participants regarding whether, given the changes in the capital markets over the past 30 years, Nasdaq could update its shareholder approval rules to enhance the ability for capital formation without sacrificing investor protections. Based on the feedback received, and Nasdaq's experience, Nasdaq has proposed to amend its rules to: (i) change the definition of market value for purposes of the shareholder approval rules from the closing bid price to the lower of the closing price or the average closing price of the common stock for the five trading days immediately preceding the signing of the binding agreement; and (ii) eliminate the requirement for shareholder approval of issuances at a price less than book value but greater than market value.

The Securities and Exchange Commission is seeking comments on this proposal. We encourage all interested parties to review the detailed description of these proposed changes in our rule filing and provide comments to the SEC before March 13, 2018.

Read the proposed rule change in the Federal Register >>

Submit a comment on SR-NASDAQ-2018-008 >>

 
diversity
Clearhouse
5 Barriers to Gender Parity in the Boardroom
Publication Date: February 14, 2018

Despite calls to action from a swelling number of advocacy groups and the investment community, women remain drastically underrepresented in the boardrooms of Corporate America.

A Business Journals study published last month found that men outnumbered women by a six-to-one ratio in the boardrooms of the 3,000 publicly traded companies included in the study. That ratio increases significantly for companies with market caps under $1 billion.

In honor of International Women's Day in March, Nasdaq's Governance Clearinghouse is publishing a series of articles that will explore practical solutions to closing the gender gap in public company boardrooms. To kick off this series, we've invited Coco Brown of The Athena Alliance to share her perspective on the top barriers women face when breaking through the boardroom ceiling.

We want our readers to join this important conversation: What ideas or approaches do you believe would improve gender diversity in the boardroom? Send your ideas to governancenews@nasdaq.com no later than February 28th. We will compile the most compelling ideas and publish them on International Women's Day in March.

The Athena Alliance has a unique boots-on-the-ground role in moving the needle towards gender parity in the boardroom. Because we serve on the front lines of this initiative, we have a close-up perspective of the obstacles women face as they seek seats at the table. A lack of motivation and absence of a cohesive effort on the part of corporate America are still formidable obstacles to resolving this issue, but some of the barriers women face are self-inflicted—and it's important to shed light on that side of the equation as well.

Here are the five key barriers that we believe are obstructing progress towards gender parity in the boardroom:

1. Traditional board configurations severely limit the pool of qualified female candidates.

This issue is resolving itself organically, but slowly. As the fiduciary mandate of boards has expanded to include oversight of forward-looking risks and opportunities, boards are beginning to view themselves through an investor lens to self-assess for collusion, insular thinking, and lack of relevant skillsets. A traditional board configuration of sitting and former CEOs and CFOs can leave a board with critical skill gaps.

There are relatively few female CEOs to choose from when recruiting board members, which has contributed to the perception that the female executive talent pool is shallow. However, as boards begin to cast wider nets in search of relevant, modern skillsets, they open up seats to a deep well of qualified female candidates. There are many women with tested leadership experience in disciplines that modern boards need, such as engineering, digital technology, cyber risk management, supply chain management, operations, marketing, organizational structure and people.

2. There is no champion galvanizing the majority to resolve this issue.

As boards seek to broaden their skillsets, they could potentially accelerate progress towards gender parity by creating new opportunities for women to make meaningful contributions in the boardroom. While promising, this trend alone is not enough—women must have genuine access to these opportunities at a proportional rate to men, and men have to want to bring them in.

It's very difficult to create balance from imbalance without buy-in and intentional action from the majority in power. Men occupy 80-100% of decision-making seats on the average board, and therefore are in the best position to move the needle. Yet many men do not see a problem with gender imbalance, and/or do not believe there are enough qualified women to fill board seats.

Boardrooms began to diversify rapidly in the U.K. when Lord Davies championed the cause. An iconic male business leader in the U.S., who has the clout and charisma to coalesce efforts of the investment community and advocacy groups, could build powerful momentum towards moving the needle.

3. Boards aren't accessing diverse networks in their recruitment process.

Most boards rely heavily on their own networks to fill a candidate slate, just as professionals leverage their networks to find new job opportunities for themselves or fill jobs within their own organizations. The average profile of a board director is a 63-year-old white male. 60-year-old white men are mostly surrounded by other 60-year-old white men (and younger men who remind them of themselves). Women do this too, and so do people of different ethnicities and backgrounds. The problem isn't the method—it's access to diversity.

