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q&a
Clearhouse
Corporate Governance Teams, Investor Relations, and the Changing Governance Landscape
Publication Date: December 13, 2018

Meagan Tenety, Senior Advisory Analyst, Nasdaq IR Intelligence, recently sat down with Joan Conley, SVP and Corporate Secretary of Nasdaq, as she discussed her role, Investor Relations and the changing governance landscape. She outlined trends, best practices and tools for engagement for CFOs, Corporate Secretaries and IR teams.

How has institutional interest in ESG, and in particular, governance changed over time?

Conley: Governance used to be a check-the-box category. Over time it has become one of the most influential tools that institutional investors and activists use to evaluate the strength of the Board and an organization's leadership. The ESG conversations at the likes of Vanguard and BlackRock, and Warren Buffet's letters to stockholders show that investors are increasingly concerned with governance and the environmental and social issues surrounding companies. The environmental and social side of the conversation is evolving but governance issues are clearly defined and measurable and have become a focus area for institutional investors and activists alike.

Focusing specifically on governance, what data and information do the corporate governance teams use to make decisions?

Conley: Corporate Governance teams use varying sources of data:

1. Your IR team, CFO and/or Corporate Secretary/Governance Team

2. Engagement with institutional investor governance teams

3. Harvard Law School Forum on Corporate Governance

4. Thought leaders in the governance field

5. ISS

6. Glass-Lewis

There are limited data sets for corporate governance teams. The good news is that their sources are public so you can do the investigation yourself. More importantly, your team should be getting in front of the governance teams at the largest institutions to tell your story and continually engage these professionals.

What do you communicate publically to engage corporate governance teams and proxy voters?

Conley: Publically outline your proxy guidelines over time:

• This is what you said with regards to corporate governance

• This is what we heard from investors

• This is what we did

Listen to the feedback you are getting from institutional investors both through your meetings and through their proxy votes. It is equally as important to listen to your retail investors. Analyze your stockholder meeting votes looking for year-over-year changes. Document and follow up with engagement conversation and listening tours on an annual basis to discuss your progress given their feedback. Dialogue and listening is key here!

What are the key topics that governance teams are interested in?

Conley: Corporate Governance teams use varying sources of data:

1. Board

• Composition

• Skills

• Board Refreshment

• Board Evaluation

Board Composition needs to encompass gender and ethnic diversity and unique skill sets that align with the strategy and needs of your organization to achieve your strategic plan. It is not just checking boxes but, rather, having a truly dynamic, strategic and skilled board that will help guide your organization. In order to properly communicate with governance teams, IROs and CFOs need to understand where your board is today, communicate this to governance teams, and work with leadership to design a plan to reach your board composition goals.

It is important to note that board composition is not stagnant and needs to constantly be refreshed and updated as your company strategy evolves and grows. The evolution can be strategy changes, pivots or refreshes or reaching new market cap thresholds. Stockholders, stakeholders, institutional governance investor teams and retail stockholders want to know that your board is changing and growing to meet the strategic needs of your company.

2. Leadership

• Executive Compensation

• CEO Salary Ratio

• Goals for Executive Compensation

The governance teams really care about the metrics and milestones associated with executive compensation. Get to know the governance teams so that you can make sure your executive compensation structure is not leaving you exposed.

3. Environmental and Social

The field is growing with organizations assessing your company's ESG policies. We have yet to see a leader emerge in terms of measurable and actionable guidelines on environmental and social issues like ISS and Glass Lewis provide for governance. I look to the thought leadership in Europe to guide me on forward-thinking environmental and social issues. Nasdaq Nordics ESG Reporting Guide

What is your overall strategy in terms of engagement?

Conley: Regardless of the size of your team there are simple ways to engage in activities you are already doing for your shareholder clients. Be proactive. Identify and engage with these teams as soon as possible, come prepared for the meeting and listen carefully.

1. Be Proactive: Connect with proxy teams to bring them up to speed of progress on governance issues

2. Listen, document and follow through

3. Develop a quarterly engagement plan

Can you outline for us some actionable ways a CFO, IRO or Corporate Secretary can start to engage corporate governance teams?

Conley:

• Invite the governance team/proxy voters into meetings with portfolio managers

• Send most recent earnings reports ahead of scheduled calls and invite governance teams of top institutions to your quarterly earnings calls

• Invite governance teams to your investor days

• Let governance teams know when you are in town

• If there is a key issue that is made public, let the governance teams know immediately

• Conduct a GAP analysis of the largest institutions for their proxy voting guidelines and create an action plan

• Assess the content of all of the ESG questionnaires/your institutional investor preferences and then come to an agreement within your company on the key metrics

Lastly, any final advice when engaging governance teams?

Conley: Always keep in mind that:

• They don't want to only be brought in when there is an issue

• They know which companies engage with them and which do not

• They want a relationship leading into proxy voting season

A two-way dialogue is the preference for all governance teams. They want to know that they have the latest and most up-to-date information and are being heard when they raise concerns.

Overall, your team should be proactive as possible. Add governance teams to your travel and communications schedules and begin the dialogue. Through these relationships, you will lessen your exposure to governance risk and strengthen your organization's knowledge and best practices on governance issues.

For more insights from Joan Conley, read:

Seven Tactics to Engineer Better Boardroom Dynamics >>
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.


 
outside insight
Clearhouse
Innovation Competitions are a Unique Way for Companies to Foster Innovation and Diversity: Here's How
Publication Date: November 29, 2018

Jennifer Byrne is the co-founder and CEO of Quesnay Inc, an innovation consulting services firm that helps traditional firms and brands accelerate innovation by working with startups.

Legacy industries like insurance and banking continue to face the threat of disruption by new technologies and solutions. Many corporations are looking for proactive ways to catalyze innovation such as partnering with startups and influencing new ideas from within.

A survey by Accenture reports that over 85% of incumbent businesses from China, India, and the U.S. believe that collaborating with their smaller rivals will give them access to game-changing technologies that can help them thrive in technology-driven markets. The majority of companies surveyed view access to new technologies as the biggest opportunity of engaging with small high-tech firms in innovation initiatives. However, many companies don't know how to go about collaborating with startups and small tech companies—or don't go about it in the right ways.

A new way to approach collaborative innovation

That's where programs like innovation competitions come in. With the ability to be customized to any corporation's need, innovation competitions are essentially a form of business development that focuses on the creation and celebration of the best new ideas or solutions, crowdsourced from top innovators. Competitions typically run over the course of several months, during which companies are able to identify startups that can provide a different outlook on their industry and assess opportunities for long-term partnerships with them.

A corporation's objectives help determine the competition topic, question, and timeline. Once these factors are decided, recruitment for qualified startups takes place through numerous channels and industry experts judge the best solutions for the stated challenge. As an innovation consultancy, Quesnay Inc. has been running innovation competitions for over five years, helping clients to achieve their goals by introducing them to high-quality startups offering innovative solutions beyond their own industries, geographies, and demographics. Clients are encouraged to create relationships with these startups and often go on to have strong, mutually beneficial partnerships long after the competition ends.

The link between diversity and innovation

Whatever approach a company takes to collaborative innovation, there is one key element that should not be overlooked–the positive correlation between innovation and diversity.

