CGLytics supports responsible investing with NN Investment Partners

CGLytics supports responsible investing with NN Investment Partners (NN IP) helping investors to deliver attractive returns and build a sustainable future.

NN Investment Partners (NN IP) is helping investors to realise their responsible investing goals, deliver attractive returns and helps build a sustainable future.

NN IP is a leader in responsible investing, monitoring assets for a diverse group of clients worldwide. NN IP sees responsible investing as the best way to enhance risk-adjusted returns and to contribute to society as a whole. With a founding belief that companies with sustainable business practices and high standards of corporate governance will become the success stories of the future, they produce their annual Responsible Investing Report.

In their latest report NN IP highlight their responsible investing approach, show how they help their clients achieve their financial and sustainable goals, and what they can look forward to in the future.

CGLytics is proud to support NN IP with governance data and analytics for the ESG research and reporting in their 2018 report.

Download NN Investment Partners Responsible Investing Report 2018 here.

Latest Industry News, Views & Information

Equity Incentive Schemes: Examining the rationale behind shareholder rejection

Two historical examples of organizations that have had their stock option plans rejected by shareholders include Red Lion Hotels and HomeAway. How could they have reduced the likelihood of rejected plans? Read to find out

The increasing popularity of linking equity compensation to socially responsible practices

Social responsibility is an increasing priority for corporates, reflecting changing pressures from stakeholders and society. In this article CGLytics looks at the trend of linking executive equity compensation to responsible social practices.

The Effect of Executive Departures on Company Performance

The Executive Management Team plays a pivotal role in the performance of a company. The dismissal or exit of one or more executives is often accompanied by a change in strategy. However, this isn’t always perceived as a positive change by investors.

Interlocking Directorates: Looking for signs of collusion, conflict of interest and overboarding

Conflicts of interest, collusion and the overboarding of directors have been known to grab the attention of the biggest media outlets. As many companies are unfortunately aware. How can this be avoided right from the start?

Conflicts of interest, collusion and the overboarding of directors on publicly listed companies have been known to grab the attention of the biggest media outlets. As many companies are unfortunately aware, this unwanted attention raises questions, creates risk to a company’s reputation, gains attention from activist investors, and can ultimately affect the value of company shares. However, there is a way that all of this can be avoided right from the start.

Interlocking directorates are nothing new. It occurs when two firms share a common director, and the tie or connections that he/she creates is also referred to as a board interlock.

Although lawful and not illegal, it does raise questions about the independence of decisions made in the boardroom and can be seen by the U.S. Federal Trade Commission (FTC) as an anti-competitive practice prompting an investigation.

As stated by the FTC it is their responsibility to, “take(s) action to stop and prevent unfair business practices that are likely to reduce competition and lead to higher prices, reduced quality or levels of service, or less innovation”.

WHEN INTERLOCKS BECOME A CONCERN

An example of where interlocks became a concern for the FTC was during 2009. During this year Apple’s director Arthur Levinson abruptly resigned his seat on Google board following pressure from regulators. Following the announcement FTC’s chairman praised Google and Levinson “for their willingness to resolve our concerns without the need for litigation”.

That same year also saw Google’s Eric Schmidt resign from Apple’s board, three years after accepting a seat.

Eric Schmidt
Eric Schmidt resigns from Apple’s board in 2009

It’s important to mention that prior to these resignations, the FTC had been looking into whether interlocking directorates between Google and Apple raised competitive issues. These competitive issues may have violated U.S. antitrust laws.

The only safe way for companies to avoid situations of interlocking directorates that prompt investigation is by having oversight of every board members’ seats on other companies. By gaining this oversight companies can instantly see any risks or red flags, which are likely already on the radar of investors with governance issues coming under greater scrutiny of late.

This is also hugely important when a company makes new appointments to their board, or an existing director takes on additional responsibilities. Without oversight, companies might be opening themselves up to governance risk and wider liability.

 

CGLytics online solution provides instant information about a company’s board composition, director skills and expertise, as well as interlocking directorates for corporations, investors and advisors.

 

Interlocking directorates are common. It is not new. Most directors will have other board positions across one or more industry, however with highly confidential information that they are privy to, it is vital to identify potential conflicts of interest.

That being said, interlocking directorates can be indicators of the following:

– Collusion: Two or more members of the board holding appointments on another board and using this connection to influence the decision-making away from the best interests of either company.