Progress hinges on opening up and expanding isolated and insular professional networks. In the absence of an iconic male business leader who can galvanize a movement to increase diversity in the boardroom, we need to create an organic groundswell by exposing influential men to networks of board-ready women.

While there are a growing number of databases cataloguing executive "board ready" women, these are not going to move the needle appreciably. Databases are essentially a collection of digital resumes. I personally have not obtained a job through a resume since I was 23 (and I'm not sure I did even then). It's all about networks. To be useful, static databases should be brought to life through face-to-face interactions.

Zack Rosen, CEO of Pantheon, recently attended an Athena Alliance event, one of only seven men who showed up out of 100 male executives invited. Zack emailed me the next day, stating that our event was "hands-down the best event I have attended all year." Why? Because although he showed up to show solidarity with our organization, he wound up leaving with unexpectedly valuable business contacts. "I never make that number of high-impact connections at one event. All of the women I interacted with were rare talents," Zack shared.

Zack was introduced to me through one of his investors, OpenView Venture Partners. Their senior managing partner, Scott Maxwell, also saw this sort of power in the Athena Alliance community and sent three CEOs from other companies in OpenView's portfolio to Athena's Seattle launch, who were in turn equally impressed and pleasantly surprised by how easy it can be to diversify their own top tier network in meaningful ways when motivated to move beyond the usual events and circles. These grassroots "guy-talking-to-the-guys" testimonials are an authentic and very effective means of bringing talented women into powerful male networks.

4. Women aren't always visible, or aren't visible in the right ways.

Women professionals limit their visibility in two ways: spending too much time in circles of women, and failing to realize their own worth.

Working women have long relied on the support of women's conferences, women's affinity groups, and women's business groups. By gravitating to gender-specific organizations, women are guilty of exactly what we accuse men of doing—limiting our networks to people who are like us. Women should instead build networks that include and leverage powerful men.

A side effect of underrepresented groups is too few role models. When women perceive that only the Sheryl Sandbergs and Meg Whitmans are qualified for board service, they incorrectly assume that they aren't yet at the right stratosphere to make themselves visible. It always shocks me (yet it happens often) when we invite a highly-qualified woman to join Athena Alliance and discover she has no idea she is of value to a corporate board.

Women who do land on a slate of candidates need to elevate their representation of what they bring to the boardroom. When we coach Athena Alliance members for board interviews, we instruct them to take off their business operator hats and instead think holistically about their careers, experiences, and touch points to industry. We ask them to consider what they can bring from that perspective to boardroom conversations about global business risks and opportunities, emerging threats, and disruptive technology developments. If a candidate focuses too much of her interview on how she executes her day-to-day operating role, the board may underestimate her ability to function at a higher stewardship level.

5. Women aren't always qualified in the right ways.

As women take a long view of the career roles and experiences that will enhance their value to public company boards, they need to understand that boards always use open seats to think about going from "here" to "there." Boards recruit candidates who are where they are heading, not where they are or where they've been. They also seek candidates with a strong degree of currency and connection to the markets and industries their companies operate in.

Given that parameter, there are several factors that can eliminate a woman for board service:
  • She has been out of the C-suite for five or more years, so is perceived as lacking current relevance and an innovative edge.

  • She has been a consultant for more than five years (unless she is a partner at a large leading global consultancy or is broadly recognized as an authority in her discipline).

  • She has served as a top executive for only smaller cap companies that generate less than $300M in revenue.

That said, there are many women who are not on the SEC filings of public companies who should be considered qualified for board service. These women represent the top 10% of their company's leadership and have had certain professional experiences that make them valuable in the boardroom, including:

  • She has significantly scaled a company in size, serving as part of an early or founding executive team that took a company public or through a significant acquisition.

  • She is part of a senior leadership team that grew a company from a small-cap to a mid- or large-cap.

  • She holds a large domain of responsibility, serving as CxO or VP of a large function or business line within a company of significant size and stature.

  • She holds a high-demand leadership role, such as CMO, CTO, Chief Product Officer, COO, or CIO in a company of $300M in revenue or greater in size.

It also helps to have served on notable non-profit boards, as they are governed like public company boards and are a great proving ground for board leadership.

Please join this important solution-oriented conversation and share your perspective on how to close the boardroom gender gap. Send your ideas to governancenews@nasdaq.com no later than February 28th. We will compile the most compelling ideas and publish them on International Women's Day in March.

***

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.


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.


