July 2023 Newsletter

Jul 25, 2023

Executive Pay | Average CEO Compensation Up By 6.25% For FY23

Latest trends show how boards of prominent companies are investing greater attention in balancing shareholder, financial, competitive, and regulatory dimensions while managing remuneration.

CEO compensations have continued to increase, reports the latest leg of Deloitte’s Executive Remuneration Survey. However, the high post-pandemic growth rate seen in FY22 has moderated to 6.25 percent growth in FY23. The size of a company continues to be a large determinant of the CEO/CXO pay. For example, the average CEO pay in the smallest reported revenue segment (<INR 1,000 crore) was 31 percent of that seen in the largest revenue segment (>INR 20,000 crore). The compensation levels for Sales Heads (average: 2.9 crores) surpassed Business Unit Heads (average: 2.82 crores) as more Sales Heads have a pan-India responsibility across businesses. COOs (average – INR 4.8 crore) and CFOs (average – INR 4.2 crore) continue to be amongst the top-earning CXO roles. The average CXO compensation stood at INR 3.2 crore.

Regarding the findings, Aditya Nanavaty, Director, Deloitte India said, “Indian executive talent continues to be highly sought after, including outside India. Rise in executive pay in India also correlates with relatively faster economic growth in India.” “Beyond the overall CTC, executive remuneration decisions today have added design variables like pay- mix, long-term incentive vehicle choice, performance metrics and linkages. Boards of prominent companies are investing greater attention in balancing shareholder, financial, competitive, and regulatory dimensions while managing executive remuneration,” he added, elaborating on the role of Boards in determining remuneration. Here are the key trends in their composition.

The mix of pay suggests a continued focus on ‘pay for performance’. About 56 percent of pay for CEOs and 38 percent of pay for CXOs is ‘at risk’ or variable. Higher pay at risk enables companies to continue to offer higher executive compensation in a competitive market. In case the anticipated performance does not materialize, actual earnings for CEOs/CXOs from the ‘at risk’ component could be lower. Companies are now making their short-term incentive plans more stringent by using more stringent company performance targets. Profitability-linked metrics continue to show the highest prevalence. High emphasis on pay for performance implies that the realized earnings from the ‘at risk’ component could drop to zero in case of poor share price and/or business performance.

About 33 percent of pay for CEOs was in the form of long-term incentives (for example, ESOPs). For CXOs, long-term incentives accounted for 18 percent of pay. Long-term incentives typically accrue or vest to executives over three or more years. 2023 marks the first year where the prevalence of classic stock options as a vehicle for long-term incentives has dropped below 50 percent. Since January 2022, the majority of new long-term incentive proposals to shareholders were for deep-discounted vehicles, such as RSUs and performance shares. An RSU is a deep-discounted stock option with an exercise price equal to the face value of the share. Several RSU proposals without performance conditions received an unfavorable voting recommendation/vote from proxy advisory firms and institutional shareholders. Performance shares (RSUs with performance-linked vesting) are fast emerging as a preferred vehicle for companies, while also being acceptable to proxy advisors and institutional shareholders. FY23 saw several prominent companies in India adopt performance shares as their long-term incentive vehicle for the first time. Read More.

Board Diversity | Challenges In Expanding Diversity In The Boardroom

According to a survey, 60% of the companies surveyed use DEI initiatives to attract talent or to comply with applicable legal requirements; however, only 19% link such DEI initiatives to actual business results or financial performance.

As we have seen over the past number of years and will continue to see throughout 2023, corporations are focused on expanding diversity. This is a laudable goal, but it does not come without legal risks. Legislatures and private citizens alike have taken action against certain diversity, equity, and inclusion (DEI) initiatives. Programs seeking to boost the representation of select demographic groups in executive ranks, boardrooms, and the workforce more broadly have received backlash, particularly when the companies’ goals have numeric targets attached to them.

DEI programming can come in many different forms. Some companies have focused on building the diversity pipeline by offering certain programming, such as fellowships or mentorships, to minority groups, often accompanied by scholarships or monetary grants. Other companies have set multi-year, aspirational goals to increase their workforce diversity generally, or in specific roles. Still, other companies have focused on the power of the purse, looking for opportunities to increase spending with minority and women-owned businesses. Challengers to these programs allege that these initiatives discriminate against individuals outside of the protected group(s) at which they are aimed, in violation of applicable anti-discrimination law. For example, last year an anti-DEI activist group backed a proposed class action against Amazon, alleging that its “Black Business Accelerator” program, which provides $10,000 grants to diverse delivery service entrepreneurs, unlawfully discriminated against non-black-owned businesses in violation of Section 1981. Disgruntled employees also have taken aim at their employers. A white male healthcare executive, for example, received a multi-million-dollar award after claiming his former employer fired him as part of its diversity efforts.

