joan conley
Investor Relations

An Interview with Joan Conley, Senior Vice President & Corporate Secretary, Nasdaq

Joan Conley, Senior Vice President and Corporate Secretary of NASDAQ, discusses her role, Investor Relations and the changing governance landscape.

By Meagan Tenety, Senior Advisory Analyst, Nasdaq IR Intelligence

We recently sat down with Joan Conley, Senior Vice President and Corporate Secretary of NASDAQ, as she discussed her role, Investor Relations and the changing governance landscape. She outlined trends, best practices and tools for engagement for CFO’s, Corporate Secretaries and Investor Relations teams.

How has institutional interest in ESG, and in particular, governance changed over time?

Conley: Governance used to be a check-the-box category. Over time it has become one of the most influential tools that institutional investors and activists use to evaluate the strength of the Board and an organization’s leadership. The ESG conversations at the likes of Vanguard and BlackRock, and Warren Buffet’s letters to stockholders show that investors are increasingly concerned with governance and the environmental and social issues surrounding companies. The environmental and social side of the conversation is evolving but governance issues are clearly defined and measurable and have become a focus area for institutional investors and activists alike.

Focusing specifically on governance, what data and information do the corporate governance teams use to make decisions?

Conley: Corporate Governance teams use varying sources of data:

  1. Your IR team, CFO and/or Corporate Secretary/Governance Team
  2. Engagement with institutional investor governance teams
  3. Harvard Law School Forum on Corporate Governance
  4. Thought leaders in the governance field
  5. ISS
  6. Glass-Lewis

There are limited data sets for corporate governance teams. The good news is that their sources are public so you can do the investigation yourself. More importantly, your team should be getting in front of the governance teams at the largest institutions to tell your story and continually engage these professionals.

What do you communicate publically to engage corporate governance teams and proxy voters?

Conley: Publically outline your proxy guidelines over time:

  • This is what you said with regards to corporate governance
  • This is what we heard from investors
  • This is what we did

Listen to the feedback you are getting from institutional investors both through your meetings and through their proxy votes. It is equally as important to listen to your retail investors. Analyze your stockholder meeting votes looking for year-over-year changes. Document and follow up with engagement conversation and listening tours on an annual basis to discuss your progress given their feedback. Dialogue and listening is key here!

What are the key topics that governance teams are interested in?

Conley:

  1. Board
  • Composition
  • Skills
  • Board Refreshment
  • Board Evaluation

Board Composition needs to encompass gender and ethnic diversity and unique skill sets that align with the strategy and needs of your organization to achieve your strategic plan. It is not just checking boxes but, rather, having a truly dynamic, strategic and skilled board that will help guide your organization. In order to properly communicate with governance teams, IROs and CFOs need to understand where your board is today, communicate this to governance teams, and work with leadership to design a plan to reach your board composition goals.

It is important to note that board composition is not stagnant and needs to constantly be refreshed and updated as your company strategy evolves and grows. The evolution can be strategy changes, pivots or refreshes or reaching new market cap thresholds. Stockholders, stakeholders, institutional governance investor teams and retail stockholders want to know that your board is changing and growing to meet the strategic needs of your company.

  1. Leadership
  • Executive Compensation
  • CEO Salary Ratio
  • Goals for Executive Compensation

The governance teams really care about the metrics and milestones associated with executive compensation. Get to know the governance teams so that you can make sure your executive compensation structure is not leaving you exposed.

  1. Environmental and Social

The field is growing with organizations assessing your company’s ESG policies. We have yet to see a leader emerge in terms of measurable and actionable guidelines on environmental and social issues like ISS and Glass Lewis provide for governance. I look to the thought leadership in Europe to guide me on forward-thinking environmental and social issues.

What is your overall strategy in terms of engagement?

Conley: Regardless of the size of your team there are simple ways to engage in activities you are already doing for your shareholder clients. Be proactive. Identify and engage with these teams as soon as possible, come prepared for the meeting and listen carefully.

  1. Be Proactive: Connect with proxy teams to bring them up to speed of progress on governance issues
  2. Listen, document and follow through
  3. Develop a quarterly engagement plan

Can you outline for us some actionable ways a CFO, IRO or Corporate Secretary can start to engage corporate governance teams?

  • Invite the governance team/proxy voters into meetings with portfolio managers
  • Send most recent earnings reports ahead of scheduled calls and invite governance teams of top institutions to your quarterly earnings calls
  • Invite governance teams to your investor days
  • Let governance teams know when you are in town
  • If there is a key issue that is made public, let the governance teams know immediately
  • Conduct a GAP analysis of the largest institutions for their proxy voting guidelines and create an action plan
  • Assess the content of all of the ESG questionnaires/your institutional investor preferences and then come to an agreement within your company on the key metrics

Lastly, any final advice when engaging governance teams?

Conley: Always keep in mind that:

  • They don’t want to only be brought in when there is an issue
  • They know which companies engage with them and which do not
  • They want a relationship leading into proxy voting season

A two-way dialogue is the preference for all governance teams. They want to know that they have the latest and most up-to-date information and are being heard when they raise concerns.

Overall, your team should be proactive as possible. Add governance teams to your travel and communications schedules and begin the dialogue. Through these relationships, you will lessen your exposure to governance risk and strengthen your organization’s knowledge and best practices on governance issues.


© Copyright 2018 Nasdaq, Inc. The Nasdaq logo and the Nasdaq ‘ribbon’ logo are the registered and unregistered trademarks, or service marks, of Nasdaq, Inc. in the U.S. and other countries. This communication being is provided to you by Corporate Solutions, a business of Nasdaq, Inc. and certain of its subsidiaries (collectively, “Nasdaq”), for informational purposes only and is of general character only. None of the information herein constitutes advice, a recommendation, solicitation, invitation or inducement to buy or sell securities of any kind, or as commentary on the value of any security. Before making any investment decision, you should seek independent legal, taxation or financial advice. Nasdaq makes no representation or warranty with respect to this communication or such content and expressly disclaims any implied warranty under law. At the time of publication, the information herein was believed to be accurate, however, such information is subject to change without notice and Nasdaq makes no representation or warranty as to the correctness or completeness of the information. The information provided in this report remains, unless otherwise stated, the copyright of Nasdaq and may not be used, reproduced, published or copied, in whole or in part, in any form or for any purpose whatsoever without the express written permission of Nasdaq. This information is not directed or intended for distribution to, or use by, any citizen or resident of, or otherwise located in, any jurisdiction where such distribution or use would be contrary to any law or regulation or which would subject Nasdaq to any registration or licensing requirements or any other liability within such jurisdiction. By reviewing this document you acknowledge that neither Nasdaq nor any of its third-party providers shall under any circumstance be liable for any lost profits or lost opportunity, indirect, special, consequential, incidental, or punitive damages whatsoever, even if Nasdaq or its third-party providers have been advised of the possibility of such damages. Additionally, unless due to willful tortious misconduct or gross negligence, neither Nasdaq nor any of its third-party providers shall have any liability in tort, contract, or otherwise (and as permitted by law, product liability), to you or any third party. This disclaimer is governed by the laws of the State of New York.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.