A recent study by BCG shows that in both developing and mature economies, companies with an above-average diversity profile generated 45% of their total revenue from innovation versus just 26% for companies with below-average leadership diversity. In addition, organizations with diverse leadership reported better overall financial performance.

The research is clear, yet a lack of diversity persists in industries that are striving for innovation. A report by Mercer shows that when it comes to gender diversity in the financial services industry, as career level rises female representation severely declines. It shows the comparison of female to male employees at the manager level is 37% to 63%, at the senior manager level it 26% to 74%, and at the executive level, 15% to 85%.

Many corporations have created employee special interests groups and focused on diversity in their recruiting efforts to solve the problem, but they are also looking for new and actionable ways to move the needle. 

An innovative way to foster diversity

Here's how some organizations worked with Quesnay to structure innovation competitions to generate new ideas to help their business while fostering diversity.

Verizon Powerful Answers Award

When Verizon Communications Inc. (Nasdaq: VZ) was looking for new ways to expand into emerging areas of technology, they asked Quesnay to help design a program that allowed them to find and support innovative entrepreneurs. The result was the Verizon Powerful Answers Award, which provided more than $12 million in cash prizes to support the growth and development of new mobile-centric social enterprises around the world.  The award also opened up new integration and engagement pathways for startups across the Verizon organization, leading to multiple corporate venture investments, product partnerships and commercial relationships.

An example of this is Verizon's investment in Swiftmile, the leading provider of scalable turnkey eBike and eScooter transit systems, to support its growing internet of things (IoT) initiative. The relationship started with Swiftmile using Verizon's IoT-enabled Share Solutions platform as part of its electronic bike transit share system and continues today.

National Association of Broadcasters Pilot Innovation Challenge

The National Association of Broadcasters (NAB) chose to start their PILOT Innovation Challenge at the ideation stage. The competition awarded cash prizes for original ideas and innovative solutions to help broadcasters and media organizations better serve their local communities and audiences.

One of the winners was nēdl, an app that lets users search live radio as easily as they search the web and also start their own live broadcasts.  In addition to its $20,000 prize, nēdl received funding from Backstage Capital and Matter.vc, launched on Alexa, and was featured in the App Store. 

The NAB has continued to support the development of other winning teams through funding, mentorship, and introductions to key industry leaders with much success.

Quesnay's newest competition series, Female Founders in Tech (FFiT), works to not only support diversity of thought like the NAB PILOT and Verizon competitions discussed above, but places a special emphasis on gender diversity. Recent reports indicate that only 3% of venture capital dollars went to female founders.  Quesnay launched the FFiT to address the gap among women leaders in numerous industries with specific competitions for insurtech, fintech, and mediatech. This program recognizes and supports women-led startups and awards them with money, mentorship, education, and—perhaps most importantly—partnership opportunities with the companies sponsoring the program.

The 2017 FFiT winner, Goalsetter, is a goal-based savings and gifting platform. Goalsetter received investment from a competition sponsor, went on to raise $600,000, was selected to join Morgan Stanley's Multicultural Innovation Lab and was named a winner of JP Morgan Chase's Financial Solutions Lab competition.

The FFiT program is a powerful way for participating companies to increase staff engagement and actively promote an innovative culture, while also demonstrating their commitment to diversity and inclusion. Employees can directly impact women entrepreneurs through mentorship and coaching. In addition, workers at all levels can participate in evaluating the startup applicants and attending the pitch event.

The latest competition, Female Founders in FinTech presented by Wells Fargo, just launched on November 12 and is seeking innovative fintechs to change the game for financial services incumbents. The program's other sponsors and partners, Fidelity Investments, Shearman & Sterling LLP, and Royal Bank of Canada are supporting the program by providing mentorship and experts to evaluate the companies.  PayPal Holdings, Inc. (Nasdaq: PYPL) is also a strategic partner for FFiT's competition.   Louise Pentland, PayPal's Chief Business Affairs and Legal Officer, had this to say:

"Much like PayPal's mission to democratize financial services and create greater opportunities for consumers and merchants to participate – and in fact, thrive – in the global economy, Female Founders in Tech is designed to democratize access to capital, giving female entrepreneurs access to much needed resources. We are proud to serve as a strategic partner for FFiT's competition and look forward to hosting the final pitch event." 

To learn more about the current Female Founders in FinTech competition, visit www.quesnays.com/ffit2018fintech.

***

Whether corporations are looking to support women in tech from a diversity perspective, invest in strong, cutting-edge startups, or just get a better view on what startups are doing in their industry, an innovation competition is a compelling way to bring together and promote factors that can easily impact a corporation's future business success.

***

Quesnay is an innovation consulting services firm that helps traditional firms and brands accelerate innovation by working with startups. Quesnay achieves this by running innovation competitions and acceleration programs, as well as providing strategic partnership consulting services. Prior sponsors and clients include AARP, American Family Insurance, Condé Nast, CSAA Insurance Group, Farmers Insurance Group, Hearst Corporation, John Hancock, Liberty Mutual Group, MassMutual, National Association of Broadcasters, Prudential, QBE Insurance Group, RGAX Inc., Sterling National Bank, TD Bank, Thomson Reuters, and Verizon. For more information, follow us at @QuesnayInc or visit www.quesnays.com.

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
It's Time to Fix the Proxy Process
Publication Date: November 22, 2018

On November 15, 2018, John Zecca, Senior Vice President, General Counsel North America, and Chief Regulatory Officer of Nasdaq Regulation for U.S. Markets, participated in the SEC's Proxy Process Roundtable. Prior to his appearance at the roundtable, Mr. Zecca submitted a comment letter to the SEC advocating key changes to the proxy rules on behalf of public companies and retail investors.  Highlights are provided below. 

Nasdaq operates 19 regulated entities in the United States and Canada, including the Nasdaq Stock Market, which is home to over 3,000 public companies and exchange traded products.  Nasdaq is also a listed company and is subject to the same regulations as other public companies, including the proxy rules.

A common theme we hear as we talk to our listed companies (and our own experience confirms this) is that the proxy process is costly, inefficient, unduly complicated, and requires a disproportionate share of management's attention.  Specifically:

  • Companies routinely cite the proxy process as one of a series of complaints, which, in the aggregate, discourages them from joining the public markets.
  • Despite its cost and complexity, the current system results in a disproportionately few number of retail investors voting their shares. 
  • The current outdated proxy process also limits a company's ability to communicate with shareholders—especially younger retail shareholders—in the digital way that they prefer to communicate.

In my letter to the SEC dated November 15, 2018, we urge the Commission to address the cost and difficulties for companies to communicate with shareholders; reform the rules related to shareholder proposals; and require transparency about the methodologies and conflicts of proxy advisory firms, as well as a mechanism for companies to address errors by the firms. Excerpts from this letter, which address each of these issues, are provided below.

Proxy Voting Mechanics and Technology

The primary purpose of all aspects of the SEC's proxy rules should be to facilitate communications between companies and their shareholders.  In this digital age, it is notable how incredibly complex and expensive it is for companies to communicate with their shareholders, especially their retail shareholders. 

