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Corporate Governance Survey 2022, Shearman & Sterling, NYC street view

November 14, 2022

Shearman & Sterling Releases 20th Annual Corporate Governance & Executive Compensation Survey

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SHEARMAN & STERLING RELEASES 20TH ANNUAL CORPORATE GOVERNANCE & EXECUTIVE COMPENSATION SURVEY

Global law firm Shearman & Sterling released the 20th edition of its annual Corporate Governance & Executive Compensation Survey which examines the corporate governance and compensation practices of 100 of the largest U.S. public companies listed on the NYSE and Nasdaq. Shearman & Sterling has been chronicling developments in corporate governance and executive compensation matters since 2003.

While shareholders and boards continue to wrestle with traditional governance concepts, new challenges have emerged for companies that require additional focus from management and boards of directors. This year’s survey found that amid the continued increased calls for transparency by shareholders and other stakeholders and evolving disclosure requirements related to environmental, social and governance (ESG) matters, companies have shifted their focus and commitments in stride. From the increased attention on the board agenda, to the rise of ESG officers to setting climate-related targets and goals, companies are making significant changes to chart a course to respond to the demands presented by a growing number of stakeholders.

As with past years, Shearman & Sterling's survey explores key issues including human capital management; diversity and inclusion (D&I) practices; ESG metrics; cybersecurity and risk management; governance practices of newly public companies; compensation clawback policies; CEO pay ratio; and shareholder activism, among others.

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

  • ESG: More than half (60%) of surveyed companies incorporated ESG metrics into their executive compensation programs - a 19% increase from the previous year. Results also showed a growing emphasis on ESG principles permeating other areas of corporate governance with 73 of the Top 100 Companies setting a net zero carbon/greenhouse gas emissions target and 84 of the Top 100 Companies stating that a “social purpose” is important to the corporation.
  • D&I: Companies vary considerably in how they present information regarding board diversity in their proxy statements. The number of Top 100 Companies that presented information about the diversity of their boards on a director-specific basis increased from 2021 to 2022, from 26 to 43 respectively. The survey also found that 71 of the Top 100 Companies had 30% or more women on the board, up from 58 companies in 2021. Additionally, 15 board chairs of the top 100 Companies are women in 2022, up from 6 in 2021.
  • Human Capital Management: Nearly 75% of companies disclosed information on recruitment and hiring practices; however, only 60% of companies chose to disclose information on turnover or retention rates.
  • Cybersecurity and Risk Management: Cybersecurity, data protection and related risk management discussions continue to be areas of focus for directors. According to the survey, boards and/or board committees are taking on more responsibility for cybersecurity matters, with 56% of companies specifically identifying directors with cybersecurity or data security experience this year, up from 53% in 2021.

Leading up to the release of this report, the SEC has been extremely active. In addition to providing a more in-depth look into these areas, the report provides an overview of the current corporate governance landscape and identifies best practices for boards grappling with these numerous rule proposals.

Read the 20th Annual Corporate Governance & Executive Compensation Survey.

Subscribe to the Shearman & Sterling’s mailing lists for Corporate Governance and other relevant insights.

Authors and Contributors

Richard Alsop

Partner

Capital Markets

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+1 212 848 7333

New York

Lara Aryani

Partner

Mergers & Acquisitions

+1 212 848 7556

+1 212 848 7556

New York

George Casey

Partner

Mergers & Acquisitions

+1 212 848 8787

+1 212 848 8787

New York

Phil Cheveley

Partner

Mergers & Acquisitions

+44 20 7655 5822

+44 20 7655 5822

London

Mark Chorazak

Partner

Financial Institutions Advisory & Financial Regulatory

+1 212 848 7100

+1 212 848 7100

New York

Dan Feldman

Partner

Project Development & Finance

+971 2 410 8158

+971 2 410 8158

Abu Dhabi

Erika Kent

Partner

Capital Markets

+1 212 848 7313

+1 212 848 7313

New York

Emily Leitch

Partner

Capital Markets

+1 713 354 4845

+1 713 354 4845

Houston

Taylor Landry

Partner

Capital Markets

+1 713 354 4893

+1 713 354 4893

Houston

Doreen E. Lilienfeld

Partner

Compensation, Governance & ERISA

+1 212 848 7171

+1 212 848 7171

+1 650 838 3804

+1 650 838 3804

New York

Daniel Litowitz

Partner

Mergers & Acquisitions

+1 212 848 7784

+1 212 848 7784

New York

Gillian Emmett Moldowan

Partner

Compensation, Governance & ERISA

+1 212 848 5356

+1 212 848 5356

New York

Maegen Morrison

Partner

Mergers & Acquisitions

+44 20 7655 5064

+44 20 7655 5064

London

Lona Nallengara

Partner

Capital Markets

+1 212 848 8414

+1 212 848 8414

New York

Scott Petepiece

Partner

Mergers & Acquisitions

+1 212 848 8576

+1 212 848 8576

New York

Omar Samji

Partner

Private Equity

+1 713 354 4887

+1 713 354 4887

Houston

Matthew Behrens

Counsel

Compensation, Governance & ERISA

+1 212 848 7045

+1 212 848 7045

New York

Gabriel Salinas

Counsel

Private Equity

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+1 713 354 4846

Houston

Michael Scargill

Counsel

Mergers & Acquisitions

+44 20 7655 5161

+44 20 7655 5161

London

Melisa Brower

Associate

Compensation, Governance & ERISA

+1 212 848 5070

+1 212 848 5070

New York

Jess Gorski

Associate

Mergers & Acquisitions

+1 212 848 7064

+1 212 848 7064

New York

Giulia La Scala

Associate

Compensation, Governance & ERISA

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+1 212 848 7863

New York

Ilya Mamin

Associate

Capital Markets

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+1 212 848 4564

New York

Karen Mann

Associate

Capital Markets

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+1 212 848 5239

New York

Ryan Robski

Associate

Capital Markets

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+1 416 360 2961

+1 212 848 5140

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Toronto

Stella (Xinyan) Sun

Associate

Capital Markets

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+1 646 434 9238

New York

Lucas Wherry

Associate

Mergers & Acquisitions

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+1 212 848 4057

New York

Humzah Yazdani

Associate

Private Equity

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+1 713 354 4881

Houston