WeWork’s initial public offering

WeWork has had a tumultuous build-up to their IPO. Many investors were hesitant to back the company as their corporate governance policies did not meet their standards. CGLytics looks at some of the key factors that created controversy.

Preparing for an initial public offering (IPO) is often a strenuous undertaking. Companies strive to ensure that all their affairs are in order before they submit their S-1 filing to the SEC. This is done primarily to make sure that the initial public offering IPO is well received by investors.

WeWork

WeWork first filed its prospectus on August 14th 2019. Two main components of the filing prompted investor backlash. First and foremost, investors were alarmed at WeWork’s consecutive and increasing financial losses over the past three years. Secondly, investors took note of the company’s unusual governance practices. Although a justification could be provided for the financial losses, namely that they were essential to their growth strategy, no justification could be provided for the latter. With lazy governance practices increasingly linked to poor company performance, WeWork responded by making sweeping changes to assuage concerns.

Women on Boards

Gender diversity on boards has become a prominent issue in recent years. Some major investors, such as Blackrock, have even updated their voting guidelines to try and work towards a more equal representation. In light of this, investors were surprised and disappointed when WeWork’s initial filing included seven board members, all of which were male. In response, WeWork quickly recruited renowned culture coach Frances Frei to their board.

Frei earned her reputation when she was hired by Uber to help fix their “Bro Culture”. Although this a step in the right direction, WeWork might benefit from adding more women to their portfolio of directors. Using CGLytics data and intelligence a trendline can be made, in the S&P 500 real estate industry, between the percentage of women on boards and a company’s Average 1-year Total Shareholder Return (TSR).

Women on boards versus average TSR

Source: CGLytics Data and Analytics

CGLytics’ data and analytics are trusted and used worldwide by Glass Lewis, the leading independent proxy advisor, as a basis for their research on companies

 

Voting Rights

Also included in WeWorks initial filing were plans to award the company’s founders and early investors 20 votes for each share of Class Stock. This would grant unchecked power to the CEO. Moreover, in the event that the Chief Executive Officer, Adam Neumann, would become incapacitated, then his wife, Rebekah Neumann, and two directors would decide who the successor would be.

This plan has subsequently been scrapped and been replaced by a more contemporary policy where the Board of Directors holds the power to pick a successor. In regard to the voting rights, the number of votes for each share of Class A stock will now only account for 10 votes each.

WeWork has had a tumultuous build-up to their IPO. Many investors were hesitant to back the company as their corporate governance policies did not meet their standards. WeWork is just one example of many where Corporate Governance plays an integral role in the health and viability of a company, especially when third parties are involved.

For more information regarding how CGLytics’ deep, global data set and unparalleled analytical screening tools can potentially help you make better decisions, click here.

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Deutsche Bank: How CGLytics Tools Inform Glass Lewis’ Pay and Governance Analysis

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Shutterfly: A Glass Lewis Use Case

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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.

Historically, the primary concern of shareholders and company executives has been to deliver returns on investments and ensure that the company meets or exceeds their quarterly earnings expectations. Inevitably this led to a more short-term view with any projects that didn’t contribute to the present quarter / yearly results being at risk of cuts.

However, as some of the leading shareholders continue to embrace their roles in ensuring that companies are held accountable for their impact on both the environment and society, a growing trend has emerged of remuneration committees coming under pressure to link equity and compensation awards to sustainable environmental and socially responsible business practices (E.g. Alphabet 2019 Proxy Statement – Proposal 13).

A number of studies [Project ROI] have been carried out that link social and environmental impact to attracting and retaining customers, increasing revenue and building a vibrant corporate culture, whilst also having significant brand impact in a landscape where simply achieving results may become secondary to the “how” they were achieved.

Linking social impact to executive compensation

One of the most significant hurdles of linking the social impact of a company to the equity based compensation of senior executives and directors has been the attempt to identify  quantifiable measures for what can be a very subjective definition of success.

As the topic has come under more scrutiny there has been a visible appetite for businesses to provide more reporting and demonstrate measures that have been taken to ensure they partake in socially responsible practices. This can include:

  • Auditing suppliers to ensure that they and their subcontractors adhere to the values that they wish to demonstrate,
  • Allocating employee time and resources to positively impact society, or
  • Specific metrics regarding health and safety at work.

An example of this trend is Alcoa. In their 2019 proxy statement Alcoa links 30% of incentive goals to non-financial measures such as safety at work and diversity in the workforce, up from 20% in 2018.