Problems fall into three broad categories:

  • Lack of transparency as to beneficial ownership.  Companies consistently report that there is over-voting and under-voting in their proxy elections, in part as a result of double-voting in connection with security lending.  Shareholders express frustration that they have no way to verify that their votes have been counted. 
  • The proxy process makes it impossible for companies and shareholders to communicate in the way retail shareholders expect to communicate today.  Because of the complexities of the proxy system, and particularly the distinction between objecting beneficial owners (OBOs) and non-objecting beneficial owners (NOBO), companies often don't know the identities of their retail shareholders, making it impossible to contact them directly.  Even when companies do know shareholders' identities, for proxy-related matters they must contact them through expensive intermediaries. 
  • Companies are frustrated they are charged fees that they cannot negotiate. Issuers receive large, obscure annual bills from intermediaries that they did not select, for delivering proxy materials.  In addition, while notice and access has improved the proxy system considerably, companies still pay a large amount in printing fees each year because intermediaries report that large numbers of stockholders have requested full set delivery of proxy materials. Issuers have little ability to contest, or even deconstruct, the annual bills they receive.  Companies would like to reach out to those stockholders to encourage them to use technology to receive materials, but again, the proxy system makes it difficult to identify and contact them.  Even where they can use electronic delivery the cost to do so remains high.

As a technology company, Nasdaq knows there is a better approach—and Nasdaq's eVoting initiative has shown that it is possible.  We have conducted proof of concept tests in Estonia and South Africa that use a cryptographically secure transaction private ledger to address many of the current challenges of the proxy process, including the lack of transparency and traceability in the voting process. In the Estonian market, we were able to use the national identity numbers issued to each resident to help establish each digital identity in this market where investors directly hold their securities. Users in South Africa, which has a central securities depositary (similar to the US), access eVoting via a web enabled front end; the system records the data on the blockchain. The system can also accommodate the transmission of voting-related materials and, of course, the audit trail and immediate vote tally functionality is available through permissioned reports that provide different levels of information to issuers and shareholders and, if needed, auditors and even regulators.

We are hopeful that technology will one day enhance many aspects of the proxy process, but in the meantime the SEC should consider the following actions:

  • Revise rules to permit direct communication between companies and their shareholders. 
  • Consider assigning the cost of the OBO designation to those shareholders whose status force those costs.
  • Give issuers a say in selecting intermediary providers and ensure transparency to companies about the fees they pay, giving them the ability to ensure that those fees are correct.  
  • Enhance the integrity of the shareholder vote by improving transparency and the mechanisms to reconcile long and short positions, thereby better limiting voting, and the cost of proxy solicitations, to only those persons entitled to vote.

Shareholder Proposals

Another cost that public companies face is related to the shareholder proposal process.  Many companies spend thousands of dollars and countless hours of management time addressing proposals from proponents who own minimal amounts of their shares. 

Nasdaq proposes the following amendments to Rule 14a-8:

  • Increase the minimum ownership percentage to ensure that shareholders have a meaningful investment in the company before they are given access to the proxy. 
  • Delete the meaningless $2,000-dollar threshold and instead require that a proposing shareholder hold a material investment in that issuer.
  • Increase the holding period to a longer period, such as three years, which would help ensure that management and boards spend their scarce time focused on shareholder proposals that come from shareholders who are aligned with other shareholders in the long-term success of the company. 
  • Increase the resubmission thresholds, so companies aren't burdened year after year with proposals that the majority of their shareholders don't support. 

In addition, shareholder activists are increasingly using Notices of Exempt Solicitation on Form PX14A6G to advocate for certain proposals and policy issues without subjecting their materials to review by the company or the SEC.  As a result, communications about a shareholder proposal that would otherwise be excluded from a Company's proxy statement in accordance with Rule 14a-8 can nonetheless be presented to shareholders on a Form PX14A6G, which can be filed at any time prior to or after an annual meeting.   

Nasdaq proposes that the SEC revise the "cover" in Rule 14a-103 to clearly identify the filing party, similar to Schedules 13D and 13G, and require the filing party to disclose the number of shares held and any interest in the proposal or policy issues it is advocating for. The SEC should also consider restricting the time period in which a voluntary Notice may be filed.

Proxy Advisory Firms

Given the number of public companies, the large number of proposals placed on each company's proxy, and the limited time to consider these proposals, institutional shareholders have come to rely on proxy advisory firms.  While this service is valuable in theory, in practice the industry is a largely unregulated black box, rife with opacity, lack of accountability and conflicts of interest.  Specifically:

  • Proxy advisory firms are not required to fully or completely explain their criteria or provide companies a means to question analysis or even correct factual errors.

  • Proxy advisory firms are not required to disclose whether they have a financial relationship or ownership stake in the companies on which they report.

  • When shareholders rely on the voting recommendations of the proxy advisory firms, it further distances companies from their shareholders.

While the SEC took preliminary steps to address these concerns several years ago by issuing Staff Legal Bulletin 20 , and again earlier this year when it withdrew two no-action letters concerning the ability of investment advisors to rely upon recommendations by proxy advisory firms in voting their clients' securities, additional guidance is needed about the impact of this withdrawal and the important underlying concerns that other market participants have with proxy advisory firms. 

Proxy advisors must also have a line of communication with the companies they analyze and clear transparency around their ownership of, or short interest in, covered companies.  The stories we hear from public companies further bear this out.  In one case, in two successive years, a proxy advisory firm based its recommendations on an erroneous and incomplete understanding of the relevant facts.  In each instance, the company was told that it could avoid such issues by subscribing to (and paying for) the proxy advisory firm's corporate services.  

Each of the above issues are central to the willingness of companies to join the public markets and to retail investors' ability to interact with the companies whose shares they own.  Nasdaq urges the SEC to address the cost and difficulties of communicating with shareholders; update the rules related to shareholder proposals; and require transparency about the methodologies and conflicts of proxy advisory firms, as well as a mechanism for companies to address errors by the firms. 

Please note that the SEC encourages public companies to submit comments related to these topics.  Comments can be submitted here

* * * * *

For more information, read:

Letter from John Zecca, Chief Regulatory Officer of Nasdaq, to the SEC >>

Chairman Jay Clayton's Statement at the SEC Staff Roundtable on the Proxy Process >>

Commissioner Kara Stein's Opening Remarks at the 2018 SEC Staff Roundtable on the Proxy Process >>

Roundtable on the Proxy Process, November 15, 2018: Transcript >>


 
technology
Clearhouse
5 Ways Companies are Transforming Their Businesses with Machine Learning
Publication Date: November 5, 2018

At the intersection of machine learning and natural language processing sits Amenity Analytics, a relative newcomer to the text analytics industry. Amenity's founders see the information gushing from today's knowledge economy as a massive, untapped resource of important data for companies across a spectrum of industries.

The brainchild of a former portfolio manager and a machine learning academic, Amenity Analytics has automated the process of sifting through complex documents and narrative content to find and visualize meaningful data sets. For businesses that rely heavily upon the consumption and analysis of complex documents and texts, natural language processing (NLP) tools can save man-hours on a massive scale and deliver powerful insights to decision makers.

We spoke with Nate Storch, co-founder and CEO of Amenity Analytics, about how companies can stop drowning in information and start surfing it instead.

NLP is the branch of computer science that turns complex, unstructured data—specifically text written in human language—into structured datasets that can then be processed, visualized and analyzed.

