It’s hardly a secret that corporate boards of directors are under heightened pressure these days, compared with the traditional, rather rote state of affairs. Investors, corporate governance organizations, and regulators have all turned up the heat over the past few years.

The most acute pressure flows from activism by institutional investors. According to a 2018 proxy season review, such investors held 70% of the ownership of public companies, and their voting participation rate was 91%.

The institutions are particularly focused on board diversity. For example, BlackRock, the world’s largest asset manager, said earlier this year that it expected to see at least two female directors on every public company board. The firm wrote to approximately 300 companies that hadn’t met that new guideline, asking for information on their board diversity efforts.

It’s not a soft topic, either. Today, many successful companies regard inclusion and diversity as a source of competitive advantage and key enabler of growth, says Akin Gump Strauss Hauer & Feld. The law firm recently published its annual outlook for the following year’s top issues for corporate boards.

Board diversity was among the top 10 issues Akin Gump says boards will confront in 2019, and which CFOs should be prepared to discuss with board members. Here are the others:

Corporate Culture. Boards have always been charged with the responsibility of ensuring a management culture that safeguards a company’s reputation, such as its response to safety or environmental issues that may arise.

That concern has been much heightened in recent times, given the instantaneous relay of information via social media that means “any company lives in a fishbowl,” the law firm’s report states.

The #MeToo Movement. Sexual impropriety was far from unheard-of before Harvey Weinstein’s public freefall sparked a new era of accountability for such behavior. Now, though, the harm that can befall executives and companies as a consequence of sexual harassment is razor-sharp.

Indeed, Akin Gump advises companies to have a “harassment allegation response plan” in place before a crisis involving a high-level executive occurs.

Corporate Social Responsibility. While CSR efforts have long been under discussion by many boards, 2018 represented a “turning point” for how consumers, shareholders, fund managers, and governments view such efforts, according to the report.

For example, pension funds have responded to pressures related to gun control and immigration, in some cases divesting from entities involved in those contentious debates. “Institutional investors are likely to seek information regarding such efforts … going forward,” Akin Gump says.

Corporate Strategy. Traditionally, strategic oversight was boards’ most important function of a board, so it’s interesting the law firm listed it fifth in this year’s ranking. Key strategic matters for 2019 include the individual and combined impacts of the U.S. and global economies, geopolitical and regulatory uncertainties, and M&A activity by a company and within its industry.

Sanctions. During the second year of the Trump administration, U.S. sanctions expanded significantly to include new restrictions targeting transactions with Iran, Russia, and Venezuela, the report notes. The U.S. government also expanded its use of “secondary sanctions” penalizing non-U.S. companies that engage in proscribed activities involving sanctioned countries and persons.

Shareholder activism. This concern relates to far more than the above-mentioned board diversity issue. There was an overall increase in activist campaigns in 2018, regarding both the number of companies targeted and the number of board seats won through such campaigns, according to the report.

There’s also been an uptick this year in “traditionally passive and institutional investors playing an active role in encouraging company engagement with activists, advocating for change themselves, and formulating express policies for handling activist campaigns,” Akin Gump writes.

Cybersecurity. This has been a top concern for boards for a few years now. Notable 2018 trends included threats of nation-states infiltrating supply chains and the implementation of landmark laws like the European Union’s General Data Protection Legislation.

For its part, the report notes, the U.S. Securities and Exchange Commission recently warned that it may consider cybersecurity vulnerabilities as actionable violations of federal securities laws, which require robust internal controls.

Tax Cuts and Jobs Act. Even though it’s been a year since the TCJA’s passage, “there will be plenty of potential actions and new faces on the tax landscape in 2019,” Akin Gump asserts.

For example, both the Senate Finance Committee and the House Ways and Means Committee will have new chairs, and Treasury Department regulations for implementing the tax law will be finalized. The regs will address such TCJA provisions as global intangible low-tax income (GILTI), the base erosion and anti-abuse tax (BEAT), and foreign derived intangible income.

SEC Regulation and Enforcement. The commission this year adopted and proposed significant revisions to update and simplify disclosure requirements for public companies. The SEC also has taken steps to enhance boards’ role in evaluating whether to include shareholder proposals in proxy statements, the report notes.

Furthermore, the SEC has solicited comments on the possible reform of proxy adviser regulation, following increasing calls for action from companies, investor advocates, and congressional leaders.

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