In addition to the individual metrics defined by organizations, there has also been a growing trend of executive compensation being linked to the performance of a company on a corporate responsibility index (e.g. Dow Jones Sustainability Index). By linking elements of incentive multipliers to performance against a wider set of peers and the index, companies are able to not only create quantifiable targets to base awards on but are also focused on ensuring that they take a long term view in order to outperform competitors.

Gathering momentum

By defining these criteria and linking to long term incentives, businesses are more able to demonstrate their roles in a socially responsible business world. The positive financial impact of a socially responsible business is only a relatively recent trend. However, with a growing number of large investors taking an active role in the stewardship and engagement of their assets (Blackrock letter to CEOs), it is a trend that is likely to continue to gain traction.

Conversely, organizations that are perceived to be failing to meet their obligations to society will increasingly impact the brand, reputation, and ultimately the bottom line. Hence companies that traditionally have been focused on their financial results are exploring how they can adapt to the new criteria.

The Glass Lewis Equity Compensation Model

Glass Lewis’ Equity Compensation Model (ECM) is now available exclusively via CGLytics. Providing unprecedented transparency to the U.S. market in one powerful online application, both companies and investors can use the same 11 key criteria as the leading proxy advisor to assess equity incentive plans.

Click here to experience Glass Lewis’ new application.

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Glass Lewis’ assessment of executive remuneration reflects a balance of quantitative and qualitative considerations, with CGLytics’ suite of tools underpinning the quantitative component. In the following discussion, we review the quantitative assessment with respect to Deutsche Bank, using CGLytics’ analytical tools.

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Uber: Culture Clash

CGLytics takes a look at the recent IPO of Uber and how negative stories and scandals led to lower than expected interest

Uber launched its IPO on May 10th, with an initial share price of USD 45.00 per share. Despite a potential undervaluation of the business of at least USD 25 billion, Uber failed to attract the attention of investors and only managed to raise USD 8.1 billion. An array of scandals and controversies that the company had to contend with over the past several years may have led to the company’s uninspiring launch. Examples hereof include Kalanick referring to his desirability as “Boob-er”, proven allegations that the company booked fake rides on Lyft’s app, spying on the movements of celebrities such as Beyoncé, and even launching a self-driving program without having obtained the necessary permits. These events eventually culminated in a series of revelations in 2017 that ended with Travis Kalanick stepping down as CEO.

Kalanick and Company Culture

In February a former employee released a blog post in which she detailed her experience working for the company which involved sexual harassment and gender bias. Shortly thereafter the New York Times released an article which described Uber employees indulging in illicit substances, in addition to a manger being fired for sexual misconduct. The article would appear to be the tip of the iceberg and by June that same year over 20 employees were fired due to inappropriate behavior. Founder and CEO Travis Kalanick was also forced to step down amid pressure from investors.

Determined to regain control, Kalanick promised to return to the helm of his company. Kalanick’s super-voting shares, which gave him 10 votes per share, had previously allowed him to drastically influence corporate decisions. This was evidenced when Kalanick spontaneously appointed two new directors without informing the board. These appointments came amidst a lawsuit against Kalanick by venture capital firm, and major Uber shareholder, Benchmark. The VC firm sued for fraud, breach of contract and breach of fiduciary duty. The firm further pledged to reject a critical USD 9 billion investment proposal from multinational conglomerate SoftBank.

Ultimately, Uber’s Board approved a series of changes in order to counter Kalanick’s influence, appease Benchmark, and lock in the Softbank investment. These changes included a reform of the company’s by-laws which implemented a “one-share one-vote” rule and led to an increase in size of Uber’s board from an original 11 members to 17. Two of these seats are reserved for representatives of SoftBank, and three are to be filled by independent directors. Of the 17 board positions available, five remain unfilled. This is in part due to the deal still being in review by the Committee on Foreign Investment in the United States (CIFUS), although the deal is expected to eventually be approved.

Board Size: Bigger Does Not Always Equal Better

Although these reforms were implemented in the hopes of instigating better governance practices, studies have repeatedly shown that companies with a smaller board size (9.5 directors) outperform companies with a large board (14+) by as much as 8.5% in terms of return.  Utilising CGLytics’ governance data and analytics, an examination of the two industries in which Uber operates (Information Technology and Consumer Discretionary) appears to corroborate the correlation between a smaller board size and higher shareholder returns.

