CII Spring Conference Highlights

This year’s theme was “Putting the Band Back Together.” Attendees who last gathered at the March 2020 spring conference were very aware that it was their last public event before the COVID-19 shut-down. After virtual gatherings, it was good to be back at the Mandarin. Or at least it looked that way — press were still attending via Zoom.

Throughout the panel discussions, the same themes recurred, and they can best be summarized as ESG. Almost every presenter spoke about the impact of the pandemic in personal, operational, and investment terms. Most of them also mentioned the murder of George Floyd as a turning point as well, and more focus on stakeholders including employees (in the consequence of “the great resignation”). All of them made the case that they had come through stronger, some more effectively than others.

Some highlights:

GM CEO and Business Roundtable Chair Mary Barra was interviewed by Afsaneh Beschloss, Founder & CEO of Rock Creek Group. She talked about the commitment to zero carbon targets and called for government action to support them but did not provide specifics about the allocation of political contributions.

Renee Jones made her first public appearance as Director of the SEC’s Division of Corporation Finance to give attendees a historical perspective on shareholder proposals and a general outline of the Division’s current initiatives. She made it clear that shareholder engagement in general and shareholder proposals in particular are a “core function” of her office. Shareholder proposals are intended to “replicate as clearly as possible” the experience of raising an issue at the annual meeting.

It was reassuring to hear hear commitment to letters for all no-action decisions, a return to past practice that will provide more consistency and predictability to the decisions made on the viability of shareholder proposals. There was a nine percent decline in no-action requests this year, 231 down from 253 last year. Most proposals were about corporate governance, environment, human rights, and political spending. One-fifth of the challenged proposals have been withdrawn, an encouraging indicator of effective engagement. They are working on the proposed proxy advisory rule rollback as well as rulings on climate change and human disclosures and SPACs.

A panel on Civil Rights audits made a strong case for them as risk mitigation. Facebook was described as an example of a company that responded to an audit from Laura Murphy & Associates with a number of initiatives including a new Office of Civil Rights and examination of its hiring announcements and algorithms. One indicator — who does the diversity and inclusion executive report to? If it is HR or the General Counsel the office does not have the independence and authority it needs.

Michelle Edkins from Blackrock appeared on a panel about pass-through voting, which they are making available to selected institutional clients. The panel discussed technological and operational challenges, with no plans to make pass-through voting available to individuals with pooled accounts. Edkins said that pass-through voting would not affect their ability to engage with portfolio companies, mentioning that they already have different votes cast from managed and index funds and it has not made a difference in their effectiveness.

Gretchen Carlson spoke about ending binding arbitration and NDAs for sexual assault and harassment claims. She has successfully shepherded bi-partisan legislation that was passed and signed by President Biden. She hopes to extend this to other violations of employee rights. The panel discussed leading indicators of employee risk including turnover and “attitudinal data.”

CII members also approved two revised policies:

The updated policy on shareowner meetings expresses a preference for in-person meetings but gives companies flexibility to choose the format that best reflects their shareowner base and current circumstances. The policy also encourages companies to disclose the circumstances under which virtual-only meetings would be held. It also recommends giving shareholders who are participating electronically rights and opportunities comparable to those participating in-person.

The revised policy on poison pills asks companies to hold a shareowner vote on a poison pill no later than a year after the pill’s adoption by the board. It also asks companies to refrain from adopting pills that contain certain provisions such as extremely low triggers. A poison pill is a defensive measure used by public companies to prevent or discourage hostile takeover attempts.

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