One of the most important decisions that a board of directors must make is the selection of the CEO. What type of disclosure can provide shareholders with insight into succession planning?
Chris Hurn, CEO and Co-Founder of Mercantile Capital Corporation, dicusses with the House Small Business Subcomittee his business and the experience it has given him to improve the industry. In this written testimony Hurn explains the SBA 504 and FMLP backround, its timeframe, and success to date. The request of the written testimony is to extend the FMLP program by 12 months with an additional SBA fee of 0.125% and additionally extend the SBA 504 Debt Refinance program for one year. This written testimony has been requested to be "co-signers" from 92 other businesses nationwide.
Union pension funds manage approximately $3.5 trillion in retirement assets on behalf of public and private sector employees covered by collective bargaining agreement. They are also very active in the proxy process, sponsoring approximately one-third of the shareholder proposals that are included in corporate proxies each year.
Federal and state laws (including ERISA) require that the trustees and administrative bodies that oversee these funds manage their plans “solely in the interest of participants and beneficiaries.” Furthermore, the U.S. Department of Labor is clear that pension funds are not to use plan assets and their voting rights “to further legislative, regulatory or public policy issues through the proxy process.”
We examine this issue is greater detail, including the types of proposals put forward but union pension funds, the support these proposals receive, and the companies they target. We ask:
Are union-sponsored proposals made solely in the interest of their pension beneficiaries?
How can the public or a pension beneficiary assess the motives of funds that sponsor proxy proposals?
How do union pension funds determine which positions to advocate and which companies to target?
Are unions violating their ERISA duties by sponsoring these proposals?
Chris Roush presents "Investigating Private Companies and Nonprofits" at the free business journalism workshop, "Covering Business on Tribal Lands," hosted by the Donald W. Reynolds National Center for Business Journalism and the Native American Journalists Association.
For more information about free training for business journalists, please visit businessjournalism.org.
Chris Roush presents "Investigating Private Companies and Nonprofits" in Minneapolis on Oct. 4, 2011 at the Star Tribune during the Reynolds Center's free workshop, "Business Journalism Boot Camp."
For more information about training for business journalists, please visit businessjournalism.org.
Chris Hurn, CEO and Co-Founder of Mercantile Capital Corporation, dicusses with the House Small Business Subcomittee his business and the experience it has given him to improve the industry. In this written testimony Hurn explains the SBA 504 and FMLP backround, its timeframe, and success to date. The request of the written testimony is to extend the FMLP program by 12 months with an additional SBA fee of 0.125% and additionally extend the SBA 504 Debt Refinance program for one year. This written testimony has been requested to be "co-signers" from 92 other businesses nationwide.
Union pension funds manage approximately $3.5 trillion in retirement assets on behalf of public and private sector employees covered by collective bargaining agreement. They are also very active in the proxy process, sponsoring approximately one-third of the shareholder proposals that are included in corporate proxies each year.
Federal and state laws (including ERISA) require that the trustees and administrative bodies that oversee these funds manage their plans “solely in the interest of participants and beneficiaries.” Furthermore, the U.S. Department of Labor is clear that pension funds are not to use plan assets and their voting rights “to further legislative, regulatory or public policy issues through the proxy process.”
We examine this issue is greater detail, including the types of proposals put forward but union pension funds, the support these proposals receive, and the companies they target. We ask:
Are union-sponsored proposals made solely in the interest of their pension beneficiaries?
How can the public or a pension beneficiary assess the motives of funds that sponsor proxy proposals?
How do union pension funds determine which positions to advocate and which companies to target?
Are unions violating their ERISA duties by sponsoring these proposals?
Chris Roush presents "Investigating Private Companies and Nonprofits" at the free business journalism workshop, "Covering Business on Tribal Lands," hosted by the Donald W. Reynolds National Center for Business Journalism and the Native American Journalists Association.
For more information about free training for business journalists, please visit businessjournalism.org.
Chris Roush presents "Investigating Private Companies and Nonprofits" in Minneapolis on Oct. 4, 2011 at the Star Tribune during the Reynolds Center's free workshop, "Business Journalism Boot Camp."
For more information about training for business journalists, please visit businessjournalism.org.
Chris Roush presents "Investigating Private Companies" during the four-day, Reynolds Center webinar, "Investigating Private Companies and Nonprofits."
For more information about free training for business journalists, please visit businessjournalism.org.
Using the Internet to Research Private CompaniesAugust Jackson
There is a wealth of information that is available about private companies on the Internet. In this presentation I tell you how you can exploit these sources to gain insights into your privately held competitors.
