Investor interest and corporate disclosures
Overall, almost three in 10 respondents (29 percent) say investors ask about board refreshment sometimes, frequently or always. More than a third (34 percent) say investors ask occasionally and more than a fifth (22 percent) say it never happens. Company size appears to be a factor in investor interest. A combined 30 percent of respondents at mega-caps say investors ask about board refreshment frequently or always, while none say their investors never ask about the topic.
By comparison, 30 percent of respondents at small-cap companies say investors never ask about board refreshment and 35 percent report that they ask only occasionally.
The levels of investor interest are broadly similar between North America and Europe: a combined 16 percent of respondents in North America say investors ask about board refreshment frequently or always, compared with 14 percent of those in Europe.
On balance, there seems to have been an uptick of investor interest in board refreshment. More than a quarter (27 percent) of respondents report a slight or large increase in the frequency with which investors have asked about the topic over the past 12 months.
Almost two thirds (63 percent) report no change but only 2 percent say there has been a slight drop-off. This appears to be part of a longer-term trend: more than a third (34 percent) report either a slight or large increase in the frequency of questions over the past three years.
The increasing level of scrutiny has ramped up more noticeably at larger companies: 43 percent of respondents at mega-caps say there has been more frequent investor questioning about board refreshment over the past year. This compares with 30 percent of those at large caps, 24 percent at mid-caps and 20 percent at small-cap firms.
Companies are increasingly moving beyond viewing the proxy statement as a simple compliance document. Instead, they are using these annual filings to communicate with their investors, tell their corporate story and respond to social and political issues. One aspect of that is an increasing focus on the board’s composition.
Overall, a majority (81 percent) of respondents say directors’ gender is included in their company’s latest proxy statement. That’s followed by skills (76 percent of respondents), age (65 percent), race/ethnicity (61 percent), sexual orientation (16 percent) and veteran status (8 percent).
Race and ethnicity are mentioned by just 38 percent of respondents at small-cap companies, compared with 67 percent, 68 percent and 75 percent of those at mid-caps, mega-caps and large-cap firms, respectively. Among respondents, only 8 percent of those at mega-caps say directors’ sexual orientation is mentioned in the proxy statement, compared with 15 percent, 19 percent and 20 percent of those at small, mid and large-cap companies, respectively.
More than three quarters (76 percent) of respondents in North America say their company’s proxy statement mentions the race/ethnicity of directors. That compares with less than a third (31 percent) of those in Europe. Disparities are also seen in terms of respondents in North America more frequently saying their company’s proxy statement discloses directors’ sexual orientation, age, skills and veteran status.
Another evolving facet of proxy statement design concerns how to present information – including on board composition. Overall, where they can select more than one option, 84 percent of respondents say their latest proxy statement took a narrative approach, 70 percent say it used a matrix and 54 percent say it included photographs of directors.
Around two thirds of respondents at small caps (63 percent) and large caps (64 percent) say their firm’s proxy statement used a board matrix, while 76 percent of those at mega-caps and 81 percent of those at mid-caps say the same. While 37 percent of those at small caps say their latest proxy statement included directors’ photos, 52 percent, 61 percent and 62 percent of respondents at mega-caps, mid-caps and large caps, respectively, say likewise.
More than four fifths (81 percent) of respondents in North America report using a board matrix – almost double the percentage of those who say the same in Europe (41 percent).
