The Equilar Institute provides in-depth data research and analysis on boards of directors, shareholder engagement, executive compensation and other issues affecting the world of corporate governance. Below are some top picks from the last quarter that can be found exclusively on www.equilar.com. Visit www.equilar.com/institute or www.equilar.com/blog to read these articles in full as well as many, many more.
Shareholders are highly attuned to board composition because they want to be sure their interests are represented with company management, and a director’s job is to be their liaison and advocate in this regard. One way to quantify the quality of a board is through total shareholder return (TSR), which measures how a company performs for its shareholders.
Two recent Equilar studies looked at different aspects of board composition in order to uncover potential correlations between board leadership structure and director age and TSR. The first study found a trend toward more independent leadership, i.e., a non-executive chair of the board. While companies with an executive chair (an employee director) had the poorest performance—as denoted in the article title: “Executive Chair-Led Boards Underperform on TSR”—the numbers show that companies with a combined CEO/chair have seen the best results recently. In the second study, “How Director Age Influences Corporate Performance,” Equilar found that boards indeed are getting younger, but the correlations to TSR depending on the relative age changes to a board are more nuanced.
In order to maximize connections to professional networks, is it better to know board members or CEOs? Which corporate roles tend to be the most connected, and may therefore add the most value to one’s network? A recent study entitled “Is It Better to Know Board Members or CEOs?” utilized Equilar BoardEdge, a database of over 1.5 million unique executive connections, to explore the above questions.
The study found that current or former C-suite executives without board experience are connected to just 14.4 other top corporate leaders on average, while board members are so well-connected that even individuals without any executive work history at all still enjoy an average of about 22 first-degree contacts. Those who have C-suite and director experience have the widest networks, with an average of 30.5 connections.
The two largest proxy advisory firms released their much-anticipated annual voting guideline updates, each centering on critical issues relating to the board of directors. From board diversity to director compensation, updates to the recommendations from these influential firms have a profound influence on how companies interact with their shareholders across the world. Equilar weighed in to contextualize these guidelines with its proprietary governance data in articles with eponymous titles regarding each firm’s updates.