MBA Compliance Essentials Unfair, Deceptive or Abusive Acts or Practices (UDA...MBAMortgage
The MBA Compliance Essentials Unfair, Deceptive, or Abusive Acts and Practices (UDAAP) and FTC Mortgage Acts and Practices Advertising (MAP) Rule Resource Guide™ is intended to serve as a base for the development of your company's policies and procedures in this area.
This presentation was given as part of seminar at Universidad Sergio Arboleda in Bogota. I have given versions of it elsewhere. I work in the corporate governance and have taught comparative corporate governance.
This presentation was first given at the World Bank, April 25, 2012. A version was also given at Transparency Camp 2012. The World Bank presentation was also webcast and a recording is available at: A recording of the webcast of the World Bank presentation is at http://bit.ly/ocdw
Boards of Directors are not only expected to monitor a company management; they are also held
responsible for an organization’s failure to attain organizational performance goals.The purpose of this study
was to establish the relationship between board of directors’ composition, strategic leadership and performance
of commercial banks in Kenya. The specific objectives were to establish the relationship betweenboard size,
non-executive directors, and board diversityand performance of commercial banks in Kenya and the extent to
which strategic leadership moderates such relationships
This case examines seven commonly accepted myths about corporate governance. How can we expect managerial behavior and firm performance to improve, if practitioners continue to rely on myths rather than facts to guide their decisions?
Recently, shareholder groups have sued companies for inadequate disclosure in the annual proxy. They allege that companies provide insufficient disclosure to determine how to vote on “say on pay.” If a company follows SEC guidelines, why is this not sufficient?
Corporate Governance a Balanced Scorecard approach with KPIs between BOD, Exe...Chris Rigatuso
This paper, from 2003, during my time at Oracle, was an early attempt to define metrics for inducing accountability between BOD, executives, and operating management of corporations. It's geared to large companies, but the lessons are broadly appreciable. It was published in CFO Reviews by Anderson Consulting, and other places. It predates the SOX Sarbanes Oxley laws that were a result of the Enron Scandal.
Linguists and psychologists have developed techniques to identify deceptive language and behavior. Why don’t shareholders use these same techniques to evaluate the truthfulness of management and detect financial manipulation?
25law43665_ch02_025-046.indd 25 111618 1108 AMC H .docxstandfordabbot
25
law43665_ch02_025-046.indd 25 11/16/18 11:08 AM
C H A P T E R T W O
Managing Public
Issues and Stakeholder
Relationships
Businesses today operate in an ever-changing external environment, where effective management
requires anticipating emerging public issues and engaging positively with a wide range of stake-
holders. Whether the issue is growing concerns about climate change, health care, safety at work
or in our schools, social equality, or consumer safety, managers must respond to the opportunities
and risks it presents. To do so effectively often requires building relationships across organizational
boundaries, learning from external stakeholders, and altering practices in response. Effective man-
agement of public issues and stakeholder relationships builds value for the firm.
This Chapter Focuses on These Key Learning Objectives:
LO 2-1 Identifying public issues and analyzing gaps between corporate performance and stakeholder
expectations.
LO 2-2 Applying available tools or techniques to scan an organization’s multiple environments and assess-
ing stakeholder materiality.
LO 2-3 Describing the steps in the issue management process and determining how to make the process
most effective.
LO 2-4 Identifying the managerial skills required to respond to emerging issues effectively.
LO 2-5 Understanding the various stages through which businesses can engage with stakeholders, what
drives this engagement, and the role social media can play.
LO 2-6 Recognizing the value of creating stakeholder dialogue and networks.
Final PDF to printer
26 Part One Business in Society
law43665_ch02_025-046.indd 26 11/16/18 11:08 AM
A 2016 study from the Public Affairs Council found that many major corporations are
feeling increased pressure to speak out on social issues, ranging from discrimination and
human rights to environmental sustainability and quality education. Among companies
with more than $15 billion in annual revenue, more than three in four said expectations for
engagement had risen. Most of the pressure to engage in social issues, said the companies,
has come from their own employees.1
Legislative battles in North Carolina, Tennessee, Mississippi, and Georgia prompted
business leaders to take a stand favoring rights for transgender individuals. Dow Chemical,
Alcoa, and Northrup Grumman lobbied elected officials and publicly condemned measures
seen as discriminatory. Monsanto lead the fight in Missouri against a bill that would allow
businesses to deny certain services to same-sex couples as a matter of religious freedom. In
response to North Carolina’s state legislature passing a law that blocked antidiscriminatory
protections at the local level, Deutsche Bank, the German financial institution with signifi-
cant business in the United States, said it would freeze its plans to add jobs in North Caro-
lina. PayPal announced it would halt its plans to open a new global operations center there.
While .
Succession “Losers”: What Happens to Executives Passed Over for the CEO Job?
