BIHC Emerging Trend Series - Trends in Board Diversity

NET WORK

EMERGING TRENDS SERIES TRENDS IN BOARD DIVERSITY Tifarah Roberts Allen, Partner, Hogan Lovells

EXECUTIVE SUMMARY

EMERGING TRENDS SERIES NETWORK

Emerging Trends in Board Diversity Hogan Lovells’ Tifarah Roberts Allen BIHC recently spoke with Tifarah Roberts Allen, a partner in the Washington, D.C. office of Hogan Lovells. Allen is in the Corporate & Finance practice group, where she advises public companies on securities and corporate governance matters.

Q: W hat major trends do you see in working with public companies?

A: I see continued focus on, and increased

disclosure about, board diversity. This area has garnered significant attention in recent years, but companies are all over the map in addressing it. Some have embraced it and made significant progress in identifying, recruiting, and onboarding directors that are gender and racially diverse, while others have not. Now, board diversity cannot be ignored.

Q: What underlying factors are driving this increased focus on board diversity?

A: F irst, corporate boards are generally not

representative of our population and these statistics are being publicized. Second, and potentially a tipping point, was the death of George Floyd and the heightened focus on social justice. In the aftermath, many companies made pledges to improve their company’s diversity efforts.

Also driving change is that the SEC, stock exchanges, proxy advisory firms, and states are imposing guidelines and rules about board diversity.

These guidelines include having a minimum number of diverse directors and disclosure about diversity policies.

Q: H ow does this emerging trend impact general counsel?

A: C orporate governance, and as a result,

board diversity, is within the GC’s purview. In some instances, GCs have been advocating for greater board diversity, but didn’t have support. GCs are now empowered to promote board diversity.

Also, as GCs of public companies are often responsible for preparing their companies’ proxy statements, they need to understand the applicable board diversity requirements and voting policies.

As an example, for certain larger companies, Glass Lewis, one of the proxy advisory firms, will recommend a vote against a company’s nominating committee chair if the company doesn’t have two gender-diverse board members. It is the GC’s responsibility to ensure the board understands the various board diversity requirements and the consequences of not hitting these targets.

In addition, companies that fail to hit certain metrics may need to provide additional disclosure to explain why. GCs need to be on top of this and also need to know what’s coming in the future.

Further, before meetings with major shareholders, GCs need to prepare management about those shareholders’ voting policies and the company’s progress on diversity metrics to ensure they are not caught flat-footed.

Q: H ow and when should GCs consider engaging with outside counsel?

A: I t is never too early for GCs to engage with

outside counsel. GCs of public companies should seek advice on applicable rules and requirements to ensure their companies don’t receive a recommendation to vote against a director, or advice on how to manage that event. GCs should also seek ongoing advice on upcoming changes to rules and voting policies to ensure they are adequately preparing their company, management, and board.

EMERGING TRENDS INTERVIEW SERIES

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EMERGING TRENDS SERIES NETWORK

About the BIHC Network & Emerging Trends The Black In-House Counsel (BIHC) Network works with legal departments and law firms to advance Diversity, Equity, and Inclusion in the legal profession. We create content, events, networks, and professional development training for corporate legal departments and law firms. A key part of our mission is to showcase the talents of leading lawyers of color in top law firms to in-house legal departments.

Emerging Trends features insights from leading partners of color on key trends shaping the business landscape over the next 12 months. Each Emerging Trends briefing provides concise information on what general counsel and boards need to know about and best practices in how to approach this topic.

BIHC is pleased to hear from the following Hogan Lovells partners in the Emerging Trends Series:

Tifarah Roberts Allen

Shelita M. Stewart

Partner

Partner

WASHINGTON, D.C. Practice Group: Corporate & Finance

WASHINGTON, D.C. Practice Group: Litigation, Arbitration, and Employment

Russell Benjamin Hedman

Courtney Devon Taylor

Partner

Partner

DENVER Practice Group: Corporate & Finance

PHILADELPHIA, NEW YORK Practice Group: Litigation, Arbitration, and Employment EMERGING TRENDS INTERVIEW SERIES

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