By David F. Larcker, Brian Tayan, Vinay Trivedi and Owen Wurzbacher, CGRI Survey Series. Corporate Governance Research Initiative, Stanford Rock Center for Corporate Governance, July 2019
In spring 2019, the Rock Center for Corporate Governance at Stanford University surveyed 209 CEOs and CFOs of companies included in the S&P 1500 Index to understand the role that stakeholder interests play in long-term corporate planning.
Key Findings
• CEOs Are Divided On Whether Stakeholder Initiatives Are A Cost or Benefit to the Company
• Companies Tout Their Efforts But Believe the Public Doesn’t Understand Them
• Blackrock Advocates … But Has Little Impact
David F. Larcker, Brian Tayan, Vinay Trivedi, and Owen Wurzbacher, Stanford Closer Look Series, July 2, 2019
Currently, there is much debate about the role that non-investor stakeholder interests play in the governance of public companies. Critics argue that greater attention should be paid to the interest of stakeholders and that by investing in initiatives and programs to promote their interests, companies will create long-term value that is greater, more sustainable, and more equitably shared among investors and society. However, advocacy for a more stakeholder-centric governance model is based on assumptions about managerial behavior that are relatively untested. In this Closer Look, we examine survey data of the CEOs and CFOs of companies in the S&P 1500 Index to understand the extent to which they incorporate stakeholder needs into the business planning and long-term strategy, and their view of the costs and benefits of ESG-related programs.
We ask:
• What are the real costs and benefits of ESG?
• How do companies signal to constituents that they take ESG activities seriously?
• How accurate are the ratings of third-party providers that rate companies on ESG factors?
• Do boards understand the short- and long-term impact of ESG activities?
• Do boards believe this investment is beneficial for the company?
FTI Consulting publie cette semaine une étude globale sur le thème de l’activisme actionnarial, disponible en pièce jointe de ce message.
FTI Consulting a interrogé plus de 100 investisseurs institutionnels, représentant collectivement plus de 1 700 milliards de dollars d’actifs sous gestion, sur leur perception des campagnes activistes.
Cette étude démontre que les investisseurs institutionnels sont de plus en plus favorables aux activistes, et qu’ils soutiennent plus facilement la nomination d’administrateurs indépendants au sein des conseils d'administration.
Plus de la moitié des sociétés de gestion interrogées a indiqué qu'au moins 15% des sociétés actuellement présentes dans leur portefeuille « pourraient bénéficier » d'une situation activiste. Considérant que les activistes ciblent publiquement, ou non, des centaines d'entreprises par an, ce ratio confirme l’ampleur du mouvement. La tendance actuelle devrait se poursuivre.
D’autre part, si les entreprises ont une meilleure approche et une meilleure gestion des campagnes activistes, l’enquête menée par FTI Consulting démontre que leur efficacité peut être encore augmentée. La condition préalable est de reconnaître que les investisseurs institutionnels soutiennent alors un «changement» stratégique de l’entreprise sans pour autant s’intéresser aux moyens d’y parvenir.
FTI Consulting peut ainsi contribuer à élaborer une communication transparente avec les investisseurs, mettant en valeur les changements entrepris par la société et démontrant la création de valeur à long terme, et ainsi se défendre efficacement contre les fonds activistes.
La division Strategic Communications de FTI Consulting est l'une des plus réputées au monde, avec plus de 25 ans d'expérience dans le conseil auprès des équipes dirigeantes dans le cadre de situations sensibles. Pour ses clients, FTI active les leviers de communications pour protéger et améliorer réputation et valeur d'entreprise.
N'hésitez pas à nous contacter pour plus d'informations.
L'équipe FTI Consulting
The Michael Page CFO & Financial Leadership Barometer is a unique study that independently analyses key trends in financial leadership across the world. It takes a timely look at issues such as the increasing complexity of the role of financial leader and the greater focus on value creation. It reveals the way in which financial leaders are moving towards being leaders of change, not just within their own function but in driving the organisation as a whole.
CFO & Financial Leadership Barometer - Global Report (English)Nadezhda Simakova
The Michael Page CFO & Financial Leadership Barometer is a unique study that independently analyses key trends in financial leadership across the world. It takes a timely look at issues such as the increasing complexity of the role of financial leader and the greater focus on value creation. It reveals the way in which financial leaders are moving towards being leaders of change, not just within their own function but in driving the organisation as a whole.
David F. Larcker, Brian Tayan, Vinay Trivedi, and Owen Wurzbacher, Stanford Closer Look Series, July 2, 2019
Currently, there is much debate about the role that non-investor stakeholder interests play in the governance of public companies. Critics argue that greater attention should be paid to the interest of stakeholders and that by investing in initiatives and programs to promote their interests, companies will create long-term value that is greater, more sustainable, and more equitably shared among investors and society. However, advocacy for a more stakeholder-centric governance model is based on assumptions about managerial behavior that are relatively untested. In this Closer Look, we examine survey data of the CEOs and CFOs of companies in the S&P 1500 Index to understand the extent to which they incorporate stakeholder needs into the business planning and long-term strategy, and their view of the costs and benefits of ESG-related programs.
We ask:
• What are the real costs and benefits of ESG?
• How do companies signal to constituents that they take ESG activities seriously?
• How accurate are the ratings of third-party providers that rate companies on ESG factors?
• Do boards understand the short- and long-term impact of ESG activities?
• Do boards believe this investment is beneficial for the company?
FTI Consulting publie cette semaine une étude globale sur le thème de l’activisme actionnarial, disponible en pièce jointe de ce message.
FTI Consulting a interrogé plus de 100 investisseurs institutionnels, représentant collectivement plus de 1 700 milliards de dollars d’actifs sous gestion, sur leur perception des campagnes activistes.
Cette étude démontre que les investisseurs institutionnels sont de plus en plus favorables aux activistes, et qu’ils soutiennent plus facilement la nomination d’administrateurs indépendants au sein des conseils d'administration.
Plus de la moitié des sociétés de gestion interrogées a indiqué qu'au moins 15% des sociétés actuellement présentes dans leur portefeuille « pourraient bénéficier » d'une situation activiste. Considérant que les activistes ciblent publiquement, ou non, des centaines d'entreprises par an, ce ratio confirme l’ampleur du mouvement. La tendance actuelle devrait se poursuivre.
D’autre part, si les entreprises ont une meilleure approche et une meilleure gestion des campagnes activistes, l’enquête menée par FTI Consulting démontre que leur efficacité peut être encore augmentée. La condition préalable est de reconnaître que les investisseurs institutionnels soutiennent alors un «changement» stratégique de l’entreprise sans pour autant s’intéresser aux moyens d’y parvenir.
FTI Consulting peut ainsi contribuer à élaborer une communication transparente avec les investisseurs, mettant en valeur les changements entrepris par la société et démontrant la création de valeur à long terme, et ainsi se défendre efficacement contre les fonds activistes.
La division Strategic Communications de FTI Consulting est l'une des plus réputées au monde, avec plus de 25 ans d'expérience dans le conseil auprès des équipes dirigeantes dans le cadre de situations sensibles. Pour ses clients, FTI active les leviers de communications pour protéger et améliorer réputation et valeur d'entreprise.
N'hésitez pas à nous contacter pour plus d'informations.
L'équipe FTI Consulting
The Michael Page CFO & Financial Leadership Barometer is a unique study that independently analyses key trends in financial leadership across the world. It takes a timely look at issues such as the increasing complexity of the role of financial leader and the greater focus on value creation. It reveals the way in which financial leaders are moving towards being leaders of change, not just within their own function but in driving the organisation as a whole.
CFO & Financial Leadership Barometer - Global Report (English)Nadezhda Simakova
The Michael Page CFO & Financial Leadership Barometer is a unique study that independently analyses key trends in financial leadership across the world. It takes a timely look at issues such as the increasing complexity of the role of financial leader and the greater focus on value creation. It reveals the way in which financial leaders are moving towards being leaders of change, not just within their own function but in driving the organisation as a whole.
Shareholders Are Dissatisfied with CEO Compensation and Disclosure--Proxies Are Too Long, Difficult to Read.
Only 38 percent of institutional investors believe that corporate disclosure about executive compensation is clear and easy to understand. “Shareholders want to know that the size, structure, and performance targets used in executive compensation contracts are appropriate,” says Professor David F. Larcker of the Stanford Graduate School of Business. “Our research shows that, across the board, they are dissatisfied with the quality and clarity of the information they receive about compensation in the corporate proxy. Even the largest, most sophisticated investors are unhappy.”
“With new pressure from activist investors and annual ‘Say on Pay’ (SOP) votes, it is more important than ever that companies explain to their shareholder base why the compensation packages they offer are appropriate in size and structure,” says Aaron Boyd, director of Governance Research at Equilar. “Investors are noticing the wide range in quality and clarity among various companies’ proxies. They want companies to communicate and explain, rather than simply disclose,” adds Ron Schneider, director of Corporate Governance Services at RR Donnelley Financial Services. “This represents a significant opportunity for many companies to improve the clarity of their proxies.”
