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Fenwick Releases 2015 Trends in Corporate Governance Comparing Silicon Valley 150 and S&P 100

Mountain View, CA (December 10, 2015) – Fenwick & West today released its Corporate Governance Survey for the 2015 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 Stock

  • There is a clear multi-year trend of increasing use of dual-class stock structures among SV 150 companies, which allow founders or other major long-term holders to retain control of a company through special shares with outsized voting rights.
  • Their use has tripled since 2011 to 9.4%, up from 2.9%.

Classified Boards

  • Companies in the S&P 100 have inherent protection from hostile takeovers in part due to their much larger size, so we’ve seen them declassify in recent years from ~47% a little more than a decade ago down to only 10% in the 2015 proxy season (though that is unchanged from 2014).
  • During that same 10 year period the number of SV 150 companies with classified boards has held strong at ~45%.

Insiders

  • While there has been a longer term downward trend in insiders in both groups, the percentage of insider directors has held essentially steady over the past five years in the SV 150 but has declined slightly in the S&P 100 over the same period.

Board Leadership

  • Silicon Valley companies are also substantially less likely to have a combined chair/CEO (35% compared to 76% in the S&P 100).
  • Where there is a board chair separate from the CEO, the S&P 100 are about as likely as SV 150 companies to have a non-insider chair (in the 2015 proxy season, 58% compared to 60%, respectively).

​Gender Diversity

  • Overall, 2015 continued the long term trend in the SV 150 of gradually increasing numbers of women directors (both in absolute numbers and as a percentage of board members), as well as the trend of declining numbers of boards without women members.
  • The rate of increase for the SV 150 continues to be higher than among S&P 100 companies.
  • Women directors make up an average of 19.1% of board members among the top 15 companies of the SV 150, compared to 21.6% among their peers in the S&P 100.
  • The number of SV 150 companies without women directors fell to 48 (compared to 57 in the 2014 proxy season and 72 companies as recently as the 2012 proxy season).

New in 2015

  • The high technology and life sciences companies in the SV 150 held board meetings less often in 2015 (average = 7.8 in 2015 compared to 8.7 in 2014), while S&P 100 companies increased meeting frequency (average =9.1 in 2015 compared to 8.4 in 2014). As a result, for the first time in many years, SV 150 companies skew noticeably toward fewer meetings compared to the S&P 100.
  • The 2015 proxy season continued the long term downward trend in the number of executive officers identified by companies in the S&P 100 and the SV 150. The determination of which officers are “executive officers,” and therefore are subject to a variety of potential additional disclosure requirements and restrictions on stock trading, is a somewhat subjective determination of each company. There has been a clear tightening of that determination by companies over time.
  • Shareholder activism in terms of the number of stockholder proposals required to be included in company proxy statements was down in the 2015 proxy season among SV 150 companies, while it increased among S&P 100 companies. A substantially more detailed review of stockholder proposals and other aspects of annual meeting voting in the SV 150 will be presented in the forthcoming Fenwick publication Results of the 2015 Proxy Season in Silicon Valley: A Comparison of Silicon Valley Public Companies and Other Large Bay Area Public Companies, anticipated to be released in January 2016.

Complete results of the survey with related discussion are posted on Fenwick & ​West’s website at www.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 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 information about a career at Fenwick visit us at fenwick.com/careers.