1 / 9

Board Worries: Disclosure, Strategy, Shareholders, Proxy Access, Compensation, Composition

Learn about the top concerns keeping boards up at night, including disclosure and transparency, long-term business strategy, shareholder engagement, proxy access, executive compensation, and board composition.

hcorrales
Download Presentation

Board Worries: Disclosure, Strategy, Shareholders, Proxy Access, Compensation, Composition

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. What Keeps Boards Up At Night?ACC Chapter Meeting CLEJuly 28, 2016Aaron Carlson, Associate General Counsel, Noble Energy, Inc.Pamela Taylor, Senior Attorney, Securities and Governance, Noble Energy, Inc.Sean Gorman, Partner, Bracewell LLPEMILY LEITCH, Partner, Bracewell LLP

  2. Boards are up Thinking About: • Disclosure and Transparency • Long-term Business Strategy • Shareholder Engagement • Proxy Access • Executive Compensation • Board Composition

  3. Board Member Fiduciary Duty Standards • Duty of care – Board members must educate themselves with “all material information reasonably available to them” prior to making a business decision Smith v. Van Gorkom, 488 A.2d 858, 872 (Del. 1985). • Duty of loyalty – Board members have the duty to “eschew any conflict between duty and self-interest” Ivanhoe Partners v. Newmont Mining Corp., 535 A.2d 1334, 1345 (Del. 1987).

  4. Disclosure and Transparency • Why do we disclose? • Public companies must disclose information (good and bad) that may influence investment decisions • How do we disclose? • Periodic and current filings • Proxy statements • Registration statements

  5. Long-term Business Strategy • Balancing the goals of long-term value creation versus delivery of short-term results • Board and management both have roles in strategy development • Recent developments - climate change and corporate social responsibility • Boards must be able to effectively communicate long-term strategy

  6. Shareholder Engagement • Engagement has historically been focused on business or financial matters • Recent trend includes focus on governance issues • Activists are recruiting and teaming with mainstream investors • Shareholders are increasingly demanding access to boards

  7. Proxy Access • Hot topic over the last two years – well over 100 companies received a proxy access proposal • SEC has been unwilling to grant companies relief • Noble withstood proposals over last two years but has made adjustments • Is this the new normal?

  8. Executive Compensation • Say-on-pay advisory votes • Proper performance measures • Special awards • Upcoming Dodd-Frank requirements • CEO pay ratio • Pay-for-performance • Clawbacks • Hedging disclosure

  9. Board Composition • Looking for proper balance of experience and expertise • A single director can draw the attention of activists • Women and minorities are still underrepresented • Most companies have mandatory retirement age but few have term limits • Boards should have succession plans in place • 40% of directors surveyed say at least one director on their board should resign.

More Related