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This proxy season, companies may have a harder time getting a handle on how their shareholders will vote as the federal government and a number of states move to limit the power of proxy advisors, and some large institutional investors are taking decision-making in-house that they once delegated to firms like ISS and Glass Lewis. That could force a rethink of everything from shareholder engagement strategies to the wording of financial disclosures.
Also in this issue of The Informed Board: As board self-evaluations gain popularity, we talk to a director about what she has learned from leading these. Her practical tips will help boards get the most out of the process. Spoiler alert: Ditch the multiple-choice questionnaires.
And, in an article and our podcast, we look at the nature of board oversight when it comes to AI — how boards can educate themselves, the need to inventory a company's different AI applications, and how corporate AI uses are in fact already regulated by multiple existing laws even though there is no comprehensive federal regulatory framework in the U.S.
Will Curbs on Proxy Advisors Make Shareholder
Votes Less Predictable?
As the administration challenges the power of proxy advisors and
some institutional investors take decision-making in-house, it may
be harder to muster support for critical shareholder votes and
outcomes could be less predictable.
No Loopholes for AI: Putting Legal Guardrails on
Your Company's Use of AI
While there is no comprehensive federal AI law in the
U.S., many existing laws govern business uses of AI, particularly
in regulated industries. Companies need to take stock of the ways
they employ AI and identify areas that may already be
regulated.
Interview: Effective Board Evaluations: A
Director's Practical Tips
Forget check-the-box questionnaires. Confidential,
in-person director interviews by an outsider about critical board
roles and functions yield candid feedback that will spark
discussion. But follow-through on the insights that emerge is
essential.
Podcast: As AI Evolves, So Must Board
Oversight
AI is advancing so quickly that directors need to
familiarize themselves with the technology and regularly reevaluate
their companies' use of it to stay on top of its potential and
risks.
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