“ESG in the Proxy: 5 Expert Tips for Getting It Right” from Clermont Partners suggests action items for companies to bring their proxy statements into alignment with evolving ESG-related expectations, accompanied by examples from 2022 proxy statements. With regard to the board cyber and climate expertise and ESG-linked pay tips specifically, members should be advised that investor views vary considerably on these topics. Many investors and the SEC’s own Investor Advisory Committee don’t support the notion of climate- or cyber-expert directors (see, e.g., note 5 of this Society comment letter; this post; and our report: “Institutional Investors Speak! Portfolio Company Priorities”) or expect ESG-linked pay (see, e.g., last week’s report: “Institutional Investors Weigh in on ESG Engagement & Voting” and positions expressed by BlackRock (p.2), Vanguard (p.13), and State Street).
As with any proposed practice, companies should resist external pressures to act in ways they deem inconsistent with maximizing company-specific long-term shareholder value. That said, for those companies that are seeking climate, cyber, or ESG training for directors or ESG-linked pay guidance or benchmarking for whatever reasons, the Society has plenty of resources for your consideration.
DLA Piper’s “Eight key considerations for 2022 Form 10-K updates” and “Updating risk factors in 2023: Key risks and developments” focus on significant developments or conditions that may warrant risk factor disclosure and/or discussion / disclosure in the MD&A, Business Section, legal proceedings, and financials. Topics include macroeconomic issues, climate, human capital, the Russia – Ukraine conflict, and cybersecurity, among others. The firm’s “Legal and regulatory updates: In planning for 2023, a 2022 review” highlights several new and proposed laws and regulations that may materially impact companies and thus should be considered for current or future disclosure.
Orrick’s “New Disclosure Requirements to Consider for 2022 Fiscal Year End, the 2023 Proxy Season and Beyond” provides a convenient checklist of action items to effect new SEC disclosure and other compliance requirements, together with the source of mandate, disclosure location, and compliance deadlines.
Weil’s “Heads up for the 2023 Proxy Season: Key Disclosure and Engagement Topics” identifies key topics for companies to consider in preparation for shareholder engagement, annual meeting preparation, and proxy statement disclosure, inclusive of tangible action items. Coverage includes executive compensation and human capital disclosure, board leadership and composition, DGCL officer exculpation charter amendment considerations, ESG oversight and disclosure, universal proxy, shareholder proposals, and other annual meeting considerations.
Wilson Sonsini’s “Preparing for the 2023 Proxy Season” discusses an array of key disclosure and governance considerations (including board leadership and risk oversight, board diversity, and E&S disclosure), proxy advisor voting policy updates, shareholder engagement and activism (including universal proxy), and several technical and disclosure-related compliance reminders, in addition to Rule 10b5-1 plans and related disclosure and other considerations. The memo includes a tabular summary of director overboarding policies imposed by ISS, Glass Lewis, BlackRock, Fidelity, and Vanguard.