Ron Schneider, DFIN’s Director of Corporate Governance Services, discussed how early disclosures about the coronavirus pandemic fit with other proxy trends with talk show host TK Kerstetter on an episode of Inside America’s Boardrooms slated to air this week.
Schneider noted that in March and April, when most companies filed their proxies, the effects of the pandemic were only just beginning to be felt, and so there was no clarity on COVID’s likely duration or the extent of impacts to come. Still, he emphasized that companies fell into one of two camps. The first camp viewed “COVID as an event,” and relied upon lengthy CEO and/or board cover levers to highlight impacts to date and to illustrate adjustments that had been made, such as shifting to virtual meetings or restricting travel.
The second approach, said Schneider, was to view “COVID as a lens” that intensified the focus on topics that investors were already keenly interested in. For companies pursuing this approach, COVID could be said to have been a stress test for how they were already sharpening their processes around vital issues such as board oversight of ESG and other risks, a commitment to employee health & safety, work-from-home policies, and supply chain flexibility and resilience.
Schneider also pointed out that some companies have begun to address corporate culture in more detail, couching cultural considerations as “values,” not just “tactics.”
A Look to the Future
Kerstetter asked Schneider to discuss how proxies are ramping up to meet disclosure demands in areas ranging from ESG to diversity & inclusion, human capital, and a heightened sensitivity to Say on Pay.
Here, Schneider noted that companies are moving beyond discussions of external or visible board metrics, such as gender and race and ethnicity, to present a fuller picture of board processes. These processes include a board’s oversight of a growing array of risks and opportunities, including ESG, as well as refreshment exercises to expand diversity and include emerging skills within the boardroom.
Finally, Schneider discussed the publication of the 8th edition of DFIN’s Guide to Effective Proxies. He emphasized that this invaluable guide is available free of charge either by contacting your DFIN representative or by going to https://www.dfinsolutions.com/insights/guide/dfin-s-guide-effective-proxies.