Politics in the boardroom? Well, with an historic U.S. presidential election on the horizon, a polarized electorate, and vocal stakeholders, politics are certainly on directors’ minds. Directors are signaling greater confidence in the economy, according to a new poll, even as their optimism grows more cautious for the post-election period. And as executives weight the pros and cons of political involvement, commentary from law firm Skadden, Arps, Slate, Meagher, & Flom offers salient advice about board oversight of political contributions. Meanwhile, election season also presents an opportune moment to consider the distinctly undemocratic practice of proxy voting, where it came from, and how evolving governance norms could make corporate governance more democratic.
In other news: Intriguing insights on CEO succession planning, a controversial bill that would limit board oversight of deals with shareholders for companies incorporated in Delaware heads to the governor’s desk for signature, plus a roadmap to oversight of DEI during contentious times, and more.
In the Spotlight
Director Confidence Grows For 2025
Directors are hopeful the upcoming presidential election will usher in conditions for growth
“With a high cost of capital, many companies have taken a prudent approach to spending in recent years—but directors say that era may be coming to a close. Directors’ perception of the current business conditions in the U.S. increased [favorably] 4 percent in the third quarter…. Now at 6.3 out of 10, directors’ rating of the current landscape is just 1.5 percent away from its January high (6.4/10), and those polled attribute the upward swing to a healthy consumer and continued strong demand, amid market indicators that are continuing to move in the right direction. When it comes to the year ahead, however, directors’ forecasts remain cautious: Our forward-looking indicator eked out a gain of slightly less than 1 percent in our latest polling, to 6.5/10 from 6.4 in April. ‘A lot depends on the election,’ said Paul William Hylbert, lead director at National Storage Affiliates, ‘but we’re hoping long-term rates will drop and foster a recovery.’” CORPORATE BOARD MEMBER
In case You Missed It
A Guide for Directors to Political Law Issues in This Election Year
Conventions are expensive events, and corporations have increasingly become an important source of support
“With the 2024 election season underway, corporations may want to support the presidential nominating conventions as well as transition efforts and inaugural activities for incoming federal, state and local administrations. These opportunities may come before boards, so it is critical for directors to understand the rules of the road — for their companies as well as for their own individual involvement and that of executives — because these activities can fall under an array of campaign finance, pay-to-play and government ethics rules.” SKADDEN
Is Democracy Relevant to the Way We Govern Public Companies?
Shareholders begin to take their collective power back
“It is tempting to view Exxon Mobil’s recent corporate election as a referendum on the Environmental, Social, and Governance (ESG) movement, particularly since the press framed it that way. In fact, however, that election was about something else altogether: whether democracy has any relevance to the way we govern public companies in the United States….Proxy voting is profoundly undemocratic—not only does it transfer total discretion over one shareholder’s vote to another person, but it allows a ‘proxy solicitor’ (the party asking for shareholders’ votes, i.e. management) to aggregate votes across holders, concentrating the voting power of thousands or even millions into a single actor. In political governance, we would call this minority rule.” PRO MARKET
From Boardspan this Week:
The 2024 Board Benchmark Report
The power of performance benchmarking is undeniable. For boards, it’s essential to understand how they stack up against peers, identify new trends and lean into the broader governance landscape. The 2024 Board Benchmark Report enables boards to build on successes and identify areas for improvement, ensuring continuous growth and effectiveness. Learn how your board compares and what you can do to achieve excellence.
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