Corporate Governance

Counseling senior management and boards of directors to achieve their business objectives within the framework of best practices for investor protection is the forte of Shearman & Sterling’s Corporate Governance practice.

The firm’s corporate governance attorneys include former SEC directors and senior staff members, attorneys who have served as federal prosecutors and who have held supervisory positions within the US Department of Justice, and former leaders of other regulatory agencies, as well as a cadre of experienced business lawyers from multiple disciplines and jurisdictions.

Our attorneys counsel clients on a broad range of corporate governance and compliance matters, including the Sarbanes-Oxley Act of 2002, board and committee membership matters, executive and director compensation, conflicts of interest and audit committee responsibilities and requirements, stock exchange rules in the US and Europe and US Sentencing Commission Guidelines, codes of conduct and business ethics, internal controls, risk assessment, compliance matters, investigations and disclosures. We often advise clients which are subject to multiple corporate governance rules (e.g. those made under the Sarbanes-Oxley Act and the corresponding European rules) on developing compliance programs that meet the requirements of all the rules to which they are subject.

We surveyed the Top 100
US Public companies
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of the Top 100 Companies that held a say-on-pay vote in 2015 received approval (93 of 94 companies).

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Of the 94 Top 100 Companies that held a say-on-pay vote in 2015, 77% received approval rates in excess of 90% and 7% received approval rates below 70%. Approval rates are calculated on the ratio of votes “for” over the sum of votes cast plus abstentions, as reported in SEC filings.
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of the Top 100 Companies were the subject of an activist campaign.

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The last year saw a substantial increase in shareholder activism activity at the Top 100 Companies, with activist campaigns increasing 50% – from 6 companies in 2014 to 9 companies in 2015. As capital continues to flow into the activist fund asset class, and as the number of single- and multi-strategy activist funds continues to grow, all signs indicate activists will continue to look toward larger targets to provide the outsized returns they and their investors seek.
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of the Top 100 Companies disclosed their compensation-related shareholder engagement efforts, a 71% increase since 2013.

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While the number of shareholder proposals increased by 27% in 2015 (up from 30 proposals in 2014), many of the 2015 proposals were either company specific (Incentive Compensation and certain of the Other Proposals) or industry specific (Government Service Golden Parachute Proposals). None of the 2015 compensation-related proposals were approved.
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of the Top 100 Companies use a majority voting standard in uncontested director elections.

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The number of Top 100 Companies in our Survey that use majority voting, rather than plurality voting, in uncontested director elections has increased dramatically – from 11 companies in 2006 to 94 companies in 2015. Of these, 77 require an incumbent director who is not re-elected to tender a resignation and another five companies have policies stating that s/he ceases to be a director after 90 days (or, if earlier, the date that the board selects a replacement director).
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Top 100 Companies announced plans to submit proxy access proposals in 2015.

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Only 7 of the Top 100 Companies currently have a proxy access by-law in place. In 2015, 15 companies (up from only one company last year) announced plans to submit a proxy access by-law at the 2016 annual meeting. This trend is also observable at US-listed companies more broadly, and points to an increasing view among shareholders that proxy access will keep boards on their toes by introducing new directors with fresh perspectives into the boardroom.
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had an increase in dollar value of directory equity awards, which ranged from $5,000 to $70,000.

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99 of the Top 100 Companies grant equity compensation to their directors. The equity mix has remained fairly constant over the past few years. The types of equity compensation include restricted stock or units, stock options, deferred stock units and no-restricted stock or units. In 2015, 22 Top 100 Companies announced changes to their director equity awards.
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