In the fall of 2014, RR Donnelley, Equilar, and the Rock Center for Corporate Governance at Stanford University surveyed 64 asset managers and owners with a combined $17 trillion in assets to understand how institutional investors use the information in corporate proxies.
Watson Helsby's FTSE 100 Group Director of Corporate Communications / Affairs...Samantha Rogers
Each year, to enhance our executive search advisory offer, Watson Helsby publishes a FTSE 100 Group Director of Corporate Communications/Affairs Survey. This provides an intriguing picture of everything from reporting lines and Executive Committee membership to the – ever fascinating – subject of remuneration. The 2018 Survey has just been published.
This has become the most comprehensive and insightful survey of its type, in terms of both the number of companies surveyed and the range of questions we ask/themes we investigate.
Findings include:
• 79% of FTSE 100s employ a Corporate Communications/Affairs Director, a decline year-on year of 2%.
• The percentage of FTSE 100 Corporate Communications/ Affairs Directors who are formal members of the Executive Committee has dropped to 49% this year (from 51%).
• Budgets are generally flat or down (90%). Given a number of factors, including the economic uncertainty created by Brexit. This compares with only 73% reporting flat or down in 2016/17.
• The year 2017/18 has, again, seen considerable change at the top, with 15 companies in the FTSE 100 making changes (vs. 20 the previous year and 16 the year before that). This means that 51 companies have changed their corporate communications/affairs director since 2015 or disbanded the role.
We would welcome any questions or comments.
Nick Helsby is the CEO of Watson Helsby, a specialist communications (external and internal) and corporate affairs/government relations executive search and leadership firm. He has over twenty years headhunting experience, in the UK, Europe, Middle East and Africa, placing senior communications, PR and corporate affairs professionals in some of the world’s leading organisations. He can be found at nickh@watsonhelsby.co.uk for any questions or comments.
The full report is available to download on http://www.watsonhelsby.co.uk/assets/files/FTSE_Report_2018.pdf
Watson Helsby's Annual FTSE 100 Group Director of Corporate Communications/Af...Nick Helsby
Each year, to enhance our executive search advisory offer, Watson Helsby publishes a FTSE 100 Group Director of Corporate Communications/Affairs Survey. This provides an intriguing picture of everything from reporting lines and Executive Committee membership to the – ever fascinating – subject of remuneration. The 2018 Survey has just been published.
This has become the most comprehensive and insightful survey of its type, in terms of both the number of companies surveyed and the range of questions we ask/themes we investigate.
Findings include:
• 79% of FTSE 100s employ a Corporate Communications/Affairs Director, a decline year-on year of 2%.
• The percentage of FTSE 100 Corporate Communications/ Affairs Directors who are formal members of the Executive Committee has dropped to 49% this year (from 51%).
• Budgets are generally flat or down (90%). Given a number of factors, including the economic uncertainty created by Brexit. This compares with only 73% reporting flat or down in 2016/17.
• The year 2017/18 has, again, seen considerable change at the top, with 15 companies in the FTSE 100 making changes (vs. 20 the previous year and 16 the year before that). This means that 51 companies have changed their corporate communications/affairs director since 2015 or disbanded the role.
We would welcome any questions or comments.
Nick Helsby is the CEO of Watson Helsby, a specialist communications (external and internal) and corporate affairs/government relations executive search and leadership firm. He has over twenty years headhunting experience, in the UK, Europe, Middle East and Africa, placing senior communications, PR and corporate affairs professionals in some of the world’s leading organisations. He can be found at nickh@watsonhelsby.co.uk for any questions or comments.
The full report is available to download on http://www.watsonhelsby.co.uk/assets/files/FTSE_Report_2018.pdf
This year’s mandatory Say-on-Pay (SOP) brought new challenges for issuers. Not only did the pace of failed plans accelerate, but last year’s votes proved to be a poor indicator of how companies’ plans would fare this season. This report, which will be updated at the conclusion of the calendar year, will point out some high-level trends in the voting data for companies with low SOP votes so far this year.
Although receiving at least 50% support on SOP is the primary goal for issuers, in many cases the institutional investor community will apply heightened scrutiny to compensation plans that received “significant” opposition. Thus, the data set we reviewed in this report—shown in Appendix A—covers plans that received less than 70% support. Following our analysis of these data is a brief section on guidance for issuers, both how to recover from a failed SOP vote in 2012 and how to prepare for 2013.
The ES&G Accountability Forum (2013) provided participants and panelists with an opportunity to examine the question of how information (both financial and non-financial) can best be provided in a form that is useful to decision makers that are affected by, or have an affect on Canada’s companies.
This document captures key points made by panelists, their answers to questions posed, and the Forum’s participants’ table discussions. It is organized around each panel: investors, companies, evaluation organizations. We hope to encourage all groups to consider the advice and comments discussed at the Forum, and to take action on the outstanding questions and issues to improve the state of ES&G disclosure, analysis and investing that are highlighted on pages 9 & 10.
This year on September 23, 2014 in Calgary, many of these unanswered questions will be addressed at the ES&G Forum 2014: "Non-financial performance... A missed opportunity?"
Building on the last two years' discussions, participants will hear how investors and businesses are implementing innovative methods to manage investor demand for ES&G information. To learn more about & register for this year's ES&G Forum, please visit: http://bit.ly/esg-forum-2014
By David F. Larcker, Brendan Sheehan, and Brian Tayan
September 1, 2016, Stanford Corporate Governance Initiative, and Stanford Rock Center for Corporate Governance
5 major opportunities awaiting manufacturers and their CFOsGrant Thornton LLP
It’s an exciting time to be in manufacturing. Revenues are on the rise, employment is up, and with potential for increased profits, today’s manufacturing CFOs understand that their role goes beyond the bottom line. A fall 2014 Grant Thornton LLP survey of 350 CFOs explored some of these burgeoning possibilities. This infographic identifies C-level insights about how to make the most of them.
Find out more about our survey at grantthornton.com/valueaddCFO.
Nearly 900 investors from 700 VC firms responded to the mid-2016 survey covering Deal Sourcing, Investment Decisions, Valuations, Deal Structures, Post-Investment Value Adds, Exits, Org Structures of VCs, LP Relationships.
This document describes the results.
ERA 2010 Business Climate Survey Results Final 102010jagnew
A summary of responses to the 2010 Business climate survey conducted by Expense Reduction Analysts in partnership with Elite Financial Communications Group.
Credit availability in Canada 2014: Targeting an ideal capital structurelbobak
The majority of Canadian financial executives surveyed by the Canadian Financial Executives Research Foundation are more optimistic about their company’s ability to obtain sufficient capital to meet its financing requirements in the next year (whether these needs are short-term, long-term or equity based). Most financial executives surveyed said credit for working capital and growth financing is generally available to their organizations, according to the study, which was published by the research arm of Financial Executives International Canada (FEI Canada), and sponsored by EY. The report, entitled Targeting an ideal capital structure, is based on the results of an online survey of financial executives across Canada, which took place in June 2014. According to the study, even those for whom credit was less available this year, the expectation is availability will improve by the spring of 2015.
The results suggest that there is a real opportunity to improve the investment process so nonprofits can better protect the capital they’ve worked so hard to raise. I hope you find the results as interesting as I did. Please feel free to reach out to me directly if you have questions.
• Chief executives are now thinking strategically about international business ethics—specifically, how trustworthy their companies need to be. To generate that trust, CEOs are not just interested in growth for their enterprises. They want to attain “good growth”: real, inclusive, responsible, and lasting growth. And they want their companies to contribute to good growth in every country where they operate.
Executives View Ideal Shareholder Base as Key to Increased Market Value
Companies that want to maximize their market value would do well to pay attention to shareholder composition.
This study found that nearly all companies describe their ideal shareholder as having a long-term investment horizon, but that about half of companies’ shareholder base has a short- or medium-term horizon. As a result, the authors find, most companies see significant upside to managing their shareholder base, and senior leaders spend considerable time meeting with current and prospective investors.
“More than three-quarters of companies in our survey see significant stock market benefits from managing their shareholder base,” says Anne Beyer, associate professor of accounting at Stanford Graduate School of Business (GSB) and coauthor of the study. “Companies believe that if they can identify and attract the right shareholder base, they will be able to increase the price of their stock and decrease its volatility.”
In fact, this survey of 138 investor relations professionals at North American companies shows that 80% of companies believe their stock price would trade higher over a two- to three-year period if they could attract their ideal shareholder base. On average, companies estimate their stock would rise 15% and share price volatility would decrease 20%.
Read the full report!
