The Informed Board

Investors often believe that companies are too slow to refresh their boards.  Directors and CEOs may also think that their companies do not have the right mix of directors, as strategies change and some directors’ skills become dated. 

Yet annual board turnover remains low and fairly steady, Spencer Stuart partner Laurel McCarthy tells podcast host, Skadden M&A partner Ann Beth Stebbins. Together with Skadden partner, Elizabeth Gonzalez-Sussman, Laurel and Ann Beth discuss the ways boards should approach refreshment, and the risk that they could be targeted by activist investors if they do not replace directors regularly. 

Many board policies do not encourage refreshment. The typical mandatory retirement age for S&P 500 directors, has been increasing, and is now at age 75. “We usually don’t see many stats that surprise us in our annual board index, but this one did,” Laurel says. At the same time, the number of boards with mandatory retirement ages has been dropping. 

Meanwhile, board term limits, when present in a company’s bylaws, are usually generous — 15 or 20 years. Proxy advisory services do not have prescriptive policies on term limits, but they question the independence of directors who have served for more than nine years on a board. 

As Laurel and Elizabeth explain, age and term limits can encourage turnover, but they should not be the sole mechanism. Boards need to continually analyze the skills required by the board in light of a company’s changing strategies, and develop pipelines of potential new directors to fill those needs.

Elizabeth points out that companies that have a number of long-tenured directors may be vulnerable to activist investor campaigns if the company underperforms. Demands that a company appoint new directors to improve performance often figure prominently in activist campaigns.

Some investors may favor adding younger board members, particularly where the customer base is young or if technology is central to the business, Elizabeth says. 

In evaluating potential board members, Laurel and Elizabeth suggest prioritizing candidates who have recent experience, are good cultural fits and ask tough questions that management should be prepared to answer. 

Ultimately, they advise boards to be proactive, as succession planning and maintaining a pipeline of potential directors is critical to a company’s future performance. 

Name: Ann Beth Stebbins

Title: Partner at Skadden

Connect: LinkedIn

Name: Laurel McCarthy

Title: Consultant, Board and CEO Practice, Spencer Stuart

Connect: LinkedIn

Name: Elizabeth Gonzalez-Sussman 

Title: Partner, Shareholder Engagement and Activism, Skadden

Connect: LinkedIn

☑️ Follow us on X & LinkedIn.

☑️ Subscribe to The Informed Board on Apple Podcasts, Spotify, Google Podcasts, or your favorite podcast app.

☑️ Let us know what topics you would like to hear about on The Informed Board by reaching out to us at [email protected].

The Informed Board is a podcast by Skadden, Arps, Slate, Meagher & Flom LLP, and Affiliates. This podcast is provided for educational and informational purposes only and is not intended and should not be construed as legal advice. This podcast is considered advertising under applicable state laws.

What do investors think makes a board effective? Skadden M&A partner Ann Beth Stebbins kicks off the discussion with that question with her guests, Allie Rutherford and Adrienne Monley of PTJ Camberview, which advises companies on shareholder relations. 

It's a board that evolves with the trends, says Allie. It's a board that discloses its composition in a way that conveys how the skill sets and the experiences of particular directors and directors in combination meet the business and strategy needs of the particular company.

Companies need to show investors that they have right directors and that those people are doing the right things as a team, following practices and engaging together in a way that supports value creation, says Adrienne. It is incumbent upon companies to be specific and help investors understand, perhaps through anecdotes, the human perspective about what's happening in the boardroom — how they run meetings and bring in outside voices, for example. Being generous with those descriptions, both in written disclosures and in engagement with investors, will help promote where investor support and understanding.

In terms of directors' skill sets, not everybody has to have every skill. It's how all of those come together, says Allie. And boards can supplement that by bringing in outside expertise.

Investors also want a board to be doing things that improve the efficacy and the functioning of the board as a team, says Adrienne. As a result, today more board self-assessments include things like independent interviews.