By David F. Larcker, Stephen A. Miles, and Brian Tayan
Stanford Closer Look Series
Overview:
Shareholders pay considerable attention to the choice of executive selected as the new CEO whenever a change in leadership takes place. However, without an inside look at the leading candidates to assume the CEO role, it is difficult for shareholders to tell whether the board has made the correct choice. In this Closer Look, we examine CEO succession events among the largest 100 companies over a ten-year period to determine what happens to the executives who were not selected (i.e., the “succession losers”) and how they perform relative to those who were selected (the “succession winners”).
We ask:
• Are the executives selected for the CEO role really better than those passed over?
• What are the implications for understanding the labor market for executive talent?
• Are differences in performance due to operating conditions or quality of available talent?
• Are boards better at identifying CEO talent than other research generally suggests?
Chris Roush presents "Investigating Private Companies" during the four-day, Reynolds Center webinar, "Investigating Private Companies and Nonprofits."
For more information about free training for business journalists, please visit businessjournalism.org.
Using the Internet to Research Private CompaniesAugust Jackson
There is a wealth of information that is available about private companies on the Internet. In this presentation I tell you how you can exploit these sources to gain insights into your privately held competitors.
MBA Compliance Essentials Unfair, Deceptive or Abusive Acts or Practices (UDA...MBAMortgage
The MBA Compliance Essentials Unfair, Deceptive, or Abusive Acts and Practices (UDAAP) and FTC Mortgage Acts and Practices Advertising (MAP) Rule Resource Guide™ is intended to serve as a base for the development of your company's policies and procedures in this area.
This presentation was given as part of seminar at Universidad Sergio Arboleda in Bogota. I have given versions of it elsewhere. I work in the corporate governance and have taught comparative corporate governance.
This presentation was first given at the World Bank, April 25, 2012. A version was also given at Transparency Camp 2012. The World Bank presentation was also webcast and a recording is available at: A recording of the webcast of the World Bank presentation is at http://bit.ly/ocdw
Boards of Directors are not only expected to monitor a company management; they are also held
responsible for an organization’s failure to attain organizational performance goals.The purpose of this study
was to establish the relationship between board of directors’ composition, strategic leadership and performance
of commercial banks in Kenya. The specific objectives were to establish the relationship betweenboard size,
non-executive directors, and board diversityand performance of commercial banks in Kenya and the extent to
which strategic leadership moderates such relationships
This case examines seven commonly accepted myths about corporate governance. How can we expect managerial behavior and firm performance to improve, if practitioners continue to rely on myths rather than facts to guide their decisions?
Recently, shareholder groups have sued companies for inadequate disclosure in the annual proxy. They allege that companies provide insufficient disclosure to determine how to vote on “say on pay.” If a company follows SEC guidelines, why is this not sufficient?
Corporate Governance a Balanced Scorecard approach with KPIs between BOD, Exe...Chris Rigatuso
This paper, from 2003, during my time at Oracle, was an early attempt to define metrics for inducing accountability between BOD, executives, and operating management of corporations. It's geared to large companies, but the lessons are broadly appreciable. It was published in CFO Reviews by Anderson Consulting, and other places. It predates the SOX Sarbanes Oxley laws that were a result of the Enron Scandal.
Linguists and psychologists have developed techniques to identify deceptive language and behavior. Why don’t shareholders use these same techniques to evaluate the truthfulness of management and detect financial manipulation?
25law43665_ch02_025-046.indd 25 111618 1108 AMC H .docxstandfordabbot
25
law43665_ch02_025-046.indd 25 11/16/18 11:08 AM
C H A P T E R T W O
Managing Public
Issues and Stakeholder
Relationships
Businesses today operate in an ever-changing external environment, where effective management
requires anticipating emerging public issues and engaging positively with a wide range of stake-
holders. Whether the issue is growing concerns about climate change, health care, safety at work
or in our schools, social equality, or consumer safety, managers must respond to the opportunities
and risks it presents. To do so effectively often requires building relationships across organizational
boundaries, learning from external stakeholders, and altering practices in response. Effective man-
agement of public issues and stakeholder relationships builds value for the firm.
This Chapter Focuses on These Key Learning Objectives:
LO 2-1 Identifying public issues and analyzing gaps between corporate performance and stakeholder
expectations.
LO 2-2 Applying available tools or techniques to scan an organization’s multiple environments and assess-
ing stakeholder materiality.
LO 2-3 Describing the steps in the issue management process and determining how to make the process
most effective.
LO 2-4 Identifying the managerial skills required to respond to emerging issues effectively.
LO 2-5 Understanding the various stages through which businesses can engage with stakeholders, what
drives this engagement, and the role social media can play.
