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March/April 2018 — Vol. XXXIV      No. 229

THE NEW TAX REFORMS: A BOARD BRIEFING by William Tysse and Taylor French
How will this major U.S. tax overhaul change your executive pay plans?

When the U.S. “Tax Cuts and Jobs Act” was signed into law just before Christmas, many board and compensation committee members wondered what corporate surprises this gift might include. When it comes to setting top executive pay and benefits, changes are fairly modest, but will have some far-reaching implications.

Corporations must disclose their CEO median pay ratio this proxy season. Are you ready?

The 2018 proxy season will see U.S. public companies disclosing their CEO/median employee compensation ratios for the first time. After years of delay and debate, your board is now reviewing this disclosure for imminent release. What does the SEC require for this inaugural year? What story does your pay ratio tell analysts and investors—and what story should it not be telling?

The chief compliance officer and your board need to talk.

Board interaction with compliance staff often consists of periodic reports that all is well, and little more. However, corporate scandals (and costly enforcement actions) have made clear that all is not well, and that greater boardroom attention to compliance is needed. How can boards shape a stronger relationship with compliance staff, so both sides have the support and tools they need to be effective?

by Ajay Agrawal, Joshua Gans and Avi Goldfarb
The opportunities (and dangers) of artifical intelligence are your board’s next strategic challenge.

The pace of major, market-shifting technology change has increased over the past century. The latest wave, artificial intelligence (AI), brings many previous shifts together and takes them in a whole new direction. AI, along with related trends like machine learning and big data, will demand top-level strategic discussion in the boardroom to tap its dawning business opportunities—and to avoid its potential dangers.

Big tech firms offer a valuable diversity model.

The technology industry has an (often deserved) reputation as a boys’ club that has stymied the progress of women into leadership positions, particularly the boardroom. Yet the largest tech corporations, such as Apple and HP, are leaders in building gender diversity into their boards. Smaller techs lag behind. A few strategic changes could offer a model for women’s board advancement.

CONVERSATIONS: MICHELLE EDKINS BlackRock rocks proxy season 2018.

When a $6 trillion investor says “ahem” just before proxy season, even the biggest companies show respectful silence. That surely happened in January, when mega-fund manager BlackRock sent a letter to the companies it holds regarding social responsibility.
   BlackRock CEO Laurence Fink’s missive was addressed to the managers and boards of the world’s major corporations. “To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.” The BlackRock letter called on companies to weigh sustainability, diversity and social needs in all aspects of setting strategy and weighing results.
   Michelle Edkins is BlackRock’s intermediary in this dialogue between the fund and corporate boards. As former chair of the International Corporate Governance Network, she also brings expertise on the board role.

IN REVIEW  Index to actions, regulations and surveys.

SPOKEN & WRITTEN  Excerpts of articles and speeches.

DIRECTORS' REGISTER  Recent board elections.

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