Because few investors have first-hand boardroom experience, it can be helpful to have direct discussions with your top investors about the board's functioning, says Adrienne. 

Name: Ann Beth Stebbins

Title: Partner at Skadden

Connect: LinkedIn

Name: Allie Rutherford   

Title: Partner, PJT Camberview    

Connect: LinkedIn  

Name: Adrienne Monley     

Title: Managing Director, PJT Camberview    

Connect: LinkedIn  

☑️ Follow us on X & LinkedIn.

☑️ Subscribe to The Informed Board on Apple Podcasts, Spotify, Google Podcasts, or your favorite podcast app.

☑️ Let us know what topics you would like to hear about on The Informed Board by reaching out to us at [email protected].

The Informed Board is a podcast by Skadden, Arps, Slate, Meagher & Flom LLP, and Affiliates. This podcast is provided for educational and informational purposes only and is not intended and should not be construed as legal advice. This podcast is considered advertising under applicable state laws.

In this episode of the Informed Board podcast, our host, Skadden M&A partner Ann Beth Stebbins is joined by guest, Rebecca Corbin from Corbin Advisors, to explore the critical role that board directors play in shareholder engagement. Corbin stresses that a proactive approach toward shareholder engagement can enhance a company’s value. 

In their conversation, Ann Beth and Rebecca discuss how a board can best stay attuned to investor sentiment, the practical actions a company can take to raise the profile of its directors, and the role of the board in spreading the culture and message of the company.

Looking at topics that investors are focused on, the episode explains that corporate culture, if communicated effectively, can give a company a competitive edge with investors. Future-readiness is another key theme, highlighting the necessity for boards to have diversified skill sets that align with the company's strategic objectives.

This episode serves as an insightful guide to the world of proactive shareholder engagement, emphasizing the role directors can play as value-enhancing ambassadors of a company.

Name: Ann Beth Stebbins

Title: Partner at Skadden

Connect: LinkedIn

Name: Rebecca Corbin

Title: Founder & CEO at Corbin Advisors

Connect: LinkedIn

☑️ Follow us on Twitter & LinkedIn.

☑️ Subscribe to The Informed Board on Apple Podcasts, Spotify, Google Podcasts, or your favorite podcast app.

☑️ Let us know what topics you would like to hear about on The Informed Board by reaching out to us at [email protected].

The Informed Board is a podcast by Skadden, Arps, Slate, Meagher & Flom LLP, and Affiliates. This podcast is provided for educational and informational purposes only and is not intended and should not be construed as legal advice. This podcast is considered advertising under applicable state laws.

“There’s certainly an argument to be made, that the moment you name a new CEO, then you ought to be starting to think about who the next person is,” says Blair Jones. 

In this episode of the Informed Board podcast, our host, Skadden M&A partner Ann Beth Stebbins, is joined by guests, Blair Jones, a managing director at Semler Brossy Consulting Group LLC, and Erica Schohn, partner and head of the Executive Compensation and Benefits Practice at Skadden, to explore best practices in CEO succession planning. They highlight the importance of preparedness, noting that a well-conceived succession program should serve as a contingency plan for unforeseen events, as well as for orderly retirement of a CEO.

The trio emphasize that succession planning should be an annual event, allowing for adjustments as business strategy evolves. They also discuss the necessity of having multiple candidates and keeping them incentivized, including those not selected for the CEO position. A key issue is the current CEO’s role in succession planning. Typically, the CEO will be involved, but ultimately it falls to the board to make the final decision.

The guests also highlight emerging trends in succession planning, including the use of external assessments, the role of executive chairs and the development of next-level candidates. They conclude that, while companies lean toward internal candidates during planned successions, external candidates are more likely to be considered in the case of unexpected transitions or  shifts in business strategy.