DEI initiatives are also being attacked by activist shareholders. In 2022 alone, the National Center for Public Policy Research (NCPPR), a foundation dedicated to advancing the “conservative movement,” submitted proposals that resulted in 12 companies across various industries, putting the group’s anti-DEI proposals to vote.  Most of these proposals requested that the board commission an audit analyzing the impact of DEI policies on the company’s business, including, in some proposals, the impact on “non-diverse” employees.

Another avenue of attack is DEI policy retraction demands. Since 2021, the American Civil Rights Project (ACRP), a law firm that represents clients such as NCPPR, has sent at least seven retraction demand letters, threatening to sue companies if such companies refused to retract certain DEI policies. These groups have also employed a strategy of sending requests to the Equal Employment Opportunity Commission to open civil rights investigations into companies’ human resources and promotion practices. Such requests can be problematic for employers, given the agency’s ability to use a Commissioner’s charge or a directed investigation to probe individual or, more commonly, systemic discrimination concerns without the need for an aggrieved party to first file a claim.

The Individual Freedom Act, also known as the Stop the Wrongs to Our Kids and Employees Act (the “Stop W.O.K.E.” Act). This Act amends the Florida Civil Rights Act of 1992 by adding a new section to define certain DEI programs as unlawful discrimination if mandated by employers, associations, or certification organizations. The Stop W.O.K.E. Act is drafted broadly, purportedly covering DEI programs that (i) involve training, instruction, or certain other enumerated activities; (ii) espouse, promote, advance, inculcate or compel an individual to believe any of eight identified discriminatory concepts; and (iii) are a condition of employment, membership, certification, licensing, credentialing or passing an examination. The Stop W.O.K.E. Act is the subject of numerous legal challenges.

The European Union (EU) and the United Kingdom (U.K.) have not seen the same degree of activism challenging affirmative action as has occurred in the U.S. This may be partly a reflection of the law being more settled in this area than in the U.S. and partly that there seems to be less controversy amongst politicians over the issue. However, while DEI efforts have publicly been embraced by many organizations, implementation, and progress in Europe has been mixed. A recent survey by PricewaterhouseCoopers (PwC) suggested that some EU organizations have struggled to translate commitments into tangible action plans. According to the survey, 60% of the companies surveyed use DEI initiatives to attract talent or to comply with applicable legal requirements; however, only 19% link such DEI initiatives to actual business results or financial performance. In the U.K., DEI efforts have likewise been embraced, including by the U.K. government, which recently announced a program to promote diversity within the civil service. Nevertheless, at least one report suggests that almost one-third of British companies have not adopted or developed strategic programs to support DEI efforts. It is notable that the substance and focus of DEI varies across geographies. The DEI space is an evolving one, with many companies remaining committed to entrenching diversity, equity, and inclusion in their corporate ethos. These efforts are not risk free, and we fully expect such efforts to remain subject to legal, public relations and other challenges as certain stakeholders continue to push back. Read More.

Industry News | The US Is Building Factories At A Wildly Fast Rate

New data from the Census Bureau reveals construction spending by US manufacturers more than doubled from last year. The US government has offered billions of dollars in subsidies in the electric vehicle, semiconductor, and solar panel industries.

Last year, production at American factories increased, as did the production of factories themselves. According to data from the Census Bureau released last week, construction spending by US manufacturers more than doubled over the past year. For April 2023, the annual rate reached nearly $190 billion, compared with $90 billion in June 2022, with manufacturing accounting for around 13% of non-government construction.

The US government has offered billions of dollars in subsidies for the production of electric vehicles and solar panels to compete with countries such as China and to fortify US leadership in sectors including clean energy. According to the World Bank, China makes up around 30% of global value added from manufacturing, about double the US. Over the last few decades, Asia has taken up a greater share of global factory manufacturing. Factories are being constructed everywhere, from deserts to resort towns, as the US tries to bring back manufacturing of goods commonly imported from lower-cost countries. Many battery and electric vehicle factories have popped up in the Rust Belt, while solar panel and renewable energy factories now span much of the South and Southeast.

