Key performing indicators (KPIs) are frequently used to evaluate corporate governance teams. Based on nearly 30 years of experience as Nasdaq’s Corporate Secretary, I have found that there are many important KPIs for corporate governance teams—especially in their role supporting the organization’s corporate governance practices, strategy, and purpose. While there are many KPIs, there are three in particular that percolate to the top of the list.
Support from Institutional Investors
The first KPI is engaging with and having support from institutional investors. This means support for all aspects of the organization’s corporate governance and environmental, social, and governance (ESG) programs, as detailed in the annual proxy statement. Engaging with the investment stewardship teams and institutional investors throughout the year is critical to receiving support for the proposals in the organization’s annual proxy statement.
A Strong ESG ‘Report Card’
The second KPI is a strong ESG ‘report card’ of crucial corporate governance factors from proxy advisory firms like Institutional Shareholder Services (ISS) and Glass Lewis. It’s important for the ‘report card’ to indicate a positive rating and commentary on an organization’s ESG policies and programs, both collectively and individually.
Individual reports on the three subcomponents, environmental, social, and governance, are important KPIs for every governance team. There has been an increased attention on ESG. Moreover, there has been increased focus when it comes to environmental issues like carbon neutrality and energy usage, as well as social issues related to human capital management and diversity, inclusion, and belonging data.
The Board’s Evaluation of the Corporate Governance Team
Lastly, the third KPI is the board’s evaluation of the corporate governance team and its ability to provide directors with advisory services, tools, and support. Annual feedback from directors and executives on the level of knowledge and support of the corporate governance team is critically important and valuable.
At the end of the day, that’s what I was assessed on in my role as corporate secretary for many years. If there was a successful stockholder meeting during which all of the proposals got approved, it meant the proxy statement was clear, the governance framework was supportive of the institutional investors’ initiatives, and the engagement sessions and board meetings were successful.
To help corporate governance teams improve and perform against these KPIs, there are different tools that corporate governance teams can leverage, including board management software to streamline corporate governance processes and save and reference materials, board evaluations to turn feedback into strategic action and identify growth opportunities, and ESG reporting and data management platforms to help gather, engage, report, and disclose ESG data.