What Boards and C-suites Need to Consider Post-IPO

With a robust pipeline for initial public offerings (IPOs), companies need to ensure they are ready not only for listing day, but also for committing to annual governance requirements through the lens of ESG once they enter the public markets. In a growing trend, there’s been an uptick in corporate sustainability transparency, diversity, equity and inclusion, as regulatory reporting continues to evolve, which means the demand for robust and comprehensive sustainability governance considerations is more important than ever.

In the second part of this two-part series, we explore what C-suites and board directors need to know about key annual governance considerations as a public company. Following our pre-IPO checklist, outlining considerations that a company should think about completing ahead of a successful IPO, Business Combination or Direct Listing, we now delve into what public companies need to do annually to ensure compliance with listings rules and regulations:

Committee Composition and Schedule

• Review committee membership and terms, as well as diversity of skills and perspectives, to determine appropriate committee composition, refreshment and leadership. This review should be done in collaboration with the Nominating and ESG/Governance Committee. This review should take place following the Annual Meeting and, if possible, in connection with the Board Strategy Meeting. 
• Create and review a committee calendar, establishing topics and meeting cadence while determining any changes. Your calendar should determine timing and identify the group or individual in charge of each follow-up item from each committee meeting. It should also be clear what the follow-up item entails, when it is expected by and when it will be presented to the Committee. Assign one group to take responsibility for updating the calendar and tracking the status of completion notations on a regular basis.
• Review the committee charter and consider updates based on emerging trends and feedback from institutional investors and proxy advisors.
• Develop a forward-looking agenda in the board portal, highlighting any changes and additions. This should make clear exactly what stakeholders should be considering and discussing in the current period.
• Consider the results of the annual Committee Assessment and develop an action plan with goals for improvement.

Disclosure

• Plan for the company’s disclosure on compensation-related matters, considering and reviewing all foundational documents related to pay or human capital disclosures. Incorporate into disclosures feedback and suggestions from the annual Say-on-Pay advisory vote and engagement session feedback from institutional investors and proxy advisors.
• Consider the integration of compensation disclosures across all formats, including the company’s Form 10K, Proxy and Sustainability Report, to ensure consistent reporting.
• Seek input from management or an external compensation consultant for best practices on pay and human capital management disclosures.
• Determine any additional reporting based on international operations.

Emerging Trends

• Understand institutional investors and proxy voting firms’ policies and perspectives on emerging governance issues, notably ESG, human capital management (HCM), cybersecurity and supply chain, as well as their inclusion in metrics associated with compensation programs.
• Clarify and define the role/responsibility of each corporate committees’ role in addressing emerging topics, including ESG, HCM, executive compensation, and coordination with other Committees.
• Agree on how emerging issues will be tracked and reported to the corporate committees and the board, for example, through a dashboard in a board portal, such as Nasdaq Boardvantage. This will streamline the notification process across stakeholders. 

Risk Profile

• Ensure board and other corporate committees are informed on emerging issues and developing regulations that may impact the company compensation program.
• Perform annual risk review of pay programs and review the extent to which incentive programs may encourage undue risk-taking before sharing with the Audit Committee. 

Company-specific Pay Programs

• Evaluate executive compensation program components, including alignment with company mission, values and stakeholder experiences, as well as effectiveness in attracting and retaining executives.
• Conduct a realizable pay assessment to provide a more accurate view of the actual value of compensation delivered to executives.
• Consider company performance and how it may affect payouts, either directly or through discretion. Evaluate the use and impact of discretionary payouts.
• Evaluate and consider changes to the compensation program design, structure or metrics based on emerging issues.
• Evaluate and model proxy advisor and institutional investor assessments of the company’s compensation program and payouts.
• Update all board members on the feedback and issues raised at shareholder engagement sessions, specifically on compensation-related shareholder concerns. Discuss and be prepared to address any concerns.
• Review Shareholder Proposals on emerging issues, such as ESG, human capital management and executive compensation, and consider the company’s response and impact. Review compensation peers’ experiences with similar proposals.

Thorough and high-quality review of feedback from previous annual meetings and preparation for the upcoming proxy season with special care to sustainability is key for company investors to effectively evaluate the performance indicators affecting business risk and valuation. Reporting standards in this area are continuously evolving and can be challenging for corporates to navigate. Well-structured and easily readable reporting on all aspects of ESG is paramount for annual governance assessments by stockholders, stakeholders and proxy advisors.

Nasdaq is here to partner with companies at every stage of their lifecycle and offer support from IPO day, through the planning period, and onto proxy season year after year. Whether a company goes public via traditional IPO, Business Combination, or Direct Listing, they face new and unique challenges in the public markets. Based on our more than five decades of experience, these are the critical governance considerations that companies should consider annually to help them achieve success in the public markets and beyond.

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IPOs Board and Leadership

Karen Snow

Nasdaq

Karen Snow is a Senior Vice President and the Global Head of Listings at Nasdaq.

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Joan Conley

Nasdaq

Joan C. Conley is currently a Senior Advisor on Corporate Governance and ESG Programs at Nasdaq, a role she assumed in January 2021, and a member of several boards.

Read Joan's Bio