Fenwick's annual survey covers a variety of corporate governance practices and data for the companies included in the Standard & Poor's 100 Index (S&P 100) compared to the technology and life sciences companies included in the Silicon Valley 150 Index (SV 150). This in depth survey will be a useful resource for board members, senior executives, in house legal counsel and their advisors, based in Silicon Valley and throughout the United States.

Key findings from the 2013 survey include:

Majority voting: The trend towards majority voting continues with the gap between S&P 100 companies and SV 150 companies narrowing in 2013. From the 2011 proxy season, S&P 100 companies decreased the use of majority voting by 5% for a 92% overall adoption rate, while SV 150 companies increased the use of majority voting by 7%, with 44% adopting the practice.

Stock ownership guidelines: The prevalence of stock ownership guidelines among SV 150 executive officers increased 9% in the past year alone up from 8% total in 2004 to a total of 53% during the 2013 proxy season. The growth in the use of these plans among S&P 100 companies has been similarly strong up from 58% in 2004 to 95% this year.

Equity ownership: Speaking to a strength of the technology sector, the SV 150 continues to lead in the percent of equity ownership among executives and directors, seeing a spike of nearly one third from 2011 when the average was less than 10% up to an average of 13.2% in 2013. That compares to a steady 3.3% average equity ownership among S&P 100 executives and directors.

Women on boards: Silicon Valley companies continue to trail their larger S&P 100 counterparts in this important measure of diversity. Among S&P 100 companies, 98% have at least one woman board member, while only 56.7% of the boards of SV 150 companies have one or more women board members. However, the SV 150 has continued a long trend of closing the gap with the S&P 100 in this measure, and taking size into account, the gap is essentially closed. Among the 15 largest SV 150 companies, which more closely relate in size to companies in the S&P 100, 93.3% have one or more women board members.

Stockholder activism: Both the frequency and number of stockholder proposals continue to be more prevalent among S&P 100 companies. Although, over the last two proxy seasons, the largest companies in the SV 150 have closed the gap and are now comparable to the S&P 100 in terms of frequency of having a least one such proposal.

Executive officers: The survey was expanded this year to include coverage of executive officers. The number of executive officers tends to be substantially lower in the SV 150, averaging 6.5 per company in the 2013 proxy season, compared to the S&P 100, where companies averaged 11.2 executive officers. In both groups there has been a long term, slow but steady decline in the average number of executive officers per company, as well as a narrowing in the range of the number of executive officers in each group.

The full length survey provides technology and life sciences companies with clear information on corporate governance practices among their peers as well as among the largest companies. Other areas covered in the report include:

  • makeup of board leadership
  • number of insider directors
  • size and number of meetings for boards and their primary committees
  • frequency of maintaining and number of other standing committees
  • board classification
  • use of a dual-class voting structure
  • voting ownership

While practices among S&P 100 companies are generally held out as the desired norm, Fenwick collects this information to enable boards and executives at technology and life sciences companies to better determine when diverging practices might actually be best practices, particularly for their size.

Download the full report: Corporate Governance Survey—2013 Proxy Season

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