LO 2-6 Recognizing the value of creating stakeholder dialogue and networks.
Final PDF to printer
26 Part One Business in Society
law43665_ch02_025-046.indd 26 11/16/18 11:08 AM
A 2016 study from the Public Affairs Council found that many major corporations are
feeling increased pressure to speak out on social issues, ranging from discrimination and
human rights to environmental sustainability and quality education. Among companies
with more than $15 billion in annual revenue, more than three in four said expectations for
engagement had risen. Most of the pressure to engage in social issues, said the companies,
has come from their own employees.1
Legislative battles in North Carolina, Tennessee, Mississippi, and Georgia prompted
business leaders to take a stand favoring rights for transgender individuals. Dow Chemical,
Alcoa, and Northrup Grumman lobbied elected officials and publicly condemned measures
seen as discriminatory. Monsanto lead the fight in Missouri against a bill that would allow
businesses to deny certain services to same-sex couples as a matter of religious freedom. In
response to North Carolina’s state legislature passing a law that blocked antidiscriminatory
protections at the local level, Deutsche Bank, the German financial institution with signifi-
cant business in the United States, said it would freeze its plans to add jobs in North Caro-
lina. PayPal announced it would halt its plans to open a new global operations center there.
While .
Succession “Losers”: What Happens to Executives Passed Over for the CEO Job?
By David F. Larcker, Stephen A. Miles, and Brian Tayan
Stanford Closer Look Series
Overview:
Shareholders pay considerable attention to the choice of executive selected as the new CEO whenever a change in leadership takes place. However, without an inside look at the leading candidates to assume the CEO role, it is difficult for shareholders to tell whether the board has made the correct choice. In this Closer Look, we examine CEO succession events among the largest 100 companies over a ten-year period to determine what happens to the executives who were not selected (i.e., the “succession losers”) and how they perform relative to those who were selected (the “succession winners”).
We ask:
• Are the executives selected for the CEO role really better than those passed over?
• What are the implications for understanding the labor market for executive talent?
• Are differences in performance due to operating conditions or quality of available talent?
• Are boards better at identifying CEO talent than other research generally suggests?
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, 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.
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?
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?
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
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?
More from Stanford GSB Corporate Governance Research Initiative (20)
Affordable Stationery Printing Services in Jaipur | Navpack n PrintNavpack & Print
Looking for professional printing services in Jaipur? Navpack n Print offers high-quality and affordable stationery printing for all your business needs. Stand out with custom stationery designs and fast turnaround times. Contact us today for a quote!
B2B payments are rapidly changing. Find out the 5 key questions you need to be asking yourself to be sure you are mastering B2B payments today. Learn more at www.BlueSnap.com.
Implicitly or explicitly all competing businesses employ a strategy to select a mix
of marketing resources. Formulating such competitive strategies fundamentally
involves recognizing relationships between elements of the marketing mix (e.g.,
price and product quality), as well as assessing competitive and market conditions
(i.e., industry structure in the language of economics).
Putting the SPARK into Virtual Training.pptxCynthia Clay
This 60-minute webinar, sponsored by Adobe, was delivered for the Training Mag Network. It explored the five elements of SPARK: Storytelling, Purpose, Action, Relationships, and Kudos. Knowing how to tell a well-structured story is key to building long-term memory. Stating a clear purpose that doesn't take away from the discovery learning process is critical. Ensuring that people move from theory to practical application is imperative. Creating strong social learning is the key to commitment and engagement. Validating and affirming participants' comments is the way to create a positive learning environment.
Personal Brand Statement:
As an Army veteran dedicated to lifelong learning, I bring a disciplined, strategic mindset to my pursuits. I am constantly expanding my knowledge to innovate and lead effectively. My journey is driven by a commitment to excellence, and to make a meaningful impact in the world.
An introduction to the cryptocurrency investment platform Binance Savings.Any kyc Account
Learn how to use Binance Savings to expand your bitcoin holdings. Discover how to maximize your earnings on one of the most reliable cryptocurrency exchange platforms, as well as how to earn interest on your cryptocurrency holdings and the various savings choices available.
Business Valuation Principles for EntrepreneursBen Wann
This insightful presentation is designed to equip entrepreneurs with the essential knowledge and tools needed to accurately value their businesses. Understanding business valuation is crucial for making informed decisions, whether you're seeking investment, planning to sell, or simply want to gauge your company's worth.
Recruiting in the Digital Age: A Social Media MasterclassLuanWise
In this masterclass, presented at the Global HR Summit on 5th June 2024, Luan Wise explored the essential features of social media platforms that support talent acquisition, including LinkedIn, Facebook, Instagram, X (formerly Twitter) and TikTok.
