G – Corporate Governance

BOARD OF DIRECTOR ISSUES / CONCERNS

• Quality of Corporate Governance Performance of the Board
• Director Independence
• Board Make up – Independent Directors
• Quality of Board Oversight of Corporate Management
• Board Role in Strategic Planning – Strategy Setting - Oversight
• Board Member(s) Conflict(s) of Interest / Related Party Transactions
• Board Nominations / Elections / Process / Access to Process by
• Shareholders
• Term Limits for Directors / Age Limit Policies
• Board Member Renumeration Policies
• Staggered Election Terms – One Class Boards
• Board – Investor Communications / Investor Access to Boards / General
• Diversity Issues – Board Level (board makeup, policies)
• Separation of Board Chair and CEO positions
• Lead Director – Role, Performance, Independence
• Committee Structure – Performance - Indpendence
• Oversight – Sarbanes-Oxley Compliance
• Takeover Defenses – Poison Pills – Golden Parachutes
• CEO Compensation-Setting – Oversight – Review
• Setting Corporate Codes / Practices / Accountability Standards
• Compliance Issues
• Setting of Corporate Governance Standards
• Board Focus on Enterprise Risk Management (ERM)
• Response of Board to Shareowner Requests – Demands on Issues
• Response of Board to Request for Shareowner Dialogue

EXECUTIVE COMPENSATION

• Executive Compensation – Pay for Performance?
• Makeup of Comp Packages
• “Say on Pay” – Shareholder Input on Compensation (Advisory)
• Options Plan / Options Accounting
• Non-Salary Compensation Plans
• Pay-for-Performance Standards for C Suite Officers
• Post-Retirement Benefits – Compensation for Officers
• Officer Perks – Accounting / Disclosure for same
• Clawback Provisions for Non-Performance
• Quality of CD&A Disclosure & Narrative (Compensation Disclosure & Analysis)
• Relationship of CEO Comp to Peer Compensation
• Role of Compensation Experts – Who Hires / Oversees? (Board or CEO?)

INVESTOR – BOARD RELATIONS

• Nomination of Directors by Shareholders
• Structured Access to the Proxy Process (SEC considering)
• Majority Voting for Directors – Eliminating Plurality Voting
• Annual Meeting Locations (access, rotation, convenience for shareholders)
• Board-Investor Communications / Access to Directors
• Acknowledgement of non-binding Majority Votes by Shareholder
• “Shareholder Rights” – “Corporate Democracy” Issues - General

CORPORATE ISSUES / CONCERNS

• Disclosure Policies / Quality of Transparency
• Corporate Political Contributions / Campaign Finance
• Disclosure of Climate Change Impacts on Enterprise
• Plans to Mitigate Climate Risk – Global Warming (also “E” issues)
• Diversity / Inclusivity Policies and Practices – Officers and Board (also “S” issues)
• Aggressive Accounting Practices & Policies
• Financial Reporting Practices Financial – Accounting Re-Statements Track Record
• Accounting Fraud
• Auditing / Auditor Policies & Practices
• Corporate Integrity Issues Whistleblowing Policies & Practices Corporate Accountability – Range of Issues
• Voluntary Compliance with Domestic & Global Standards (GRI, Ceres etc.)
• Compliance with Industry Standards and Codes
• Codes of Conduct for Officers – Employees
• Labor Practices
• Human Rights Practices
• Corporate Social Responsibility (CSR) Policies & Practices
• Risk Management Policies & Practices
• Integration of Risk Management and Auditing
• Variety of Compliance Issues – including Foreign Corrupt Practices Act (FCPA)
• Protection of Privacy of Third Parties – Involved in Business Activities
• Litigation Risk Profile – Track Record
• Environmental Risk – Track Record
• Corporate Governance 3rd Party Ratings (“CGQ” etc.)
• ESG Policies – Performance – 3rd Party Ratings (GS SUSTAIN, etc.)
• ESG / Sustainability Reporting – Disclosure - Transparencies
• Socially Responsible Investing - Performance – 3rd Party Ratings
• Shareholder Proxy Resolution Campaigns – Targeting of Company
• Public Sector Targeting of Company – US and Foreign Governments
• Social Activist & Advocates Targeting of Company Headline Risks of These and Other Activities – Impact on Corporate Reputation and Share Price Valuation in the Capital Markets

(and company response to above third party targeting)  Note: there is some duplication of issues in categories – issues do overlap

* * *

ESG & SUSTAINABILITY ISSUES AND THE CORPORATION

Intersections of Corporate Policies, Practices, Behaviors and Shareholder and Stakeholder Issues and Concerns

Investor Activists may link corporate policies on pharmaceutical access and pricing (for vulnerable populations) to corporate governance actions – they have been filing shareholder-sponsored resolutions that link CEO compensation (governance issue) to company’s improvements in mitigating pharma access / pricing issues. Access to AIDS drugs is an example in recent shareholder campaigns.

Religious and faith-based institutional investors have been creating these intersections in recent years – thus linking “S” (societal) and “G” (governance) issues to bring pressure on the board and C Suite through publicity, comprehensive coordination of proxy voting activities, involvement of mainstream investors (such as public employee pension funds), and more.

Be sure to check the other checklists for ESG –

Environmental & Energy
Social Issues and Concerns

- The Institute Editors
- September 2008