TheCorporateCounsel.net

Here’s the survey results from our recent survey about registration statement due diligence:

1. Prior to the effectiveness of a registration statement, we do this:
– No formal action was taken to bolster a due diligence defense – 31%
– Management reported to the board about the contents of the registration statement – 36%
– Counsel reported to the board about the contents of the registration statement – 31%
– Some other process was followed to bolster a due diligence defense – 29%

2. If no formal action was taken to bolster a due diligence defense, the reasons include:
– Counsel did not alert us to this issue – 11%
– Director personal liability seems remote – 34%
– Board relied on the audit committee’s prior review of the incorporated SEC filings, which are the likely source of any liability – 66%
– Process takes too much time for the value that it provides – 29%

Please take a moment to participate anonymously in this “Quick Survey on Management Representation Letters” – and this “Quick Survey on Board Minutes & Auditors.”

Board Diversity: Disclosures Few & Far Between

A new Equilar study says that companies aren’t saying much about board diversity in their SEC filings:

Lacking any regulatory requirement to disclose diversity on their boards of directors, few companies explicitly detail this information in public filings. Just 12.8% of S&P 500 companies included information on board diversity in terms of race or ethnicity in their most recent proxy statements, according to a new study from Equilar.

The tech sector lagged almost every other industry, with only four (5.7%) of the technology companies in the S&P 500 disclosing information about board diversity in their 2016 proxy statements. Oil & gas companies were also lacking when it came to diversity disclosure – only one company included this type of information in its 2016 proxy statement.

According to the report, tech companies have improved board diversity in recent years – but still have far to go:

While still lagging the overall S&P 500, the technology sector did see the largest percentage growth of women on boards during the last five years, according to the Equilar study. In 2012, women held 14.4% of tech board seats, and that percentage increased to 21.0% in 2016. However, that growth still was not enough to reach the overall S&P 500 average—21.3%—nor up its ranking in comparison to other sectors.

Women on Boards: Benefits of Gender Diversity

While we’re on the topic of gender diversity, this recent CFA Institute blog highlights the results of an MSCI study on women serving on corporate boards in the US and other developed & emerging markets.  It also cites some interesting results associated with increasing the gender diversity of corporate boards:

– Companies that had strong female leadership generated a return on equity of 10.1% per year versus 7.4% for those without (on an equal-weighted basis).

– Companies lacking board diversity tend to suffer more governance-related controversies than average.

– Strong evidence was not found that having more women in board positions indicates greater risk aversion.

– John Jenkins