Stephanie Forshee, Agenda, December 20, 2019
Agenda’s survey showed that audit committee directors have been tasked with taking the lead on cyber risks, at least according to 23.8% of survey respondents. And almost 36% of respondents feel that substantiated whistle-blower claims belong with the audit committee. Even though sexual misconduct allegations have been high-risk areas for legal recourse from shareholders, the committee of choice isn’t always with audit- or risk-focused directors.
According to the quarterly survey, 42.7% of respondents said that MeToo issues don’t belong to an individual committee but rather the full board. By contrast, 12.2% felt that MeToo issues don’t even belong in the boardroom to begin with.
But then there are the 18% who think the comp committee should be in charge of Me Too issues. Corporate governance professionals think that as an offshoot of human capital issues, cultural concerns have increasingly been landing with the comp committee.
Davia Temin, president and CEO of Temin & Co., says that in her experience with boards, the audit and risk committee members are typically the directors who primarily oversee sexual misconduct allegations, or sometimes the complaints will go to the executive committee. “A fair amount of time, those committees will inform the whole board if the issue is important enough,” Temin explains.
Temin notes that the push for boards to handle concerns of sexual harassment or misconduct is happening more frequently and is largely being driven by boards that have more women on them. “Often we find that it is women corporate directors who will champion MeToo issues being examined at the board level,” Temin says.
As for comp committees’ overseeing sexual misconduct claims, Temin thinks that responsibility should lie elsewhere, since executives subject to misconduct allegations aren’t just having their pay docked but are often being ousted from the companies if they are found guilty. “Comp committees historically have handled the issue when penalties have not included letting executives go, but instead included the forfeiture or clawback of compensation as a penalty for sexual harassment. Today, we know that this remedy is not seen to be as viable under public scrutiny as it once was. Thus, stronger measures are usually taken.”
The bottom line, in Temin’s opinion, is that “what worked yesterday no longer works today, and most assuredly will not work tomorrow.” […read more] (subscription required)