I was an investment portfolio manager in my previous career, a job that required constant scanning of SEC filings, earnings call transcripts, broker research and news for nuggets of information relevant to our investments. Amenity Analytics was born out of finding a solution to information overload, which was one of my biggest problems in financial analysis.

I first learned about natural language processing when I was researching an investment and met my future business partner, Professor Ronen Feldman. Prof. Feldman is an early pioneer in NLP who coined the phrase "text mining" back in the ྖs.

I saw immediately that NLP technologies could be a game-changer for me in investment analysis, not only bringing enormous time efficiencies to scanning complex financial documents but also creating data sets that could be visualized and analyzed to uncover trends and outliers. I saw potential applications of NLP to many other industries as well, and that's why Prof. Feldman and I founded Amenity Analytics.

We created a platform that gives people the ability to take a document and apply artificial intelligence to mimic the perspective of an expert. Forensic accountant, top financial analyst, an expert in ESG—all of those models are there, and countless others can be created. Amenity's NLP platform can quickly highlight, extract, and visualize data so users can spot patterns and outliers or establish causality—correlating stock prices with suspicious behavior, for example.

When you think about it, it's ridiculous that humans are still consuming text in much the same way we did 100 years ago. At Amenity, we are challenging our clients to reassess a process very core to their operations: reading complex financial documents. Here are five case studies that illustrate the innovative ways our clients are applying Amenity's NLP tools to solve problems, answer questions, and revolutionize the way they consume information.

1. Analyze quarterly earnings conference call transcripts to uncover deception or looming issues.

One of the spaces we're most focused on is my old industry—investment services. Amenity's platform is designed to address the needs of financial analysts and portfolio managers on a fundamental level, in a way that is going to be highly disruptive for the industry.

We are working with some of the world's largest and most sophisticated hedge funds. Our platform empowers their discretionary investors—the people doing true fundamental analysis—by providing additional insights and datasets into what's going on at their targeted companies.

For example, Amenity's software can process earnings conference call transcripts to flag companies that may be in trouble—before simmering issues impact earnings results. We've embedded the language analysis techniques used by CIA interrogators into our platform to capture and highlight clusters of language that might indicate uncertainty, doubt or even dishonesty, such as clichés and detour statements. A sudden spike in this type of language used by a CEO during a company's earnings call is often a reliable indicator that something is amiss.

Our platform can also process documents through a niche investment lens. For example, we built processing models from the perspective of an Environmental, Social and Governance (ESG) expert. If an analyst wants to quickly find pertinent ESG information related to a potential investment in a certain document, in the news, or in a 10-K or in an earnings call transcript, they can enter our platform and use an ESG model to highlight their documents from the ESG perspective.

2. Make better underwriting decisions, faster.

Starr Insurance Companies has customized Amenity's platform to assist in underwriting Directors and Officers (D&O) Insurance. Underwriters are often tasked with coming to a decision very quickly around whether they want to underwrite a company's D&O risk or not. And in order to make that decision, they have to process and understand information that's included in a stack of documents that can be a foot high.

Starr Insurance turned to us for help, first off, to create a model that analyzes those documents from the perspective of their top underwriters, those who consistently have the best feel for the data points that indicate whether a company is an acceptable risk or an unacceptable risk. We've been able to define and codify those data points, so the model can lead the underwriter directly to the relevant text in those documents that reveals that critical information.

So now, when one of their underwriters sits down to start analyzing a company, he has a checklist and nearly all the information that he is responsible for knowing is right there in front of him, already highlighted. Not only is he more efficient, but he's also more accountable because the information that he's responsible for knowing has now been defined and is very much measurable.

As the company continues to acquire and track relevant information, Starr's underwriters can add it to their predictive models to identify where and how those data points correlate to risk or to opportunity. As machine learning improves underwriting models, it drives smarter decision-making. For example, an underwriter could review the historical record of various types of litigation to identify how they correlate to claims and problematic situations. Underwriters can score this data so they can identify specific risks for the models to flag so it can extract related commentary.

Another insurance client recently tasked us with tracking diseases and epidemics. The company was trying to understand the path that an epidemic was taking by analyzing how people were talking about it—first in the news, second in social media and finally within the academic and scientific communities. We created a tracking model that brought together all three views to help the insurer separate true emerging epidemics from controlled diseases that were merely getting overblown in the news media or going viral in social media.

3. Track sentiment on political and economic issues.

Amenity was recently approached by a large investment bank to monitor news and conversations related to trade wars and flag changes in the tone of policy makers. For this project, we conducted a dynamic analysis of social media conversations and news statements regarding trade and tariff issues that were being made by major players in political and economic arenas, including Donald Trump, Steve Mnuchin, Robert Lighthizer and Wilbur Ross.

The trick in monitoring social media—as well as monitoring increasingly fragmented traditional media outlets and blogs—is cutting through noise to find data that is truly relevant to the specific topic. We identified and scored trade-related terms in key regions of the world, looking at equity, currencies, credit, and commodities. We were able to pull from unlimited sources and social media, cut the noise and false positives, and flag statements that were indicative of shifts in rhetoric or perspective.

4. Establish causality of market moves.

NLP is a useful tool for teasing out underlying factors of sudden movements in price or volume of trades in commodities, stocks, or currencies. Amenity was recently challenged by a client to sift through over 5 million news articles to discern what made the dollar move during a specific range of days. We were able to program our models and deliver an answer to our client in less than a week, via a dashboard of visualized data which enabled them to pinpoint the cause of each move.

We've created a similar dynamic analytic system for another client, centered around monitoring conversations related to cryptocurrencies. It processes discussions on cryptocoins to flag what is moving markets in each of them. We input Twitter's raw API, blogs and chatrooms that discuss cryptocurrency, and scraped various news sources such as Dow Jones and Reuters. We created a taxonomy of weighted topics to score meaningful data, so the system can pinpoint news and conversations that are directly connected to changes in coin prices as well as to buy and sell recommendations.

5. Prioritize documents for review.

In fact, Nasdaq partnered with Amenity to harness NLP technology for its regulatory compliance program. Today, Nasdaq's analysts spend about 60% of their workday reviewing the more than 48,000 SEC filings submitted by Nasdaq companies each year. While their compliance program effectively evaluates securities for compliance with quantitative requirements (e.g., equity), it has limited ability to facilitate the qualitative elements of an analyst's review (e.g., equity offerings, investigations). Nasdaq believes that our technology can improve efficiency and save time by helping them prioritize the filings that require manual review without compromising the integrity of the market.

***

One of the easiest ways for public companies to experiment with this technology is to use it to systematically analyze the earnings call transcripts of their competitors. Boards and executive leaders can use NLP technology to see at a glance what's going on in their industries with an incredible level of depth and granularity. They can monitor what all the companies in their space are saying about the competitive environment—not just in their specific industry, but up and down the supply chain as well.

Amenity has recently launched a new cloud-based software solution called Viewer, which enables any interested party to simply log on through Amenity's website and rapidly process earnings call transcripts and uncover real-time, actionable insights that can only be gleaned by analyzing massive numbers of complex documents at scale. Soon we will be adding SEC Filings, news, and research to Viewer.