Discover the innovative and creative projects that highlight my journey throu...dylandmeas
Discover the innovative and creative projects that highlight my journey through Full Sail University. Below, you’ll find a collection of my work showcasing my skills and expertise in digital marketing, event planning, and media production.
3.0 Project 2_ Developing My Brand Identity Kit.pptxtanyjahb
A personal brand exploration presentation summarizes an individual's unique qualities and goals, covering strengths, values, passions, and target audience. It helps individuals understand what makes them stand out, their desired image, and how they aim to achieve it.
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/
Search Disrupted Google’s Leaked Documents Rock the SEO World.pdf
CEO Succession Planning: Who’s Behind Door Number One?
1. Topics, Issues, and Controversies in Corporate Governance and Leadership
S T A N F O R D C L O S E R L O O K S E R I E S
stanford closer look series 1
CEO Succession Planning: Who’s Behind
Door Number One?
CEO Succession Planning
One of the most important decisions that a board
of directors must make is the selection of the chief
executive officer (CEO) of the company. To make
an informed decision, the board must have an un-
derstanding of not only the skills and experience
required to lead the company but also the neces-
sary behavioral attributes such as ethics, cultural
fit, work style, risk tolerance, competitiveness, and
leadership. The board then compares these against
the pool of available talent, both within and out-
side the company, to identify those who are best
qualified and willing to serve in the role. Internal
candidates are groomed for a succession, while ex-
ternal candidates are brought in to interview for the
position.1
Despite the importance, survey data indicates
that many boards are not prepared for the CEO
succession process. According to one recent sur-
vey, just over half of companies would be unable to
name a successor if required to do so immediately.
While 70 percent of companies have identified an
emergency candidate to fill in as CEO on an inter-
im basis, board members expect that it would take
90 days, on average, to name a permanent succes-
sor. This may be due in part to the fact that boards
do not spend extensive time discussing CEO suc-
cession. The average board dedicates only 2 hours
per year to the topic.2
The importance of CEO succession planning
was underscored in September 2009, when Ken
Lewis, chairman and CEO of Bank of America,
unexpectedly announced that he would retire from
the company by the end of the year.3
At the time,
the company was struggling to repay federal funds
received through the Troubled Asset Relief Program
By David F. Larcker and Brian Tayan
June 24, 2010
(TARP). It was also involved in an SEC lawsuit for
inadequate disclosure relating to its acquisition of
Merrill Lynch one year before. The company’s lack
of preparedness came to light as it reached out to
multiple external candidates, only to be rebuffed.
Some speculated that an interim CEO would have
to be named.4
On December 16, only two weeks
before Lewis’s retirement, Brian Moynihan, head of
consumer banking, was given the job.
Disclosure of CEO Succession
In recent years, shareholder groups have pressured
boards to increase transparency about their CEO
succession plans. In 2008, the Laborers’ Interna-
tional Union of North America (LiUNA) spon-
sored a proxy proposal at Whole Foods that would
require the board to adopt and disclose a detailed
succession planning policy. According to a union
official, “the rigor of the succession planning pro-
cess that a board puts in place provides an impor-
tant window into how effectively that board is gov-
erning.”5
Whole Foods excluded the proposal from
its proxy, citing SEC Rule 14a-8(i)7. Rule 14a-
8(i)7 allows for omission “if the proposal deals with
a matter relating to the company’s ordinary busi-
ness operations.”6
At the time, the SEC elaborated
that the ordinary business exclusion would apply
to a proposal that involves “the management of the
workforce, such as the hiring, promotion, and ter-
mination of employees.” It also would apply if “the
proposal seeks to ‘micro-manage’ the company by
probing too deeply into matters of a complex nature
upon which shareholders, as a group, would not
be in a position to make an informed judgment.”7
The SEC supported Whole Foods’ argument that
2. stanford closer look series 2
CEO Succession Planning: Who’s Behind Door Number One?
proposals relating to CEO succession fell under the
ordinary business exclusion.8
The following year, however, the SEC re-
versed its position. In a staff bulletin, the agency
wrote:
One of the board’s key functions is to provide for
succession planning so that the company is not
adversely affected due to a vacancy in leadership.
Recent events have underscored the importance
of this board function to the governance of the
corporation. We now recognize that CEO suc-
cession planning raises a significant policy issue
regarding the governance of the corporation that
transcends the day-to-day business matter of
managing the workforce. […] Going forward,
we will take the view that a company generally
may not rely on Rule 14a-8(i)(7) to exclude a
proposal that focuses on CEO succession plan-
ning.9
That is, the SEC no longer viewed CEO succes-
sion planning as an employment issue but as a risk
management issue that fell within the governance
obligations of the board of directors.