Name: Ann Beth Stebbins

Title: Partner at Skadden

Connect: LinkedIn

Name: Erica Schohn

Title: Partner at Skadden

Connect: LinkedIn

Name: Blair Jones

Title: Managing Director at Semler Brossy Consulting Group, LLC

Connect: LinkedIn

☑️ Follow us on Twitter & LinkedIn.

☑️ Subscribe to The Informed Board on Apple Podcasts, Spotify, Google Podcasts, or your favorite podcast app.

☑️ Let us know what topics you would like to hear about on The Informed Board by reaching out to us at [email protected].

The Informed Board is a podcast by Skadden, Arps, Slate, Meagher & Flom LLP, and Affiliates. This podcast is provided for educational and informational purposes only and is not intended and should not be construed as legal advice. This podcast is considered advertising under applicable state laws.

Skadden partners Ann Beth Stebbins, David Schwartz and Lara Flath discuss the implications for US companies of the Supreme Court’s decision in June striking down race-based affirmative action programs in higher education. David Schwartz is global head of Skadden’s labor and employment group, and Lara Flath is a Skadden litigation partner who represented the University of North Carolina (UNC) in the litigation relating to its consideration of race in the admissions process.

Name: Ann Beth Stebbins

Title: Partner at Skadden

Connect: LinkedIn

Name: David E. Schwartz 

Title:  Partner at Skadden

Connect: LinkedIn

Name: Lara A. Flath  

Title:  Partner at Skadden

Connect: LinkedIn

☑️ Follow us on Twitter & LinkedIn.

☑️ Subscribe to The Informed Board on Apple Podcasts, Spotify, Google Podcasts, or your favorite podcast app.

☑️ Let us know what topics you would like to hear about on The Informed Board by reaching out to us at [email protected].

The Informed Board is a podcast by Skadden, Arps, Slate, Meagher & Flom LLP, and Affiliates. This podcast is provided for educational and informational purposes only and is not intended and should not be construed as legal advice. This podcast is considered advertising under applicable state laws.

Companies now face an additional regulatory hurdle when making acquisitions in the European Union. In addition to merger control and foreign direct investment (FDI) filings, they will be subject to the EU’s new Foreign Subsidies Regulation (FSR), Skadden partner Giorgio Motta explains. The law, which took effect in July, allows the European Commission to look into acquisitions of, and investments in, businesses in Europe by non-EU companies that have received some sort of financial support from a non-EU government.

Read the full summary of the conversation HERE.

Name: Ann Beth Stebbins

Title: Partner at Skadden

Connect: LinkedIn

Name: Giorgio Motta

Title:  Partner at Skadden

Connect: LinkedIn

☑️ Follow us on Twitter & LinkedIn.

☑️ Subscribe to The Informed Board on Apple Podcasts, Spotify, Google Podcasts, or your favorite podcast app.

☑️ Let us know what topics you would like to hear about on The Informed Board by reaching out to us at [email protected].

The Informed Board is a podcast by Skadden, Arps, Slate, Meagher & Flom LLP, and Affiliates. This podcast is provided for educational and informational purposes only and is not intended and should not be construed as legal advice. This podcast is considered advertising under applicable state laws.

In 2022, the U.S. restricted technology exports to China that might have military uses, and an executive order is expected soon limiting investments in certain Chinese tech companies. Skadden M&A partner Ann Beth Stebbins leads a discussion about the reasons for the rules and their impact on companies doing business in China. Joining her are Jessie Liu, a partner in Skadden’s White Collar Defense and Investigations Group, and partner Brian Egan of the firm’s National Security, CFIUS and International Trade Groups.

Read the full summary of the conversation HERE.

Name: Ann Beth Stebbins

Title: Partner at Skadden

Connect: LinkedIn

Name:  Jessie Liu

Title:  Partner at Skadden

Connect: LinkedIn

Name:  Brian Egan

Title:  Partner at Skadden

Connect: LinkedIn

☑️ Follow us on Twitter & LinkedIn.

☑️ Subscribe to The Informed Board on Apple Podcasts, Spotify, Google Podcasts, or your favorite podcast app.