By David F. Larcker, Brian Tayan, Dottie Schindlinger and Anne Kors, CGRI Survey Series. Corporate Governance Research Initiative, Stanford Rock Center for Corporate Governance and the Diligent Institute, November 2019
New research from the Rock Center for Corporate Governance at Stanford University and the Diligent Institute finds that corporate directors are not as shareholder-centric as commonly believed and that companies do not put the needs of shareholders significantly above the needs of their employees or society at large. Instead, directors pay considerable attention to important stakeholders—particularly their workforce—and take the interests of these groups into account as part of their long-term business planning.
• While directors are largely satisfied with their ESG-related efforts, they do not believe the outside world understands or appreciates the work they do.
• Directors recognize that tensions exist between shareholder and stakeholder interests. That said,
most believe their companies successfully balance this tension.
• In general, directors reject the view that their companies have a short-term investment horizon in
running their businesses.
In the summer of 2019, the Diligent Institute and the Rock Center for Corporate Governance at Stanford University surveyed nearly 200 directors of public and private corporations globally to better understand how they balance shareholder and stakeholder needs.
Shareholders Are Dissatisfied with CEO Compensation and Disclosure--Proxies Are Too Long, Difficult to Read.
Only 38 percent of institutional investors believe that corporate disclosure about executive compensation is clear and easy to understand. “Shareholders want to know that the size, structure, and performance targets used in executive compensation contracts are appropriate,” says Professor David F. Larcker of the Stanford Graduate School of Business. “Our research shows that, across the board, they are dissatisfied with the quality and clarity of the information they receive about compensation in the corporate proxy. Even the largest, most sophisticated investors are unhappy.”
“With new pressure from activist investors and annual ‘Say on Pay’ (SOP) votes, it is more important than ever that companies explain to their shareholder base why the compensation packages they offer are appropriate in size and structure,” says Aaron Boyd, director of Governance Research at Equilar. “Investors are noticing the wide range in quality and clarity among various companies’ proxies. They want companies to communicate and explain, rather than simply disclose,” adds Ron Schneider, director of Corporate Governance Services at RR Donnelley Financial Services. “This represents a significant opportunity for many companies to improve the clarity of their proxies.”
In the fall of 2014, RR Donnelley, Equilar, and the Rock Center for Corporate Governance at Stanford University surveyed 64 asset managers and owners with a combined $17 trillion in assets to understand how institutional investors use the information in corporate proxies.
Watson Helsby's FTSE 100 Group Director of Corporate Communications / Affairs...Samantha Rogers
Each year, to enhance our executive search advisory offer, Watson Helsby publishes a FTSE 100 Group Director of Corporate Communications/Affairs Survey. This provides an intriguing picture of everything from reporting lines and Executive Committee membership to the – ever fascinating – subject of remuneration. The 2018 Survey has just been published.
This has become the most comprehensive and insightful survey of its type, in terms of both the number of companies surveyed and the range of questions we ask/themes we investigate.
Findings include:
• 79% of FTSE 100s employ a Corporate Communications/Affairs Director, a decline year-on year of 2%.
• The percentage of FTSE 100 Corporate Communications/ Affairs Directors who are formal members of the Executive Committee has dropped to 49% this year (from 51%).
• Budgets are generally flat or down (90%). Given a number of factors, including the economic uncertainty created by Brexit. This compares with only 73% reporting flat or down in 2016/17.
• The year 2017/18 has, again, seen considerable change at the top, with 15 companies in the FTSE 100 making changes (vs. 20 the previous year and 16 the year before that). This means that 51 companies have changed their corporate communications/affairs director since 2015 or disbanded the role.
We would welcome any questions or comments.
Nick Helsby is the CEO of Watson Helsby, a specialist communications (external and internal) and corporate affairs/government relations executive search and leadership firm. He has over twenty years headhunting experience, in the UK, Europe, Middle East and Africa, placing senior communications, PR and corporate affairs professionals in some of the world’s leading organisations. He can be found at nickh@watsonhelsby.co.uk for any questions or comments.
The full report is available to download on http://www.watsonhelsby.co.uk/assets/files/FTSE_Report_2018.pdf
Watson Helsby's Annual FTSE 100 Group Director of Corporate Communications/Af...Nick Helsby
Each year, to enhance our executive search advisory offer, Watson Helsby publishes a FTSE 100 Group Director of Corporate Communications/Affairs Survey. This provides an intriguing picture of everything from reporting lines and Executive Committee membership to the – ever fascinating – subject of remuneration. The 2018 Survey has just been published.
This has become the most comprehensive and insightful survey of its type, in terms of both the number of companies surveyed and the range of questions we ask/themes we investigate.
Findings include:
• 79% of FTSE 100s employ a Corporate Communications/Affairs Director, a decline year-on year of 2%.
• The percentage of FTSE 100 Corporate Communications/ Affairs Directors who are formal members of the Executive Committee has dropped to 49% this year (from 51%).
• Budgets are generally flat or down (90%). Given a number of factors, including the economic uncertainty created by Brexit. This compares with only 73% reporting flat or down in 2016/17.
• The year 2017/18 has, again, seen considerable change at the top, with 15 companies in the FTSE 100 making changes (vs. 20 the previous year and 16 the year before that). This means that 51 companies have changed their corporate communications/affairs director since 2015 or disbanded the role.
We would welcome any questions or comments.
Nick Helsby is the CEO of Watson Helsby, a specialist communications (external and internal) and corporate affairs/government relations executive search and leadership firm. He has over twenty years headhunting experience, in the UK, Europe, Middle East and Africa, placing senior communications, PR and corporate affairs professionals in some of the world’s leading organisations. He can be found at nickh@watsonhelsby.co.uk for any questions or comments.
The full report is available to download on http://www.watsonhelsby.co.uk/assets/files/FTSE_Report_2018.pdf
This year’s mandatory Say-on-Pay (SOP) brought new challenges for issuers. Not only did the pace of failed plans accelerate, but last year’s votes proved to be a poor indicator of how companies’ plans would fare this season. This report, which will be updated at the conclusion of the calendar year, will point out some high-level trends in the voting data for companies with low SOP votes so far this year.
Although receiving at least 50% support on SOP is the primary goal for issuers, in many cases the institutional investor community will apply heightened scrutiny to compensation plans that received “significant” opposition. Thus, the data set we reviewed in this report—shown in Appendix A—covers plans that received less than 70% support. Following our analysis of these data is a brief section on guidance for issuers, both how to recover from a failed SOP vote in 2012 and how to prepare for 2013.
The ES&G Accountability Forum (2013) provided participants and panelists with an opportunity to examine the question of how information (both financial and non-financial) can best be provided in a form that is useful to decision makers that are affected by, or have an affect on Canada’s companies.
This document captures key points made by panelists, their answers to questions posed, and the Forum’s participants’ table discussions. It is organized around each panel: investors, companies, evaluation organizations. We hope to encourage all groups to consider the advice and comments discussed at the Forum, and to take action on the outstanding questions and issues to improve the state of ES&G disclosure, analysis and investing that are highlighted on pages 9 & 10.
This year on September 23, 2014 in Calgary, many of these unanswered questions will be addressed at the ES&G Forum 2014: "Non-financial performance... A missed opportunity?"
Building on the last two years' discussions, participants will hear how investors and businesses are implementing innovative methods to manage investor demand for ES&G information. To learn more about & register for this year's ES&G Forum, please visit: http://bit.ly/esg-forum-2014
By David F. Larcker, Brendan Sheehan, and Brian Tayan
September 1, 2016, Stanford Corporate Governance Initiative, and Stanford Rock Center for Corporate Governance
5 major opportunities awaiting manufacturers and their CFOsGrant Thornton LLP
It’s an exciting time to be in manufacturing. Revenues are on the rise, employment is up, and with potential for increased profits, today’s manufacturing CFOs understand that their role goes beyond the bottom line. A fall 2014 Grant Thornton LLP survey of 350 CFOs explored some of these burgeoning possibilities. This infographic identifies C-level insights about how to make the most of them.
Find out more about our survey at grantthornton.com/valueaddCFO.
Nearly 900 investors from 700 VC firms responded to the mid-2016 survey covering Deal Sourcing, Investment Decisions, Valuations, Deal Structures, Post-Investment Value Adds, Exits, Org Structures of VCs, LP Relationships.
This document describes the results.
ERA 2010 Business Climate Survey Results Final 102010jagnew
A summary of responses to the 2010 Business climate survey conducted by Expense Reduction Analysts in partnership with Elite Financial Communications Group.
Credit availability in Canada 2014: Targeting an ideal capital structurelbobak
The majority of Canadian financial executives surveyed by the Canadian Financial Executives Research Foundation are more optimistic about their company’s ability to obtain sufficient capital to meet its financing requirements in the next year (whether these needs are short-term, long-term or equity based). Most financial executives surveyed said credit for working capital and growth financing is generally available to their organizations, according to the study, which was published by the research arm of Financial Executives International Canada (FEI Canada), and sponsored by EY. The report, entitled Targeting an ideal capital structure, is based on the results of an online survey of financial executives across Canada, which took place in June 2014. According to the study, even those for whom credit was less available this year, the expectation is availability will improve by the spring of 2015.
