EGC Corporate Governance Practices (May 2018)

EGC Corporate Governance Practices: A Survey and Related Resources PAGE 16 Board Composition Independent Directors At or immediately following IPO pricing, approximately 84.3% of the non-controlled company issuers (based on 700 companies for which data was available) had a majority of independent directors. 11 The average number of non-independent directors was 2.2 (based on 842 companies for which data was available). Interestingly, only approximately 9.3% of the 848 issuers had the chief financial officer as a member of the board of directors. Gender Diversity Women made up on average approximately 9.4% of the board membership of EGCs that we reviewed, a little more than half of the overall 16% female board membership of S&P 1500 companies in 2014, as noted in the December 2015 U.S. Government Accountability Office (“GAO”) report on the gender diversity of corporate boards . 12 The GAO report indicated that small cap companies, such as EGCs, have the lowest representation of women on corporate boards, with a 12% representation rate for S&P SmallCap 600 companies (with an adjusted market capitalization of $400 million to $1.8 billion). Of the 404 companies that had female board representation, 270 companies (approximately 66.8%) had one female board member, 101 companies (approximately 25.0%) had two female board members, 27 companies (approximately 6.7%) had three female board members, and five companies (approximately 1.2%) had five female board members. Limitations on Board Tenure 28 companies, or approximately 3.4%, had limitations on board tenure, and approximately 96.7% did not. 10 of these companies are Israeli companies following the Israeli Companies Law, which limits the tenure of external directors to three years except for Israeli companies traded on certain foreign stock exchanges, including the NYSE and Nasdaq. Six of these companies were Dutch companies following the Dutch Corporate Governance Code, which limited supervisory board tenure to no more than 12 years. 11 Generally, the NYSE and the Nasdaq standards for director independence are similar. See Appendix D for a summary of differences between the NYSE and the Nasdaq listing requirements. 12 A copy of the GAO report is available a t http://www.gao.gov/assets/680/674008.pdf . The GAO has not issued any updated statistics at this time.