Spencer Stuart's "Key Voting Policies for 2020 and the Considerations for Boards" augments its recent report: "Institutional Investor Focus 2020: Board Composition" (which we reported on here - see "Investors Focused"), and is a convenient tool for companies seeking to benchmark their board composition-related practices against the proxy voting policies of the largest institutional investors and proxy advisors.
The online resource summarizes institutional investor sentiment across each of the key topics of board diversity, director overboarding, board leadership, and director age/tenure limits; suggests how boards can best respond to institutional investor expectations in these areas; and sets forth the relevant proxy voting policies of BlackRock, Vanguard, State Street, ISS, and Glass Lewis on these topics.
The firm's insights and guidance include:
- Board Diversity - Boards should commit to including female and racial/ethnic minorities in all director searches and should charge their executive search firms accordingly. At a minimum, proxy disclosure should include aggregate breakdowns of the gender and self-identified racial/ethnic composition of the board.
- Director Overboarding - Boards should regularly evaluate each director's other professional, directorship (including private companies), and other obligations, and their capacity for fully engaged board service, and should enhance proxy disclosures on active executives currently serving on more than one outside public company board and any retired executives serving on more than four public company boards.
- Board Leadership - Boards should tailor their leadership structure to their facts and circumstances but use a CEO transition event as an opportunity to consider modifying the current structure. The roles and responsibilities of the independent board chair or lead director should be disclosed in the proxy statement.
- Age/Tenure Limits - Boards should focus on effective evaluation processes in lieu of relying on mandatory retirement policies and tenure limitations to ensure the board is composed of an optimal mix of skills, diversity, and other attributes. Boards should consider periodically retaining an independent facilitator to enhance their evaluation process.
Access institutional investors' policies on our Institutional Investors page, and additional relevant resources on our Board Diversity, Board Composition, Board Leadership, Board/Director Evaluations, and Board/Governance Practices pages. This post first appeared in the weekly Society Alert!