The results suggest that there is a real opportunity to improve the investment process so nonprofits can better protect the capital they’ve worked so hard to raise. I hope you find the results as interesting as I did. Please feel free to reach out to me directly if you have questions.
• Chief executives are now thinking strategically about international business ethics—specifically, how trustworthy their companies need to be. To generate that trust, CEOs are not just interested in growth for their enterprises. They want to attain “good growth”: real, inclusive, responsible, and lasting growth. And they want their companies to contribute to good growth in every country where they operate.
Executives View Ideal Shareholder Base as Key to Increased Market Value
Companies that want to maximize their market value would do well to pay attention to shareholder composition.
This study found that nearly all companies describe their ideal shareholder as having a long-term investment horizon, but that about half of companies’ shareholder base has a short- or medium-term horizon. As a result, the authors find, most companies see significant upside to managing their shareholder base, and senior leaders spend considerable time meeting with current and prospective investors.
“More than three-quarters of companies in our survey see significant stock market benefits from managing their shareholder base,” says Anne Beyer, associate professor of accounting at Stanford Graduate School of Business (GSB) and coauthor of the study. “Companies believe that if they can identify and attract the right shareholder base, they will be able to increase the price of their stock and decrease its volatility.”
In fact, this survey of 138 investor relations professionals at North American companies shows that 80% of companies believe their stock price would trade higher over a two- to three-year period if they could attract their ideal shareholder base. On average, companies estimate their stock would rise 15% and share price volatility would decrease 20%.
Read the full report!
By David F. Larcker, Brian Tayan, Dottie Schindlinger and Anne Kors, CGRI Survey Series. Corporate Governance Research Initiative, Stanford Rock Center for Corporate Governance and the Diligent Institute, November 2019
New research from the Rock Center for Corporate Governance at Stanford University and the Diligent Institute finds that corporate directors are not as shareholder-centric as commonly believed and that companies do not put the needs of shareholders significantly above the needs of their employees or society at large. Instead, directors pay considerable attention to important stakeholders—particularly their workforce—and take the interests of these groups into account as part of their long-term business planning.
• While directors are largely satisfied with their ESG-related efforts, they do not believe the outside world understands or appreciates the work they do.
• Directors recognize that tensions exist between shareholder and stakeholder interests. That said,
most believe their companies successfully balance this tension.
• In general, directors reject the view that their companies have a short-term investment horizon in
running their businesses.
In the summer of 2019, the Diligent Institute and the Rock Center for Corporate Governance at Stanford University surveyed nearly 200 directors of public and private corporations globally to better understand how they balance shareholder and stakeholder needs.
CEOs and Directors on Pay: 2016 Survey on CEO Compensation
By David F. Larcker, John T. Thompson, Nicholas E. Donatiello, Brian Tayan
CGRI Survey Series. Corporate Governance Research Initiative, Stanford Rock Center for Corporate Governance, Heidrick & Struggles, February 2016
Recently, Heidrick & Struggles and the Rock Center for Corporate Governance at Stanford University and the Rock Center for Corporate Governance at Stanford University surveyed 107 CEOs and directors of Fortune 500 companies to understand their perception of CEO pay practices among the largest U.S. corporations.
The research finds that public company directors give CEOs considerable credit for corporate success, believing that 40 percent of a company’s overall results, on average, are directly attributed to the CEO’s efforts.
Marking the sixth installment in McKinley Advisors' ongoing benchmarking series, the 2013 EIA study provides a glimpse of the current perceptions within our sector as well as clear illustrations of trending data that becomes so valuable in looking at the impact of changes over time.
Brunswick Insight Report: Conventional wisdom holds that “Stakeholder Engagement” is important and organisations should be doing it. But there’s very little data available about what “it” is, or about the benefits and risks organizations see from engaging in new ways with groups they may not have dealt with in the past. The purpose of this survey was to explore what stakeholder engagement looks like with those who are closest to the front line.
Faculty & Research › Publications › 2015 Survey on Board of Directors of Nonprofit Organizations
2015 Survey on Board of Directors of Nonprofit Organizations
By David F. Larcker, Nicholas Donatiello, Bill Meehan, Brian Tayan
Stanford GSB, Rock Center for Corporate Governance, BoardSource, and GuideStar. April 2015
Accounting, Corporate Governance
In fall 2014, the Stanford Graduate School of Business, in collaboration with BoardSource and GuideStar, surveyed 924 directors of nonprofit organizations about the composition, structure, and practices of their boards.
Institutional investors are always looking for better ways to increase returns, reduce risk and achieve specific investment goals. Particularly in the wake of the financial crisis, investors have been seeking more robust ways to diversify and reduce risk.
Commercial real estate executives appear relatively optimistic about the general state of the market in 2016, with many predicting higher than average deal volumes for their firms. When considering the adoption of new technology, most believe that the influx of commercial real estate tech companies is revolutionizing the industry. These executives recognize that while the U.S. commercial real estate market is recovering, there are still certain segments that are poised for significant decline.
Brighter Planet Employee Engagement and Sustainability Survey 2009Elizabeth Lupfer
An Analysis of the Extent and Nature of Employee Sustainability Programs . This report sheds light on the interactions between employers and their employees around sustainable actions in the
workplace. Includes useful social media data as a communications channel.
Source: Brighter Planet, http://brighterplanet.com/research
This report touches upon themes such as increasing complex reporting requirements, growing demand for transparency, the adoption of big data technology solutions, the management of environmental, social and governance (ESG) factors in private equity portfolio companies as well as the growing popularity of various private equity fund structures, and how this is set to change over the next 12 to 24 months.
Similar to 2019 Survey On Shareholder Versus Stakeholder Interests (20)
Authored by: David F. Larcker, Bradford Lynch, Brian Tayan, and Daniel J. Taylor, June 29, 2020
Investors rely on corporate disclosure to make informed decisions about the value of companies they invest in. The COVID-19 pandemic provides a unique opportunity to examine disclosure practices of companies relative to peers in real time about a somewhat unprecedented shock that impacted practically every publicly listed company in the U.S. We examine how companies respond to such a situation, the choices they make, and how disclosure varies across industries and companies.
We ask:
• What motivates some companies to be forthcoming about what they are experiencing, while others remain silent?
• Do differences in disclosure reflect different degrees of certitude about how the virus would impact businesses, or differences in management perception of its obligations to shareholders?
• What insights will companies learn to prepare for future outlier events?
Authored by: avid F. Larcker, Brian Tayan, CGRI Research Spotlight Series. Corporate Governance Research Initiative (CGRI), April 2020
This Research Spotlight provides a summary of the academic literature on board composition, quality, and turnover. It reviews the evidence of:
The appointment of outside CEOs as directors
The importance of industry expertise to performance
The relation between director skills and performance
The stock market reaction to director resignations
Whether directors are penalized for poor oversight
This Research Spotlight expands upon issues introduced in the Quick Guide Board of Directors: Selection, Compensation, and Removal.
David F. Larcker and Brian Tayan, April 21, 2020, Stanford Closer Look Series
Little is known about the process by which pre-IPO companies select independent, outside board members—directors unaffiliated with the company or its investors. Private companies are not required to disclose their selection criteria or process, and are not required to satisfy the regulatory requirements for board members set out by public listing exchanges. In this Closer Look, we look at when, why, and how private companies add their first independent, outside director to the board.
We ask:
• Why do pre-IPO companies rely on very different criteria and processes to recruit outside directors than public companies do?
• What does this teach us about governance quality?
• How important are industry knowledge and managerial experience to board oversight?
• How important are independence and monitoring?
• Does a tradeoff exist between engagement and fit on the one hand and independence on the other?
Authored by David F. Larcker and Brian Tayan, April 1, 2020, Stanford Closer Look Series
We examine the size, structure, and demographic makeup of the C-suite (the CEO and the direct reports to the CEO) in each of the Fortune 100 companies as of February 2020. We find that women (and, to a lesser extent, racially diverse executives) are underrepresented in C-suite positions that directly feed into future CEO and board roles. What accounts for this distribution?
By John D. Kepler, David F. Larcker, Brian Tayan, and Daniel J. Taylor, January 28, 2020
Corporate executives receive a considerable portion of their compensation in the form of equity and, from time to time, sell a portion of their holdings in the open market. Executives nearly always have access to nonpublic information about the company, and routinely have an information advantage over public shareholders. Federal securities laws prohibit executives from trading on material nonpublic information about their company, and companies develop an Insider Trading Policy (ITP) to ensure executives comply with applicable rules. In this Closer Look we examine the potential shortcomings of existing governance practices as illustrated by four examples that suggest significant room for improvement.