Following the pronouncement, LiUNA
filed proposals on CEO succession at more than
70 companies, including Whole Foods and Bank
of America. The proposals would require that com-
panies “develop criteria for the CEO position,”
“identify and develop internal candidates,” “begin
non-emergency CEO succession planning at least 3
years before an expected transition,” and “annually
produce a report on its succession plan to share-
holders.”10
The proposals would not require compa-
nies to disclose the names of potential candidates.11
Whole Foods urged shareholders to vote
against the proposal. According to the company, its
CEO succession plan was “confidential and propri-
etary information that should not be publicly avail-
able.” Disclosure of this information would result
in “competitive harm” (see Exhibit 1).
Bank of America similarly urged share-
holders to vote against the proposal. It argued that
the company already maintained succession plans
and the proposal was therefore duplicative with ex-
isting policy (see Exhibit 2). In addition, the com-
pany disclosed its succession planning policy in the
proxy and would maintain that disclosure in future
years (see Exhibit 3).
When they came to a vote, the proposals were
rejected by shareholders of both companies (at
Whole Foods, 34 million in favor and 82 million
against; at Bank of America, 2.6 billion in favor and
4.0 billion against).12
Why This Matters
1. CEO succession is a key part of corporate risk
management. As boards revise their risk man-
agement policies, shareholders need to be con-
vinced that companies have real succession plans
in place and understand the quality of internal
candidates.
2. The release of proprietary information on suc-
cession planning can cause economic harm to
the firm and shareholders. What type of disclo-
sure can provide shareholders with insight into
succession planning without revealing propri-
etary information?
3. Moody’s and Standard and Poor’s include suc-
cession planning factors in their credit rat-
ings. Moody’s determination of bank financial
strength ratings include what it labels “Key Man
Risk.” It defines this risk as the degree to which
key business decisions are dependent upon a
single executive or group of executives.13
Would
public disclosure of this type of information al-
low shareholders to gain better insights into
succession planning and corporate risk manage-
ment?
1
For more on this topic, see also: David F. Larcker and Brian Tayan,
“Multimillionaire Matchmaker: An Inside Look at CEO Succes-
sion Planning,” GSB Case No. CG-21, Apr. 15, 2010. Available at:
https://gsbapps.stanford.edu/cases/.
2
Heidrick & Struggles and the Rock Center for Corporate Gover-
nance at Stanford University, “2010 Survey on CEO Succession
Planning, June 2010. Available at: http://www.gsb.stanford.edu/
cldr/.
3
Greg Farrell, “Struggle to find successor for Lewis at BofA,” Finan-
cial Times, Nov. 12, 2009.
4
Bradley Keoun, David Mildenberg and Ian Katz, “BofA May Name
Stopgap Chief If Board Needs More Time,” Bloomberg, Nov. 23,
2009.
5
Beverly Behan, “Shareholder Activists Target Succession Planning,”
Bloomberg Businessweek, Jan. 15, 2010.
6
Securities Lawyer’s Deskbook, “Rule 14-8: Proposals of Security
Holders.” Available at: http://www.law.uc.edu/CCL/34ActRls/
rule14a-8.html.
7
SEC Release No. 40018, “Amendments to Rules on Shareholder
4. stanford closer look series 4
CEO Succession Planning: Who’s Behind Door Number One?
Exhibit 1 — Whole Foods: Shareholder Proposal (2010)
Shareholder Proposal
We recently received a formal shareholder proposal from The Central Laborers’ Pension Fund
[which…] has beneficially owned approximately 2,543 shares of Whole Foods Market, Inc. com-
mon stock for at least one year prior to September 28, 2009.* The Proponent’s Proposal and Sup-
porting Statement are quoted verbatim below. […]
Resolved: That the shareholders of Whole Foods Market, Inc. (“Company”) hereby request that
the Board of Directors […] adopt and disclose a written and detailed succession planning policy,
including the following specific features:
• The Board of Directors will review the plan annually;
• The Board will develop criteria for the CEO position which will reflect the Company’s business
strategy and will use a formal assessment process to evaluate candidates;
• The Board will identify and develop internal candidates;
• The Board will begin non-emergency CEO succession planning at least 3 years before an ex-
pected transition and will maintain an emergency succession plan that is reviewed annually;
• The Board will annually produce a report on its succession plan to shareholders.
Supporting Statement
CEO succession is one of the primary responsibilities of the board of directors. A recent study pub-
lished by the NACD quoted a director of a large technology firm: “A board’s biggest responsibility
is succession planning. It’s the one area where the board is completely accountable, and the choice
has significant consequences, good and bad, for the corporation’s future.” (The Role of the Board
in CEO Succession: A Best Practices Study, 2006). The study also cited research by Challenger, Gray &
Christmas that “CEO departures doubled in 2005, with 1228 departures recorded from the begin-
ning of 2005 through November, up 102 percent from the same period in 2004.”
