January 18, 2022

Overboarding: State Street Wants More Governance & Disclosure

Dave blogged last week about State Street Global Advisors’ 2022 priorities. SSGA’s expectations on climate disclosures, climate transition plans, board & workforce diversity, human capital management, and human rights disclosures & practices are rightfully getting a lot of attention – but if you’re of the view that corporate governance is the linchpin that holds E&S together, then the asset manager’s updated guidance on director time commitments is also something to pay attention to.

The guidance notes that S&P 500 boards averaged more than 9 formal meetings during 2021 – a 25% increase over 2020 – in light of intensifying challenges & oversight expectations. This means that it’s more important than ever for boards to manage their directors’ time commitments. SSGA has updated its overboarding guidelines to emphasize that Nominating Committees are in the best position to establish, enforce & disclose corporate policies that support director effectiveness.

Starting in March 2022, for non-NEO directors who hold what SSGA deems to be “excessive commitments,” the stewardship team may consider waiving the typical policy to vote “against” the overboarded director. SSGA will consider voting in support of the director if the company publicly discloses its overboarding policy (which may be in corporate governance guidelines, the proxy statement, or on the company website) – and the policy includes:

– A numerical limit on public company board seats a director can serve on (which cannot exceed SSGA’s policy by more than one seat)

– Consideration of public company board leadership positions (e.g., Committee Chair)

– Affirmation that all directors are currently compliant with the company policy

– Description of an annual policy review process undertaken by the Nominating Committee to evaluate outside director time commitments

As a reminder, SSGA’s “standard” policy is to vote against:

– Non-executive board chairs or lead independent directors who sit on more than 3 public company boards

– Director nominees who sit on more than 4 public company boards

– NEOs of a public company who sit on more than 2 public company boards

The new disclosure waiver policy applies only to the first two categories – i.e., directors who are not NEOs. If you want to utilize the waiver, the SSGA team asks companies to share their publicly disclosed director commitment policy (including primary source materials), or intention to establish such a policy in 2022 with our team via email at If a director is imminently leaving a board and the departure is disclosed in a written, time-bound and publicly available manner, SSGA may also consider waiving its withhold vote.

SSGA also points out that in addition to service on mutual fund boards and UK investment trusts not counting towards the overboarding total, service on a SPAC board won’t be considered when evaluating directors for excessive commitments. However, SSGA does expect these roles to be considered by Nominating Committees when evaluating director time commitments.

Liz Dunshee