We ask:
• Should an ITP go beyond legal requirements to minimize the risk of negative public perception from trades that might otherwise appear suspicious?
• Why don’t all companies make the terms of their ITP public?
• Why don’t more companies require the strictest standards, such as pre-approval by the general counsel and mandatory use of 10b5-1 plans?
• Does the board review trades by insiders on a regular basis? What conversation, if any, takes place between executives and the board around large, single-event sales?
Short summary
We identify potential shortcomings in existing governance practices around the approval of executive equity sales. Why don’t more companies require stricter standards to lessen suspicion around insider equity sales activity? Do boards review trades by insiders on a regular basis?
By David F. Larcker, Brian Tayan
Core Concepts Series. Corporate Governance Research Initiative,
A roadmap to understanding the fundamental concepts of corporate governance based on theory, empirical research, and data. This guide takes an in-depth look at the Principles of Corporate Governance.
Authors: David F. Larcker and Brian Tayan, Stanford Closer Look Series, November 25, 2019
Among the controversies in corporate governance, perhaps none is more heated or widely debated across society than that of CEO pay. The views that American citizens have on CEO pay is centrally important because public opinion influences political decisions that shape tax, economic, and regulatory policy, and ultimately determine the standard of living of average Americans. This Closer Look reviews survey data of the American public to understand their views on compensation. We ask:
• How can society’s understanding of pay and value creation be improved and the controversy over CEO pay resolved?
• How should the level of CEO pay rise with complexity and profitability, particularly among America’s largest corporations?
• Should pay be reformed in the boardroom, or should high pay be addressed solely through the tax code?
• Are negative views of CEO pay driven by broad skepticism and lack of esteem for CEOs? Or do high pay levels themselves contribute to low regard for CEOs?
By David F. Larcker and Brian Tayan
CGRI Survey Series. Corporate Governance Research Initiative, Stanford Rock Center for Corporate Governance, November 2019.
In fall 2019, the Rock Center for Corporate Governance at Stanford University conducted a nationwide survey of In October 2019, the Rock Center for Corporate Governance at Stanford University conducted a nationwide survey of 3,062 individuals—representative by age, race, political affiliation, household income, and state residence—to understand the American population’s views on current and proposed tax policies.
Key findings include:
--Tax rates for high-income earners are about right
--Majority favor a wealth tax … but not if it harms the economy
--Americans do not want to set limits on personal wealth
--Americans do not believe in a right to universal basic income
--Trust in the ability of the U.S. government to spend tax dollars effectively is low
--Americans believe in higher taxes for corporations who pay their CEO large dollar amounts
--Little appetite exists to break up “big tech”
by David F. Larcker and Brian Tayan, Stanford Closer Look Series, October 7, 2019
A reliable system of corporate governance is considered to be an important requirement for the long-term success of a company. Unfortunately, after decades of research, we still do not have a clear understanding of the factors that make a governance system effective. Our understanding of governance suffers from 1) a tendency to overgeneralize across companies and 2) a tendency to refer to central concepts without first defining them. In this Closer Look, we examine four central concepts that are widely discussed but poorly understood.
We ask:
• Would the caliber of discussion improve, and consensus on solutions be realized, if the debate on corporate governance were less loosey-goosey?
• Why can we still not answer the question of what makes good governance?
• How can our understanding of board quality improve without betraying the confidential information that a board discusses?
• Why is it difficult to answer the question of how much a CEO should be paid?
• Are U.S. executives really short-term oriented in managing their companies?
By David F. Larcker, Brian Tayan
Core Concepts Series. Corporate Governance Research Initiative, June 2019
A roadmap to understanding the fundamental concepts of corporate governance based on theory, empirical research, and data. This guide will take an in-depth look at Shareholders and Activism.
By Brandon Boze, Margarita Krivitski, David F. Larcker, Brian Tayan, and Eva Zlotnicka
Stanford Closer Look Series
May 23, 2019
Recently, there has been debate among corporate managers, board of directors, and institutional investors around how best to incorporate ESG (environmental, social, and governance) factors into strategic and investment decision-making processes. In this Closer Look, we examine a framework informed by the experience of ValueAct Capital and include case examples.
We ask:
• What is the investment horizon prevalent among most companies today?
• Do companies miss long-term opportunities because of a focus on short-term costs?
• How many companies have an opportunity to profitably invest in ESG solutions?
• What factors determine whether a company can profitably invest in ESG solutions?
• Can investors earn competitive risk-adjusted returns through ESG investments?
• If so, how widespread is this opportunity?
This Research Spotlight provides a summary of the academic literature on environmental, social, and governance (ESG) activities including:
• The relation between ESG activities and firm value
• The impact of environmental and social engagements on firm performance
• The market reaction to ESG events
• The relation between ESG and agency problems
• The performance of socially responsible investment (SRI) funds
This Research Spotlight expands upon issues introduced in the Quick Guide “Investors and Activism”.
This Research Spotlight provides a summary of the academic literature on how dual-class share structures influence firm value and corporate governance quality. It reviews the evidence of:
• The relation between dual-class shares and governance quality
• The relation between dual-class shares and tax avoidance
• The relation between dual-class shares and firm value and performance
This Research Spotlight expands upon issues introduced in the Quick Guide “The Market for Corporate Control.”
By Courtney Hamilton, David F. Larcker, Stephen A. Miles, and Brian Tayan, Stanford Closer Look Series, February 15, 2019
Two decades ago, McKinsey advanced the idea that large U.S. companies are engaged in a “war for talent” and that to remain competitive they need to make a strategic effort to attract, retain, and develop the highest-performing executives. To understand the contribution of the human resources department to company strategy, we surveyed 85 CEOs and chief human resources officers at Fortune 1000 companies. In this Closer Look, we examine what these senior executives say about the contribution of HR to the strategic efforts and financial performance of their companies.
We ask:
• What role does HR play in the development of corporate strategy?
• Does HR have an equal voice or is it junior to other members of the senior management team?
• Do boards see HR and human capital as critical to corporate performance?
• How do boards ascertain whether management has the right HR strategy?
• How adept are companies at using data from HR systems to learn what programs work and why?
By David F. Larcker and Brian Tayan, Stanford Closer Look Series, December 3, 2018
Companies are required to have a reliable system of corporate governance in place at the time of IPO in order to protect the interests of public company investors and stakeholders. Yet, relatively little is known about the process by which they implement one. This Closer Look, based on detailed data from a sample of pre-IPO companies, examines the process by which companies go from essentially having no governance in place at the time of their founding to the fully established systems of governance required of public companies by the Securities and Exchange Commission. We examine the vastly different choices that companies make in deciding when and how to implement these standards.
We ask:
• What factors do CEOs and founders take into account in determining how to implement governance systems?
• Should regulators allow companies greater flexibility to tailor their governance systems to their specific needs?
• Which elements of governance add to business performance and which are done only for regulatory purposes?
• How much value does good governance add to a company’s overall valuation?
• When should small or medium sized companies that intend to remain private implement a governance system?
By David F. Larcker, Brian Tayan, CGRI Survey Series. Corporate Governance Research Initiative, Stanford Rock Center for Corporate Governance, November 2018
In summer and fall 2018, the Rock Center for Corporate Governance at Stanford University surveyed 53 founders and CEOs of 47 companies that completed an Initial Public Offering in the U.S. between 2010 and 2018 to understand how corporate governance practices evolve from startup through IPO.
David F. Larcker, Stephen A. Miles, Brian Tayan, and Kim Wright-Violich
Stanford Closer Look Series, November 8, 2018
CEO activism—the practice of CEOs taking public positions on environmental, social, and political issues not directly related to their business—has become a hotly debated topic in corporate governance. To better understand the implications of CEO activism, we examine its prevalence, the range of advocacy positions taken by CEOs, and the public’s reaction to activism.
We ask:
• How widespread is CEO activism?
• How well do boards understand the advocacy positions of their CEOs?
• Are boards involved in decisions to take public stances on controversial issues, or do they leave these to the discretion of the CEO?
• How should boards measure the costs and benefits of CEO activism?
• How accurately can internal and external constituents distinguish between positions taken proactively and reactively by a CEO?
By David F. Larcker, Brian Tayan, CGRI Survey Series. Corporate Governance Research Initiative, Stanford Rock Center for Corporate Governance, October 2018
In summer and fall 2018, the Rock Center for Corporate Governance at Stanford University conducted a nationwide survey of 3,544 individuals — representative by gender, race, age, household income, and state residence — to understand how the American public views CEOs who take public positions on environmental, social, and political issues.
“We find that the public is highly divided about CEOs who take vocal positions on social, environmental, or political issues,” says Professor David F. Larcker, Stanford Graduate School of Business. “While some applaud CEOs who speak up, others strongly disapprove. The divergence in opinions is striking. CEOs who take public positions on specific issues might build loyalty with their employees or customers, but these same positions can inadvertently alienate important segments of those populations. The cost of CEO activism might be higher than many CEOs, companies, or boards realize.”
