Boardroom Governance with Evan Epstein

Amy Borrus: The Council of Institutional Investors' Voice of Corporate Governance.

Episode Summary

In this episode, I talk with Amy Borrus, the Executive Director of the Council of Institutional Investors, one of the most influential association of institutional investors. Founded in 1985, CII seeks to advance “strong governance standards at public companies and strong shareholder rights.” Today, its membership includes more than 140 U.S. asset owners including public pension funds, corporate and labor funds, foundations and endowments; over 150 foreign asset owners, and more than 60 assets managers and other investors, with combined assets under management of $40 trillion dollars. In this podcast, we discuss the history and current focus of CII, the evolution of corporate governance, stewardship and engagement, and other matters of relevance to institutional investors such as dual class shares, board diversity, ESG, sustainability and more. If you like this show, please consider subscribing, leaving a review or sharing this podcast on social media. You can find all the show notes on the website boardroom-governance.com and please feel free to subscribe to the Boardroom Governance Newsletter at evanepstein.substack.com

Episode Notes

Intro.
(1:22) - Start of interview
(2:23) - Amy's "origin story"
(3:41) - Her time as a journalist at Businessweek (US, UK and Japan).
(5:02) - Her return to the US in 1990, where her last beat was to cover the SEC and corporate governance (including corporate scandals from the early 2000s and SOX).
(6:32) - Her start at the Council of Institutional Investors in 2006.
(7:52) - The history of CII, founded in 1985 "at a time of corporate takeovers, imperial CEOs and insulated boards of directors."
(9:23) - The three founding principles of CII:
1. Investors benefit when corporate boards provide robust and effective oversight of management (directors are accountable to shareowners);
2. Investors are more powerful when they speak with one voice; and
3. Investors are not monolithic so CII focuses on "big tent issues" where there is consensus.
(10:31) - Members of CII: asset owners, asset managers and other investors - combined AUM: $40T.
(12:31) - The evolution of governance since SOX in 2002. "When I joined CII, corporate governance was kind of a backwater." "Since then it has gone mainstream."
(15:01) - Her take on BRT's purpose of the corporation restatement (2019) and CII's response letter. "At the end of the day, the north star for public companies is driving sustainable long term shareholder value."
(22:14) - Her take on how Say-on-Pay was a catalyst for more engagement between companies & shareholders.
(24:06) - The evolution of engagement by CII: it used to be done directly, now not so much because CII members are engaging directly.
(26:15) - Her take on ESG. "We focus primarily on the G." "We think that strong governance standards and practices are the linchpin for appropriate attention to the E and the S issues." "We put governance first."
1. CII's Special Reports and Publications.
2. CII's Education Initiatives.
(30:03) - "CII's policies on board diversity have always adopted a broad view of diversity including background, experience, age, gender, ethnicity and culture." "It's a bulwark against clubbiness, against having blinders on." "We believe diverse boards can be achieved without quotas."
(32:44) - CII's policies on dual class stock. "We've evolved into a compromise position [with sunset provisions]." "If you want to stay private fine, but if you want to tap the public markets you need to treat your public shareholders appropriately - there is a certain baseline expectation." "We have an international race to the bottom with London, HK, Singapore, etc allowing dual class share listings."
(42:03) - CII's advocacy priorities for 2021:
1. Investors rights and protections:
  1. Independent proxy research. CII's amicus brief in support of ISS lawsuit against the SEC.
  2. CII is opposed to SEC's Rule to Limit Shareholder Proposals (Amend Rule 14a-8)
  3. Sunset Provisions for Dual Class Shares.
  4. Clawbacks for executive compensation.
2. Corporate disclosure:
  1. Climate change risk disclosure.
  2. Board diversity.
  3. Human capital disclosure.
  4. Political spending disclosure.
3. Market systems and structures:
  1. Abuse of 10b5-1 Plans.
  2. Share buybacks: there should be stronger disclosures.
  3. End-to-end vote confirmation.
  4. Universal proxies in contested elections.
  5. High frequency trading
  6. Stock exchanges
(48:06) - Her take on the GameStop saga, "the real danger there is that it undercuts public confidence and integrity of the markets, and that is not good. It's long term problem."
(50:02) - Some of her favorite books:
1. A Gentleman in Moscow, by Amor Towles (2016)
2. Alexander Hamilton, by Ron Chernow (2005)
3. Leadership: In Turbulent Times, by Doris Kearns Goodwin (2018)
4. On corporate governance:
  1. Bad Blood, by John Carreyrou (2020)
  2. Too Big to Fail, by Andrew Ross Sorkin (2010)
(52:25) - Her mentors (in addition to her father):
1. Ann Yerger (former Exec Dir of CII)
2. Ken Bertsch (former Exec Dir of CII)
(54:31) - Her favorite (current) quotes:
1. "Be curious not judgmental" (Walt Whitman)
2. "To whom much is given, much will be required."
(56:30) - Her "unusual habit": she loves architecture and city/urban planning.

Amy Borrus became executive director of the Council of Institutional Investors (CII) in July 2020. She joined CII in 2006 as deputy director, and was interim executive director in 2015-2016. She serves on the boards of the CII Research and Education Fund and the Sinai Assisted Housing Foundation. She also serves on the Best Practice Principles Oversight Committee, which will monitor principles underpinning services of leading proxy advisory firms. Prior to CII, she was a correspondent for Businessweek magazine for more than 20 years. Her journalism career included multi-year assignments in London, Tokyo and Washington, D.C. She earned an MSc. in International Relations from the London School of Economics and a B.A. in History and English from the University of Pennsylvania

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Music/Soundtrack (found via Free Music Archive): Seeing The Future by Dexter Britain is licensed under a Attribution-Noncommercial-Share Alike 3.0 United States License