November 03, 2021

Shearman & Sterling Releases Its 19th Annual Corporate Governance & Executive Compensation Survey

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SHEARMAN & STERLING RELEASES ITS 19TH ANNUAL CORPORATE GOVERNANCE & EXECUTIVE COMPENSATION SURVEY

Today, Shearman & Sterling released its 19th annual Corporate Governance & Executive Compensation Survey, which finds that the boards of directors of the largest 100 U.S. companies have maintained their strong focus on diversity, equity and inclusion (DE&I) and cybersecurity in 2021, following last year’s tumultuous events, while increasing overall emphasis on environmental, social and governance (ESG) issues including climate change and energy transition, as well as human capital beyond DE&I.

Key insights and findings presented in this year’s report include:

  • Human Capital Management: In the midst of new SEC requirements for companies to provide disclosures on human capital management, the survey found there was little uniformity in the information and related data that was reported on this topic, although certain key themes emerged. Only a third of companies included data on the diversity of the employee population and, while the pandemic accelerated change in the workforce and contributed to a new labor shortage in some industries, the survey showed that only 15% of the companies surveyed revealed data on employee turnover.
  • Climate Change: Companies are under pressure to address climate risks and opportunities in a thoughtful and comprehensive way. With investors and other stakeholders increasingly asking questions about how companies are managing this changing environment and the SEC clearly on the road to proposing new rules related to climate change disclosure, the survey looks at how companies should be thinking about these coming changes in terms of executive compensation trends, energy transition, the role of activist investors and disclosure trends.
  • Diversity, Equity and Inclusion: The most commonly identified categories of board diversity continue to be gender/gender identity and race/ethnicity. The survey shows that the vast majority of companies are disclosing aggregated diversity information for the board, but only about a quarter are providing director-specific diversity information, which is data that companies are increasing being pressed to disclose. The report also revealed that 58% of the companies had boards where woman constituted at least 30% of the seats. Additionally, 89% of the Top 100 companies added one or more female directors since 2018, with 35 companies adding one or more female directors in the year following their 2020 Annual Meeting.
  • Cybersecurity: With cybersecurity becoming increasingly important, 95% of companies surveyed indicated that the board and/or a board committee has a responsibility for cybersecurity matters. The increasing importance was shown in the jump in the number of companies with directors with cybersecurity experience, increasing to 53% in 2021 from 36% in 2019.

In the Corporate Governance & Executive Compensation Survey, Shearman & Sterling reviewed the corporate governance and compensation practices of 100 of the largest U.S. public companies listed on the NYSE or Nasdaq.

In addition to providing a more in-depth look into these areas, the report identifies best practices for boards and covers a range of topics, including shareholder activism trends, energy transition and more.

Read the 19th Annual Corporate Governance & Executive Compensation Survey.

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Authors and Contributors

Richard Alsop

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George Casey

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Doreen E. Lilienfeld

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Gillian Emmett Moldowan

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Lona Nallengara

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Scott Petepiece

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Kristina L. Trauger

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Matthew Behrens

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Natalie Ko

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Gina Lee

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Ilya Mamin

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