– Conflict of interest: Directors with specific industry experience will often sit on boards that could be in competition. This can lead to questions from investors on if these board members are performing their duties in the best interests of the company.

– Overboarding: Directors must have the adequate time to devote to their duties of providing oversight for a company. US Proxy Advisory standards state that a director is considered to be overboarded when he/she is a non-executive director and sits on more than five boards, or he/she is an executive director and sits on more than three boards.

– Chairmen of the board are expected to spend double the amount of time as a NED and are considered overboarded with one chair and three other NED roles.

By identifying whether a board member is also on the board of a potential competitor (sometimes inevitably in niche markets where experience is necessary), or if two or more members of the board sit on the same board of another company, is vital for the nomination and governance committees to be aware and ensure that they have the correct policies and procedures in place, as regulators, investors and activists are constantly monitoring.

THINK LIKE AN ACTIVIST

Activist investor campaigns are continuing to show a year-on-year increase with more focus being placed on the composition of the board and the board members existing commitments. Leading investors are voting against the re-appointment of directors who are perceived to be overboarded. In addition, never before has there been as much scrutiny on the skills that a director brings to the board.

Activist investors are using CGLytics’ data and analytics for assessing the board effectiveness of listed companies worldwide.

 

With deep insights into how boards are composed in the CGLytics platform, and a skills matrix applied consistently across all companies in its universe, activist investors easily benchmark a board and assess if its compliant with regulatory and stewardship codes, hence see if there is any reputational risk.

Companies can access these very same insights in the CGLytics platform.

Corporate issuers, their boards and stakeholders can see exactly how they are perceived by activist investors. CGLytics is helping to promote good governance through transparency to the market. View director interlocks, see how board composition compares to competitors and raise concerns of any red flags. Identify any potential skills gaps and be proactive in succession planning, with access to a database of 125,000+ executive profiles draw from 5,500+ publicly listed companies across 40 indexes and 24 countries.

Curious to see how companies are viewed through the eyes of an activist investors? Click here

 

RESOURCES

https://www.ftc.gov/enforcement/anticompetitive-practices

https://www.reuters.com/article/us-google/arthur-levinson-quits-google-board-appeasing-ftc-idUSTRE59B2R120091012

https://techcrunch.com/2009/08/03/google-ceo-eric-schmidt-resigns-from-apple-board-surprised/

Latest Industry News, Views & Information

Equity Incentive Schemes: Examining the rationale behind shareholder rejection

Two historical examples of organizations that have had their stock option plans rejected by shareholders include Red Lion Hotels and HomeAway. How could they have reduced the likelihood of rejected plans? Read to find out

The increasing popularity of linking equity compensation to socially responsible practices

Social responsibility is an increasing priority for corporates, reflecting changing pressures from stakeholders and society. In this article CGLytics looks at the trend of linking executive equity compensation to responsible social practices.

The Effect of Executive Departures on Company Performance

The Executive Management Team plays a pivotal role in the performance of a company. The dismissal or exit of one or more executives is often accompanied by a change in strategy. However, this isn’t always perceived as a positive change by investors.

Corporate governance and executive pay: A joint report with PwC

PwC Belgium and CGLytics have joined forces to analyse the current corporate governance and executive pay landscape in Belgium and Luxembourg, helping companies better prepare for the 2019 proxy season.

Corporate governance and executive pay: Corporate governance and executive pay

PwC Belgium and CGLytics have joined forces to help companies better prepare for the 2019 proxy season.

The report analyses the current corporate governance and executive pay landscape in Belgium and Luxembourg, to help Remuneration Committees, and their Executive Compensation and Governance Professionals better understand shareholders’ concerns and make sure they are prepared for any upcoming challenges.

Access the report and learn about:

How SRD II will impact EU listed companies including disclosure requirements of CEO-to-employee pay ratio and fairness of pay

The evolution of CEO realised variable remuneration (base salary, STIs and LTIs) in the Selected Index (Bel 20 & LuxX) from 2009 to 2017

Companies in the Index that show a strong alignment of their CEO pay compared to their TSR over both one and three years, with the most aligned being Groupe Bruxelles Lambert SA, Orange Belgium S.A. and Proximus PLC

Board composition of companies in the Index including board size, age and percentage of women on each board.

Download the report now to be fully prepared for the proxy season ahead.