***

Nathaniel "Nate" Storch is the Co-Founder and CEO of Amenity Analytics, a New York and Israel based provider of NLP analytical solutions and software. Nate is an experienced financial industry executive with nearly two decades as an investor and business builder. Before co-founding Amenity Analytics, he served as Managing Partner of Pilgrim Hill Capital, where he provided equity-related capital and strategic advice to small and mid-cap companies. Previously, Nathaniel served as Partner and Senior Portfolio Manager at Swieca Holdings/Talpion Fund Management, Partner and Head of Equities at One East Partners, and Head of Merger Arbitrage Research & Event-Driven Healthcare at Highbridge Capital Management.


 
diversity
Clearhouse
Learn How 6 Successful Women Earned a Seat at the Table
Publication Date: October 18, 2018

Aspiring women leaders gathered in New York City at Nasdaq's MarketSite last week to hear firsthand how successful women earned a seat at the table in some of America's most high profile public company boardrooms. They also heard how they too can join the pipeline of board-ready women and ascend to the next rung on the corporate ladder.

Nasdaq teamed up with ICR to host this event, which featured a dynamic slate of experienced women – all of whom are current or former C-suite executives. Between them, these accomplished women currently serve on more than a dozen boards:

  • Betsy Atkins, Board member of Cognizant (Nasdaq: CTSH), Wynn Resorts (Nasdaq: WYNN), SL Green Realty, Schneider Electric and Volvo
  • Coco Brown, Founder & CEO of The Athena Alliance
  • Zoe Cruz, Board member of Ripple and Man Group Plc and the former Co-President of Morgan Stanley
  • Rachel Glaser, Board member of The New York Times Company and CFO of Etsy (Nasdaq: ETSY)
  • Claudia Fan Munce, Board member of NEA, Best Buy, Bank of the West/BNP Parabis Group, and CoreLogic
  • Diane Neal, Board member of Fossil Group, Inc. (Nasdaq: FOSL) and former CEO of Sur La Table and Bath & Body Works

Following are six key takeaways from our distinguished guests:

Clearhouse

1) "Pay it forward." Betsy Atkins

To gain access to people in influential networks, you have to invest time and do something for them to prove you are valuable. Go out of your way to do a favor, make a meaningful introduction, or share useful information. For example, what can you do for some company in a private equity firm's portfolio? What door can you open? What presentation can one of those start-up companies make to your company that might result in buying their product or service?

You can't withdraw money from the bank until you put money in the bank. You have to forward invest with people, too. Don't ask for favors or introductions until you've proven you are worthy of making that withdrawal.


Clearhouse

2) "Get to know the power players." Coco Brown

In order to be in the right place at the right time to be discovered, women need to be part of the power networks. These are the networks of private equity firms, venture capitalists, CEOs and board members. Don't overlook advisory roles for companies backed by private equity, because they offer a fluid proving ground for board service and access to private equity networks.


Clearhouse

3) "Kiss a few frogs." Claudia Fan Munce

Consider helping a young company, which is basically a micro-version of a large company dealing with similar issues. There are incubators and accelerators in universities all over the country; there are local entrepreneurial programs in your communities. These organizations need people to bring skills because the little businesses they are nurturing can't afford to hire those skills.

Start engaging there and you will become known within what is actually a small network of investors and entrepreneurs. From there, you are in a better position to be tapped to advise larger start-up companies, privately funded companies and potentially a public board.

Hopefully your batting average is good. Then you will be elevated from startup advisor to advisor of a company that is now funded by a major institutional firm. You have to kiss a few frogs!


Clearhouse

4) "Bring more than your gender to the table." Diane Neal

Accept a board seat when you are respected for what you know, when you can identify how you will add value, and when you will grow in some way from the experience. The relationship won't work if you join a board that wants you just because you are a woman.


Clearhouse

5) "Take recruiter calls, even when you are happy with your job." Rachel Glaser

When you are ready to seek a board seat, it's important to reach out to the people who have mentored you and the board members of the companies you work for. Stay in touch, continue to be helpful to them, and make it known that you would like to be on a board. Plant those seeds with the people you like and know and trust.

Don't overlook recruiters. At The New York Times, board seats are filled by search firms. Take all those recruiter calls, even if you have no intention of leaving your current job, because a meaningful conversation that keeps you on their radar could lead to a spot on a board slate later.


Clearhouse

6) "Look abroad for opportunities to serve on boards." Zoe Cruz

In the U.K., the government has established targets for FTSE 350 companies that, by the year 2020, 33% of their board and leadership positions at be held by females. Many British companies are looking to head hunters to find women candidates to help meet these targets. When you call your favorite recruiting firms, they will claim to be global, but most are very regional. Ask to be introduced to their European counterparts and then go meet with them. It's well worth your while.


***
If you were not able to attend the event in person, a video recording of the entire event is available here; a description of each segment along with a video link is provided below.

Changing the Face of Corporate Boardrooms

While more women are joining corporate boards than ever before, some say progress is too slow with only 20% of board seats among Fortune 1000 companies filled by women. In this fireside chat, Diane Neal discussed with CNBC's Bertha Coombs the changing face of corporate boardrooms, reflecting on her experience as a female director to share insights into why gender diversity in board composition matters now more than ever.
Watch a video of this fireside chat here>>

Building the Modern Boardroom

From the leaders at the largest investment firms and pension funds to the limited partners of venture firms, there is a growing call for a new form of corporate governance. There is a lot that is changing. In her presentation, Coco Brown shared more about this transformation and elaborated on where the opportunities lie for women in the process.
Watch a video of Coco's Presentation here>>

Advancing C-Suite Women to Board Service

The panel, moderated by Stacie Swanstrom, engaged four highly accomplished women who have made an impact in the boardrooms and the C-suites of many high profile organizations, including Etsy, Wynn Resorts, Cognizant and Morgan Stanley. The conversation focused on leadership lessons and perspectives gained during their careers and provided the audience with practical, actionable intelligence that they could use to prepare themselves for board service.
Watch a video of the panel discussion here>>

View pictures from this event here>>

Learn from other Winning Women like Janet Hill and Candace Duncan here>>

***

ICR is a leading strategic communications and advisory firm with offices in New York, Norwalk, Los Angeles, Boston, San Francisco and Beijing. The firm pairs capital markets veterans with senior communications professionals, bringing deep sector knowledge and relationships to more than 500 clients in 20 industries.


 
spotlight
Clearhouse
Wynn Resorts: 7 Tactics to Cultivate a World-Class Employment Brand
Publication Date: October 4, 2018

It's been just eight months since Matt Maddox, CEO of Wynn Resorts (Nasdaq: WYNN), took the reins of the company following the abrupt departure of founder Steve Wynn following sexual misconduct allegations. During that short time, the company's board and leadership team have demonstrated they are serious about creating a workplace that fosters diversity and inclusion.

Perhaps the most public example of that commitment is the swift nomination and onboarding of three new women board members: Betsy Atkins, Dee Dee Myers and Wendy Webb. Nasdaq reached out to these newly-minted Wynn board members to learn more about the multi-faceted approach the company is taking to restore its employment brand and the trust of all its stakeholders, from shareholders to front-line employees.

They shared seven tactics Wynn has employed to emerge from the crisis stronger than ever—and with a world-class employment brand that maximizes its diverse talent pool.

1) Separate the CEO and Chairman roles.

