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 events of the last two years have had seismic impacts on the landscape of corporate governance. As a result, institutional investor voting patterns shifted in 2021, especially regarding diversity and environmental initiatives. Multiple institutional investors voted in favor of more than 60% of diversity proposals in 2021, while opposition to environmental proposals fell to 50% or less among several firms. A recent Equilar study analyzed voting trends across a variety of critical issues coming out of the 2021 annual meeting season.
As pressure has grown on companies to diversify their boardrooms, especially with respect to gender and ethnicity, proxy disclosures on this issue have increased in prevalence and complexity. This Equilar study analyzed the proxy statements from the largest 100 U.S. companies by revenue to see if and how this information is being communicated to shareholders. The analysis found that 92% of companies disclosed some form of diversity data. 81% disclosed specific statistics on the gender make-up of their boards, while 73% disclosed the same for ethnicity.
Retaining key talent during M&A activity is critical, and retention requires a comprehensive approach to compensation. An Equilar analysis studied large public acquisitions to find out how companies ensure successful outcomes during periods of change. Granting executives longer vesting cash awards, known as the “pay to stay” approach, is an effective way of retaining talent long term. On the other hand, shorter post-merger vesting periods are often employed when companies want to ensure a smooth transition of power between incoming and incumbent executive teams.