The Advisors' Blog

– Liz Dunshee

Here’s something I recently blogged on our “Proxy Season Blog” on TheCorporateCounsel.net: CtW Investment Group has announced a new initiative that takes issue with “anti-competitive” terms in employment agreements – including non-competes, no-poach agreements, non-disclosure agreements, and mandatory arbitration. They’ve sent a letter to approximately 30 companies, which asks the boards of those companies to:

– Review their company’s employment contracting practices, including the use of any of the provisions listed above.
– Report the board’s findings to shareholders before the next annual meeting.
– Commit to increased human capital management disclosure going forward.

CtW says the initiative is motivated by its desire for more transparent “human capital” disclosure and a potential lack of board awareness when it comes to the increasing business risks that these widespread contractual provisions may create.

This isn’t the only recent “human capital” initiative. In August, the “ShareAction Workforce Disclosure Initiative” – a 100-member investor coalition – sent this 45-page survey to 500 companies. The heightened interest is causing some companies to broaden their compensation committee charters to include oversight of non-executive employment & cultural issues in the committee’s enumerated responsibilities – and shows why compensation committees may need to become more familiar with emerging environmental, social & governance issues.

Depending on the company, the compensation committee may be best-equipped to make recommendations to the full board on “human capital” proposals and requests to incentivize executives to accomplish ESG goals. This Semler Brossy memo discusses how committee charters can reflect these evolving responsibilities. At our recent “Proxy Disclosure Conference,” one panel noted that some companies are changing the committee’s name to reflect a broader mandate…