When Steve Wynn stepped down, there was naturally concern that Wynn Resorts would have a difficult time separating the man from the brand—the very logo of the company is his signature. However, Matt Maddox, Wynn's new CEO, has spearheaded a smooth succession—in part because the board separated the roles of chairman and CEO when Steve Wynn stepped down.

The onboarding of a new CEO is a key opportunity for companies with a combined chairman/CEO role to consider separating that role. Wynn's board elected to split the roles, as they wanted to allow Matt to focus on leading the company through a potentially bumpy transition period. "Matt has taken this transition very seriously, devoting a lot of time in-person engaging with employees to listen to them and to share his vision for the company going forward," shared Betsy Atkins. "And when you look at the company's recent performance, Wynn hasn't missed a beat: The overall performance of the company has remained strong and the corporation continues to function smoothly."

2) Bring meaningful gender diversity to the board.

The Wynn Resorts leadership team committed to bringing a new perspective to company leadership and the board as the company turned its focus internally on gender diversity, inclusion, and sensitivity. The board recruited Betsy Atkins, Dee Dee Myers, and Wendy Webb through a very robust and transparent process, during which the entire board was fully engaged. Adding three new independent women directors placed the company among the top 40 of S&P 500 companies (by female board representation).

"There are mountains of evidence that show conclusively that diverse groups of decision-makers make better decisions. So diversifying the Wynn board quickly in the wake of Steve Wynn's departure was essential to navigating the crisis," said Dee Dee Myers. "Betsy, Wendy and I not only bring our unique perspectives and experiences to our roles, but we also bring new skills, and that has been helpful as the board develops and rolls out strategies to address a range of challenges, from improving workplace diversity and inclusion, to compliance, compensation and communications."

"Adding three new directors at once—let alone three new women directors—changes the dynamics in any boardroom," said Betsy Atkins. "However, we were warmly received, and the board's timing has allowed Dee Dee, Wendy, and me to be part of the launch of a whole new set of diversity and inclusion initiatives, both from an oversight as well as a participation standpoint. Wynn's board and leadership team are moving quickly to ensure the company and its employees come through this transition stronger than ever, and I'm thrilled to be a part of that work."

3) Recruit critical skillsets to the board.

With its new women board members, Wynn not only improved the board's gender profile, but added skillsets that will be instrumental in guiding the company going forward. Dee Dee Myers and Wendy Webb each have high PR profiles that can help to bolster Wynn's brand halo. They also bring critical crisis management, strategic communications and PR skillsets that the board can leverage to help Wynn communicate its new strategies and navigate the leadership transition smoothly.

Wynn Resorts is actually five businesses in one: entertainment, retail, hospitality, gaming, and dining, so there are myriad ways the company can leverage the talents and expertise of its new board members. Wendy spent 20 years as a senior executive at The Walt Disney Company, so she has an entertainment and direct-to-consumer perspective that is valuable on the Wynn Resorts board.

"I'm excited to bring to the Wynn Resorts board not only my experience in global travel & tourism learned over two decades at Disney, but also knowledge about the nuances associated with transitioning from a founder-led company to the next phase of professional management," said Wendy Webb. "Additionally, given my background in Investor Relations and Strategy, and through service on other public company boards, I recognize the importance of maintaining a sharp focus on creating value for shareholders. It is through this lens that I have approached my duties as a Wynn board member, while not losing sight of this company's culture and core values that make it a leading brand in the hospitality industry."

Dee Dee also brings considerable experience in public relations, messaging, transition management, and crisis management. She is currently executive vice president for worldwide corporate communications and public affairs at Warner Bros. Entertainment, so she is very familiar with the ripple effects of #MeToo issues.

Betsy Atkins' background as a veteran board member and a tech entrepreneur with experience with digital transformation, AI, branding, retail ecommerce and creating seamless omnichannel consumer experiences can be applied a number of ways to Wynn's business lines.

4) Benchmark the current culture.

The board and management team of Wynn are committed to having a workplace where every employee feels safe, supported, and has equal opportunities to develop his or her full potential. The first thing Matt and his leadership team did was benchmark the current culture.

Wynn conducted an employee-wide survey based on Fortune's "100 Best Companies to Work For" survey, adding questions related to diversity, working women, harassment, discrimination, and women's leadership opportunities to get a full baseline of how employees perceive the culture and working environment at Wynn Resorts. The leadership team has done a preliminary read-out of the results. Several focus groups have been created, each working on the departments that have the biggest impact on the employee base.

In addition, Wynn has engaged a compensation consultant to conduct a comprehensive pay equity study and a promotion equity study to review the rate of succession by gender and by ethnic groups. The company is also working with the Secretary of State of Nevada to participate in their gender equity workplace study.

"When I was approached about joining the board of Wynn Resorts, I quietly paid a visit to the Wynn Las Vegas property," said Betsy Atkins. "I wanted to get a read on its front-line employee base. Wynn is a premium hospitality company, delivering boutique luxury hotel service on a massive 4,000+ room scale—which means service employees are the core asset of the company's brand halo."

"At every level and every touch point at Wynn Las Vegas, I was consistently met with employees who were clearly happy to be working at Wynn and who truly cared about their customers. Whatever issues Wynn would face in the fallout of its founder stepping down, a demoralized and indifferent employee base wasn't one of them—a fact that reinforced my decision to join the company's board of directors."

5) Create a new division focused on leadership development.

Wynn has created a new division, the Culture and Community Department, which is specifically focused on leadership and development, diversity and inclusion, community relations, and gender equality. The entire 25,000 employee workforce of Wynn will feel the impact of the rollout of this division.

As part of this initiative, Wynn launched a Women's Leadership Council, and all four women directors (there was already one woman on the board, Patricia Mulroy) participated in the kickoff and will be involved going forward. The council will host town hall meetings, chats, and networking events to promote advancement of the female employee base.

Wynn is also expanding its already robust internal organizational development program to include leadership development curriculum that covers its broad employee base. There are classes that develop interns into first-time leaders, courses to develop supervisors and managers, courses for rising directors and senior VPs, and training for junior executives reporting to Wynn's C-suite.

6) Roll out a comprehensive compliance and education program.

Wynn Resorts has revisited and updated its internal employee "code of conduct" and associated training and taken that process a step further by adding specific diversity and inclusion courses. The content and complexity of the courses are tailored by the level of employee: directors and above take an eight-hour course, first-line managers or supervisors take a four-hour course, and line level employees in hospitality, restaurants or retail take a two-hour course.

The curriculum includes unconscious bias awareness, updated anti-sexual harassment and compliance training, and very comprehensive reporting training for management. An outside firm is implementing the program, which is supervised and owned at the senior level of Wynn's internal human resources and legal departments.

7) Rebuild trust with shareholders and foster support for long-term strategies.

As Wynn's leadership team began rolling out internal strategies to bolster trust with employees and consumers, the board participated directly in the most recent proxy outreach season. The goal was to update shareholders on how the company's leadership team is navigating the leadership transition and to generate support for the new long-term strategies the company is implementing to ensure the employee brand is strong.

Board members had face-to-face conversations with several big index funds, including Vanguard, State Street Global Advisors and BlackRock. Along with Wynn's general counsel and CFO, board members also had conversations by phone with institutional shareholder corporate governance and proxy voting groups.

***

Wynn Resorts (Nasdaq: WYNN) is a $16 billion developer and operator of premium resorts and casinos.

