The Equilar Institute provides in-depth research and analysis on boards of directors, shareholder engagement, executive compensation and other issues affecting the world of corporate governance. Below are some key highlights from the last quarter that showcase the in-depth information available in public filings via the Equilar database. Visit www.equilar.com/institute or www.equilar.com/blog.html to read these articles in full as well as many more.
Earlier this year, California became the first state in the U.S. to pass legislation that will require publicly traded companies to have at least one woman on their board. California will most certainly not be the last state to pass a mandate of this nature. An Equilar study examined female representation on Russell 3000 boards across each state to identify any trends and variations between regions.
The study* revealed that just 11 states have an average of two or more female directors on boards. Contrarily, only two states—Utah and Wyoming—have an average of one female director per board, which makes them the least gender diverse among all 50 states. When divided into regions, the Midwest has the highest average number of female directors at 1.9 per board, while the West and South, at 1.5 females per board, have the lowest average of female directors.
Royal Dutch Shell recently announced that it would begin linking executive compensation to carbon emission targets. While Shell is the pioneer in applying this metric, shareholders across many energy companies have long advocated for environmental proposals. An Equilar study examined the prevalence of these proposals and how often they are approved.
This study analyzed the number of environmental shareholder proposals introduced at the annual meetings of public U.S. energy companies from 2010 to 2017. The number of proposals has fluctuated greatly throughout this period, with a large increase from 2012 to 2013 and a high of 28 proposals in 2014. As concern for climate change grows, investors will become more preoccupied with what the failure to adopt more sustainable practices could mean for long-term shareholder return, and it seems that this concern is certainly spreading to board members and company management as well.
While CEO pay is a topic of interest across the U.S., historically, there has been less insight into how it compares to other parts of the globe. In this study, Equilar compared the compensation of CEOs at medium-sized companies in Europe and Canada and those in the U.S. In 2018, the median compensation of CEOs at U.S. mid-sized companies was approximately $5.3 million, while median pay in Canada and Europe was $3.2 million and $4.5 million, respectively. Likely due to variation in the global corporate governance landscape, European CEO pay trends were more volatile across the years involved in the study, experiencing a net decrease of 22% in median pay from $5.5 million in 2014 to $4.5 million in 2018.