United States of america: 2021 Corporate Governance Practices and Trends
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Fenwick surveys the corporate governance practices of companies included in the Standard & Poor’s 100 Index (S&P 100) and the technology and life sciences companies included in Fenwick – each year since the passage of the Bloomberg Law Silicon Valley 150 List (SV 150). The Sarbanes-Oxley Act of 2002, which signaled an initial wave of corporate governance reforms among public companies.
In this report, we present statistical information for a subset of data that we have collected over the years, updated for the 2021 proxy season. These include board leadership makeup, majority voting, board classification, the use of a dual-class voting structure size and the number of meetings for boards and their primary committees, and the number of inside directors.
We also included data covering the number of women on the board of directors, stock ownership guidelines for executive officers and directors, executive officer numbers and classifications, and additional information about committees beyond the primary committees. In each case, we present comparative data for the S&P 100 companies and for the technology and life sciences companies included in the SV 150, as well as trend information.
Much of the governance practice and trends from previous years continued into the 2021 proxy season. Notable developments include an increase in gender diversity in both the SV 150 and the S&P 100. We have also seen changes in other key areas, including dual-class voting structure, board classification and majority voting.
Select comments for 2021 include:
- The percentage of female board members is now essentially the same for the SV 150 and the S&P 100, bridging the gap between the smaller technology companies in the S&P 100 and their larger public company counterparts. The percentage of women serving on the boards of SV 150 companies increased from 30.2% in 2021 to 25.7% in 2020. The percentage of women serving on the boards of S&P 100 companies stood at 30.3%, a somewhat smaller increase from 28.7% in 2020. Rate compared to SV 150.
- The adoption of dual-class voting stock structures has recently emerged as a clear trend among Silicon Valley technology companies—including those that have joined the medium-to-large SV150 companies—though it is still the case for companies. is a small percentage. During the past decade, the SV 150 saw a sharp increase in the frequency of the dual-class voting structure (from 2.9% in 2011 to 21.3% in 2021). This rate easily surpassed the S&P 100 (which fell slightly from 9.0% in 2011 to 8.0% in 2021).
- Classified boards are significantly more common among technology and life science companies in the SV 150.
S&P 100 companies. Their use has steadily increased in the SV 150 (from 44.3% in 2015 to 52.1% in the 2021 proxy season). The mid 50 and bottom 50 of the SV 150 were more likely to have classified boards than the larger SV 150 companies, although the mid 50 companies saw a significant drop from 70% in 2020 to 49% in 2021.
- Over the long term, many companies have implemented Some sort of majority vote between both the S&P 100 and the SV 150, although adoption rates have stabilized in recent years and the prevalence is far higher among the S&P 100. Growth has been particularly dramatic among S&P 100 companies, rising from 10% to 96% between the 2004 and 2021 proxy seasons. In the SV150 in technology and life sciences companies, the rate has increased from zero in the 2005 proxy season to 56.3% in the 2021 proxy season.
- SV 150 companies are less likely to have a joint chairman/CEO than S&P 100 companies, with 38.2% and 58.6% holding combined roles, respectively. Between 2004 and 2021, there has been a decline in the percentage of board chairs that are inside for both groups.
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