October 15, 2020
Virtual Shareholder Meetings: Broadridge Mid-Year Stats
These mid-year stats from Broadridge show what a watershed year it’s been for virtual shareholder meetings. Here’s some highlights:
– 1,494 VSMs hosted on Broadridge technology – 98% of those were virtual-only
– Average meeting attendance was 30 for small-caps, 37 for mid-caps and 122 for large-caps – higher if a shareholder proposal was being presented
– When it came to shareholder questions, 97% allowed live questions, 11% allowed pre-meeting questions, 5 questions were asked on average and one company somehow fielded 316
– Average duration was 34 minutes if a shareholder proposal was presented and 18 minutes if not
Check out this Skadden memo and other resources in our “Virtual Shareholder Meetings” Practice Area as you plan for the possibility of another virtual shareholder meeting in 2021. And don’t forget to tune into our October 29th webcast with CII’s Amy Borrus, Doug Chia of Soundboard Governance, Dorothy Flynn of Broadridge, Independent Inspector of Election Carl Hagberg and Bristol-Myers Squibb’s Kate Kelly to hear what you should be doing right now to prepare.
ISS Proposes Diversity and E&S Policy Changes: Comment By October 26th!
Yesterday, ISS announced a public comment period for proposed policy changes that would apply to annual meetings taking place on or after February 1, 2021. For the US, the proposed changes include:
– Board Diversity, Race and Ethnicity: Beginning in 2022, at companies where there are no identified racial or ethnically-diverse board members, the proposed ISS U.S. policy will be to recommend voting against the chair of the nominating committee (or other relevant directors on a case-by-case basis). Mitigating factors will be considered and the proposed coverage universe is all companies in the Russell 3000 and S&P 1500 indexes.
– Director Accountability: ISS policies globally will explicitly note that significant risk oversight failures related to environmental and social concerns may, on a case-by-case basis, trigger vote recommendations against board members.
– Shareholder Litigation Rights: ISS proposes modifications in the U.S. policy regarding management proposals to establish exclusive forums.
Submit comments to firstname.lastname@example.org by 5 pm Eastern Time on Monday, October 26th. Unless otherwise specified in writing, all comments will be disclosed publicly upon release of final policies – which is expected during the first half of November.
COVID-19: Audit Committee Questions for the “New Normal”
COVID-19 disclosures remain a top area of focus for audit committees, according to this KPMG survey. Specifically, the uncertainty caused by the pandemic – along with expectations for companies to deliver forward-looking information and analysis – are leading to substantial discussion on disclosures about the pandemic’s effect on business, the preparation of forward-looking cash flow estimates, impairments, use of non-GAAP financial metrics and other topics.
This Deloitte memo suggests questions that audit committees should ask to ensure that disclosure is accurate and transparent. Here are a few:
– Is data from the 2008 financial crisis being used to benchmark the timing and pattern of recovery from the current pandemic? Has management carefully considered the differences between the two economic periods?
– What “new normal” conditions or future trends are included in the forecast assumptions?
– In considering the use of non-GAAP measures, has the company considered what costs might be part of the “new normal” and how certain non-GAAP adjustments may impact comparability in the future?
– Has the company reassessed its volatility assumption when valuing new stock awards in light recent market volatility?
– Has the company modified any significant contracts, particularly contracts with customers and leases?
Both memos note that audit committees are also focusing on reassessing or changing internal controls due to return-to-work plans, virtual working and cybersecurity – and that internal auditors are adjusting audit plans and activities to identify emerging risks posed by the pandemic. The KPMG survey says that audit committee members also indicated that they expect employee safety and diversity issues, as well as supply chain resilience and corporate reputation, to get significantly more attention from the board as a result of COVID-19 and recent protests against systemic racism.
– Liz Dunshee