The US has added around 800,000 jobs in manufacturing employment over the last two years, employing around 13 million workers, per the May Bureau of Labor Statistics jobs report. However, according to the National Association of Manufacturers, the manufacturing skills gap, caused by the labor market’s struggle to find workers with highly technical and manual expertise, could lead to 2.1 million unfilled jobs by 2030. Manufacturing, though, has accelerated its move back to the US from other countries over the past year. According to Kearney’s 2022 Reshoring Index, 96% of American companies have shifted production to the US or are evaluating reshoring operations, a spike from 78% in the 2021 index. The sudden rise in factory construction corresponds with the passage of the CHIPS and Science Act in July 2022, which provided $280 billion in funding to boost the manufacturing of semiconductors, as well as the Inflation Reduction Act in August 2022. The IRA has sought to create new jobs in manufacturing, construction, and renewable energy, which are estimated to create up to 1.5 million jobs by 2030. Construction spending in most areas of the US economy has fallen, including office, health care, and educational construction. Residential construction has also declined amid a big cooldown from the pandemic housing market boom.

Census Bureau data reveals manufacturing construction spending has escalated from January 2020 until April 2023 in every region except New England and the Mid-Atlantic. While the spending boom could lead to a future manufacturing boom, the new factories need to actually get built first. Much of this spending may go toward legal setbacks or delays from the National Environmental Policy Act, which requires projects with federal involvement to conduct environmental impact reviews. Some Chinese companies have recently moved their supply chains out of the country, following in the footsteps of some Western countries following the 2018 trade war with China. Tensions with the US and rising costs have pushed some Chinese companies to look to India, Thailand, and Vietnam for manufacturing. Read More.

Board Effectiveness | 6 C’s For Cultivating A More Engaged & Effective Board

Optimal inputs of different members with different areas of expertise can make a board even more effective. With questionnaires, board members can find focus on relevant areas instead of usual review of sales figures or product development. Today’s managers recognize the impact that measures have on performance. But they rarely think of measurement as an essential part of their strategy. For example, executives may introduce new strategies and innovative operating processes intended to achieve breakthrough performance, then continue to use the same short-term financial indicators they have used for decades, measures like return-on-investment, sales growth, and operating income. These managers fail not only to introduce new measures to monitor new goals and processes but also to question whether or not their old measures are relevant to the new initiatives.

Effective measurement, however, must be an integral part of the management process. The balanced scorecard, first proposed in the January-February 1992 issue of HBR (“The Balanced Scorecard—Measures that Drive Performance”), provides executives with a comprehensive framework that translates a company’s strategic objectives into a coherent set of performance measures. Much more than a measurement exercise, the balanced scorecard is a management system that can motivate breakthrough improvements in such critical areas as product, process, customer, and market development.

The scorecard presents managers with four different perspectives from which to choose measures. It complements traditional financial indicators with measures of performance for customers, internal processes, and innovation and improvement activities. These measures differ from those traditionally used by companies in a few important ways. Clearly, many companies already have myriad operational and physical measures for local activities. But these local measures are bottom-up and derived from ad hoc processes. The scorecard’s measures, on the other hand, are grounded in an organization’s strategic objectives and competitive demands. And, by requiring managers to select a limited number of critical indicators within each of the four perspectives, the scorecard helps focus this strategic vision.

In addition, while traditional financial measures report on what happened last period without indicating how managers can improve performance in the next, the scorecard functions as the cornerstone of a company’s current and future success. Moreover, unlike conventional metrics, the information from the four perspectives provides a balance between external measures like operating income and internal measures like new product development. This balanced set of measures both reveals the trade-offs that managers have already made among performance measures and encourages them to achieve their goals in the future without making trade-offs among key success factors.

Finally, many companies that are now attempting to implement local improvement programs such as process reengineering, total quality, and employee empowerment lack a sense of integration. The balanced scorecard can serve as the focal point for the organization’s efforts, defining and communicating priorities to managers, employees, investors, and even customers. As a senior executive at one major company said, “Previously, the one-year budget was our primary management planning device. The balanced scorecard is now used as the language, the benchmark against which all new projects and businesses are evaluated.”