 
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IN CASE YOU MISSED IT!
In the News
PCAOB Seeks Public Input on its Strategic Plan
Publication Date: April 23, 2018

Following the recent appointment of five new Board members, the Public Company Accounting Oversight Board is taking a fresh look at the organization and its future direction in fulfilling its mission. In that regard, the PCAOB is seeking input into its 2018-2022 strategic planning through a public survey. The brief survey asks for participants' perspectives on the PCAOB's vision, priorities, and opportunities in fulfilling its mission. Survey responses are requested by May 15, 2018.

Read more >>

Take the survey here >>


Society for Corporate Governance Complimentary Directors' Cut Newsletter
Publication Date: April 19, 2018

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, with a view toward a director and C-suite audience. Each issue covers a range of relevant developments and guidance in areas such as audit/financial reporting, board composition/refreshment, board and key committee oversight, and shareholder engagement/activism - as well as institutional investor developments & perspectives.

Read the Society Alert - Directors' Cut for 2018 Q1 >>

Subscribe to the newsletter here >>


Webcast -- Blockchain: What it is & implications for investors
Publication Date: April 11, 2018

On April 12, 2018, Invesco QQQ ETF, Microsoft and Nasdaq will participate in a live webcast where they will discuss what blockchain is from a practitioner's point of view, how broad blockchain's application can be, trends within blockchain and what may lie ahead. Speakers include Yorke E. Rhodes III, co-founder of Microsoft's blockchain initiative, Fredrik Voss, Nasdaq's Vice President of Blockchain Innovation, and John Q.Frank, Invesco's QQQ Equity Product Strategist.

Read more and register here >>


2018 Proxy Season Preview
Publication Date: April 6, 2018

Highlights of the upcoming proxy season, including governance and compensation issues, are discussed in this 2018 proxy review by Shirley Westcott, Senior Vice President at Alliance Advisors LLC. Westcott expects the upcoming proxy season to reflect shifting investor priorities with social and environmental issues at the forefront of engagement discussions and shareholder resolutions. The article identifies two issues from 2017—board diversity and change risk— that are likely to gain more traction in 2018. The article also describes new and revived proposals that are expected for the 2018 annual meetings, updates from proxy advisory firms, and trends that will help plan for 2019.

Read more >>


DTCC Calls for Cross Industry Cooperation in Case of Cyber Attack
Publication Date: March 28, 2018

The Depository Trust & Clearing Corporation (DTCC) recently published a white paper that makes several recommendations to strengthen financial sector resiliency from cyber-risks, including increased coordination across the industry, the development and implementation of standards to facilitate effective response and recovery and adherence to regulatory principles. Andrew Gray, Chief Risk Officer at DTCC, stated, "An attack on one or more institutions or critical infrastructures could have a contagion effect across the financial system, especially as interconnectedness continues to grow. As a result, it is critically important that firms incorporate additional redundancies to ensure that the failure of any single institution can be contained and mitigated. To successfully achieve this, we must collectively prioritize resilience and recovery efforts across market participants, infrastructure providers, technology vendors and regulators."

Read more >>

Read the DTCC white paper here >>


Discussion on Dodd-Frank
Publication Date: March 27, 2018

In a recent Facebook Live video, Nasdaq's John Zecca, Sr. Vice President of MarketWatch, and Alan Hahn, Partner, Davis & Gilbert, discuss the evolution of the Dodd-Frank Act, providing pointers to help prepare for the CEO pay ratio disclosure and describing guidance offered to companies from the SEC. They also discuss pending legislation to repeal provisions of Dodd-Frank.

View on Facebook Live >>


U.S. Supreme Court Holds that Securities Act Class Actions May Be Brought in State Courts
Publication Date: March 22, 2018

In a decision that has a wide-ranging impact for newly public companies, the Supreme Court of the United States held that state courts have jurisdiction over class actions brought under the Securities Act of 1933 (Securities Act) and that such actions filed in state court may not be removed to federal court. This decision interprets the Securities Litigation Uniform Standards Act of 1998 and resolves a split among federal district courts.

Learn more from Wilson Sonsini Goodrich & Rosati, who represented the petitioners >>

Read the Court's opinion >>


What's on the Minds of Shareholders This Proxy Season?
Publication Date: March 12, 2018

In a recent publication, BDO examines the topics that boards should be prepared to discuss during 2018 annual meetings, including risks and opportunities related to actions of the Trump administration. Shareholders also continue to express interest in corporate accountability and compliance matters, and boards should be prepared to address the companies' abilities to respond timely and appropriately to cyber threats and executive misconduct; refreshment policies that ensure board diversity; transparency with regard to environment, social and governance (ESG) sustainability; and pay ratio disclosures.

Read BDO's alert >>

Register for 3/27 webinar >>



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