Betsy Atkins serves as President and Chief Executive Officer at Baja Corp, a venture capital firm. She is currently 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.

Margaret J. "Dee Dee" Myers has been Executive Vice President, Worldwide Corporate Communications and Public Affairs for Warner Bros. Entertainment, a broad-based entertainment company and division of TimeWarner, Inc., since September 2014. She also serves on the board of the National Museum of American History. Myers served as White House Press Secretary under President Bill Clinton during his first term.

Winifred "Wendy" Webb has been Chief Executive Officer of Kestrel Corporate Advisors, an advisory services firm counseling corporate and non-profit organizations on strategic business issues, including growth initiatives, digital marketing, board governance and investor relations, since February 2013. Ms. Webb currently serves on the Boards of ABM Industries (since 2014) and 9 Spokes (since 2015). She also serves as Co-Chair of Women Corporate Directors, Los Angeles/Orange County Chapter.


 
leadership
Clearhouse
Bridging the Confidence Gap in the Leadership Pipeline
Publication Date: September 12, 2018

Nasdaq's Winning Women series seeks to share the insights of successful business women from inside the boardroom and C-suite.

In the second of our series on Winning Women, Caren Merrick, veteran director and entrepreneur, spoke with fellow veteran board member Candace "Candy" Duncan about the important role confidence plays in getting women to the next rung of the corporate ladder. As a former Managing Partner at KPMG who has gone on to serve on several high-profile public company boards, including FTD Companies, Inc. (Nasdaq: FTD), Discover Financial Services, and Teleflex Incorporated, she has unique insights on how to help build confidence in corporate America's pipeline of emerging female leaders.

During her conversation with Caren, Candy shared key insights gleaned from decades of experience as a corporate leader and mentor.

Gender parity is a business issue, not a "woman's issue." The statistics tell a very vivid story; consider for example the Credit Suisse report that revealed that the top 50% of companies with female CEOs experienced returns on equity that are on average 19% higher. Boards are becoming aware that they will have a more powerful team sitting around the table, and hopefully a more positive impact on the bottom line, as they bring more diversity to the boardroom. Technical skills and professional experience continue to be paramount, but boards also need global, regional, ethnic and gender-based perspectives to ensure companies stay relevant.

There is no lack of women qualified to lead, but I have noticed during my career that women sometimes lack the confidence to step up onto the next rung of their careers. "Confidence is the stuff that forms thoughts into action." That quote is from The Confidence Code, a book about self-assurance written by Katty Kay and Claire Shipman. It's been my experience that action begets confidence—and many women wait too long to seize opportunities that will help them grow professionally.

Those of us who have made it to the C-suite and the boardroom can have a real impact on the confidence factor. While this isn't exclusively a female issue, it is more prevalent in females than in males. Here are three ways we can help nurture a pipeline of women who are confident and action-oriented leaders.

#1   Encourage talented women in your company's pipeline to pursue challenging roles.

Women in the management pipeline need to be given opportunities to take risks, to make mistakes, to fail—which also gives them opportunities to gain confidence. I noticed a number of times during my career that when a male and female candidate were each asked to apply for a promotion that required multiple skillsets, the woman saw that opportunity very differently. She looked at the list of ten skillsets and said, "You know, I'm only really good at eight of these. Give me another six months, give me another year, I'll get the other two mastered." The male looked at the same list and said, "Great, I'm really good at four! No problem, I'll learn the other six on the job."

Oftentimes the female candidate who hesitates just needs a bit of a push. Obviously, someone thought she was ready, or she wouldn't be considered for the position. More than once during my own career at KPMG, I was asked to take on a role and my immediate response was, "I'm not sure I'm ready for that." I was lucky, because the individuals in those instances said, "Think about it, I'll call you back tomorrow." And in in the meantime, they called my immediate supervisor and said, "Get her straight. She needs to do this." Not everybody has that kind of support in their companies.

Managers should be aware of this "readiness=perfection" mindset and how it can make good candidates hesitate to take on challenging roles, so they are prepared to give them a nudge in the right direction.

#2   Sponsor and mentor high potential women.

Sponsors and mentors are important career catalysts for emerging leaders. I personally had different sponsors and mentors along the course of my career, and I've been a mentor and sponsor myself. These aren't necessarily lifelong relationships, as people need different kinds of coaching and sponsorship throughout their careers.

If you've never served as a mentor, consider it. These relationships are so beneficial to companies because they are a two-way street: My mentees have given me insights into team dynamics issues, industry specific knowledge and ways to use emerging technologies. When I was an audit partner, I'd often sit next to the most junior person in the audit room and tell them to teach me two things by the end of the day. It was amazing how my technology skills soared as they taught me shortcuts and ways to leverage new software platforms.

Sponsors and mentors serve different purposes. A sponsor is often a level or two higher than a mentor. A sponsor's role is to push female leaders to their next challenge. As a sponsor, you make pivotal comments when that woman is not in the room, sharing that she is ready for the next responsibility, the next opportunity. You know her well enough to say, "I think Candy would do a great job at this. She's already done A, B, and C, so D, E, F, and G will follow naturally." And you likely do some coaching and help her make connections to get ready for that next position.

A mentor, on the other hand, is closer on the management ladder to their mentees; likely they mentor direct reports or other professionals who work elsewhere in the company or industry at the same level as their direct reports. As a mentor, you talk your mentees through different issues as they grow and stretch into new responsibilities and challenges. You help them navigate those growth opportunities. You are probably one of the first to know when she makes mistake and one of the first to know when she does something really good. You have the ability to coach, guide and provide constant feedback on a real-time basis.

How did I find these people? Sometimes the relationships happened organically, sometimes they came to me for help and sometimes I was supervising individuals who I thought had the potential to go far. I felt responsible for helping them become even better than I was, because the company as a whole wins when we have a really strong team.

#3   Keep a mental list of female colleagues to recommend for board seats.

Women on boards are in an excellent position to help other women be recruited for board service. Women board members are often approached to join additional boards, at times by companies that may not be a good fit for any number of reasons: we may be over-boarded, or the timing isn't right, or there is too much overlap between multiple company board and committee meeting calendars. When these situations come up, it's important to be prepared to put someone else's name forward, someone who is ready for board service but perhaps not yet on the radar.

Twice I've been approached to join new boards at a time when I was already serving on three others. Both times I declined, but quickly made introductions to alternative female candidates who were very talented and had similar audit practice backgrounds and experiences to my own. Both women were ultimately voted onto those boards.

We all know women who are very similar to ourselves. Women executives have deep networks of female colleagues through the workplace, through professional associations, and through our involvement with women's leadership and advocacy groups like Catalyst, National Association of Corporate Directors, Paradigm for Parity, Committee of 200, and Women Corporate Directors. If you don't belong to one of these groups, look into joining one. Women at the top can—and should—facilitate the process of scoping for talent outside of the normal viewing lens and make introductions to the decision-makers who choose board members.

Now is such an exciting time to be a young professional woman in corporate America. Never before has the younger generation had so many skillsets and competencies that older executives and board members need to stay relevant. The emergence of new technologies within critical domains, such as cyber security, risk management and social media, has opened up unprecedented opportunities for talented young professionals (women included) to move up in the corporate ranks quickly, and move into the boardroom as well.