DOWNLOAD THE REPORT

Latest Industry News, Views & Information

  • All
  • Blog

Equity Incentive Schemes: Examining the rationale behind shareholder rejection

Two historical examples of organizations that have had their stock option plans rejected by shareholders include Red Lion Hotels and HomeAway. How could they have reduced the likelihood of rejected plans? Read to find out

The increasing popularity of linking equity compensation to socially responsible practices

Social responsibility is an increasing priority for corporates, reflecting changing pressures from stakeholders and society. In this article CGLytics looks at the trend of linking executive equity compensation to responsible social practices.

The Effect of Executive Departures on Company Performance

The Executive Management Team plays a pivotal role in the performance of a company. The dismissal or exit of one or more executives is often accompanied by a change in strategy. However, this isn’t always perceived as a positive change by investors.

Revolution in Italian Companies Ownership Structure – 2019

Italy has been well known for its ‘Relational capitalism’. CGLytics take a look at the revolution taking place in Italian Corporate Governance.

Revolution in Italian Companies Ownership Structure – 2019

Italy has been well known for its ‘Relational capitalism’. CGLytics take a look at the revolution taking place in Italian Corporate Governance.

DOWNLOAD THE REPORT

Latest Industry News, Views & Information

  • All
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Equity Incentive Schemes: Examining the rationale behind shareholder rejection

Two historical examples of organizations that have had their stock option plans rejected by shareholders include Red Lion Hotels and HomeAway. How could they have reduced the likelihood of rejected plans? Read to find out

The increasing popularity of linking equity compensation to socially responsible practices

Social responsibility is an increasing priority for corporates, reflecting changing pressures from stakeholders and society. In this article CGLytics looks at the trend of linking executive equity compensation to responsible social practices.

The Effect of Executive Departures on Company Performance

The Executive Management Team plays a pivotal role in the performance of a company. The dismissal or exit of one or more executives is often accompanied by a change in strategy. However, this isn’t always perceived as a positive change by investors.

How will Engagement on Executive Pay Evolve in 2019?

On the 28th February, Aniel Mahabier, CEO of CGLytics, was joined by Andrew Gebelin, VP Research, Engagement and Stewardship of Glass Lewis, to discuss some of the key themes and trends that will impact the way companies and their investors engage over executive pay in the 2019 Proxy Season.

How will Engagement on Executive Pay Evolve in 2019?

A joint webinar with CGLytics and Glass Lewis

On the 28th February, Aniel Mahabier, CEO of CGLytics, was joined by Andrew Gebelin, VP Research, Engagement and Stewardship of Glass Lewis, to discuss some of the key themes and trends that will impact the way companies and their investors engage over executive pay in the 2019 Proxy Season.

During the session we looked at three key elements:

The focus on quantum payouts
The shift towards sustainable performance measurement
The battle between performance formulas and simplification

Complete the form to watch the webinar recording.

WATCH THE WEBINAR

Latest Industry News, Views & Information

  • All
  • Blog

Equity Incentive Schemes: Examining the rationale behind shareholder rejection

Two historical examples of organizations that have had their stock option plans rejected by shareholders include Red Lion Hotels and HomeAway. How could they have reduced the likelihood of rejected plans? Read to find out

The increasing popularity of linking equity compensation to socially responsible practices

Social responsibility is an increasing priority for corporates, reflecting changing pressures from stakeholders and society. In this article CGLytics looks at the trend of linking executive equity compensation to responsible social practices.

The Effect of Executive Departures on Company Performance

The Executive Management Team plays a pivotal role in the performance of a company. The dismissal or exit of one or more executives is often accompanied by a change in strategy. However, this isn’t always perceived as a positive change by investors.

Shining the Light on CEO Pay Practices – 2018 AEX Proxy Review

In preparation for this year’s proxy season, CGLytics is releasing its annual AEX proxy review, providing key takeaways from 2018 and setting out what will be topping agendas in 2019. Learning from key issues last season, as presented in this report, ensures corporations will be fully prepared to engage with investors confidently.

SHINING THE LIGHT ON CEO PAY PRACTICES:
2018 AEX Proxy Review

In preparation for this year’s proxy season, CGLytics is releasing its annual AEX proxy review, providing key takeaways from 2018 and setting out what will be topping agendas in 2019. Learning from key issues last season, as presented in this report, ensures corporations will be fully prepared to engage with investors confidently.