Source: CGLytics Data and Analytics

As the legal frameworks for companies leveraging the concept of a “sharing economy” are still developing, much of Uber’s future lies in the hands of market regulators. Many European countries such as Greece, Belgium, and Romania have outlawed Uber from operating in their countries. Moreover, if Uber drivers were to be classed as employees rather than independent contractors, as is currently under debate in the United States, then Uber’s bottom line would be significantly impacted.

Although the company has come a long way since its “Bro-Culture” days, the company’s inability to enforce a professional corporate culture have led to the installation of what may appear to be inconsistent governance measures. Primarily, it has increased the size of the board (which could potentially affect the company’s ability to provide returns to shareholders) in an attempt to counterbalance the influence of the company’s former CEO. The clashes between Softbank, Benchmark, and Kalanick have left an enduring impact on Uber’s reputation, valuation, and governance dynamics, with the company’s share price currently feeling the most pressure.

Get access to the same insights as investors and proxy advisors with CGLytics’ boardroom intelligence capabilities. With easy to use comparison tools and standardised data, instantly perform a governance health check against regulatory norms and market standards.

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Corporate Governance Risk Report

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The increasing trend of shareholder opposition to executive pay

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Glass Lewis’ assessment of executive remuneration reflects a balance of quantitative and qualitative considerations, with CGLytics’ suite of tools underpinning the quantitative component. In the following discussion, we review the quantitative assessment with respect to Deutsche Bank, using CGLytics’ analytical tools.

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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

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The Gender Barometer in the Dutch Boardroom

This article describes the current state of play of gender diversity in boardrooms of Dutch listed companies (AEX, AMX and AScX) and the prospect to achieve the 30% quota in the Netherlands in 2016.

The Gender Barometer in the Dutch Boardroom

This article describes the current state of play of gender diversity in boardrooms of Dutch listed companies (AEX, AMX and AScX) and the prospect to achieve the 30% quota in the Netherlands in 2016.

DOWNLOAD THE REPORT

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Votes against executive remuneration are growing. In this article we look at this change in the European indices and the S&P500.

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Glass Lewis’ assessment of executive remuneration reflects a balance of quantitative and qualitative considerations, with CGLytics’ suite of tools underpinning the quantitative component. In the following discussion, we review the quantitative assessment with respect to Deutsche Bank, using CGLytics’ analytical tools.

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Waivers Of Mandatory Retirement Ages And Company Performance

CGLytics examines the costs and benefits of waiving the mandatory retirement age for directors, elaborating upon aspects of the S&P 500: Increasing Boardroom Diversity Report.

In today’s competitive corporate landscape, a company’s board refreshment policy should aim to ensure that board agendas are robustly debated with a variety of perspectives present. This multitude of perspectives as an integral part of the organisation’s decision-making bodies has often been termed “cognitive diversity”.

This article seeks to further elaborate upon certain aspects of CGLytics’ S&P 500: Increasing Boardroom Diversity Report, with a particular focus on age diversity within the boardroom, and examines the costs and benefits of waiving the mandatory retirement age for directors. The data included in this report is based on the same data set used in the publication, incorporating board composition data as of year end 2018.

Download Now: Mandatory Retirement Age – A Brief Overview

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The increasing trend of shareholder opposition to executive pay

Votes against executive remuneration are growing. In this article we look at this change in the European indices and the S&P500.

Deutsche Bank: How CGLytics Tools Inform Glass Lewis’ Pay and Governance Analysis

Glass Lewis’ assessment of executive remuneration reflects a balance of quantitative and qualitative considerations, with CGLytics’ suite of tools underpinning the quantitative component. In the following discussion, we review the quantitative assessment with respect to Deutsche Bank, using CGLytics’ analytical tools.

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AI in the Boardroom: Fantasy or Reality?

While the exact role of AI in the boardroom in up for debate, the question remains: has the Robo Director come of age?

Artificial intelligence (AI) is everywhere even as a member of the board of a private equity firm based in Hong Kong. While the exact role of AI in the boardroom is up for debate, the question remains: has the Robo Director come of age?

Enter the Robo Director

On the face of it, the case for an AI-based director is powerful: machines can pull together vast amounts of information and make decisions based on complex algorithms. Moreover, certain technological advancements have given certain algorithms the ability to learn: cognitive technologies – such as machine learning and deep learning – are becoming more reliable and accessible day by day.