“Hot-button issues are hot for a reason,” adds Brian Tayan, researcher at Stanford Graduate School of Business. “Interestingly, people are much more likely to think of products they have stopped using than products they have started using because of a position the CEO took on a public issue. When consumers don’t like what they hear, they react the best way they know how to: by closing their wallets.”
By David F. Larcker, Brian Tayan, CGRI Quick Guide Series. Corporate Governance Research Initiative, September 2018
This guide provides data and statistics on the attributes of the CEOs and CEO succession events at publicly traded companies in the United States. This data supplements the issues introduced in the Quick Guide “CEO Succession Planning.”
By David F. Larcker, Brian Tayan, CGRI Quick Guide Series. Corporate Governance Research Initiative, September 2018
This Data Spotlight provides data and statistics on the attributes of boards of directors of publicly traded companies in the United States. This data supplements the issues introduced in the Quick Guide “Board of Directors: Structure and Consequences.”
More from Stanford GSB Corporate Governance Research Initiative (20)
The world of search engine optimization (SEO) is buzzing with discussions after Google confirmed that around 2,500 leaked internal documents related to its Search feature are indeed authentic. The revelation has sparked significant concerns within the SEO community. The leaked documents were initially reported by SEO experts Rand Fishkin and Mike King, igniting widespread analysis and discourse. For More Info:- https://news.arihantwebtech.com/search-disrupted-googles-leaked-documents-rock-the-seo-world/
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A Memorandum of Association (MOA) is a legal document that outlines the fundamental principles and objectives upon which a company operates. It serves as the company's charter or constitution and defines the scope of its activities. Here's a detailed note on the MOA:
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Name Clause: This clause states the name of the company, which should end with words like "Limited" or "Ltd." for a public limited company and "Private Limited" or "Pvt. Ltd." for a private limited company.
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Registered Office Clause: It specifies the location where the company's registered office is situated. This office is where all official communications and notices are sent.
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Capital Clause: This clause specifies the authorized capital of the company, i.e., the maximum amount of share capital the company is authorized to issue. It also mentions the division of this capital into shares and their respective nominal value.
Association Clause: It simply states that the subscribers wish to form a company and agree to become members of it, in accordance with the terms of the MOA.
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Legal Requirement: The MOA is a legal requirement for the formation of a company. It must be filed with the Registrar of Companies during the incorporation process.
Constitutional Document: It serves as the company's constitutional document, defining its scope, powers, and limitations.
Protection of Members: It protects the interests of the company's members by clearly defining the objectives and limiting their liability.
External Communication: It provides clarity to external parties, such as investors, creditors, and regulatory authorities, regarding the company's objectives and powers.
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Binding Authority: The company and its members are bound by the provisions of the MOA. Any action taken beyond its scope may be considered ultra vires (beyond the powers) of the company and therefore void.
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While the MOA lays down the company's fundamental principles, it is not entirely immutable. It can be amended, but only under specific circumstances and in compliance with legal procedures. Amendments typically require shareholder
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2. TA B L E O F C O N T E N T S
Executive Summary and Key Findings............................ 1
Methodology....................................................................... 4
2019 Survey on Shareholder versus
Stakeholder Interests........................................................ 5
Demographic Information.............................................. 12
About the Authors........................................................... 13
Acknowledgments............................................................14
About Stanford Graduate School of Business and
the Rock Center for Corporate Governance................ 15
Contact Information....................................................... 15
3. 2019 SURVEY ON SHAREHOLDER VERSUS STAKEHOLDER INTERESTS 1
EXECUTIVE SUMMARY AND KEY FINDINGS
CEOS ARE DIVIDED ON WHETHER STAKEHOLDER INITIATIVES ARE A COST OR BENEFIT TO
THE COMPANY
COMPANIES TOUT THEIR EFFORTS BUT BELIEVE THE PUBLIC DOESN’T UNDERSTAND THEM
BLACKROCK ADVOCATES … BUT HAS LITTLE IMPACT
Only 12 percent of the CEOs and CFOs of S&P 1500 companies
believe that addressing stakeholder interests is a short-term
cost that leads to long-term value.
“We find that the standard narrative around stakeholder
considerations is not accurate,” says Professor David F.
Larcker, Stanford Graduate School of Business. “Common
consensus is that U.S. companies are not investing in areas
like sustainability, the environment, their employee base, or
communities because they do not want to incur the costs
today that are necessary for long-term success in these
areas. However, the companies themselves do not see it
this way. Most do not believe that a tradeoff exists between
short- and long-term outcomes. Instead, their viewpoints
tend to fall into one of two buckets: either they believe
addressing stakeholder concerns is costly to the company in
the short run and will continue to be costly in the future, or
they believe that addressing these concerns is immediately
beneficial to the company and will remain so into the
future—a so-called ‘free lunch.’”
“Companies really do strive to meet the needs of their
stakeholders,” adds Vinay Trivedi, Stanford MBA Class of
2019. “CEOs and CFOs agree that employees, community
members, and the general public welfare are important
constituents in their business. They do not believe, however,
that they get proper recognition for their efforts from
external groups, such as the media. The board and senior
management need to do a better job of communicating the
initiatives they undertake and explain the positive impact.”
4. 2019 SURVEY ON SHAREHOLDER VERSUS STAKEHOLDER INTERESTS 2
“Large institutional investors, such as BlackRock and
Vanguard, have been vocal advocates of the view that
companies need to play a more central role in meeting the
needs of society, beyond the pursuit of profits,” observes
Owen Wurzbacher, Stanford MBA Class of 2019. “Companies,
however, are not very receptive to these overtures. While
CEOs and CFOs generally agree with some of the specific ideas
advocated, many do not believe that their shareholder base
as a whole really cares about stakeholder interests. We find
only modest evidence that the letters written by these firms
to their portfolio companies are discussed at the board level,
and almost no evidence that they spark new initiatives.”
In spring 2019, the Rock Center for Corporate Governance at
StanfordUniversitysurveyed209CEOsandCFOsofcompanies
included in the S&P 1500 Index to understand the role that
stakeholder interests play in long-term corporate planning.
KEY FINDINGS INCLUDE THE FOLLOWING:
STAKEHOLDERS ARE NOT IGNORED
Stakeholderinterestsplayanimportantroleinthelong-term
management of companies. The vast majority of CEOs and
CFOs (89 percent) believe it is important or very important
that they incorporate stakeholder interests in their business
planning. Only 3 percent believe it is slightly or not at all
important.
When asked to assess the relative importance of stakeholders
and shareholders, most companies give considerable weight
to stakeholder interests. Only a quarter (23 percent) of
companies say shareholder interests are significantly more
important than stakeholder interests. By contrast, a third (32
percent) say shareholder interests are only slightly more
important, and 40 percent say they are equally important.
The rest (5 percent) say that stakeholders are more important
than shareholders.
Employees are, far and away, considered the most
important non-investor stakeholders in companies. Almost
all respondents (97 percent) say employee interests play a
key role in the company’s daily operations and long-term
strategy. Local communities (53 percent), the public in
general (26 percent), and local governments (22 percent) are
also frequently cited. Non-governmental organizations and
advocacy groups (11 percent) and trade unions (8 percent)
are less frequently cited.
COMPANIES TOUT THEIR EFFORTS BUT FEEL
UNDER-ACKNOWLEDGED
Companies are satisfied with the job they do to meet the
needs of their most important stakeholders. Almost half (48
percent) of CEOs and CFOs say they are very satisfied with
the job their company does to meet the interests of these
stakeholders. Forty-eight percent say they are somewhat
satisfied. Almost no respondents say they are dissatisfied.
Furthermore, companies receive only modest external
pressure to meet stakeholder needs. Nearly three-quarters
(79 percent) report receiving low or no pressure from their
largest institutional investors to address stakeholder
interests. A similar percentage (74 percent) report receiving
low or no pressure from advocacy groups.
Still, companies do not believe external groups accurately
understand the job they do to meet the needs of
stakeholders. Only half (50 percent) believe the stakeholders
themselves understand what they do to meet their needs. A
third (33 percent) believe institutional investors understand
this. A paltry 10 percent believe the media understands what
the company does to meet stakeholder needs.
5. 2019 SURVEY ON SHAREHOLDER VERSUS STAKEHOLDER INTERESTS 3
COMPANIES DO NOT SACRIFICE THE LONG TERM FOR
THE SHORT TERM
Opinions vary widely about the financial impact of
incorporating stakeholder considerations into a company’s
business model. Surprisingly, very few CEOs and CFOs
believe stakeholder initiatives require them to trade off
short-term profits for long-term value creation. In fact, only
12 percent of respondents believe such a tradeoff exists.