2018 PROXY SEASON HIGHLIGHTS

Last season saw some notable highlights given it was the first year that AEX companies had to comply with the revised Dutch Corporate Governance Code 2016* (the Code). The Code requires companies to detail how they will “create long-term value for all stakeholders”. The amendments pushed companies to reveal information about their internal culture and prompted them to provide greater clarity on how their strategies would result in long-term value creation for all stakeholder groups.

Disclosure of CEO-to-average employee pay ratios became mandatory as a result of the amended Code, and more Dutch listed companies included this in their 2017 annual report. The pay ratios varied widely last year and showed that a uniform methodology is needed in order to calculate pay ratios of executives to employees fairly, given companies’ presence in multiple geographic locations.

Nine of the 25 AEX companies submitted remuneration reports containing proposals to be voted on. Of the nine, five companies had over 15% vote against the proposals and three of these faced more than a quarter in dissenting votes.

Of the past years’ proposals to amend executive and supervisory directors’ remuneration, the majority encountered some criticism and a portion were withdrawn prior to the AGM. Those proposals not withdrawn encountered substantial shareholder dissent.

The study performed by CGLytics shows that 44% of the 25 AEX companies are considered misaligned between pay and performance over a one-year basis. On a three year basis, this was reduced to 38%.

Download the report to find out more.

DOWNLOAD THE REPORT

Latest Industry News, Views & Information

  • All
  • Blog

Equity Incentive Schemes: Examining the rationale behind shareholder rejection

Two historical examples of organizations that have had their stock option plans rejected by shareholders include Red Lion Hotels and HomeAway. How could they have reduced the likelihood of rejected plans? Read to find out

The increasing popularity of linking equity compensation to socially responsible practices

Social responsibility is an increasing priority for corporates, reflecting changing pressures from stakeholders and society. In this article CGLytics looks at the trend of linking executive equity compensation to responsible social practices.

The Effect of Executive Departures on Company Performance

The Executive Management Team plays a pivotal role in the performance of a company. The dismissal or exit of one or more executives is often accompanied by a change in strategy. However, this isn’t always perceived as a positive change by investors.

2017-2018 S&P 500 Review: Increasing Boardroom Diversity

The CGLytics report, Increasing Boardroom Diversity – 2017-2018 S&P 500 Review, describes the current boardroom composition of S&P 500 companies through comparative data captured between 2017 and 2018, evaluating the progress made and the likelihood of achieving greater diversity in the coming years.

2017-2018 S&P 500 Review: Increasing Boardroom Diversity

Pressure is continuing to build for S&P 500 companies to step up the pace in their board refreshment initiatives in order to catch up with their global peers.

The CGLytics report, Increasing Boardroom Diversity – 2017-2018 S&P 500 Review, describes the current boardroom composition of S&P 500 companies through comparative data captured between 2017 and 2018, evaluating the progress made and the likelihood of achieving greater diversity in the coming years. The report addresses diversity by gender and age – comparing the degree of diversity seen in accordance to sector. The report also reflects on current problems with “overboarding” and how to ensure directors have the availability to serve responsibly.

5 Key Takeaways:

Boards got bigger, with average number of members rising to 11 (from 10 in 2017)

One-third of new appointments were women

All but one company absent a female director in 2017 corrected this in 2018

The average age of all boards increased to 63.5 years old

Data reveals certain companies benefited from adding younger directors to their board

Download the report to learn more.

DOWNLOAD THE REPORT

Latest Industry News, Views & Information

  • All
  • Blog

Equity Incentive Schemes: Examining the rationale behind shareholder rejection

Two historical examples of organizations that have had their stock option plans rejected by shareholders include Red Lion Hotels and HomeAway. How could they have reduced the likelihood of rejected plans? Read to find out

The increasing popularity of linking equity compensation to socially responsible practices

Social responsibility is an increasing priority for corporates, reflecting changing pressures from stakeholders and society. In this article CGLytics looks at the trend of linking executive equity compensation to responsible social practices.

The Effect of Executive Departures on Company Performance

The Executive Management Team plays a pivotal role in the performance of a company. The dismissal or exit of one or more executives is often accompanied by a change in strategy. However, this isn’t always perceived as a positive change by investors.

Shaping up the Scandinavian Governance Landscape

Download the Shaping up the Scandinavian Governance Landscape guide to ensure you know the latest changes and regulations.

Shaping up the Scandinavian Governance Landscape

Corporate governance in Europe has evolved with the introduction of various regulations to shape up the landscape.

