Nasdaq Launches Center for Corporate Governance, First Report Highlights Focus on Stakeholders Beyond Shareholders
Martyn Chapman Named Executive Director of Nasdaq Center for Corporate Governance
Nasdaq Inc. has launched the Nasdaq Center for Corporate Governance, an information and research platform dedicated to supporting boards, senior executives, and governance professionals at public, private, and nonprofit organizations.
Nasdaq, which works with 4,000 companies listed on its global exchanges but has a total of 9,800 clients, named Martyn Chapman, Head of Strategy for Nasdaq Governance Solutions, as Executive Director of the Center. Kellie Huennekens, a former Ernst & Young executive, was also named Head of Americas and governance consultant Stephen Page was named Head of EMEA.
The Center’s first report, Where Board and Investor Priorities Intersect, assesses governance practices from the S&P 100 companies based on public disclosures. A key theme that arose in the report was shift from a “know your shareholders” tack to a more current “know your stakeholders” approach, giving more attention to issues such as diversity, sustainability, and the environment.
The heavier focus on stakeholders echoes an approach to corporate governance known as The New Paradigm, which was recently designed by Martin Lipton, Founding Partner of Wachtell, Lipton, Rosen & Katz. Mr. Lipton emphasized that corporations exist for many reasons besides the enrichment of their owners, such as benefitting a local community.
Nasdaq’s report found that 80% of reviewed companies highlight environmental or sustainability efforts in their proxy statements, 91% have posted a sustainability report, and 71% have at least one board-level committee charged with oversight of related matters. That emphasis has also led boards to think differently about who they want as new members.
“Boards are now bringing in directors because they have experience related to these topics,” Mr. Chapman said in an interview with CorpGov. “If you read between the lines you can see that board composition and behavior has been impacted by a focus on environmental issues.”
Engagement has also evolved to include a broader range of stakeholders. Some companies said they had focused on more communication with non-governmental organizations and proxy advisory firms, for instance.
When it comes to shareholder communication, another trend has been for directors – not just executives – to engage more directly with investors. Some 92% of companies in Nasdaq’s report disclose shareholder engagement activity and 58% note that directors may participate in – not just oversee – these activities.
“Historically directors have been a little scared [to speak directly to shareholders] but it’s become more common,” Mr. Chapman said. He added that while European companies weren’t in the report, it has “become common for directors there to go out and talk on certain issues such as social responsibility.”
Another finding was that many boards have sought younger directors on their board to get an additional perspective on a business. There has also been an emphasis on geographical diversity, reflecting a desire to have directors who are familiar with the regions where a company operates.
Mr. Chapman also noted that boards have begun to provide more details about how they evaluate potential director candidates. “Boards are now disclosing more about their assessment process,” he said. “They’re defining the attributes of the directors they want and it reflects a commitment to being transparent.”
Some companies have gone even further with highly-specific targeting. Best Buy, for instance, has implemented a “diverse candidate search policy” to ensure a wider range of people on its board, Mr. Chapman said. “The thinking is that if you don’t do something like that, you’re going to wind up coming back with the usual suspects in a director search,” he said.
Contact:
John Jannarone, Editor-in-Chief
www.CorpGov.com
Twitter: @CorpGovernor