In its 2007 study What Makes the Most Admired Companies Great: Board Governance and Effec-
tive Human Capital Management, Hay Group found that 85% of the Most Admired Company
boards have a well-defined CEO succession plan to prepare for replacement of the CEO on a long-
term basis and that 91% have a well defined plan to cover the emergency loss of the CEO that is
discussed at least annually by the board.
The NACD report identified several best practices and innovations in CEO succession planning. The
report found that boards of companies with successful CEO transitions are more likely to have
well-developed succession plans that are put in place well before a transition, are focused on de-
veloping internal candidates and include clear candidate criteria and a formal assessment process.
Our proposal is intended to have the board adopt a written policy containing several specific best
practices in order to ensure a smooth transition in the event of the CEO’s departure. We urge
shareholders to vote FOR our proposal.
* The Central Laborers’ Pension Fund manages pension assets on behalf of the Laborers’ International Union of North
America (LiUNA).
5. stanford closer look series 5
CEO Succession Planning: Who’s Behind Door Number One?
Exhibit 1 — continued
Our Statement in Opposition
Although we strongly oppose the Proponent’s proposal, we actively support the concept of succes-
sion planning. As noted in our Corporate Governance Principles that are publicly available on our
corporate website, succession planning (including CEO succession policy in particular) is an integral
part of the Whole Foods Market Board of Directors’ mission statement. Our Board of Directors
maintains a succession plan for the members of our executive team and periodically updates this
plan. However, the Board of Directors believes that this plan is confidential and proprietary infor-
mation that should not be publicly available.
The proposal will result in competitive harm. If we were to publicly designate a potential successor
or group of successor candidates to our CEO, this would by definition publicly exclude other ex-
ecutives. Our competitors might attempt to recruit these executives away from us based on such
public disclosures. Executives not publicly designated as potential successors might choose to vol-
untarily leave our employ. Recruitment of new executives might also be impaired. Further, the
proposal requires that the policy identify and reflect the Company’s business strategy. This factor
would potentially injure Whole Foods Market by requiring disclosure of certain long-term strate-
gic objectives and plans that are not otherwise disclosable to the public, and which could then be
used by current and future competitors.
The proposal interferes with ordinary business operations. Succession policy and planning inherently
involve the management of our workforce and decisions regarding the hiring, promotion and
termination decisions by our Board of Directors. The corporate laws of Texas, which govern our
Company, contemplate that the resolution of these ordinary business problems are best left to
management and the Board of Directors, since it is impracticable for shareholders to decide how
to solve such problems at an annual shareholders meeting.
The proposal attempts to micro-manage the Board of Directors. The Proponent’s proposal requires that
the succession policy identify and develop internal candidates. Although we have had a strong
history of developing internal candidates for our executive officer positions, our Board of Direc-
tors has a fiduciary duty to shareholders that cannot be micro-managed or constrained by share-
holders in this manner. It is certainly conceivable that an outstanding external candidate might be
presented on short notice to the Board of Directors and that the Board of Directors would choose
to consider such an approach. The proposal also requires that non-emergency CEO succession be
outlined at least three years prior to an anticipated transition date. While long range planning
is certainly commendable, the Board of Directors should not be tied to any specific timetable.
Economic conditions change quickly, and the Board of Directors requires the flexibility to change
direction on short notice.
Source: Whole Foods, Form DEF-14A, Filed Jan. 25, 2010 with the SEC.
6. stanford closer look series 6
CEO Succession Planning: Who’s Behind Door Number One?
Exhibit 2 — Bank of America: Shareholder Proposal (2010)
Stockholder Proposal Regarding Succession Planning
The Corporation has received the following stockholder proposal from the Laborers National Pen-
sion Fund [which…] owned approximately 58,500 shares of our Common Stock as of the date the
proposal was submitted to the Corporation […]
[Resolution and Supporting Statement are the same as in Exhibit 1 above]
The Board recommends a vote “AGAINST” Item 10 for the following reasons:
The Board has considered this proposal and believes that its adoption is unnecessary as our com-
pany has fully effected the proposal in all respects.
The Board of Directors, along with the Corporate Governance Committee, are responsible for
overseeing our company’s CEO and senior management succession plan and policies. The Board
recognizes the importance of CEO succession planning and has adopted a Corporate Governance
Committee Charter and Corporate Governance Guidelines, both available on our website, that ad-
dress succession planning. In addition, our company is subject to NYSE listing rules that require us
to have a succession policy in place. Our company’s succession plan complies with these NYSE rules.
