Fenwick has surveyed the corporate governance practices of the companies included in the Standard & Poor's 100 Index (S&P 100) and the technology and life sciences companies included in the Fenwick - Bloomberg Law Silicon Valley 150 List (SV 150) each year since the passage of the Sarbanes-Oxley Act of 2002, which signaled the initial wave of corporate governance reforms among public companies.
In this report, we present statistical information for a subset of the data we have collected over the years, updated for the 2021 proxy season. These include board leadership makeup, majority voting, board classification, use of a dual-class voting structure size and number of meetings for boards and their primary committees, and the number of insider directors.
We have also included data covering the number of women on boards of directors, stock ownership guidelines for executive officers and directors, executive officer numbers and classification, and additional information about committees beyond the primary committees. In each case, we present comparative data for the S&P 100 companies and for the technology and life sciences companies included in the SV 150, as well as trend information.
Most of the governance practices and trends from previous years continued in the 2021 proxy season. Notable developments include an increase in gender diversity in both the SV 150 and S&P 100. We also saw changes in other key areas, including dual-class voting structure, board classification and majority voting.
Select observations for 2021 include:
- The percentage of women board members is now essentially identical for the SV 150 and S&P 100, closing the gap between smaller technology companies and their larger public company counterparts in the S&P 100. The percentage of women serving on boards of SV 150 companies significantly increased to 30.2% in 2021 from 25.7% in 2020. The percentage of women serving on boards of S&P 100 companies was 30.3%, increasing from 28.7% in 2020, a somewhat lower growth rate than in the SV 150.
- Adoption of dual-class voting stock structures has emerged as a recent clear trend among Silicon Valley technology companies-including among those that have grown to be among the mid-to-larger SV 150 companies-though it is still a small percentage of companies. Throughout the past decade, the SV 150 saw a sharp increase in the frequency of dual-class voting structures (from 2.9% in 2011 to 21.3% in 2021). This rate has easily surpassed the S&P 100 (which slightly decreased from 9.0% in 2011 to 8.0% in 2021).
- Classified boards remain significantly more common
among technology and life sciences companies in the SV 150
S&P 100 companies. Their use has steadily increased in the SV 150 (from 44.3% in 2015 to 52.1% in the 2021 proxy season). Companies in the middle 50 and bottom 50 of the SV 150 were more likely to have classified boards than the larger SV 150 companies, although the middle 50 companies saw a significant decline from 70% in 2020 to 49% in 2021.
- Over the long term, many companies have implemented some form of majority voting among both the S&P 100 and SV 150, though the rate of adoption has stabilized in recent years with prevalence far higher among the S&P 100. The increase has been particularly dramatic among S&P 100 companies, rising from 10% to 96% between the 2004 and 2021 proxy seasons. Among the technology and life sciences companies in the SV 150, the rate has risen from zero in the 2005 proxy season to 56.3% in the 2021 proxy season.
- SV 150 companies are less likely to have a combined chair/CEO than S&P 100 companies, with 38.2% and 58.6% having combined the roles, respectively. Between 2004 and 2021, the percentage of board chairs who are insiders has declined for both groups.
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