☑️ Let us know what topics you would like to hear about on The Informed Board by reaching out to us at [email protected].

The Informed Board is a podcast by Skadden, Arps, Slate, Meagher & Flom LLP, and Affiliates. This podcast is provided for educational and informational purposes only and is not intended and should not be construed as legal advice. This podcast is considered advertising under applicable state laws.

The SEC’s Rule 14a-8, which gives shareholders the right to put proposals to a vote of other shareholders, was adopted to allow shareholders access to other shareholders and management, BlackRock Head of External Affairs Dalia Blass explained. But it came with some protections to prevent proposals that would be a waste of time, such as those that had little to do with the company’s business. Ahead of the 2022 proxy season, the SEC changed its approach, making it harder for companies to exclude shareholder proposals, even highly prescriptive or granular, micromanaging measures.

Read the full summary of the conversation HERE.

Dalia Blas - BlackRock

Marc Gerber - Skadden

Gabrielle Wolf - Innisfree M&A

☑️ Follow us on Twitter & LinkedIn.

☑️ Subscribe to The Informed Board on Apple Podcasts, Spotify, Google Podcasts, or your favorite podcast app.

☑️ Let us know what topics you would like to hear about on The Informed Board by reaching out to us at info [email protected].

The Informed Board is a podcast by Skadden, Arps, Slate, Meagher & Flom LLP, and Affiliates. This podcast is provided for educational and informational purposes only and is not intended and should not be construed as legal advice. This podcast is considered advertising under applicable state laws.

In a move intended to “democratize” shareholder voting, several large index funds are giving their investors a say in how shares are voted, instead of leaving those choices to fund managers’ stewardship teams. In the pilot projects, aimed primarily at institutional investors, fund investors are given several options: to vote as the fund manager’s stewardship team recommends; to vote with management; to vote according to an advisor; or possibly some other formula to be administered by the fund manager.

Read the full summary of the conversation HERE.

Name: Ann Beth Stebbins

Title: Partner at Skadden

Connect: LinkedIn

Dalia Blas - BlackRock

Marc Gerber - Skadden

Gabrielle Wolf - Innisfree M&A

☑️ Follow us on Twitter & LinkedIn.

☑️ Subscribe to The Informed Board on Apple Podcasts, Spotify, Google Podcasts, or your favorite podcast app.

☑️ Let us know what topics you would like to hear about on The Informed Board by reaching out to us at info [email protected].

The Informed Board is a podcast by Skadden, Arps, Slate, Meagher & Flom LLP, and Affiliates. This podcast is provided for educational and informational purposes only and is not intended and should not be construed as legal advice. This podcast is considered advertising under applicable state laws.

Skadden partners Ann Beth Stebbins and Ki Hong, Joele Frank partner Jamie Moser and the chief people officer of Duck Creek Technologies, Courtney Townsend, discuss the demands companies face to take positions on political and social issues and growing scrutiny of corporate political contributions.

Corporate culture is important to today’s work force, and employees often expect their employers to speak out on political and social issues that are important to them. Employees are also increasingly aware of a company’s political contributions.

Understanding employee perspectives on issues that are important to them is vital, says Townsend. Management can stay in touch with the employee base through surveys, round tables or on-to-one conversations, for example. What is important to employees has become important to the business. 

It is increasingly difficult for a company to avoid weighing in on political and social issues, even if  those issues do not directly affect its operations. But a company needs to have a policy to guide decisions about which issues it will address.

Four factors are driving the pressure from employees, says Joele Frank partner Jamie Moser. First, a new generation of workers wants to produce and consume products and work in an environment aligned with their values. Second, social media has increased the visibility of political and social issues and made the need to respond seem more urgent. Third, political polarization has intensified the emotions around issues. Finally, the rise in importance of ESG factors across society has heightened employee interest in such matters. 

