September 17, 2020

Quest for Director Diversity Information

Given the sensitivity of the issue, some may be grappling with how to approach gathering director diversity information.  Investors are increasingly asking for board diversity disclosures, and earlier this week, ISS ESG announced that it’s including some director and NEO racial and ethnic diversity information in the proxy advisor’s data service offerings. A frequent suggestion heard at conferences is to add a question or two to the D&O questionnaire, which most know, isn’t as straightforward as it sounds.  A recent Bryan Cave blog discusses this conundrum.

For those that aren’t keen on including another question in the D&O questionnaire, the blog says boards could consider addressing self-identification disclosures during a board meeting or in private conversations, and documenting the results in an appropriate manner, although individual director consent would still be needed for disclosures.  For those that might update the D&O questionnaire, companies could socialize the topic before circulating an updated questionnaire so they can understand whether directors wish to proceed.  The blog includes this example of a possible D&O question:

‘If you are willing to provide this information, please self-identify up to three classifications of racial/ethnic/gender/other diversity characteristics. Please note that if you choose to provide this information, you consent to possible public disclosure of the information, including in the company’s proxy statement, on our website or in response to inquiries from analysts, shareholders or the media.’

Alternatively, a separate consent checkbox could be added to the D&O questionnaire if a company wants to include only the first sentence of the sample question in order to gather diversity data and instead give directors a separate option to self-identify without consenting to public disclosure.

Quick Poll: Gathering Board Diversity Information

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September-October Issue: Deal Lawyers Print Newsletter

This September-October Issue of the Deal Lawyers print newsletter was just posted – & also mailed (try a no-risk trial). It includes articles on:

– The Road to Global Closing: Drafting Local Transfer Agreements in Cross-Border Carve-Outs

– Third Circuit Clarifies Requirements for Risk Factor Disclosures in Merger Proxies

– M&A Purchase Price Considerations in the Context of COVID-19

Remember that – as a “thank you” to those that subscribe to both & our Deal Lawyers print newsletter – we are making all issues of the Deal Lawyers print newsletter available online. There is a big blue tab called “Back Issues” near the top of – 2nd from the end of the row of tabs. This tab leads to all of our issues, including the most recent one.

And a bonus is that even if only one person in your firm is a subscriber to the Deal Lawyers print newsletter, anyone who has access to will be able to gain access to the Deal Lawyers print newsletter. For example, if your firm has a firmwide license to – and only one person subscribes to the print newsletter – everybody in your firm will be able to access the online issues of the print newsletter. That is real value. Here are FAQs about the Deal Lawyers print newsletter including how to access the issues online.
– Lynn Jokela