The balanced scorecard is not a template that can be applied to businesses in general or even industry-wide. Different market situations, product strategies, and competitive environments require different scorecards. Business units devise customized scorecards to fit their mission, strategy, technology, and culture. In fact, a critical test of a scorecard’s success is its transparency: from the 15 to 20 scorecard measures, an observer should be able to see through to the business unit’s competitive strategy. A few examples will illustrate how the scorecard uniquely combines management and measurement in different companies.

Rockwater, a wholly-owned subsidiary of Brown & Root/Halliburton, a global engineering and construction company, is a worldwide leader in underwater engineering and construction. Norman Chambers, hired as CEO in late 1989, knew that the industry’s competitive world had changed dramatically. “In the 1970s, we were a bunch of guys in wet suits diving off barges into the North Sea with burning torches,” Chambers said. But competition in the subsea contracting business had become keener in the 1980s, and many smaller companies left the industry. In addition, the focus of competition had shifted. Several leading oil companies wanted to develop long-term partnerships with their suppliers rather than choose suppliers based on low-price competition.

With his senior management team, Chambers developed a vision: “As our customers’ preferred provider, we shall be the industry leader in providing the highest standards of safety and quality to our clients.” He also developed a strategy to implement the vision. The five elements of that strategy were: services that surpass customers’ expectations and needs; high levels of customer satisfaction; continuous improvement of safety, equipment reliability, responsiveness, and cost effectiveness; high-quality employees; and realization of shareholder expectations. Those elements were in turn developed into strategic objectives (see the chart “Rockwater’s Strategic Objectives”). If, however, the strategic objectives were to create value for the company, they had to be translated into tangible goals and actions.

The financial perspective included three measures of importance to the shareholder. Return-on-capital-employed and cash flow reflected preferences for short-term results, while forecast reliability signaled the corporate parent’s desire to reduce the historical uncertainty caused by unexpected variations in performance. Rockwater management added two financial measures. Project profitability provided focus on the project as the basic unit for planning and control, and sales backlog helped reduce the uncertainty of performance. Rockwater wanted to recognize the distinction between its two types of customers: Tier I customers, oil companies that wanted a high value-added relationship, and Tier II customers, those that chose suppliers solely on the basis of price. A price index, incorporating the best available intelligence on competitive position, was included to ensure that Rockwater could still retain Tier II customers’ business when required by competitive conditions.

The company’s strategy, however, was to emphasize value-based business. An independent organization conducted an annual survey to rank customers’ perceptions of Rockwater’s services compared to those of its competitors. In addition, Tier I customers were asked to supply monthly satisfaction and performance ratings. Rockwater executives felt that implementing these ratings gave them a direct tie to their customers and a level of market feedback unsurpassed in most industries. Finally, market share by key accounts provided objective evidence that improvements in customer satisfaction were being translated into tangible benefits. To develop measures of internal processes, Rockwater executives defined the life cycle of a project from launch (when a customer need was recognized) to completion (when the customer need had been satisfied).

The internal business measures emphasized a major shift in Rockwater’s thinking. Formerly, the company stressed performance for each functional department. The new focus emphasized measures that integrated key business processes. The development of a comprehensive and timely index of project effectiveness was viewed as a key core competency for the company. Rockwater felt that safety was also a major competitive factor. Internal studies had revealed that the indirect costs of an accident could be 5 to 50 times the direct costs. The scorecard included a safety index, derived from a comprehensive safety measurement system, that could identify and classify all undesirable events with the potential for harm to people, property, or processes.

The Rockwater team deliberated about the choice of metric for the identification stage. It recognized that hours spent with key prospects discussing new work were an input or process measure rather than an output measure. The management team wanted a metric that would clearly communicate to all members of the organization the importance of building relationships with and satisfying customers. The team believed that spending quality time with key customers was a prerequisite for influencing results. This input measure was deliberately chosen to educate employees about the importance of working closely to identify and satisfy customer needs.

The innovation and learning objectives are intended to drive improvement in financial, customer, and internal process performance. At Rockwater, such improvements came from product and service innovation that would create new sources of revenue and market expansion, as well as from continuous improvement in internal work processes. The first objective was measured by percent revenue from new services, and the second objective was by a continuous improvement index that represented the rate of improvement of several key operational measures, such as safety and rework. But in order to drive both product or service innovation and operational improvements, a supportive climate of empowered, motivated employees was believed necessary. A staff attitude survey and a metric for the number of employee suggestions measured whether or not such a climate was being created. Finally, revenue per employee measured the outcomes of employee commitment and training programs.