In 2007 The Shareholders’ Rights Directive was introduced as a means of strengthening company boards, increasing disclosures and information flow, as well as encouraging shareholders’ oversight. Further notable changes to improve the Scandinavian corporate governance landscape are currently in play.

Download the Shaping up the Scandinavian Governance Landscape guide to ensure you know the latest changes and regulations.

DOWNLOAD THE REPORT

Latest Industry News, Views & Information

  • All
  • Blog

Equity Incentive Schemes: Examining the rationale behind shareholder rejection

Two historical examples of organizations that have had their stock option plans rejected by shareholders include Red Lion Hotels and HomeAway. How could they have reduced the likelihood of rejected plans? Read to find out

The increasing popularity of linking equity compensation to socially responsible practices

Social responsibility is an increasing priority for corporates, reflecting changing pressures from stakeholders and society. In this article CGLytics looks at the trend of linking executive equity compensation to responsible social practices.

The Effect of Executive Departures on Company Performance

The Executive Management Team plays a pivotal role in the performance of a company. The dismissal or exit of one or more executives is often accompanied by a change in strategy. However, this isn’t always perceived as a positive change by investors.

Review of FTSE 100 2018 Proxy Season – Getting ready for next proxy season

The report provides boards with key insights and takeaways from the 2018 proxy season, in order to aid preparation and ensure companies are adequately prepared to engage.

Getting Ready for the Next Proxy Season: 2018 FTSE 100 Proxy Review

In preparation for the 2019 proxy season, CGLytics has released its third annual FTSE 100 Proxy Season report. The report provides boards with key insights and takeaways from the 2018 proxy season, in order to aid preparation and ensure companies are adequately prepared to engage.

Key Takeaways:

The 2018 proxy season saw a higher dissent from shareholders on director re-elections than previous years. This sends a strong message to directors that they will be held directly accountable for their individual actions.

The report highlights an increasing focus from investors on key governance issues such as disclosure quality, director election, board effectiveness, CEO pay and Environmental Social Governance (ESG) practices.

Once again CEO pay continued to be a key theme with shareholders concerned with pay equity, transparency, executive pay levels, and pay for performance. In particular, pay for performance is a main area of concern for investors, and the CGLytics study shows that almost a third of the FTSE 100 companies have significant misalignment between pay and performance over a one and three year period.

DOWNLOAD THE REPORT

Latest Industry News, Views & Information

  • All
  • Blog

Equity Incentive Schemes: Examining the rationale behind shareholder rejection

Two historical examples of organizations that have had their stock option plans rejected by shareholders include Red Lion Hotels and HomeAway. How could they have reduced the likelihood of rejected plans? Read to find out

The increasing popularity of linking equity compensation to socially responsible practices

Social responsibility is an increasing priority for corporates, reflecting changing pressures from stakeholders and society. In this article CGLytics looks at the trend of linking executive equity compensation to responsible social practices.

The Effect of Executive Departures on Company Performance

The Executive Management Team plays a pivotal role in the performance of a company. The dismissal or exit of one or more executives is often accompanied by a change in strategy. However, this isn’t always perceived as a positive change by investors.

Lessons Learned: An insight into Europe’s 50 largest cap companies’ engagement & compensation practice

As companies and institutional investors have started preparations for the upcoming proxy season, a number of key points can be drawn from last year’s season.

Lessons Learned:

An insight into Europe’s 50 largest cap companies’ engagement & compensation practice

As companies and institutional investors have started preparations for the upcoming proxy season, a number of key points can be drawn from last year’s season.

DOWNLOAD THE REPORT

Latest Industry News, Views & Information

  • All
  • Blog

Equity Incentive Schemes: Examining the rationale behind shareholder rejection

Two historical examples of organizations that have had their stock option plans rejected by shareholders include Red Lion Hotels and HomeAway. How could they have reduced the likelihood of rejected plans? Read to find out

The increasing popularity of linking equity compensation to socially responsible practices

Social responsibility is an increasing priority for corporates, reflecting changing pressures from stakeholders and society. In this article CGLytics looks at the trend of linking executive equity compensation to responsible social practices.

The Effect of Executive Departures on Company Performance

The Executive Management Team plays a pivotal role in the performance of a company. The dismissal or exit of one or more executives is often accompanied by a change in strategy. However, this isn’t always perceived as a positive change by investors.