Instead, most respondents believe that either managing
stakeholder interests requires both short- and long-term
costs (37 percent) or that it produces both short- and long-
term benefits (28 percent). The remainder (24 percent) believe
it has little cost or benefit in either the short or long term.
In a similar vein, CEOs and CFOs do not believe their largest
institutional investors see stakeholder considerations as
being in conflict with their financial interests as owners.
Almost two-thirds (59 percent) of respondents say they do
not think their largest institutional investors believe meeting
the needs of stakeholders comes at the cost of lower
economic value. Only 13 percent say their investors believe
a conflict exists.
CEOS AND CFOS AGREE WITH BLACKROCK CEO
LARRY FINK …
TheaveragerespondentinoursurveyreportsthatBlackRock
owns between 6 percent and 10 percent of their company’s
publicly traded shares. Every year, BlackRock CEO Larry Fink
writes a letter to the companies that BlackRock is invested
in, encouraging them to consider broad societal interests as
they pursue business objectives.
Two-thirds (67 percent) of respondents to our survey say
they received such a letter from Mr. Fink this year. For the
most part, they agree with the ideas expressed in this letter.
Sixty-eight percent say that they agree with Mr. Fink’s ideas,
while only 7 percent do not.
Specifically, 82 percent agree with his assertion that
companies have a responsibility to address broad social and
economic issues. Only 6 percent disagree or strongly disagree.
Similarly, 69 percent agree with Mr. Fink that companies face
pressure to maximize short-term returns at the expense of
long-term growth. Twelve percent do not agree with this
statement. However, CEOs and CFOs are mixed on the degree
to which this statement applies to their own company. Only
46 percent agree they face incentives to maximize short-
term returns at the expense of long-term returns, while 42
percent disagree they do.
This might be because companies have a longer investment
horizonthanMr.Fink’sletterassumes.Seventy-eightpercent
of respondents report their company uses an investment
horizon of 3 or more years in managing the company, 9
percent use a 2-year investment horizon, and 12 percent a
1-year horizon. Two percent of respondents claim to have an
investment horizon of less than 1 year.
… HOWEVER, HIS WORDS HAVE LITTLE IMPACT ON
WHAT THEY DO
In general, Mr. Fink’s annual letter has little influence on
corporate decisions about stakeholder initiatives.
Of the companies that received the letter, only half (50 percent)
say their board discussed the ideas that he expressed in it.
Thirty-eight percent say the board did not discuss them.
Furthermore, the vast majority of these (87 percent) say the
letter did not motivate them or only slightly motivated them
to evaluate or implement new initiatives to address one or
more societal interests.
This might be because the companies themselves believe
they are already doing a satisfactory job of incorporating
stakeholder concerns into their business planning. Or it
might be because they do not necessarily believe that
their shareholder base as a whole cares about stakeholder
interests. Only 43 percent of CEOs and CFOs believe their
overall investor base cares about stakeholder interests, while
38 percent believe they do not.
6. 2019 SURVEY ON SHAREHOLDER VERSUS STAKEHOLDER INTERESTS 4
Methodology
In spring 2019, the Rock Center for Corporate Governance at Stanford University surveyed 209 CEOs and CFOs of companies included
in the S&P 1500 Index to understand the role that stakeholder interests play in long-term corporate planning.
7. 2019 SURVEY ON SHAREHOLDER VERSUS STAKEHOLDER INTERESTS 5
2019 Survey on Shareholder versus Stakeholder Interests
1. What is your title? (select all that apply)
45%
CEO
45%
CFO
6%
Other executive
9%
Chairman of the board
2%
Outside board member
9%
Inside board member
4%
Other
2. Generally speaking, how important is it that
your company consider the interests of non-
shareholder stakeholders (such as employees, local
communities, the general public, etc.) as you pursue
your business objectives?
62%
Very important
27%
Important
9%
Moderately important
2%
Slightly important
1%
Not important
Note: Some percentages in questions do not total 100% due to rounding.
3. In general, how important are stakeholder interests
relative to shareholder interests in the long-term
management of your company?
23%
Shareholder interests are significantly more
important than stakeholder interests
32%
Shareholder interests are slightly more important
than stakeholder interests
40%
Shareholder and stakeholder interests are
equally important
3%
Stakeholder interests are slightly more important
than shareholder interests
2%
Stakeholder interests are significantly more important
than shareholder interests
Driving shareholder value is our first priority. Doing
so in a principled, respectful way for employees, the
community, etc., is our objective. However, we cannot
do things that harm shareholder value because of non-
shareholder stakeholders.
You have to balance the needs of stakeholders while
not losing sight of the long-term needs of shareholders.
Shareholder value is our ultimate scorecard.
Shareholder and stakeholder interests complement
each other.
8. 2019 SURVEY ON SHAREHOLDER VERSUS STAKEHOLDER INTERESTS 6
4. Which stakeholders play a key role in or are
impacted by your company’s daily operations and
long-term strategy?
97%
Employees
8%
Trade unions
53%
Local communities
22%
Local government
11%
Non-governmental organizations (NGOs)
and advocacy groups
26%
Public at large
23%
Other
5. How satisfied are you with the job your company
does to meet the interests of these stakeholders?
48%
Very satisfied
48%
Somewhat satisfied
3%
Neither satisfied nor dissatisfied
1%
Somewhat dissatisfied
0%
Very dissatisfied
6. What is the financial impact to your company of meeting the interests of these stakeholders?
(Respondents requested to select one answer for the short-term impact and one answer for the long-term impact.)
Long-term impact
High or moderate cost Little or no cost or benefit High or moderate benefit
Short-termimpact
High or moderate cost 37% 4% 12%
Little or no cost or benefit 5% 10% 5%
High or moderate benefit 0% 0% 28%
9. 2019 SURVEY ON SHAREHOLDER VERSUS STAKEHOLDER INTERESTS 7
7. Do you believe these stakeholders accurately understand the job your company does to meet their interests?
50%
Yes
41%
No
10%
I don’t know
Sometimes it appears we are only appeasing Wall
Street even though we spend considerable energy and
resources on our other stakeholders.
Each stakeholder has a narrow understanding of their
interests but few understand the job required to meet all
stakeholder interests in aggregate.
Employee interests vary significantly, and it is difficult to
adequately convey all that we do for them.
Rank and file employees do not. The top 15% does.
The decisions to support employee programs are
an expensive alternative use of capital. Employees
underestimate the cost of benefits, training programs,
modern facilities, etc., and underappreciate the value
of these.
It’s tough in our industry to pay an adequate wage and
still earn a satisfactory ROI.
In today’s society, only faults are recognized. Most of the
good we do goes unnoticed. I have faith that over the
long term it will be recognized.
Outside stakeholders look at the company as having
deep pockets and will never be satisfied with our efforts.
They will always want more.
We don’t have a clear communication strategy to
articulate what we do to meet their needs.
We make a point to conduct outreach with shareholders,
employees, local communities, all of our customers
and governmental agencies. We also post items
of importance to our website, proxy, company
presentations and enhance with consultants.
We publish an annual sustainable report and make
available plenty of information about these issues on
our website. However, many stakeholders do not take
the time to understand how we address these issues.
Admittedly, they are complex.
It requires continual reinforcement and sharing
of relevant information. Consistent management
interaction with shareholders and stakeholders is also
important.
We have core values that are visible and demonstrated
daily.
We ‘do the right things’ for our employees and
communities. They know it and appreciate it, and it
creates great trust.
10. 2019 SURVEY ON SHAREHOLDER VERSUS STAKEHOLDER INTERESTS 8
8. Do you believe the media accurately understands
the job your company does to meet the interests of
these stakeholders?
10%
Yes
71%
No
20%
I don’t know
9. How much pressure does your company receive
from advocacy groups to do more to meet the
interests of these stakeholders?
4%
High
21%
Moderate
52%
Low
22%
None
10. Do you believe that your largest institutional
shareholders really care about the interests of these
stakeholders?
43%
Yes
38%
No
18%
I don’t know
Yes, because they know it is important to our success.
They care a lot about employees and customers, much
less about other stakeholders.
They portray themselves as caring a lot for
stakeholders, but whether they really do is unclear.
It depends which side of the investment house.
Portfolio managers understand the conflicts with
shareholder interests. The governance side does not.
11. Do you believe that your largest institutional share-
holders accurately understand the job your compa-
ny does to meet the interests of these stakeholders?
33%
Yes
49%
No
18%
I don’t know
12. Do your largest institutional shareholders believe
that a conflict exists between their own interests
and the interests of these stakeholders (i.e., do they
believe that meeting the needs of these stakeholders
comes at the cost of lower shareholder value)?
13%
Yes
59%
No
28%
I don’t know
13. How much pressure does your company receive
from your largest institutional shareholders to meet
the interests of stakeholders as you develop your
long-term strategy?