If I could give rising female professionals who aspire to the C-suite and the boardroom one key piece of advice, it would be this: Don't be afraid to speak up, your voice needs to be heard. If more and more women speak up, we are going to find ourselves in a very different place than we were 40 years ago.

Read the first of our Winning Women series featuring Janet Hill here >> 

***

Candace Duncan serves on the board of directors of Discover Financial Services, Teleflex Incorporated and FTD Companies (Nasdaq: FTD). Candy served on the KPMG LLP board of directors from 2009 to 2013, where she chaired the board's nominating committee and partnership and employer of choice committee. She retired from KPMG in November 2013 where she was Managing Partner of the Washington, DC Metropolitan Area since 2009. She is also a member of the National Association of Corporate Directors, International Women's Forum, C200, and Women Corporate Directors.

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 Gladstone Companies (Nasdaq: GAIN, GLAD, GOOD, LAND) and the Metropolitan Washington Airports Authority. 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.

 


 
boards
Clearhouse
Four Essential Elements for Optimizing Your Board's Meeting Agenda
Publication Date: August 13, 2018

As board portal tools streamline—or in some cases completely eliminate—administrative tasks on the board's meeting agenda, valuable meeting time is recaptured for the board to focus on core fiduciary duties. A well-structured meeting agenda leverages that additional time to maximize productivity in the boardroom.

In this post designed to help Chief Governance Officers build a better governance framework, Joan Conley, Nasdaq Senior Vice President and Corporate Secretary, shares the four essential elements of an effective board agenda.

Each company's optimal board agenda is dependent upon a variety of factors, including how often the board meets, how long the board meets, and how prepared board members typically are. At Nasdaq, we find that these variables can be transcended by making executive and chairman sessions standard protocol for each meeting. We also utilize an extended agenda for every board and committee meeting.

Board meeting agendas at Nasdaq are of course built within the company's secure board portal, where they are accessible to the board (and committee) chairs and archived as part of the corporate record. Nasdaq's playbook for creating an effective board agenda includes the following essential elements.

1. Executive sessions. Nasdaq board members have a standing invitation to hold executive sessions before and/or after the general board meeting. These brief sessions (typically 30 minutes or less) are attended by independent directors only, without the CEO or a corporate governance officer in attendance.

Executive sessions provide an opportunity for board members to discuss internal issues that may have cropped up since the previous meeting, or recent developments impacting corporations on a national or global level. If the consensus is that certain areas of concern or particular interest merit deeper discussion, the directors then share those with the CEO during the chairman session or general session.

2. Chairman sessions. These sessions may be longer than executive sessions, lasting up to 60 minutes. Chairman sessions at Nasdaq are attended by all directors (including the CEO) and by the Corporate Secretary.

During the chairman session, each committee chair reports on matters discussed and issues of importance to the committee. The CEO highlights key areas of focus for the board meeting, and then asks directors to candidly share any current concerns. The CEO is debriefed on topics of interest raised during the executive session so he or she can offer perspective on which items are relevant to the company and should be added to the general session agenda. Committee meeting reports, which are highly confidential, are an important component of the chairman session.

3. Regular session. This general board session includes the participants of the chairman sessions, as well as any executive staff or department heads called upon provide reports and/or updates. The board reviews the corporate strategy, receives updates on strategic initiatives, reviews quarterly or annual financials, and discusses new and emerging issues.

The goal of optimizing the board meeting agenda is to ensure directors receive all pertinent information required to carry out their fiduciary duties, that they have a voice in the decision-making process, and they make the highest and best use of meeting time. The order and length of each session within a board meeting agenda will differ from company to company and even meeting to meeting, depending upon the scheduling needs of the board and topics to discuss.

4. Extended agenda. An "extended agenda" is a highly effective tool that keeps board discussions focused and ensures directors are fully engaged.

The extended agenda is the basic meeting agenda with a script and attendance list embedded into it. This tool is used by the chair as he or she presides over meetings. The script outlines what should take place, the order of meeting sessions, and who should be there. It references specific page numbers of board materials and slide decks, and includes the standard template language required to process through the meeting agenda, including opening remarks, motions, action items, invitations for additional questions, and dismissal of staff between committee reports. The extended agenda is finalized during meeting prep sessions with the board chairman, the CEO, and each committee chairman.

The extended agenda facilitates better board meetings by allowing meeting chairs to participate in discussions without the distraction of keeping Roberts Rules of Order top of mind. Nasdaq's extended agenda is a tool our board chairs find so useful, they often carry it over to other corporate boards on which they serve. It has a tangible benefit to the chief governance officer as well, serving as a robust outline for drafting the board meeting minutes.

For more insights from Joan Conley, read:

Seven Tactics to Engineer Better Boardroom Dynamics >>

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.


 
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IN CASE YOU MISSED IT!
In the News
ISS Announces 2019 Benchmark Policy Updates
Publication Date: November 26, 2018

Institutional Shareholder Services Inc. (ISS) released updates to its 2019 benchmark proxy voting policies for the Americas, EMEA, and Asia-Pacific regions. The updated policies will generally be applied for shareholder meetings on or after Feb. 1, 2019. Among the updates is a new voting policy with respect to U.S. companies with no female directors serving on their boards, with a year's grace period before implementation. The new policy, effective for meetings on or after Feb. 1, 2020, will be applicable for companies in either the Russell 3000 or S&P 1500 indices. After the year-long grace period, adverse voting recommendations may be issued against nominating committee chairs (or other directors who are responsible for board nomination process) on boards with no gender diversity. To help market participants understand the nature and scope of the 2019 policy updates, ISS staff will host an informational webcast on November 29 at 11:00a.m. EST.

Read more >>

Register for the ISS webcast >>


Society for Corporate Governance Complimentary Directors' Cut Newsletter
Publication Date: November 1, 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 Q3 >>

Subscribe to the newsletter >>


SEC Investigative Report: Public Companies Should Consider Cyber Threats When Implementing Internal Accounting Controls
Publication Date: October 29, 2018

The Securities and Exchange Commission recently issued an investigative report cautioning that public companies should consider cyber threats when implementing internal accounting controls, calibrate their internal accounting controls to the current risk environment and assess and adjust policies and procedures accordingly. The report is based on the SEC Enforcement Division's investigations of nine public companies that fell victim to cyber fraud, losing millions of dollars in the process.

Read more >>


SEC Announces New Strategic Plan
Publication Date: October 29, 2018

The Securities and Exchange Commission recently announced its strategic plan to guide the agency's work over the next four years, with a primary focus on investors, innovation, and performance. SEC Chairman Jay Clayton, described the plan as, "a concise, straight-forward explanation of the goals that will guide us as our markets evolve" and stated that it is based on the core value of "serving long term Main Street investors."

Read more >>


Webcast Transcript: Nasdaq Speaks – Latest Developments & Interpretations
Publication Date: October 8, 2018

On September 6, 2018, TheCorporateCounsel.net hosted Nasdaq Speaks: Latest Developments & Interpretations. John Zecca, Senior Vice President, General Counsel North America and Chief Regulatory Officer and other senior Nasdaq Regulation Staff discussed the latest that Nasdaq-listed companies need to know including recent initiatives, rule changes, resources and practice pointers. A transcript of the webcast is now available.

Read the transcript >>



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