However, even the smartest machines are only as clever as the data they have at their disposal. Although this may also be said of humans, in practice people have unique intuition that operates and combines old and new variables at a different level than machines are currently capable of. This capacity enables the human director, or an entire board of directors, to change direction more quickly than a machine can when faced with new, unforeseen situations. Machine learning is based on repeated behaviours to extract data and then create an output based on that data extraction. Regular corrections to the algorithm are made based on human interpretations of the output, increasing the algorithm’s output accuracy over time. Machine-learning however does not currently provide the capacity to solve new problems when externalities comes into play. Often we hear of great business decisions made on the fly based on instinct or business nous, which are uniquely human traits…so far.

AI as the Assistant

AI works best in situations where large volumes of data must be processed and the logic that drives predictions and decisions can be easily expressed. Just as doctors and other medical professionals harness the power of AI to make better diagnoses, AI can support boards to make better decisions. However, the quality of the data plays a critical role in the algorithm’s capacity to identify trends, as it is reliant on “five-star data” for optimal recommendations.

Corporate Governance

AI can now improve problem-solving by assessing governance risks on a macro-level, and subsequently analyse structural deficiencies in a company’s governance policies and practices when compared to its peers faster than previously possible. Parameters can be set and certain aspects of governance can become data-driven rather than model-driven. This means better decisions and, more importantly, fewer wrong decisions that could lead to reputational and financial risk.

Competitive Landscape

With access to large volumes of data, AI can be harnessed to position a company in its competitive landscape. Models and methods can be developed to pinpoint a company’s competitiveness against competitors and to assess its performance trajectory.

Decision-Support Tools

AI can facilitate better strategic decisions based on real-time data and advanced analytics. Customer marketing journeys can be mapped more accurately, generating more positive outcomes. With better information at their disposal the board can focus on strategy rather than operations.

Unalterable Past, Perfidious Future

In business, many decisions are made using a combination of historical data, modelling and conjecture. But the truth is that the business environment is inherently uncertain: there are no control experiments or reruns. What worked in the past might not necessarily work in future, as evidenced in the classic case of the failure of the firm Long Term Capital Management. However, AI programs and technologies, when supplemented by governance data of the highest quality, can augment a board’s decision-making.

Getting ready for the boardroom of the future

Boards need to be fully prepared with the latest information and insights to make the right decisions, which support their long-term strategy. CGLytics has the deepest global governance data set in the market to date, and if combined with AI, the potential opportunities for boardroom intelligence really are endless.

Jonathan Nelson

CGLytics

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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.

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.

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?

S&P 500 companies are listening: One third of new board appointments in 2018 were women

Gender diversification on boards was a prominent issue in 2018 and shareholders had never been more explicit in their expectations of companies.

Gender diversification on boards was a prominent issue in 2018 and shareholders had never been more explicit in their expectations of companies. The CGLytics Review of Diversity in the Boardroom of S&P 500 Companies reveals the progress made by companies to improve female board representation and discusses new ways for identifying top candidates using new methods and tools.

Through research on the appointments and departures of S&P 500 company directors between 2017 and 2018, we can see evidence that companies are actively trying to improve gender diversity on boards. This is likely the result of investors pushing for greater female representation, along with media and legislators.

While overall female representation only grew by 1%, the following three data points demonstrate how S&P 500 companies are progressing:

1. One third of new board appointments in 2018 were women

One of the most encouraging changes we saw in 2018 was the increase in the percentage of new appointments that were women. 33% of new appointments were female, up 25% from the previous year. And of the 60 new appointments under the age of 50, more than half of these were women, demonstrating that companies are looking at younger female leaders when making their selection.

2. Telecommunications Services have the highest representation of women on boards

Almost all industries saw an improvement in gender diversity of their boards between 2017 and 2018. The financial sector showed the greatest improvement, with female appointments up by 2 percent. While Telecommunication Services had a three-percent decrease in female representation in 2018, the industry still shows the largest representation of women on boards, at 28%.

One of the most encouraging changes we saw in 2018 was the increase in the percentage of new appointments that were women. 33% of new appointments were female, up 25% from the previous year.

3. 27 female appointments needed to reach gender diversity goals of 30% and 1,431 female appointees to reach full gender parity

With female representation reaching 24%, we investigated how many more appointments are needed in order to hit 30% and 50% targets. We discovered that if the net is cast wider than the current 1,329 women sitting on S&P 500 boards, then an additional 1,227 female candidates are available (drawing from S&P Midcap 400 and S&P SmallCap 600 boards).

