Mountain View, CA (December 13, 2017) – Fenwick & West today released its Corporate Governance Survey for the 2017 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. Newly this year, the survey offers a look at various types of majority voting and features of stock ownership guidelines, as well as additional detail on the makeup of executive officers.
The latest survey shows that longtime trends in the S&P 100 and SV 150 continued in the 2017 proxy season with a few exceptions, notably in the areas of dual-class stock structures and classified boards, where SV 150 companies are going their own way, in many cases to maximize protections against the vagaries of short-term market pressures—but also in board leadership where separation of chair and CEO roles is substantially more common.
Highlights of this year's key findings include the following:
Dual-Class Voting Stock Structure
- Adoption of dual-class voting stock structures has emerged as a recent clear trend among Silicon Valley technology companies—among the mid-to-larger SV 150 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 (11.3% in 2016 to 10.9% in 2017) has surpassed the S&P 100 (9.0% in both 2016 and 2017) 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, holding steady at 6.7% for the top 15 companies in the SV 150 while the S&P 100 has been at 4.0% since 2016.
- 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 97% between the 2004 and 2017 proxy seasons. Among SV 150 companies, the rate has risen from zero in the 2005 proxy season to 59.9% in the 2017 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 minimum holding amount and period requirements for executives and directors.
- 2017 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. When measured as a percentage of the total number of directors, the top 15 of the SV 150 now slightly exceed their S&P 100 peers (the top 15 averaged 25.4% women directors in the 2017 proxy season, compared to 23.9% in the S&P 100).
- Companies with at least one woman director went from 74% to 78.2% over the past year for the SV 150. Over a two-year period the percentage of companies with at least one woman director grew by 10 percentage points.
- 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.
- By contrast, the percentage of companies including General Counsel, Chief Legal Officer or a Chief Technology Officer or engineering executive as “executive officers” have been on a long-term upswing.
Complete results of the survey with related discussion are available at Fenwick.com/CorporateGovernance.
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