Mountain View, CA (November 10, 2016) – Fenwick & West today released its Corporate Governance Survey for the 2016 proxy season, providing insight into the management, leadership and governance of technology and life sciences companies in Silicon Valley.
The survey covers more than a decade of governance trends, comparing companies in the S&P 100 and their smaller and younger counterparts in the Silicon Valley 150 (SV 150), highlighting similarities and differences over time.
This year's key findings reveal a number of continued trends:
Dual-Class Voting Stock Structure
- Adoption of dual-class voting stock structures has emerged as a recent clear trend among Silicon Valley technology companies, though it is still a small percentage of companies.
- Historically, dual-class voting stock structures have been significantly more common among S&P 100 companies than among SV 150 companies, though the frequency in the SV 150 (9.4% in 2015 to 11.3% in 2016) has surpassed the S&P 100 (9.0% in both 2015 and 2016) in recent years.
- Classified boards are now significantly more common among SV 150 companies than among S&P 100 companies. Compared to the prior year, classified boards remained fairly consistent for the SV 150 at about half of companies, but decreased for the S&P 100 from 10% in 2015 to 4% in 2016 (in each case consistent with the long term trend for the group).
- The rate of implementation of some form of majority voting has risen substantially over the period of this survey.
- The increase has been particularly dramatic among S&P 100 companies, rising from 10% to 95% between the 2004 and 2016 proxy seasons. Among SV 150 companies, the rate has risen from none in the 2005 proxy season to 55% in the 2016 proxy season.
Stock Ownership Guidelines
- The prevalence of stock ownership guidelines has generally increased over time in both groups but the SV 150 only recently surpassed the level of the S&P 100. This year’s edition of the survey includes additional detail regarding the terms of those guidelines.
Executives and Directors – Equity, Voting Power Ownership
- There is a clear multi-year trend that the distribution of simple equity ownership and voting power ownership skews higher among technology and life sciences companies in the SV 150 than among S&P 100 companies.
- 2016 continued the long-term trend in the SV 150 of increasing numbers of women directors and declining numbers of boards without women members.
- The rate of increase in women directors for SV 150 overall continues to be higher than among S&P 100 companies. The peers of the S&P 100 that are in the SV 150 (the top 15) now have about the same average percentage of women directors as their S&P 100 peers.
- Companies with at least one woman director went from 67.8% to 74% for the SV 150 with distribution ticking up.
Board Size, Meeting Frequency, Leadership
- Combined chair/CEOs existed at about one third of companies in the SV 150, while combined chair/CEOs exist at about 69% of S&P 100.
- SV 150 companies held board meetings more often in 2015 than 2014, while S&P 100 companies decreased meeting frequency in 2015 (companies report meetings for the prior year). SV 150 companies, though, continued to skew noticeably toward fewer meetings compared to the S&P 100.
- Insider directors are more common among members of the boards of SV 150 companies than among board members at S&P 100 companies, though continuing a long-term downward trend.
- The number of directors also tends to be substantially lower among SV 150 companies than among S&P 100 companies.
- Stockholder activism – measured in the form of proposals included in the proxy statements of companies – is substantially lower among the SV 150 than among S&P 100 companies. There is a current general downward trend of stockholder activism in both groups, although the SV 150 has had an upward trend in number of proposals in recent years. This year there were no contested director elections actually held in either group.
- The number of executive officers tends to be substantially lower among SV 150 companies than among the S&P 100, and there continues to be a general decline in the average number of executive officers per company in both groups.
Complete results of the survey with related discussion are available at Fenwick.com/CorporateGovernance.
About the Survey
The Fenwick & West Corporate Governance Survey is authored by law firm partner David A. Bell. The survey provides insight into corporate governance practices of the companies included in the Standard & Poor’s 100 Index (S&P 100) and the high technology and life sciences companies included in the Silicon Valley 150 Index (SV 150) each year. This unique body of information covers corporate governance trends for the period following the passage and implementation of the Sarbanes-Oxley Act of 2002. The survey contains valuable data and intelligence for publicly traded technology and life sciences companies across the U.S. as well as public companies of all sizes and across industries generally.
About Fenwick & West
Fenwick & West LLP provides comprehensive legal services to ground-breaking technology and life sciences companies – at every stage of their lifecycle – and the investors that partner with them. We craft innovative, cost-effective and practical solutions on issues ranging from venture capital, public offerings, joint ventures, M&A and strategic relationships, to intellectual property, litigation and dispute resolution, taxation, antitrust, and employment and labor law. For more than four decades, Fenwick has helped some of the world's most recognized companies become and remain market leaders. For more information, visit fenwick.com.