The Equilar Institute provides in-depth research and analysis on boards of directors, shareholder engagement, executive compensation and other issues affecting the world of corporate governance. Below are some key highlights from the last quarter that showcase the in-depth information available in public filings via the Equilar database. Visit www.equilar.com/institute or www.equilar.com/blog.html to read these articles in full as well as many more.
The passage of California SB-826 requires that every public company in California has at least one woman on its board. In light of this news, there is much speculation around how companies that plan to go public in the near future will address this requirement. Drawing data from a subset of 161 companies, Equilar conducted a study on the diversity of boardrooms at recent IPOs in 2018.
The study found that the average percentage of women on boards at new IPOs in 2018 was 13.6%, which was a jump from 11.4% female representation at IPOs in 2017. While healthcare companies that went public boasted the most female board members at a total of 31, the highest concentration of female board members still existed in the technology sector. Moving toward the future, it is worth reflecting on whether companies that went public in 2018 are promoting diversity in leadership as they gain more exposure.
Since the implementation of Say on Pay, CEO compensation has been under the public eye and shareholder attention like never before. CEO pay has been on a steady climb over the last several years, but compensation often varies by state and region. Earlier this year, Equilar and The Associated Press conducted a study* that analyzed the highest-paid CEO in each U.S. state in 2018.
The study revealed that California was home to the highest paid CEO of 2018—Tesla’s Elon Musk, who was awarded a total compensation package of $2.3 billion. States with the top 10 highest-compensated chief executives fell within the upper half of the country in terms of population size. On the other hand, the study’s bottom five states in terms of CEO compensation fell within the bottom half of the states in regard to population.
Eight years following the introduction of Say on Pay in 2011, shareholder voices are more pronounced than ever when it comes to executive compensation. This Equilar study* examined the effects of a failed Say on Pay vote and the measures companies take to avoid repeated outcomes. Of the companies that failed Say on Pay in 2018, 81.6% made at least two changes in response to the failed votes. Additionally, 67.3% of Russell 3000 companies with failed 2018 votes have passed their 2019 votes thus far while 20.4% have failed. Overall, companies that implemented changes involving metrics and favored performance equity passed 2019 Say on Pay votes in the highest proportion.
*Data from this study is current as of September 2019.