The balanced scorecard has helped Rockwater’s management emphasize a process view of operations, motivate its employees, and incorporate client feedback into its operations. It developed a consensus on the necessity of creating partnerships with key customers, the importance of order-of-magnitude reductions in safety-related incidents, and the need for improved management at every phase of multiyear projects. Chambers sees the scorecard as an invaluable tool to help his company ultimately achieve its mission: to be number one in the industry. Read More.

Board Composition And Independence | Key Trends In Investor Voting For AGM Season

Institutional investors seek to ensure that boards and their various committees act with independence. Many investors see higher levels of board independence as a sign of corporate accountability to investors and better oversight of the business.

Investor engagement has taken off. Many large investors today spend time thinking about and assessing the effectiveness of their corporate engagement. Asset owners and asset managers often formally communicate with companies through direct engagement and by voting at annual general meetings (AGMs). There are other means of engagement, however, which are worth understanding. For example, investors often publish how they intend to vote on key issues at the AGM.

The Deloitte Global Boardroom Program analyzed voting policies of 101 large investors to highlight investor concerns for the 2022 AGM season on a selection of headline topics (see sidebar): environmental, social and governance (ESG), diversity, equity and inclusion (DEI), board composition and board independence, and executive pay. The analysis revealed that institutional investors across regions are seeking disclosure on environmental issues from the companies they invest in. Intentions to vote on board diversity and independence appeared more varied across geographies. And executive remuneration continues to attract considerable scrutiny from institutional investors with many adopting say-on-pay policies. Institutional investors are increasingly seeking more disclosure on ESG-related issues, specifically climate, from the companies they invest in.

An analysis of the shareholder voting policies showed that nearly half or more of investors across Australia, the UK, and the US called for reporting aligned with the Task Force on Climate-Related Disclosure (TCFD) guidelines. The level of interest in TCFD-aligned disclosures was higher among local voting policies compared to global voting policies analyzed. Over half of US, investors sought disclosures of industry-specific metrics published by the Sustainability Accounting Standards Board (SASB). In contrast, only one in five global investors expected that their investee companies should follow SASB industry-specific guidance. In the UK, over half of investors asked companies to align their targets with other specific metrics, such as the Paris Agreement’s 1.5°C target. Both global and local investors referred to a wide range of specific ESG policies in their voting policies. These included the UN Sustainable Development Goals (UN SDG), science-based target (SBT) setting, net-zero, or environment-related.

Among the five countries where investor voting policies were reviewed, the UK and the US had the highest number of investors discussing diversity, equity, and inclusion (DEI) in their voting guidelines. Levels of integration with voting policies varied considerably, however. Among the voting policies analyzed, the investor policies in the US and the UK more frequently discussed the topic of gender diversity compared to the policies of global investors. Two-thirds of UK and three-quarters of US institutional investors also highlighted the importance of ethnic diversity considerations in their voting policies. These investors were also far more likely to set out specific diversity targets than the global average. Just under half of global investors included in this review have voting guidelines that either expressed a specific view about gender diversity with or without a target.

Institutional investors seek to ensure that boards and their various committees act with independence. Many investors see higher levels of board independence as a sign of corporate accountability to investors and better oversight of the business. More than half of the voting policies published by global investors in the review referred to having a minimum number of independent (or ‘outside’) directors on the board. Among local investors, the appointment of multiple independent directors to the board featured prominently among UK investor guidelines, with three out of five UK voting policies supporting a minimum number of independent directors—and, reflecting the principle in the UK Corporate Governance Code. The number of local investors in Japan that require a minimum number of independent directors is even higher than that of global or UK investor voting guidelines.

Institutional investors also focused on who serves on the board’s compensation (also known as remuneration) and audit committees. About half of global investors expect those committees to be fully comprised of independent directors. UK and US voting policies more frequently set out independence requirements for the audit and compensation committees, with nearly all asking for this, reflecting the long-standing Corporate Governance Code and Stock Exchange Listing Rules respectively. When it comes to the independence of the board chair, nearly two-thirds of global voting policies asked for chair independence, and more than half of the policies opposed or expressed concern over instances where the role of CEO and board chair are held by the same person. Similarly, just over half of US-based and Australia-based investors expressed reservations about boards with a combined chair/CEO. Prolonged director tenure is another area of investor concern. Approximately two out of five global and UK voting policies set out expectations for the maximum tenure for independent directors. More nuanced trends on a maximum tenure period for board members were seen among investors in Japan (one in three) and the US (one in four).