When it comes to political donations, scrutiny has increased dramatically since 2015, Hong says. Companies therefore need to balance the views of stakeholders with the consequences of making contributions and taking positions on controversial issues. He notes that taking  positions on social and political issues, if not carefully thought through, could cause the company to lose business. 

Moser and Hong emphasize that businesses need to anticipate the types of issues on which they may be asked to take a position and decide which issues warrant a public position and which do not. Advance planning is essential. You do not want to be formulating your strategy in the middle of a media storm, they stress.

Sometimes responding to a political issue requires a company to first research logistical questions, Moser points out. That was true when the U.S. Supreme Court delivered its decision in the Dobbs case regarding abortion rights. Companies had to sort out insurance and various legal questions before responding to employees’ concerns about the decision’s impact on them. In such circumstances, to maintain credibility, leadership should communicate that the company is addressing the issue and, if possible, how the company is approaching the matter even if it cannot immediately provide answers, Moser advises.

Companies can face very different business consequences for their positions on political and social issues depending on the jurisdiction, Hong notes. For example, Texas passed a law barring the state from doing business with companies that take positions in opposition to fossil fuels, and Cook County, Illinois may require its vendors to offer abortion coverage to their employees. 

On any given issue, satisfying all stakeholders may not be possible, Hong warns. 

Related to these issues, directors who come up for election soon could find more attention being paid to them as individuals — not just as members of a slate — because of the introduction this proxy season of the “universal proxy card” , making it easier for shareholders to choose individual directors, Moser explains. That could lead activists and others to conduct research on the statements and political contributions of directors, in an effort to challenge their board candidacy. 

Name: Ann Beth Stebbins

Title: Partner at Skadden

Specialty: Ann Beth is a partner in Skadden’s Mergers and Acquisitions Group, based in New York. She spent eight years in Skadden’s London office and has been involved in many cross-border transactions representing acquirers, targets and financial advisors. She was recognized as an Outstanding Women Leader by Georgetown University Law Center and was the 2018 recipient of the John Carroll Award, the highest honor bestowed upon a Georgetown alumnus. She also was named as one of The American Lawyer’s 2020 Dealmakers of the Year, Woman Dealmaker of the Year by The M&A Advisor and one of the Lawdragon 500 Leading Lawyers in America.

Connect: LinkedIn

Name: Courtney Townsend

What she does: Courtney is the chief people officer of Duck Creek Technologies and is responsible for developing and executing the company’s HR strategy and plan. With more than 15 years of HR experience, Courtney leads culture development, inclusion and diversity, succession planning, talent management, change management, and organizational and performance management.

Organization: Duck Creek Technologies

Sound bite: “I think that the expectation from a lot of employees is that we do take a stance on certain things that are happening out there. I think that companies … need to decide what is important for them to speak about externally, specifically, and what is not.”

Connect: LinkedIn 

Name: Jamie Moser

What she does: As a partner at Joele Frank, Wilkinson Brimmer Katcher, Jamie helps companies identify their communication challenges and develop and implement plans to improve. Jamie provides strategic counsel and support with investor and public relations, crisis communications, M&A, spin-offs and shareholder activism.

Organization: Joele Frank, Wilkinson Brimmer Katcher

Sound bite: “It's important for companies to create a heat map as they think about the various issues — the social, the political, the internal, any number of issues — that could impact how employees engage and interact with their employer, how they feel about their company, and, therefore, how they project to the world how they feel about the company.”

Connect: LinkedIn

Name: Ki Hong

What he does: Ki Hong is a Skadden partner and head of its Political Law Group. He is responsible for advising major corporations on government affairs and government procurement activity, such as federal and state campaign finance, lobbying, gifts, ethics and conflict-of-interest laws.

Organization: Skadden

Sound bite: “[T]he important thing is to…, in advance, … come up with a line where you’re going to weigh in and what you’re not going to weigh in on, and then stick with it. You don’t want to be making this decision during a media storm. That’s when some of the bigger mistakes get made.”

Connect: LinkedIn