3%
High
18%
Moderate
51%
Low
28%
None
14. Approximately what percent of your company’s
publicly traded shares are owned by BlackRock?
0%
None
3%
Less than 1%
20%
1% to 5%
35%
6% to 10%
41%
More than 10%
2%
I don’t know
11. 2019 SURVEY ON SHAREHOLDER VERSUS STAKEHOLDER INTERESTS 9
15. In January 2019, the CEO of BlackRock (Larry
Fink) sent a letter to all companies that BlackRock
invests in, encouraging them to consider broad
societal interests as they pursue their business
objectives. Did your company receive this letter?
67%
Yes
15%
No
18%
I don’t know
15a. [If yes] Do you agree with these ideas expressed by
Mr. Fink?
14%
Strongly agree
54%
Agree
25%
Neither agree nor disagree
6%
Disagree
1%
Strongly disagree
15b. [If yes] Did the board discuss the ideas in this
letter?
50%
Yes
38%
No
13%
I don’t know
15c. [If yes] To what extent did this letter motivate your
company to evaluate or implement new initiatives
to address one or more societal interests?
1%
To a great extent
13%
To a moderate extent
39%
To a slight extent
48%
Not at all
I agree with him on some but disagree on others.
I appreciate Larry taking the positions he does, but
unless something structural is done to limit the
influence of activist investors it won’t have an impact.
I think it’s all marketing.
We are implementing extensive ESG initiatives and
would have done so without the letter.
To the extent addressing social and economic issues is
in the long-term interest of our business we will do so.
We’re not going to tilt at windmills that have nothing
to do with our business, but we will invest in employee
comp and benefits, in reducing our environmental
footprint, and in addressing human rights policies.
We do so to the extent it is consistent with our mission
and the goals that have been approved by the board.
12. 2019 SURVEY ON SHAREHOLDER VERSUS STAKEHOLDER INTERESTS 10
16. In the letter, Larry Fink writes that: “Society is
increasingly looking to companies, both public and
private, to address pressing social and economic
issues. These issues range from protecting the
environment to retirement to gender and racial
inequality, among others.” Do you agree with this
statement?
20%
Strongly agree
62%
Agree
12%
Neither agree nor disagree
4%
Disagree
2%
Strongly disagree
17. Do you agree that your company has an obligation
to address these issues?
18%
Strongly agree
58%
Agree
18%
Neither agree nor disagree
6%
Disagree
1%
Strongly disagree
18. To what extent does this statement motivate you to
evaluate or implement new initiatives to address a
specific social or economic issue?
7%
To a great extent
27%
To a moderate extent
36%
To a slight extent
30%
Not at all
19. In his letter, Larry Fink also writes that: “Companies
must navigate the complexities of a late-cycle
financial environment including increased volatility,
which can create incentives to maximize short-term
returns at the expense of long-term growth.” Do you
agree with this statement?
22%
Strongly agree
47%
Agree
20%
Neither agree nor disagree
10%
Disagree
2%
Strongly disagree
20. Do you agree that your company faces incentives to
maximize short-term returns at the expense of long-
term returns?
15%
Strongly agree
31%
Agree
12%
Neither agree nor disagree
33%
Disagree
9%
Strongly disagree
All public companies face these pressures.
We take a long-term view but you are only allowed to
plan for the long term if you hit your quarterly numbers.
It’s a structural problem inherent in quarterly reporting
cycles and an activist environment.
Long-term institutional holders are patient to a point,
but cannot tolerate stock-price volatility.
Wall Street’s incentive system is much shorter than
ours.
13. 2019 SURVEY ON SHAREHOLDER VERSUS STAKEHOLDER INTERESTS 11
21. In your best estimation, what investment horizon
does your senior management team predominantly
consider in managing the company?
1%
0%
1%
12%
9%
32%
46%
1 quarter
2 quarters
3 quarters
1 year
2 years
3 years
More than 3 years
22. What is the single most important environmental
or societal issue that has the power to negatively
impact the performance of your company over the
long term? [unprompted]
19%
16%
16%
15%
13%
8%
7%
6%
Workforce issues including availability, unionization,
diversity, engagement or regulations that influence,
restrict or require these
Environmental issues including climate change,
pollution, waste, or recycling
Wage inequality or social unrest
Broad economic factors including national or
macroeconomic factors, tariffs, trade wars, or
personal spending
Social issues or political pressures that lead to
increased regulation or taxes
Environment regulations or rules that require a
reduction in fossil fuels
Healthcare issues including pricing, access, or
public health
Geopolitical factors or war
23. What is the single most important environmental
or societal issue that has the power to positively
impact the performance of your company over the
long term? [unprompted]
27%
23%
21%
9%
9%
7%
3%
Efforts that improve the availability of workforce,
including diversity, immigration or that improve
employee education or engagement
Efforts that improve economic results for large
portions of the population
Environment issues including efforts to improve
environmental conditions or sustainability
Efforts that successfully address widespread
social issues
Reduction in regulations or taxes, or changes to
regulations that promote competition
Efforts to improve access to or the cost of healthcare
Geopolitical factors
14. 2019 SURVEY ON SHAREHOLDER VERSUS STAKEHOLDER INTERESTS 12
Demographic Information
1. What is your gender?
Male Female
91% 9%
2. What is your age?
Average Median
56
56
3. What is your company’s revenue?
33%
49%
10%
8%
< $1 billion
$1 billion to $10 billion
$10 billion to $25 billion
> $25 billion
4. What industry is your company in?
3%
1%
8%
1%
2%
0%
3%
4%
5%
5%
11%
4%
4%
8%
0%
4%
12%
3%
4%
1%
19%
Business services
Chemicals
Commercial banking
Commodities
Communications
Computer services
Electronics
Energy
Financial services
Food and tobacco
Healthcare
Industrial and transportation equipment
Insurance
Other manufacturing
Other services
Retail trade
Technology
Transportation
Utilities
Wholesale trade
Other
15. 2019 SURVEY ON SHAREHOLDER VERSUS STAKEHOLDER INTERESTS 13
ABOUT THE AUTHORS
DAVID F. LARCKER
David F. Larcker is the James Irvin Miller Professor of Accounting at Stanford
Graduate School of Business, director of the Corporate Governance Research
Initiative, and senior faculty of the Arthur and Toni Rembe Rock Center for
Corporate Governance. His research focuses on executive compensation
and corporate governance. Professor Larcker presently serves on the Board
of Trustees for Wells Fargo Advantage Funds. He is coauthor of the books
A Real Look at Real World Corporate Governance and Corporate Governance
Matters.
Email: dlarcker@stanford.edu
Twitter: @stanfordcorpgov
Full Bio: http://www.gsb.stanford.edu/faculty-research/faculty/david-f-larcker
BRIAN TAYAN
Brian Tayan is a member of the Corporate Governance Research Initiative
at Stanford Graduate School of Business. He has written broadly on the
subject of corporate governance, including boards of directors, succession
planning, compensation, financial accounting, and shareholder relations.
He is coauthor with David Larcker of the books A Real Look at Real World
Corporate Governance and Corporate Governance Matters.
Email: btayan@stanford.edu
Full Bio: http://www.gsb.stanford.edu/contact/brian-tayan
16. 2019 SURVEY ON SHAREHOLDER VERSUS STAKEHOLDER INTERESTS 14
OWEN WURZBACHER
Owen Wurzbacher is a managing director and portfolio manager at High
Sage Ventures, an investment firm in Boston. Prior to his current role,
he worked at Amazon, Highfields Capital, and The Blackstone Group. He
received an MBA from Stanford Graduate School of Business where he was
an Arjay Miller Scholar and the winner of the Alexander A. Robichek Award for
Outstanding Achievement in Finance. While at Stanford, he also received an
MA in education. He graduated magna cum laude from Harvard University,
receiving an AB in biology with a minor in economics. At Harvard, he was the
captain of the Men’s Varsity Swimming Team.
VINAY TRIVEDI
Vinay Trivedi works in technology investing at General Atlantic, with
previous experience at Blackstone Private Equity and SoftBank Vision Fund.
Trivedi serves on the steering committee of Startup in Residence (STiR), a
program spun out of the San Francisco Mayor’s Office of Civic Innovation
that connects startups with government agencies to develop technology
products addressing civic challenges. He has also worked with the New York
City Mayor’s Office of the CTO on its NYCx Moonshot Challenge Initiative. He
is the author of How to Speak Tech, a tech education book shortlisted and
featured at SXSW.
Email: vinayt@alumni.gsb.stanford.edu
Full Bio: https://howtospeaktech.com/author
Acknowledgments
THE AUTHORS WOULD LIKE TO THANK MICHELLE E. GUTMAN OF
THE CORPORATE GOVERNANCE RESEARCH INITIATIVE AT STANFORD
GRADUATE SCHOOL OF BUSINESS FOR HER RESEARCH ASSISTANCE
ON THIS STUDY.