Getting ready for the coming season’s gender debate

Boards need to be fully prepared for conversations around gender diversification this upcoming proxy season and companies should be ready to provide evidence of their efforts to improve female representations.

In addition to real-time governance risk intelligence and Pay for Performance analytics, CGLytics provides companies with a networking tool for discovering and connecting with top candidates for succession planning.

Aniel Mahabier

CGLytics

Latest Industry News, Views & Information

Action needed despite third of new S&P 500 board appointments being women

Gender diversification on boards was a prominent issue last year, and shareholders have never been more explicit in their expectations of companies, writes Aniel Mahabier

What’s New for the 2019 Proxy Season?

By looking at the UK, which currently has the spotlight on corporate governance practices, we can be sure that company boards will be compelled to implement good governance practices.

Be prepared: Learnings from the UK 2018 proxy season

The UK is at the forefront of shareholder concern of good corporate governance practices. In a climate of increasing proactive shareholder engagement, the CGLytics FTSE 100 2018 proxy season review evaluates underlying trends to provide unique insights for being prepared for the forthcoming season.

Action needed despite third of new S&P 500 board appointments being women

Gender diversification on boards was a prominent issue last year, and shareholders have never been more explicit in their expectations of companies, writes Aniel Mahabier

Gender diversification on boards was a prominent issue in 2018 and shareholders had never been more explicit in their expectations of companies.

A CGLytics report on diversity in the boardrooms of S&P 500 companies reveals that some progress has been made on an issue that was very prominent in 2018. Companies have improved female board representation – but at a much slower rate than is needed to meet targets set by some proxy advisers and new legislation.

In the past 12 months, the emphasis on gender diversity in the boardroom has never been greater. Demands from not only the media but also shareholders, investors, proxy advisers and governing bodies, as well as campaigns such as the Fearless Girl, have made all companies, regardless of industry, sit up and take notice.

There are, of course, many benefits to improving boardroom gender diversity that go far beyond fresh perspectives and improved profitability. But in order to build an effective board that meets current diversity standards, nomination and governance committees need to find new ways to recruit the right – and best – female candidates to fill their board.

Appointments and departures of S&P 500 company directors between 2017 and 2018 are evidence that companies are actively trying to improve gender diversity on boards. While overall female representation grew by only 1 percentage point, there are some data points that demonstrate how S&P 500 companies are progressing.

1. One third of new board appointments in 2018 were women 

One of the most encouraging changes in 2018 was the increase in the percentage of female appointments to boards. Thirty-three percent of new appointments were female, up from 25 percent from the previous year. Of the 60 new appointments under the age of 50, more than half were women, demonstrating that companies are recruiting younger female leaders. In tandem with gender, diversity of age should also not be overlooked as our findings reveal a positive correlation between the number of younger directors on S&P 500 boards and one-year company total shareholder return

2. Telecommunications services have the highest representation of women on boards

Almost all industries saw an improvement in gender diversity of their boards between 2017 and 2018. The financial sector showed the greatest improvement, with female appointments up by 2 percentage points. While telecommunication services saw a 3 percentage-point fall in female representation in 2018, the industry still shows the largest representation of women on boards, at 28 percent.

One of the most encouraging changes we saw in 2018 was the increase in the percentage of new appointments that were women. 33% of new appointments were female, up 25% from the previous year.

3. Representation of female directors is growing, but radical action is required to hit targets

With female board representation reaching 24 percent (up just 1 percentage point from 2017), it’s critical to understand how many more appointments are needed to reach gender diversity goals of 30 percent and 50 percent: currently, 327 female appointments are needed to reach 30 percent and 1,431 to reach full gender parity. But to find suitable candidates to fill S&P 500 boards, companies are going to need to extend their network or look further afield.

If a wider net is cast – for instance, looking at female directors on S&P MidCap 400 and S&P SmallCap boards, as well as C-level executives – then in the US alone 2,577 candidates are available. Beyond the US market, the CGLytics database shows more than 20,000 professional and experienced female candidates.

3. 27 female appointments needed to reach gender diversity goals of 30% and 1,431 female appointees to reach full gender parity

With female representation reaching 24%, we investigated how many more appointments are needed in order to hit 30% and 50% targets. We discovered that if the net is cast wider than the current 1,329 women sitting on S&P 500 boards, then an additional 1,227 female candidates are available (drawing from S&P Midcap 400 and S&P SmallCap 600 boards).