The proposal requests that our company “adopt and disclose a written and detailed succession
planning policy.” Our company already has a well developed, “written and detailed” succession
plan. Discussion of our succession plan and planning process is included in this proxy statement
under the caption “Chief Executive Officer and Senior Management Succession Planning” on page
7 and is expected to be included annually in our proxy materials [see Exhibit 3]. outlined at least
three years prior to an anticipated transition date. While long range planning is certainly com-
mendable, the Board of Directors should not be tied to any specific timetable. Economic condi-
tions change quickly, and the Board of Directors requires the flexibility to change direction on
short notice.
Each of the measures sought by the proposal is currently part of our succession policies. Under our
succession plan and planning process, the Board:
• reviews the plan at least annually pursuant to our Corporate Governance Guidelines;
• reviews the criteria developed for the Chief Executive Officer position, which reflects, among
other things, our business strategy and which uses a formal assessment process to evaluate
potential internal and external candidates;
• reviews internal candidates identified and developed in partnership with the Chief Executive
Officer and executive management and considers potential external candidates; and
• reviews a non-emergency Chief Executive Officer succession plan, which will be developed as
reasonably as practicable in advance of an expected transition and an emergency plan that
addresses succession in the event of extraordinary circumstances.
The Board does not believe that any meaningful difference exists between the proposal and our
company’s current succession planning policies. For the foregoing reasons, the Board recommends
a vote against the proposal.
Source: Bank of America, Form DEF-14A, Filed Mar. 17, 2010 with the SEC.
7. stanford closer look series 7
CEO Succession Planning: Who’s Behind Door Number One?
Exhibit 3 — Bank of America: CEO Succession Planning (2010)
Chief Executive Officer and Senior Management Succession Planning
The Board, with and through the Corporate Governance Committee, oversees Chief Executive Of-
ficer and senior management succession planning. The process targets the building of enhanced
management depth, considers continuity and stability within the company, and responds to the
company’s evolving needs and changing circumstances.
The Corporate Governance Committee sees to the maintenance of an appropriate succession
planning process. The Chief Executive Officer meets periodically with the Corporate Governance
Committee to discuss succession planning. The company’s senior officer responsible for human
resources and executive talent development (the “HR Officer”) reports regularly to the Corporate
Governance Committee and periodically to the full Board on the review of high potential associ-
ates who are candidates for development; strategies to utilize the talents of these high potential
associates; and plans to develop their management and leadership potential. The Corporate Gov-
ernance Committee reports on its regular meetings to the full Board.
The full Board reviews succession planning at least annually at a regularly scheduled Board meet-
ing. The Board reviews senior executive performance with the Chief Executive Officer and the HR
Officer. In addition, the Board establishes criteria for the Chief Executive Officer position, reflect-
ing, among other considerations, the company’s scope of business, the business environment and
the company’s long term strategy. With these criteria, the Board reviews potential internal candi-
dates with the Chief Executive Officer and HR Officer, including development needs, creation of
development programs and developmental progress with respect to specific individuals. Directors
engage with potential candidates at Board and committee meetings and periodically in less formal
settings to allow personal assessment of candidates by the directors. Further, the Board reviews
the overall composition of the qualifications, tenure and experience of senior management and
seeks opportunities to integrate highly qualified external candidates into senior management.
The Board approves emergency contingency and continuity plans for Chief Executive Officer suc-
cession planning to enable the company to respond to an unexpected vacancy in the Chief Execu-
tive Officer position. In this regard, the Chief Executive Officer discusses and evaluates the plans
with the Corporate Governance Committee, which approves the plans annually. The Corporate
Governance Committee considers maximizing the continuing safe and sound operation of the
company and minimizing any potential disruption or loss of continuity to the company’s business
and operations, including in the case of a major catastrophe, among other factors in its evaluation
and approval of the plan.
In 2009, the Board significantly reconstituted its membership and assessed and reconfigured its
committee structure, committee charters, and committee assignments. During this assessment and
transition period, the Board created a special CEO Transition Committee to recommend a suc-
cessor to Kenneth D. Lewis, the former Chief Executive Officer, in accordance with the Board’s
criteria and process described above. The special committee included the Chairman of the Board,
Dr. Massey, and the Chair of the Corporate Governance Committee, Mr. May, as well as four other
directors, Mr. Gifford, Mr. Holliday, Mr. Powell and Mr. Ryan. The special committee was disbanded
upon the election of Mr. Moynihan as Chief Executive Officer.
Source: Bank of America, Form DEF-14A, Filed Mar. 17, 2010 with the SEC.