Investor voting policies often included expectations relating to executive pay. In many cases, voting policies appeared to call for clarity over the board’s approach to seeking shareholder engagement around remuneration policies, including a call for a ‘say-on-pay’ vote. Over half of the global voting policies expected companies to disclose details on shareholder engagement regarding pay policy proposals, the outcomes of such engagement, and the board’s response to shareholder concerns. The emphasis on other remuneration-related topics varied across geographies. Four in 10 global voting policies appeared to draw attention to the exercise of discretion over long-term benefits or bonuses – a higher rate than local voting policies reviewed. Investors in the US, Japan, Italy, and particularly in the UK commented on pension contributions. Half of US voting policies called for disclosures on retention bonus payments. Despite half of the Australian voting policies calling for investor engagement on remuneration, they seldom list specific remuneration-related topic areas in their voting policies.

The 2022 AGM season saw a high degree of interest in ESG-related proposals. In the US, for example, shareholders filed more than 500 resolutions on ESG matters. Among them, environment-focused resolutions were the most popular, and approximately one in four of these climate change-related proposals passed with majority support. For the first time, social proposals requesting civil rights/equity audits and reports on gender/racial pay gaps received majority support in several cases. UK AGMs saw a rise in the number of companies putting forward voluntary “say-on-climate” resolutions – for investors to vote on companies’ climate policies – and this year’s AGM season saw a total of 16. During the AGM season, one company’s climate transition plan failed to achieve majority support from shareholders and four high-profile companies faced opposition to their climate transition plans from a significant minority. Opposing shareholders demanded more ambitious transition plans, shorter timeframes for decarbonization, and alignment of management incentives to the company’s climate strategy.

Similar trends were seen in Australia, Italy, and Japan. In Australia, where close to 60% of the largest 100 companies already follow the recommendations of the TCFD, investors’ increasing focus on ESG risks impacted investors’ assessment of directors and their election/re-election. Say-on-climate emerged as a new topic on AGM agendas in Italy, with one company actively asking their shareholders to vote on their climate action plan to reduce greenhouse gas emissions and transition to electricity from renewable sources.  In Japan, the number of shareholders making climate change-related proposals has reached a historic high, increasing by 60% since 2021. During the 2022 AGM season, executive pay was a hot topic in multiple countries. In Italy, proposals relating to executive pay were the most contested. In Japan, remuneration reports were increasingly scrutinized—particularly with respect to retirement benefits—with some institutional investors opposing proposals on retirement benefits.  A record number of Australian companies faced shareholder backlash over their remuneration reports in the 2021 AGM season, although the trend appeared to have been more muted in 2022.

Executive remuneration proved to be an important topic in the UK as well. 19 of the FTSE100 companies received less than 90% support on their remuneration reports which was at a similar level as the previous year.   In contrast, in the US, the overall number of shareholder proposals related to executive compensation declined from 49 in 2021 to 36 during the 2022 voting season. However, there were more proposals seeking shareholder approval of severance agreements, from two in 2021 to 16 in 2022. This was largely due to a small group of activist shareholders receiving support from nearly half of the shareholders at companies where it was brought to a vote. This seems to reflect increasing concern about large payoffs for departing executives, similar to concerns observed in Japan.

In conclusion, shareholders appear to be doubling down on ESG-related proposals in their voting policies, particularly those related to climate change and decarbonization. In terms of social concerns ─ the ‘S’ in ESG ─ diversity, was the standout topic, mentioned to varying degrees across almost all global and local investors, especially in the UK and US. DEI topics beyond gender equity appear to have emerged as key topics in the US and UK but are yet to become prominent topics in global and other local voting policies.

Traditional AGM topics including board independence and composition, and remuneration also attracted investor interest. Prominent topics in 2022 included the appointment of independent directors, committee membership, and chair independence. Investor voting policies, both globally and locally, emphasized the importance of shareholder engagement in director remuneration such as through ‘say-on-pay’ votes and bonuses. As we look to the future, ESG-related topics will likely play an increasing role in the voting guidelines of both global and local investors, indicating a growing interest in the topic by investors. Moving forward, companies will likely face more demanding investors seeking to talk about an ever-widening series of topics – as well as an evolving set of investor voting guidelines that reflect the evolution of societal concerns. Read More.

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