Getting ready for the coming season’s gender debate

Boards need to be fully prepared for conversations around gender diversification this upcoming proxy season and companies should be ready to provide evidence of their efforts to improve female representations.

In addition to real-time governance risk intelligence and Pay for Performance analytics, CGLytics provides companies with a networking tool for discovering and connecting with top candidates for succession planning.

Aniel Mahabier

CGLytics

Latest Industry News, Views & Information

What’s New for the 2019 Proxy Season?

By looking at the UK, which currently has the spotlight on corporate governance practices, we can be sure that company boards will be compelled to implement good governance practices.

Be prepared: Learnings from the UK 2018 proxy season

The UK is at the forefront of shareholder concern of good corporate governance practices. In a climate of increasing proactive shareholder engagement, the CGLytics FTSE 100 2018 proxy season review evaluates underlying trends to provide unique insights for being prepared for the forthcoming season.

What’s New for the 2019 Proxy Season?

By looking at the UK, which currently has the spotlight on corporate governance practices, we can be sure that company boards will be compelled to implement good governance practices.

During the 2018 proxy season, shareholders engaged actively in governance matters. The CGLytics FTSE 100 Proxy Review revealed shareholders to be particularly interested in director election, board effectiveness, CEO pay and Environmental Social Governance (ESG) practice.  So what’s in store for 2019?

By looking at the UK, which currently has the spotlight on corporate governance practices, we can be sure that company boards will be compelled to implement good governance practices. They should prepare for early engagement with investors, who have expanded their ESG capabilities with access to best-in-class analytics to aid engagement and voting.

CEO Pay, Board Refreshment and Gender Diversity will continue to dominate

We envisage the following themes will dominate 2019 across Europe:

Proactive shareholder engagement 

To obtain early shareholder buy-in during the proxy season. Investors will favour an ongoing positive dialogue in preference to a reaction to a negative vote.

Transparency will endure as a central theme 

Boards should be prepared to engage openly on their board composition, say-on-pay proposals and governance decisions.

Board refreshment, gender diversity and board composition 

These will be key governance matters as investors seek to favour board strategy and composition that ties to long-term company performance.

CEO Pay 

Pay will be scrutinised – compensation policies and practices must be fully transparent and reflect, and support, business strategy and promote long-term success.

CEO succession planning 

Chairs and nomination and governance committees will be required to plan for CEO succession to mitigate business continuity risk.

Environmental, Social and Governance (ESG) 

ESG will continue to gain momentum as investors continue to become more information savvy and continue to evaluate companies’ progress on their environmental, social and governance practices.

Boards must be equally, if not better, informed as shareholders in order to engage adequately and constructively

Getting ready for the coming season

Boards need to be fully prepared for the upcoming proxy season. They must be equally, if not better, informed as shareholders in order to engage adequately and constructively, to be certain to avoid any reputational risks. Having access to the same intelligence as proxy advisors and investors is fundamental to proxy season preparedness and good governance decision-making.

CGLytics provides real-time governance risk analytics and solutions that provide actionable insight for companies, shareholders and proxy advisors. We empower boards of companies and investors with data analytics that enable good governance.

In preparation for the 2019 proxy season, CGLytics released its third annual FTSE 100 Proxy Season report. This series of articles summarise some of the key findings. Access the full insights and statistics by downloading the report.

Aniel Mahabier

CGLytics

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Are companies incorporating ESG factors into executive remuneration?

The last decade has seen a steady increase in the focus on Environmental, Social and Governance (ESG) factors from a range of stakeholders and that growing scrutiny appears to have reached a crescendo over the past 18 months. Only the topic of executive remuneration continues to be discussed as frequently as ESG.

FTI & CGLytics have conducted an analysis to determine whether those two topics are increasingly converging. Download the white paper to find out more.

How to take testing of equity-based compensation plans into your own hands?

Download the whitepaper and learn more about equity-based compensation plan best practice and how the ECM is supporting decision-making for Say on Pay.

Deutsche Bank: How CGLytics Tools Inform Glass Lewis’ Pay and Governance Analysis

Glass Lewis’ assessment of executive remuneration reflects a balance of quantitative and qualitative considerations, with CGLytics’ suite of tools underpinning the quantitative component. In the following discussion, we review the quantitative assessment with respect to Deutsche Bank, using CGLytics’ analytical tools.