The International Corporate Governance Network (ICGN) held its annual conference in San Francisco at the Fairmont Hotel on June 27th – 29th. On Tuesday, June 28, Mark Lonergan joined 5 other speakers in the Plenary Session “Silicon Valley boardrooms: distinctive dynamics in corporate governance.” The panel was focused on exploring growing trends in corporate governance among leading public companies in the Silicon Valley. The other panelists included Larry Sonsini (Founder, Senior Partner @ Wilson Sonsini), Joe Grundfest (Faculty Director and co-Founder, Rock Center at Stanford), Aeisha Mastagni (CalSTRS), Suzan Miller (Corporate Secretary and Deputy General Counsel, Intel). Group was chaired by Abe Friedman, Managing Partner at Camberview.
Three topics were extensively covered during the talk:
- The great reduction in the number of publicly traded companies was the first topic. Locally, Silicon Valley companies are much more reluctant to go public than they were 10 years ago, driven by regulatory costs and the added expense of being a public companies. M&A events have often yielded far greater returns to venture investors than IPOs, with shorter timeframes and more certain outcomes.
- The growing trend of companies filing for IPOs with terms requiring that a majority of voting stock remain in the hands of the CEO/Chairman/Founder was the seond topic. Companies discussed included: Google/Alphabet, Netflix, Facebook, GoPro, and Zynga. The effect of executive voting control over the governance role of the independent board directors was hotly debated.
- Tenure—both of board members and of the holders of public company stock was the third topic. With respect to board members, studies have shown that companies do less well when their board members average 10+ years on the boards of companies. The practical challenges of board members staying ‘too long’ were discussed. New laws in France and elsewhere give ‘weighted votes’ to shareholders in proportion to how long they hold their shares.
The ICGN Conference was hosted by CaIPERS & CaISTRS. The theme for 2016 was “promoting long-term thinking and behaviour for sustainable capital markets.” Other Plenary sessions included:
- Integrating sustainability principles to ensure long-term development
- Accelerating board diversity in a US context
- Governance evolution and emerging ESG risks in Asia-Pacific (APAC) markets;
- Political lobbying and donations: effectiveness of disclosure to mitigate power and influence?